Exhibit 4.4
INDENTURE
between
[ ] HOME EQUITY LOAN TRUST 200_-_
as Issuer
and
[ ],
as Indenture Trustee
Dated as of [ ]
[ ]HOME EQUITY LOAN TRUST 200_-_
Home Equity Loan Asset-Backed Notes,
Series 200_-_
Table of Contents
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions...............................................2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.........9
SECTION 1.3 Rules of Construction.....................................9
ARTICLE II
THE NOTES
SECTION 2.1 Form.....................................................11
SECTION 2.2 Execution, Authentication, Delivery and Dating...........11
SECTION 2.3 Registration; Registration of Transfer and Exchange......12
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Notes...............13
SECTION 2.5 Persons Deemed Owner.....................................13
SECTION 2.6 Payment of Principal and Interest; Defaulted Interest....14
SECTION 2.7 Cancellation.............................................14
SECTION 2.8 [Reserved]...............................................14
SECTION 2.9 Release of Trust Estate..................................15
SECTION 2.10 Book-Entry Notes.........................................15
SECTION 2.11 Notices to Clearing Agency...............................16
SECTION 2.12 Definitive Notes.........................................16
SECTION 2.13 Tax Treatment............................................16
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest........................17
SECTION 3.2 Maintenance of Office or Agency..........................17
SECTION 3.3 Money for Payments To Be Held in Trust...................17
SECTION 3.4 Existence................................................18
SECTION 3.5 Protection of Trust Estate...............................19
SECTION 3.6 Annual Opinions as to the Trust Estate...................19
SECTION 3.7 Performance of Obligations; Servicing of Mortgage Loans..20
SECTION 3.8 Negative Covenants.......................................21
SECTION 3.9 Annual Statement as to Compliance........................22
SECTION 3.10 Covenants of the Issuer..................................22
SECTION 3.11 Servicer's Obligations...................................23
SECTION 3.12 Restricted Payments......................................23
SECTION 3.13 Treatment of Notes as Debt for All Purposes..............23
SECTION 3.14 Notice of Events of Default..............................23
SECTION 3.15 Further Instruments and Acts.............................23
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SECTION 3.16 Issuer May Consolidate, etc..............................23
SECTION 3.17 Successor or Transferee..................................25
SECTION 3.18 No Other Business........................................25
SECTION 3.19 No Borrowing.............................................25
SECTION 3.20 Guarantees, Loans, Advances and Other Liabilities........26
SECTION 3.21 Capital Expenditures.....................................26
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture..................27
SECTION 4.2 Application of Trust Money...............................28
SECTION 4.3 Subrogation and Cooperation..............................28
SECTION 4.4 Repayment of Moneys Held by Paying Agent.................29
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default........................................30
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.......31
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee..............................31
SECTION 5.4 Remedies; Priorities.....................................34
SECTION 5.5 Optional Preservation of the Trust Estate................35
SECTION 5.6 Limitation of Suits......................................36
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest............................36
SECTION 5.8 Restoration of Rights and Remedies.......................36
SECTION 5.9 Rights and Remedies Cumulative...........................37
SECTION 5.10 Delay or Omission Not a Waiver...........................37
SECTION 5.11 Control by Noteholders...................................37
SECTION 5.12 Waiver of Past Defaults..................................38
SECTION 5.13 Undertaking for Costs....................................38
SECTION 5.14 Waiver of Stay or Extension Laws.........................38
SECTION 5.15 Action on Notes..........................................38
SECTION 5.16 Performance and Enforcement of Certain Obligations.......39
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee..............................40
SECTION 6.2 Rights of Indenture Trustee..............................41
SECTION 6.3 Individual Rights of Indenture Trustee...................43
SECTION 6.4 Indenture Trustee's Disclaimer...........................43
SECTION 6.5 Notice of Defaults.......................................43
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SECTION 6.6 Reports by Indenture Trustee to Holders..................43
SECTION 6.7 Compensation and Indemnity...............................44
SECTION 6.8 Replacement of Indenture Trustee.........................44
SECTION 6.9 Successor Indenture Trustee by Merger....................45
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.................................46
SECTION 6.11 Eligibility; Disqualification............................47
SECTION 6.12 Preferential Collection of Claims Against Issuer.........47
SECTION 6.13 Representations and Warranties...........................47
SECTION 6.14 Directions to Indenture Trustee..........................47
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders..........................49
SECTION 7.2 Preservation of Information; Communications
to Noteholders....................................49
SECTION 7.3 Reports by Issuer........................................49
SECTION 7.4 Reports by Indenture Trustee.............................50
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money......................................51
SECTION 8.2 Accounts; Distributions..................................51
SECTION 8.3 [Reserved]...............................................52
SECTION 8.4 Servicer's Monthly Statements............................52
SECTION 8.5 [Reserved]...............................................52
SECTION 8.6 Opinion of Counsel.......................................52
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders...53
SECTION 9.2 Supplemental Indentures with Consent of Noteholders......54
SECTION 9.3 Execution of Supplemental Indentures.....................55
SECTION 9.4 Effect of Supplemental Indenture.........................55
SECTION 9.5 Conformity with Trust Indenture Act......................56
SECTION 9.6 Reference in Notes to Supplemental Indentures............56
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption................................................57
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc.................58
SECTION 11.2 Form of Documents Delivered to Indenture Trustee..........59
SECTION 11.3 Acts of Noteholders.......................................60
SECTION 11.4 Notices...................................................61
SECTION 11.5 Notices to Noteholders; Waiver............................61
SECTION 11.6 Rights of the Insurer to Exercise Rights of Noteholders...62
SECTION 11.7 Conflict with Trust Indenture Act.........................62
SECTION 11.8 Effect of Headings and Table of Contents..................62
SECTION 11.9 Successors and Assigns....................................62
SECTION 11.10 Separability..............................................62
SECTION 11.11 Benefits of Indenture.....................................62
SECTION 11.12 Legal Holidays............................................63
SECTION 11.13 GOVERNING LAW.............................................63
SECTION 11.14 Counterparts..............................................63
SECTION 11.15 Recording of Indenture....................................63
SECTION 11.16 Trust Obligation..........................................63
SECTION 11.17 No Petition...............................................63
SECTION 11.18 Inspection................................................64
SECTION 11.19 Inconsistencies With the Sale and Servicing Agreement.....64
SECTION 11.20 Third-Party Beneficiaries.................................64
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EXHIBITS
SCHEDULE A - Mortgage Loan Schedule
EXHIBIT A - Form of Notes
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Exhibit 4.4
INDENTURE dated as of [ ] between [ ] HOME EQUITY
LOAN TRUST 200_-_, a Delaware business trust (the "Issuer"), and [ ],
a [ ] banking corporation, as trustee and not in its individual
capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the holders of the Issuer's Home Equity
Loan Asset-Backed Notes (the "Notes") and the Insurer:
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants to
the Indenture Trustee at the Closing Date, as Indenture Trustee for the
benefit of the Class A Noteholders and the Insurer, all of the Issuer's right,
title and interest in and to: (i) the Trust Estate; (ii) all right, title and
interest of the Issuer in the Sale and Servicing Agreement and the Mortgage
Loan Purchase Agreement with respect to the Mortgage Loans (including the
Issuer's right to cause the Seller to repurchase Mortgage Loans from the
Issuer under certain circumstances described therein); (iii) all present and
future claims, demands, causes of action and choses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing; (iv) all funds on deposit from time to
time in the Collection Account and the Distribution Account; (v) all other
property of the Trust from time to time; and (vi) any and all proceeds of the
foregoing (collectively the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Class A 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 Insurer in
respect of draws made on the Insurance Policy and amounts owing from time to
time pursuant to the Insurance and Reimbursement Agreement, and such Grant
shall continue in full force and effect for the benefit of the Insurer until
all such amounts owing to it have been repaid in full.
The Indenture Trustee, as Indenture Trustee on behalf of the holders
of the Notes, acknowledges the foregoing Grant, accepts the trusts hereunder
in good faith and without notice of any adverse claim or liens and agrees to
perform its duties required in this Indenture to the best of its ability to
the end that the interests of the holders of the Notes and the Insurer may be
adequately and effectively protected. The Indenture Trustee further agrees and
acknowledges that each item of Collateral that is physically delivered to the
Indenture Trustee will be held by the Indenture Trustee in [state].
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) 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 Sale and Servicing Agreement. All other capitalized terms used herein
shall have the meanings specified herein.
"Act" has the meaning specified in Section 11.3(a).
"Administration Agreement" means the Administration Agreement dated
as of [ ], among the Administrator, the Issuer, the Indenture Trustee
and [ ].
"Administrator" means [ ], [a state] banking corporation, or
any successor Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer
of the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter) and, so long as the Administration Agreement is in effect, any
Vice President or more senior officer of the Administrator or [ ] who
is authorized to act for the Administrator or [ ] in matters relating
to the Issuer and to be acted upon by the Administrator or [ ]
pursuant to the Administration Agreement and who is identified on the list of
Authorized Officers delivered by the Administrator to the Indenture Trustee on
the Closing Date (as such list may be modified or supplemented from time to
time thereafter).
"Book-Entry Notes" means any Class A Note registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the
rules of such Depository).
"Business Day" has the meaning assigned thereto in the Sale and
Servicing Agreement.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit C to the Trust Agreement.
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"Class A Note Rate" with respect to the Class A Notes shall have the
meaning assigned thereto in the Sale and Servicing Agreement.
"Class A Notes" means any Note, designated as a Class A Note,
executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A hereto.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means [ ].
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Commission" shall mean the Securities and Exchange Commission.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located
at [ ], Attention: Indenture Trust Administration, or at such other
address as the Indenture Trustee may designate from time to time by notice to
the Noteholders, the Issuer and the Insurer or the principal corporate trust
office of any successor Indenture Trustee at the address designated by such
successor Indenture Trustee by notice to the Noteholders, the Insurer, and the
Issuer.
"Default" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Article II.
"Depositor" shall mean Bond Securitization, L.L.C, a Delaware limited
liability company, in its capacity as depositor under the Sale and Servicing
Agreement, and its successor in interest.
"Depository Institution" means any depository institution or trust
company, including the Indenture Trustee, that (i) has short-term debt
obligations and long-term debt obligations at the time of any deposit therein
and throughout the time the interest is maintained that are rated at least
["P-1"] and ["A2,"] respectively, by Moody's and ["A-1"] and ["A,"]
respectively, by Standard & Poor's, and that the deposits in such account are
fully insured to the maximum extent provided by either the BIF or the SAIF and
which is any of (a) a federal savings and loan association duly organized,
validly existing and in good standing under the applicable banking
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laws of any state, (b) an institution duly organized, validly existing and in
good standing under the applicable banking laws of any state, (c) a national
banking association duly organized, validly existing and in good standing
under the federal banking laws or (d) a principal subsidiary of a bank holding
company, and in each case of (a)-(d), approved in writing by the Insurer. Such
Depository Institution shall have (x) a segregated trust account maintained
with the corporate trust department of a federal or state chartered depository
or trust company, having capital and surplus of not less than [$50,000,000,]
acting in its fiduciary capacity or (y) an account otherwise acceptable to
each Rating Agency and the Insurer as evidenced by a letter from each Rating
Agency and the Insurer to the Owner Trustee and the Indenture Trustee, without
reduction or withdrawal of the then current ratings of the Class A Notes,
without regard to the Insurance Policy.
"Distribution Account" means the Distribution Account (as defined in
the Sale and Servicing Agreement), established by the Indenture Trustee.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Final Payment Date" means, with respect to any Note, the Payment
Date occurring in [ ].
"Grant" means mortgage, pledge, bargain, warrant, alienate, remise,
release, convey, assign, transfer, create, and ▇▇▇▇▇ ▇ ▇▇▇▇ upon and a
security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral with respect to
any other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture Trust Estate" or "Trust Estate" means all money,
instruments, rights and other property that are subject or intended to be
subject to the lien and security interest of this Indenture for the benefit of
the Noteholders and the Insurer (including, without limitation, all
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Collateral Granted to the Indenture Trustee pursuant to the Granting Clause),
including all proceeds thereof.
"Indenture Trustee" means [ ], an [ ] banking corporation, as
Indenture Trustee under this Indenture, or any successor Indenture Trustee
appointed pursuant to the terms of this Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor on
the Notes, the Transferor and any Affiliate of any of the foregoing Persons,
(b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Transferor or
any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Transferor or any Affiliate of any of
the foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" means 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 11.1 herein,
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.
"Insurance and Reimbursement Agreement" shall have the meaning
assigned thereto in the Sale and Servicing Agreement.
"Insurer" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"Interest Period" shall have the meaning assigned thereto in the Sale
and Servicing Agreement.
"Issuer" means [ ] Home Equity Loan Trust 200_-_ until a successor
replaces it in accordance with the terms of the Transaction Documents and,
thereafter, means the successor.
"Issuer Order" and "Issuer Request" mean 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" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"LIBOR Business Day" shall have the meaning assigned thereto in the
Sale and Servicing Agreement.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or any
successor thereto.
"Mortgage Loan Schedule" means the listing of the Mortgage Loans set
forth in Schedule A, as supplemented as of any date on which a Defective
Mortgage Loan has been repurchased
5
from the Trust or substituted with an Eligible Substitute Mortgage Loan
pursuant to the Sale and Servicing Agreement.
"Note" means any of the Class A Notes.
"Note Depository Agreement" means the agreement dated [ ],
among the Issuer, the Indenture Trustee and The Depository Trust Company, as
the initial Clearing Agency, relating to the Book-Entry Notes.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Article II.
"Noteholder" means a Holder of a Class A Note.
"Obligations" shall mean the Mortgage Loans.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 herein, and
delivered to the Indenture Trustee. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel
who may, except as otherwise expressly provided in this Indenture, be
employees of or counsel to the Issuer and who shall be satisfactory to the
Indenture Trustee and the Insurer, and which opinion or opinions shall be
addressed to the Indenture Trustee and the Insurer, as Indenture Trustee and
the Insurer, respectively, and shall comply with any applicable requirements
of Section 11.1 herein and shall be in form and substance satisfactory to the
Indenture Trustee and the Insurer.
"Outstanding" means, with respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of
such Notes (provided, however, that if such Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision for such notice has been made, satisfactory to
the Indenture Trustee);
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(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture
unless proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a bona fide purchaser; and
(iv) Notes for which the Final Payment Date has occurred;
provided, however, in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent, or waiver hereunder or under any Transaction
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Depositor, the Transferor or any Affiliate of any of the foregoing Persons
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent, or
waiver, only Notes that the Indenture Trustee knows to be so owned shall be so
disregarded and provided further that for purposes of determining the
Insurer's subrogation rights, a Note shall be deemed Outstanding to the extent
of any payment made by the Insurer. Notes so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Issuer, any other
obligor upon the Notes, the Transferor or any Affiliate of any of the
foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all
Notes Outstanding at the date of determination.
"Owner Trustee" means [ ], not in its individual capacity but
solely as Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 of the Sale and Servicing Agreement and is authorized by the Issuer to
make payments to and distributions from the Distribution Account, including
payment of principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" shall mean the twenty-fifth day of each month or, if
such day is not a Business Day, then the next Business Day, beginning in [
].
"Person" means any individual, corporation, estate, partnership,
joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization, limited liability company,
limited liability partnership, or government or any agency or political
subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
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 Article II 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.
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"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Rating Agency Condition" means, with respect to certain actions
requiring prior Rating Agency consent, that each Rating Agency shall have been
given 10 days (or such shorter period as is acceptable to each Rating Agency)
prior notice thereof and that each of the Rating Agencies shall have notified
the Transferor, the Servicer and the Insurer in writing that such action will
not result in a reduction or withdrawal of the then current rating of the
Notes without regard to the Insurance Policy.
"Rating Agency" means either of (i) [ ]or (ii) [ ].
If no such organization or successor is any longer in existence, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable person designated by the Seller and the Insurer, notice of
which designation shall have been given to the Indenture Trustee.
"Record Date" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"Redemption Date" means, in the case of a redemption of the Notes
pursuant to Section 10.1, the Payment Date specified by the Indenture Trustee
pursuant to Section 10.1.
"Registered Holder" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Responsible Officer" shall have the meaning assigned thereto in the
Sale and Servicing Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of [ ], among the Issuer, the Transferor, the Depositor, the
Servicer and the Indenture Trustee.
"Securities Act" means the Securities Act of 1933, as amended.
"Servicer" shall mean [ ], in its capacity as servicer under
the Sale and Servicing Agreement, or any Successor Servicer appointed in
accordance with the terms of the Sale and Servicing Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"State" means any one of the ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.7(e)
hereof.
"Transaction Documents" has the meaning set forth in the Sale and
Servicing Agreement.
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"Transferor" shall have the meaning assigned thereto in the Sale and
Servicing Agreement.
"Trust" means the Issuer.
"Trust Estate" shall mean the assets subject to the Sale and
Servicing Agreement, the Mortgage Loan Purchase Agreement, the Trust Agreement
and this Indenture, assigned to the Indenture Trustee, which assets consist
of: (i) each Mortgage Loan and the related Mortgage File, including its
Principal Balance and all collections in respect thereof received after the
Cut-Off Date; (ii) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure; (iii) the Seller's rights under
any insurance policies relating to the Mortgage Loans (including any Insurance
Proceeds); (iv) amounts on deposit in the Collection Account and Distribution
Account; (v) the Depositor's rights under the Mortgage Loan Purchase
Agreement; (vi) any proceeds of any of the foregoing and (vii) all other
assets included or to be included in the Trust for the benefit of Noteholders
and the Insurer. In addition, on or prior to the Closing Date, the T shall
cause the Insurer to deliver the Insurance Policy to the Indenture Trustee for
the benefit of the Noteholders.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"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 in the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction.
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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
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented (as provided in
such agreements) and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its
permitted successors and assigns.
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ARTICLE II
THE NOTES
SECTION 2.1 Form. The Notes shall be designated as the "[
]HOME EQUITY LOAN TRUST 200_-_, Home Equity Loan Asset-Backed Notes,
Series 200_-_". Each Note shall be in substantially the form set forth in
Exhibit A with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution thereof.
Any portion of the text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
The terms of the Notes are set forth in Exhibit A hereto. The terms
of the Notes are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication, Delivery and Dating. The Notes shall be
executed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Owner Trustee shall bind the
Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or
did not hold such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in Section
2.8, the Indenture Trustee shall upon receipt of an Issuer Order, authenticate
and deliver the Class A Notes for original issue in the principal amount equal
to $[ ]. The aggregate principal amount of the Class A Notes
outstanding at any time may not exceed such amount.
The Notes that are authenticated and delivered by the Indenture
Trustee to or upon the order of the Issuer on the Closing Date shall be dated
[ ]. All other Notes that are authenticated after the Closing Date for
any other purpose under the Indenture shall be dated the date of their
authentication. The Class A Notes shall be issuable as registered Notes in the
minimum denomination of $[25,000] and multiples of $[1,000] in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated
and delivered hereunder.
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SECTION 2.3 Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of the Note Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture
Trustee shall have the right to inspect the Note Register at all reasonable
times and to obtain copies thereof, and the Indenture Trustee shall have the
right to rely upon a certificate executed on behalf of the Note Registrar by
an Executive Officer thereof as to the names and addresses of the Holders of
the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2 hereof,
the Owner Trustee on behalf of the Issuer shall execute, and the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, in the name of the designated transferee or transferees, one or more
new Notes in any authorized denominations, of a like aggregate principal
amount.
At the option of the Holder, Notes may be exchanged for other Notes
in any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or
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exchange of Notes, other than exchanges pursuant to Section 2.4 or Section 9.6
hereof not involving any transfer.
SECTION 2.4 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 reasonably 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 an Authorized Officer of the Owner
Trustee 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, or shall have been
called for redemption, instead of issuing a replacement Note, the Issuer may
pay such destroyed, lost or stolen Note when so due or payable or upon the
Redemption Date without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment
such original Note, the Issuer and the Indenture Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to 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 2.4, the
Issuer may require the payment by the Holder of such Note of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.4 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 2.4 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.5 Persons Deemed Owner. 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
on, if any, such Note and for all other purposes whatsoever, whether or not
such
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Note be overdue, and none of the Issuer, the Indenture Trustee or any agent of
the Issuer or the Indenture Trustee shall be affected by notice to the
contrary.
SECTION 2.6 Payment of Principal and Interest; Defaulted Interest.
(a) Each Class A Note shall accrue interest at the Class A Note Rate
and such interest shall be payable on each Payment Date as specified in
Exhibit A hereto, subject to Section 3.1 hereof. Any installment of interest
or principal, if any, payable on any Note that is punctually paid or duly
provided for by the Issuer on the applicable Payment Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date in the manner set forth in Section 5.01(c) of
the Sale and Servicing Agreement.
(b) The principal of each Class A Note shall be payable in
installments on each Payment Date as provided in the forms of the Notes set
forth in Exhibit A hereto. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A Notes shall be due and payable, if not
previously paid, on the earliest of (i) the Final Payment Date, (ii) the
Redemption Date or (iii) the date on which an Event of Default shall have
occurred and be continuing, if the Indenture Trustee, the Insurer or the
Holders of Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable
in the manner provided in Section 5.2 hereof. All principal payments on the
Notes shall be in the manner set forth in the Sale and Servicing Agreement.
The Indenture Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of
and interest on such Note will be paid. Such notice shall be mailed or
transmitted by facsimile prior to such final Payment Date and shall specify
that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in
connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 8.01 of the Sale and Servicing Agreement.
SECTION 2.7 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 canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in
any manner whatsoever, and all Notes so delivered shall be promptly canceled
by the Indenture Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Notes may be held or
disposed of by the Indenture Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by
an Issuer Order that they be destroyed or returned to it; provided, that such
Issuer Order is timely and the Notes have not been previously disposed of by
the Indenture Trustee.
SECTION 2.8 [Reserved].
SECTION 2.9 Release of Trust Estate.
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(a) Except as otherwise provided in subsections (b) and (c) of this
Section 2.9 and Section 11.1 hereof and the terms of the Transaction
Documents, the Indenture Trustee shall release property from the lien of this
Indenture only upon consent of the Insurer and receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(l) or an
Opinion of Counsel in lieu of such Independent Certificates to the effect that
the TIA does not require any such Independent Certificates.
(b) The Servicer, on behalf of the Issuer and with the consent of the
Insurer, shall be entitled to obtain a release from the lien of this Indenture
for any Mortgage Loan and the related Mortgaged Property at any time in
accordance with the provisions of Section 3.08 of the Sale and Servicing
Agreement.
(c) The Indenture Trustee shall, if requested by the Servicer,
temporarily release to the Servicer the Indenture Trustee's Mortgage Loan File
pursuant to the provisions of Section 3.08 of the Sale and Servicing Agreement
upon compliance by the Servicer of the provisions thereof provided that the
Indenture Trustee's Mortgage Loan File shall have been stamped to signify the
Issuer's pledge to the Indenture Trustee under the Indenture.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency or its custodian, by, or on behalf of, the Issuer. The Book-Entry Notes
shall be registered initially on the Note Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Note Owner thereof will
receive a definitive Note representing such Note Owner's interest in such
Note, except as provided in Section 2.12 below. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to such Note
Owners pursuant to Section 2.12 below:
(i) the provisions of this Section shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole holder of the Notes, and shall have no obligation to the Note
Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions
of this Section shall control;
(iv) the rights of Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Note Owners and the Clearing
Agency and/or the Clearing Agency Participants pursuant to the Note
Depository Agreement. Unless and until Definitive Notes are issued
pursuant to Section 2.12 below, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on the
Notes to such Clearing Agency Participants; and
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(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 Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to
such effect from Note Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes, to the
Clearing Agency, and shall have no obligation to such Note Owners.
SECTION 2.12 Definitive Notes. If (i) the Clearing Agency or the
Issuer advises the Indenture Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities with respect
to the Book-Entry Notes and the Clearing Agency or the Issuer is unable to
locate a qualified successor, (ii) the Issuer at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Owners of the Book-Entry Notes representing beneficial interests
aggregating at least a majority of the Outstanding Amount of such Notes advise
the Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of such Note
Owners, then the Clearing Agency shall notify all Note Owners and the
Indenture Trustee of the occurrence of such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Notes representing the Book-Entry Notes
by the Clearing Agency, accompanied by registration instructions, the Issuer
shall execute and the Indenture Trustee shall authenticate the Definitive
Notes in accordance with the instructions of the Clearing Agency. None of the
Issuer, the Note Registrar or the Indenture Trustee shall be liable for any
delay in delivery of such instructions and 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 2.13 Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for all tax
purposes, the Class A Notes will qualify as indebtedness secured by the Trust
Estate. The Issuer, by entering into this Indenture, and each Noteholder, by
its acceptance of a Note (and each Note Owner by its acceptance of an interest
in the applicable Book-Entry Note), agree to treat the Notes for all purposes
as indebtedness of the Issuer.
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ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly
and punctually pay (or will cause to be duly and punctually paid) the
principal of and interest, if any, on the Notes in accordance with the terms
of the Notes and this Indenture. Without limiting the foregoing, the Indenture
Trustee shall, pursuant to Section 5.01 of the Sale and Servicing Agreement,
distribute all amounts on deposit in the Distribution Account on each Payment
Date deposited therein pursuant to the Sale and Servicing Agreement, and held
therein for distribution to the Noteholders for the benefit of such
Noteholders and the Insurer. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall
be limited in right of payment to amounts available from the Trust Estate, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be
deemed to conflict with the provisions of this Section 3.1, the provisions of
this Section 3.1 shall control.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain
in [ ] an office or agency where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes and to serve as Paying Agent with respect to the Notes. 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 3.3 Money for Payments To Be Held in Trust. As provided in
Section 8.2(a) and (b), all payments of amounts due and payable with respect
to any Notes that are to be remitted from amounts withdrawn from the
Distribution Account pursuant to Section 8.2(c) shall be made on behalf of the
Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so
withdrawn from the Distribution Account for payments on the Notes shall be
paid over to the Issuer except as provided in this Section 3.3.
Any Paying Agent shall be appointed by Issuer Order with written
notice thereof to the Indenture Trustee. Any Paying Agent appointed by the
Issuer shall be a Person who would be eligible to be Indenture Trustee
hereunder as provided in Section 6.11 hereof. The Issuer shall not appoint any
Paying Agent (other than the Indenture Trustee) which is not, at the time of
such appointment, a Depository Institution.
The Issuer will cause each Paying Agent to execute and deliver to the
Indenture Trustee an instrument in which such Paying Agent shall agree with
the Indenture Trustee (and if the
17
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section 3.3, 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 Insurer notice of
any default by the Issuer (or any other obligor upon the Notes) of
which it has actual knowledge in the making of any payment required
to be made with respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee, forthwith
pay to the Indenture Trustee all sums so held in trust by such Paying
Agent;
(iv) immediately resign as a Paying Agent and forthwith pay
to the Indenture Trustee all sums held by it in trust for the payment
of Notes if at any time it ceases to meet the standards required to
be met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith; provided,
however, that with respect to withholding and reporting requirements
applicable to original issue discount (if any) on the Notes, the
Issuer shall have first provided the calculations pertaining thereto
to the Indenture Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums
held in trust by such Paying Agent, such sums to be held by the Indenture
Trustee upon the same terms 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.
Any termination and release of a Trust Estate shall be done in
accordance with the provisions of Section 8.01 of the Sale and Servicing
Agreement.
SECTION 3.4 Existence.
(a) Subject to Section 3.4(b) below, 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
18
necessary to protect the validity and enforceability of this Indenture, the
Notes and the Trust Estate.
(b) Any successor to the Owner Trustee appointed pursuant to Section
10.2 of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person succeeding to the Owner Trustee under the Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
SECTION 3.5 Protection of Trust Estate. 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) provide further assurance with respect to a Grant of all
or any portion of the related Trust Estate;
(ii) maintain or preserve the lien and security interest
(and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Trust Estate; or
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee, the Insurer and the Noteholders in
such Trust Estate against the claims of all persons and parties.
SECTION 3.6 Annual Opinions as to the Trust Estate.
On or before [Date] in each calendar year, beginning in [ ],
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien
and security interest of this Indenture until [Date] of the following calendar
year.
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SECTION 3.7 Performance of Obligations; Servicing of Mortgage Loans.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as expressly provided in this Indenture, the Sale and Servicing
Agreement or such other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance
of other Persons to assist it in performing its duties under this Indenture,
and any performance of such duties by a Person identified to the Indenture
Trustee in an Officer's Certificate of the Issuer shall be deemed to be action
taken by the Issuer. Initially, the Issuer has contracted with the
Administrator and [ ] to assist the Issuer in performing its duties
under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Transaction
Documents and in the instruments and agreements included in the Trust Estate,
including but not limited to (i) filing or causing to be filed all UCC
financing statements and continuation statements required to be filed by the
terms of this Indenture, the Mortgage Loan Purchase Agreement and the Sale and
Servicing Agreement and (ii) recording or causing to be recorded all
Mortgages, Assignments of Mortgage, all intervening Assignments of Mortgage
and all assumption and modification agreements required to be recorded by the
terms of the Sale and Servicing Agreement and the Mortgage Loan Purchase
Agreement, in accordance with and within the time periods provided for in this
Indenture and/or the Sale and Servicing Agreement, as applicable. Except as
otherwise expressly provided therein, the Issuer shall not waive, amend,
modify, supplement or terminate any Transaction Document or any provision
thereof without the consent of the Indenture Trustee, the Insurer and the
Holders of at least a majority of the Outstanding Amount of the Notes.
(d) Subject to the terms of the Sale and Servicing Agreement, if the
Issuer shall have knowledge of the occurrence of an Event of Servicing
Termination under the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee, the Seller, the Depositor, the Insurer, the
Servicer and the Rating Agencies thereof, and shall specify in such notice the
action, if any, the Servicer is taking with respect of such default. If such
an Event of Servicing Termination shall arise from the failure of the Servicer
to perform any of its duties or obligations under the Sale and Servicing
Agreement with respect to the Mortgage Loans, the Issuer shall take all
reasonable steps available to it to remedy or cause to be remedied such
failure.
(e) Subject to the terms of the Sale and Servicing Agreement, as
promptly as possible after the giving of notice of termination to the Servicer
of the Servicer's rights and powers pursuant to Section 8.01 of the Sale and
Servicing Agreement, a successor servicer (the "Successor Servicer") shall be
appointed pursuant to Section 7.02 of the Sale and Servicing Agreement. If the
Indenture Trustee shall succeed to the Servicer's duties as servicer of the
Mortgage Loans as provided herein, it shall do so in its individual capacity
and not in its capacity as Indenture Trustee and, accordingly, the provisions
of Article VI hereof shall be inapplicable to
20
the Indenture Trustee in its duties as successor Servicer and the servicing of
the Mortgage Loans. In case the Indenture Trustee shall become successor
Servicer under the Sale and Servicing Agreement, the Indenture Trustee shall
be entitled to appoint as Successor Servicer any one of its Affiliates
acceptable to the Insurer, provided that it shall be fully liable for the
actions and omissions of such Affiliate in such capacity as Successor
Servicer.
(f) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without
the prior written consent of the Indenture Trustee and the Insurer (which
consent shall not be unreasonably withheld), amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of the Trust Estate (except to
the extent otherwise provided in the Sale and Servicing Agreement or the other
Transaction Documents), or waive timely performance or observance by the
Servicer or the Seller under the Sale and Servicing Agreement; and (ii) that
any such amendment shall not (A) increase or reduce in any manner the amount
of, or accelerate or delay the timing of, distributions that are required to
be made for the benefit of the Noteholders or (B) reduce the aforesaid
percentage of the Notes that is required to consent to any such amendment,
without the consent of the Holders of all the outstanding Notes. If any such
amendment, modification, supplement or waiver shall be so consented to by the
Indenture Trustee and the Insurer, the Issuer agrees, promptly following a
request by the Indenture Trustee or the Insurer to do so, to execute and
deliver, in its own name and at its own expense, such agreements, instruments,
consents and other documents as the Indenture Trustee or the Insurer may deem
necessary or appropriate in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not, unless the Insurer otherwise consents in writing:
(i) except as expressly permitted by this Indenture or the
Sale and Servicing Agreement, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer, including
those included in the Trust Estate, unless directed to do so by the
Indenture Trustee and consented to by the Insurer;
(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
related Trust Estate;
(iii) engage in any business or activity other than as
permitted by the Trust Agreement or other than in connection with, or
relating to, the issuance of Notes pursuant to this Indenture and the
Ownership Interest pursuant to the Trust Agreement, or amend the
Trust Agreement as in effect on the Closing Date other than in
accordance with Section 11.1 thereof;
(iv) issue debt obligations under any other indenture;
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(v) incur or assume any indebtedness or guaranty any
indebtedness of any Person, except for such indebtedness as may be
incurred by the Issuer in connection with the issuance of the Notes
pursuant to this Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than
the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof (other than tax
liens, mechanics' liens and other liens that arise by operation of
law, in each case on any of the Mortgaged Properties and arising
solely as a result of an action or omission of the related Mortgagor)
or (C) permit the lien of this Indenture not to constitute a valid
first priority (other than with respect to any such tax, mechanics'
or other lien) security interest in the Trust Estate;
(viii) [reserved]; or
(ix) take any other action or fail to take any action which
may cause the Issuer to be taxable as (a) an association pursuant to
Section 7701 of the Code and the corresponding regulations or (b) a
taxable mortgage pool pursuant to Section 7701(i) of the Code and the
corresponding regulations.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Insurer, within 120 days after the
end of each fiscal year of the Issuer (commencing with the fiscal year [
]), an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such
year and of its performance under this Indenture has been made under
such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10 Covenants of the Issuer.
All covenants of the Issuer in this Indenture are covenants of the
Issuer and are not covenants of the Owner Trustee. The Owner Trustee is, and
any successor Owner Trustee under
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the Trust Agreement will be, entering into this Indenture solely as Owner
Trustee under the Trust Agreement and not in its respective individual
capacity, and in no case whatsoever shall the Owner Trustee or any such
successor Owner Trustee be personally liable on, or for any loss in respect
of, any of the statements, representations, warranties or obligations of the
Issuer hereunder, as to all of which the parties hereto agree to look solely
to the property of the Issuer.
SECTION 3.11 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with its obligations under the terms of the Sale and
Servicing Agreement.
SECTION 3.12 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be made (x)
distributions to the Servicer, the Indenture Trustee, the Owner Trustee, the
Ownership Interest and the Noteholders as contemplated by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement
or the Trust Agreement. The Issuer will not, directly or indirectly, make or
cause to be made payments to or distributions from the Collection Account
except in accordance with this Indenture and the Transaction Documents.
SECTION 3.13 Treatment of Notes as Debt for All Purposes.
The Issuer shall treat the Notes as indebtedness for all purposes.
SECTION 3.14 Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Seller, the Insurer and the Rating Agencies prompt
written notice of each Event of Default hereunder, each default on the part of
the Servicer of its obligations under the Sale and Servicing Agreement and
each default on the part of the Depositor or the Seller of its obligations
under the Sale and Servicing Agreement.
SECTION 3.15 Further Instruments and Acts. Upon request of the
Indenture Trustee or the Insurer, 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 3.16 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
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payment of the principal of and interest on all Notes and to the
Paying Agent, on behalf of the holder of the Transferor Interests 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 Insurer shall have consented in writing thereto
and each Rating Agency shall have notified the Issuer that such
transaction will not cause a reduction or withdrawal by a Rating
Agency of its then current rating of the Notes, without regard to the
Insurance Policy;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and
the Insurer) to the effect that such transaction will not have any
material adverse tax consequence to the Issuer, any Noteholder or the
Insurer;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Indenture
Trustee and the Insurer 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 any Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer, the conveyance or transfer of
which is hereby restricted, shall (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any state, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee
and the Insurer, in form satisfactory to the Indenture Trustee and
the Insurer, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein, (C) expressly
agrees by means of such supplemental indenture that all right, title
and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes and the Insurer,
(D) unless otherwise provided in such supplemental indenture,
expressly agrees to indemnify, defend and hold harmless the Issuer
and the Insurer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agrees by means of such supplemental indenture that such
Person (or if a group of Persons, then one
24
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 Insurer shall have consented thereto, and each
Rating Agency shall have notified the Issuer that such transaction
will not cause a reduction or withdrawal by a Rating Agency of its
then current rating of the Notes, without regard to the Insurance
Policy;
(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, the Insurer or any Noteholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
and
(vi) the Issuer shall have delivered to the Indenture
Trustee and the Insurer 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) above, 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) above, the Issuer shall be released
from every covenant and agreement (except such obligations that survive such
transfer) 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, selling and managing the
Mortgage Loans and the issuance of the Notes in the manner contemplated by
this Indenture and the Transaction Documents and all activities incidental
thereto.
SECTION 3.19 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
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SECTION 3.20 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by this Indenture or the other Transaction Documents,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing
or otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other Person.
SECTION 3.21 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. Subject to and
in accordance with Section 8.01 of the Sale and Servicing Agreement, 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 3.3, 3.4, 3.5, 3.8 and 3.10 hereof, (v) the rights, obligations
and immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 hereof and the obligations of the
Indenture Trustee under Section 4.2 hereof) and (vi) the rights of Noteholders
as beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them), and the Indenture Trustee,
on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when all of the following have occurred:
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.4
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 3.3 above) have been
delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable within one year prior
to the Final Payment Date, or.
c. are to be called for redemption within one year
under arrangements satisfactory to the Indenture
Trustee for the giving of notice of redemption by
the Indenture Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of a., b. or c. 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 not theretofore delivered to the Indenture
Trustee for cancellation when due to the Final Payment Date or Redemption Date
(if Notes shall have been called for redemption pursuant to Section 10.1
hereof) and all amounts due and owing the Insurer and the Indenture Trustee
have been paid, as the case may be;
27
(B) the later of (a) twelve months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all unpaid
fees and expenses of the Indenture Trustee hereunder and the other Transaction
Documents, (c) the payment of all amounts due and owing to the Insurer for
unpaid premiums and unreimbursed Insured Payments and all other amounts owing
to the Insurer, together with interest thereon as provided under the Insurance
and Reimbursement Agreement and (d) the date on which the Issuer has paid or
caused to be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee and the Insurer
an Officer's Certificate, an Opinion of Counsel and (if required by the TIA or
the Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.1(a) hereof and, subject to Section 11.2 hereof, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture with respect to the Notes have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Sections 3.3 and 4.1 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Sale and
Servicing Agreement, to the payment, either directly or through any Paying
Agent to the Holders of the particular Notes and the Insurer for the payment
or redemption of which such moneys have been deposited with the Indenture
Trustee, of all sums due and to become due thereon for principal and interest;
but such moneys need not be segregated from other funds except to the extent
required herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Subrogation and Cooperation.
(a) The Issuer and the Indenture Trustee acknowledge that (i) to the
extent the Insurer makes payments under the Insurance Policy on account of
principal of or interest on the Mortgage Loans, the Insurer will be fully
subrogated to the rights of the Noteholders to receive such principal of and
interest on the Mortgage Loans of the related Trust Estate, and (ii) the
Insurer shall be paid such principal and interest only from the sources and in
the manner provided herein and in the Insurance and Reimbursement Agreement
for the payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request or direction by the Insurer for action to preserve or
enforce the Insurer's rights or interest under this Indenture or the Insurance
and Reimbursement 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
an Insurer Default, a request to take any one or more of the following
actions:
(i) institute Proceedings for the collection of all amounts
then payable on the Notes or under this Indenture in respect to the
Notes and all amounts payable under the Insurance and Reimbursement
Agreement and to enforce any judgment obtained and collect from the
Issuer monies adjudged due;
28
(ii) 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;
(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 UCC
and take any other appropriate action to protect and enforce the
rights and remedies of the Insurer hereunder.
Following the payment in full of the Notes, the Insurer shall
continue to have all rights and privileges provided to it under this Section
4.3 and in all other provisions of this Indenture, until all amounts owing to
the Insurer have been paid in full.
SECTION 4.4 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the
Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes
shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held
and applied according to Section 3.3 above and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.
29
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default. "Event of Default," wherever used
herein, means with respect to the Notes any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on any Note when the same
becomes due and payable, and continuance of such default for a period of five
(5) days; or
(b) default in the payment in full of the principal of the Class A
Note Principal Balance on the Final Payment Date; or
(c) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section 5.1 specifically dealt with), or any representation or warranty
of the Issuer made in this Indenture, the Sale and Servicing Agreement or in
any certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the time
when the same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of __ 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 Insurer or the Holders of at least __%
of the Outstanding Amount of the Notes, a written notice specifying such
default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a notice of Default hereunder; or
(d) [reserved]; or
(e) 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 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 winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of __ consecutive days; or
(f) 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 Trust Estate, or the making by the Issuer of any
general assignment for the benefit of creditors,
30
or the failure by the Issuer generally to pay its debts as such debts become
due, or the taking of any action by the Issuer in furtherance of any of the
foregoing.
The Issuer shall deliver to the Indenture Trustee, the Transferor and
the Insurer within five days after the occurrence thereof, written notice in
the form of an Officer's Certificate of any event which with the giving of
notice and the lapse of time would become an Event of Default under clause (c)
above, its status and what action the Issuer is taking or proposes to take
with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case
the Indenture Trustee, at the direction of the Insurer or upon the prior
written direction of the Holders of Notes representing not less than a _______
of the Outstanding Amount of the Notes, with the written consent of the
Insurer, may declare all the Notes to be immediately due and payable, by a
notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the unpaid principal amount of
such Notes, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as hereinafter in this Article V
provided, the Insurer or the Holders of Notes representing a majority of the
Outstanding Amount of the related Notes, with the written consent of the
Insurer, by written notice to the Issuer and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(a) the Issuer has paid or deposited with the
Indenture Trustee a sum sufficient to pay:
1. all payments of principal of and interest on all
Notes and all other amounts that would then be due
hereunder or upon such Notes if the Event of
Default giving rise to such acceleration had not
occurred; and
2. all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation,
expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and
(b) all Events of Default, other than the
nonpayment of the principal of the Notes
that has become due solely by such
acceleration, have been cured or waived as
provided in Section 5.12 below.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
31
(a) The Issuer covenants that if (i) default occurs in the payment of
any interest on any Note when the same becomes due and payable, and such
default continues for a period of five days, or (ii) default occurs 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 continues for a period
of five days, the Issuer will, upon demand of the Indenture Trustee or the
Insurer if the Insurer has made a payment under the Insurance Policy, pay to
the Indenture Trustee or the Insurer, as applicable, for the benefit of the
Holders of the Notes, the whole amount then due and payable on such Notes for
principal and interest, with interest upon the overdue principal and, to the
extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of interest at the rate borne by the Notes and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, the Insurer and its
agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee may, and shall at the direction of the
Insurer, institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and
collect in the manner provided by law out of the property of the Issuer or
other obligor upon such Notes, wherever situated, the moneys adjudged or
decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, with the consent of the Insurer, and shall at the written
direction of the Insurer or of the Holders of a ________ of the Outstanding
Amount of the Notes, with the consent of the Insurer, as more particularly
provided in Section 5.4 below, proceed to protect and enforce its rights and
the rights of the Noteholders and the Insurer, [by such appropriate
Proceedings as the Insurer 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 5.3, shall be entitled and empowered by
intervention in such Proceedings with the consent of or at the direction of
the Insurer or otherwise:
32
(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, each predecessor Indenture Trustee and its agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee (except as a result of negligence or
bad faith), and of the Noteholders and the Insurer allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes and the Insurer in any
election of a trustee, a standby trustee or Person performing similar
functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders, the
Indenture Trustee and the Insurer 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, the Insurer or the Holders of Notes
allowed in any judicial proceedings relative to the Issuer, its
creditors and its property; and any trustee, receiver, liquidator,
custodian or other similar official in any such Proceeding is hereby
authorized by each of such Noteholders to make payments to the
Indenture Trustee and, in the event that the Indenture Trustee shall
consent to the making of payments directly to such Noteholders, to
pay to the Indenture Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents, attorneys
and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder or the Insurer 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 or the Insurer 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.
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(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing of
which a Responsible Officer of the Indenture Trustee has actual knowledge, the
Indenture Trustee may with the consent of the Insurer, or, at the direction of
the Insurer, shall or, if an Insurer Default shall be continuing, at the
direction of a majority of the Holders of the Notes shall, do one or more of
the following (subject to Section 5.5 below):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on
the related Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, and all amounts payable under
the Insurance and Reimbursement Agreement, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such
Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
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 or the related
Noteholders or the Insurer; and
(iv) sell the Trust Estate or any portion thereof or rights
or interest therein in a commercially reasonable manner, at one or
more public or private sales called and conducted in any manner
permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Insurer and the Holders of 100%
of the Outstanding Amount of the Notes, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to discharge in
full all amounts then due and unpaid upon such Notes for principal and
interest and to reimburse the Insurer for any unreimbursed Insured Payments
and any other amounts due the Insurer under the Insurance and Reimbursement
Agreement or (C) the Indenture Trustee determines that the Trust Estate 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
Insurer and the Holders of 66-2/3% of the Outstanding Amount of the Notes. In
determining such sufficiency or insufficiency with respect to clauses (B) and
(C) above, 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.
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(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, the Indenture Trustee and the Paying Agent in respect of
amounts due on the Senior Interest Participation shall pay out the money or
property in the following order:
FIRST: to the Indenture Trustee for the Indenture Trustee
Fee then due and any costs or expenses incurred by it in connection
with the enforcement of the remedies provided for in this Article V
and to the Owner Trustee for the Owner Trustee Fee then due;
SECOND: any amounts payable to the Servicer pursuant to
Section 5.01 of the Sale and Servicing Agreement and any premium
owing to the Insurer;
THIRD: to the Noteholders for amounts due and unpaid on the
Notes for interest pro rata among the Holders of the Notes, according
to the amounts due and payable on such Notes;
FOURTH: to the Noteholders for amounts due and unpaid on the
Notes for principal, pro rata, among the Holders of the Notes
according to the amounts due and payable until the Class A Note
Principal Balance is reduced to zero;
FIFTH: to the Insurer, any other amounts owed to the Insurer
under the Insurance and Reimbursement Agreement; and
SIXTH: to the Owner Trustee, as applicable, for any amounts
to be distributed, to the holder of the Ownership Interest, in the
manner set forth in Section 5.01 of the Sale and Servicing Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section 5.4. At least
15 days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment
date and the amount to be paid.
SECTION 5.5 Optional Preservation of the Trust Estate. If the Notes
have been declared to be due and payable under Section 5.2 above following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may with the consent of the
Insurer, but need not (but shall at the written direction of the Insurer),
elect to 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 (although the
parties hereto understand that there exists the possibility of a shortfall in
collections of the Mortgage Loans), and the Indenture Trustee shall take such
desire into account when determining whether or not to maintain possession of
the Trust Estate. In determining whether to 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.
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SECTION 5.6 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 the Insurer has otherwise consented in writing
thereto and:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding 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;
(c) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes.
It is understood and intended that no Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
SECTION 5.7 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 date thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) to
the extent funds are available therefor out of the Trust Estate and to
institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had
been instituted.
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SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee, the Insurer or any Noteholder to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of Default
or an acquiescence therein. Every right and remedy given by this Article V or
by law to the Indenture Trustee, the Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Insurer or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Insurer (so long as no
Insurer Default exists) or if an Insurer Default exists the Holders of a
majority of the Outstanding Amount of the Notes with the consent of the
Insurer, 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:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.4 above, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be in
writing by the Insurer (so long as no Insurer Default exists) or the Holders
of Notes representing not less than 100% of the Outstanding Amount of the
Notes with the consent of the Insurer;
(c) if the conditions set forth in Section 5.5 above have been
satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant
to such Section 5.5, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this
Section 5.11, subject to Section 6.1 hereof, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to
such action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2 above,
the Insurer (so long as no Insurer Default exists) or the Holders of Notes
representing not less than a _________ of the Outstanding Amount of the Notes,
with the consent of the Insurer (so long as no Insurer Default
37
exists), may waive any past Default or Event of Default and its consequences
except a Default (a) in the payment of principal of or interest on any of the
Notes or (b) in respect of a covenant or provision hereof that cannot be
modified or amended without the consent of the Holder of each Note. In the
case of any such waiver, the Issuer, the Insurer, the Indenture Trustee and
the Holders of the Notes shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding 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
(or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted
to the Indenture Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Trust Estate or upon any of
38
the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.4(b) above.
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Insurer or the Indenture
Trustee, with the consent of the Insurer to do so, the Issuer shall take all
such lawful action as the Indenture Trustee or the Insurer, as applicable, may
request to compel or secure the performance and observance by the Seller and
the Servicer, as applicable, of each of their obligations to the Issuer under
or in connection with the Sale and Servicing Agreement, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Sale and Servicing Agreement to the
extent and in the manner directed by the Indenture Trustee or the Insurer, as
applicable, including the transmission of notices of default on the part of
the Seller or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee, subject to the rights of the Insurer hereunder and under
the Sale and Servicing Agreement, may, and at the direction (which direction
shall be in writing or by telephone, confirmed in writing promptly thereafter)
of the Insurer or the Holders of a majority of the Outstanding Amount if there
is an Insurer Default shall, exercise all rights, remedies, powers, privileges
and claims of the Issuer against the Seller or the Servicer under or in
connection with the Sale and Servicing Agreement, including the right or power
to take any action to compel or secure performance or observance by the
Seller, the Servicer, as the case may be, of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction,
approval, extension, or waiver under the Sale and Servicing Agreement, and any
right of the Issuer to take such action shall be suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 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 6.1;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11 above or any direction from
the Insurer that the Insurer is entitled to give under the terms of the
Transaction Documents.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section 6.1.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
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(f) Money held in trust by the Indenture Trustee shall be segregated
from other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it; and none of the provisions contained in this
Indenture shall in any event require the Indenture Trustee to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, the Issuer or Transferor under this Indenture except during such
time, if any, as the Indenture Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Indenture.
(h) The Indenture Trustee shall challenge or cause to be challenged
any attempt at substantive consolidation of the assets and liabilities of the
Issuer with those of any Owner (as the term "Owner" is defined in the Trust
Agreement) in connection with any insolvency proceeding of the Issuer.
(i) 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 6.1 and to the provisions
of the TIA.
(j) Subject to the other provisions of this Indenture and without
limiting the generality of this Section 6.1, the Indenture Trustee shall have
no duty (A) to see to any recording, filing, or depositing of this Indenture
or any agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or
any lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Estate other than from funds available in the
Distribution Account, (D) to confirm or verify the contents of any reports or
certificates of the Issuer, Insurer or Servicer delivered to the Indenture
Trustee pursuant to this Indenture believed by the Indenture Trustee to be
genuine and to have been signed or presented by the proper party or parties.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting on any resolution, certificate
of auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or 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 and shall be entitled to receive an Officer's Certificate or an
Opinion of Counsel. The Indenture Trustee shall
41
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 such agent,
attorney, nominee or custodian appointed by the Indenture Trustee with due
care.
(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 such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel selected by it with due care with respect to legal matters
relating to this Indenture, the Notes and the Transaction Documents to which
it is a party, 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.
(f) The Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of the Insurer or any of the Noteholders, pursuant
to the provisions of this Indenture, unless the Insurer or such Noteholders
shall have offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred therein or
thereby; nothing contained herein shall, however, relieve the Indenture
Trustee of the obligation, upon the occurrence of an Event of Default of which
a Responsible Officer of the Indenture Trustee shall have actual knowledge
(which has not been cured), to exercise such of the rights and powers vested
in it by this Indenture, and to use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do
so by the Insurer or the Majority Noteholders; provided, however, that if the
payment within a reasonable time to the Indenture Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Indenture Trustee, not reasonably
assured to the Indenture Trustee by the security afforded to it by the terms
of this Indenture, the Indenture Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to taking any such
action. The reasonable expense of every such examination shall be paid by the
Issuer or, if paid by the Indenture Trustee, shall be repaid by the Issuer
upon demand.
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(h) The right of the Indenture Trustee to perform any discretionary
act enumerated in this Indenture shall not be construed as a duty, and the
Indenture Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
(i) The Indenture Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Fund created hereby or the
powers granted hereunder.
(j) The Indenture Trustee shall have no liability in connection with
the malfeasance or nonfeasance by the Issuer, the Servicer or the
Administrator. The Indenture Trustee shall have no liability in connection
with compliance by the Issuer or the Servicer with statutory or regulatory
requirements related to the Collateral or the Trust Estate. The Indenture
Trustee shall not make or be deemed to have made any representations or
warranties with respect to the Collateral or the Trust Estate or the validity
or sufficiency of any assignment of the Collateral or the Trust Estate to the
Indenture Trustee.
(k) In the event that the Indenture Trustee is also acting as Paying
Agent or Registrar hereunder, the rights, protection, immunities and
indemnities afforded to the Indenture Trustee pursuant to this Article VI
shall also be afforded to such Paying Agent or Registrar.
SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with
the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with
like rights. However, the Indenture Trustee must comply with Sections 6.11 and
6.12 below.
SECTION 6.4 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) shall not be
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.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is actually known to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall give prompt notice thereof to the Insurer. The
Indenture Trustee shall not be charged with the knowledge of an Event of
Default unless a Responsible Officer has received written notice or has actual
knowledge thereof. The Indenture Trustee shall mail to each Noteholder, the
Servicer and the Seller notice of the Default within 30 days after it occurs
at the expense of the Issuer. Except in the case of a Default in payment of
principal of or interest on any Note, the Indenture Trustee may withhold the
notice to the Noteholders 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 6.6 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 Issuer Request, the Indenture Trustee
43
shall promptly furnish such 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 6.7 Compensation and Indemnity. As compensation for its
services hereunder, the Indenture Trustee shall be entitled to receive, on
each Payment Date, the Indenture Trustee's Fee pursuant to Section 5.01 of the
Sale and Servicing Agreement (which compensation shall not be limited by any
law on compensation of a trustee of an express trust) and shall be entitled to
reimbursement for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee's agents,
counsel, accountants and experts. The Indenture Trustee shall be indemnified
from the Trust Estate 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 Indenture
Trustee shall not be entitled to any such reimbursement of any expense or to
indemnification against any loss, liability or expense incurred by the
Indenture Trustee through the Indenture Trustee's own willful misconduct,
negligence or bad faith. Anything in this Indenture to the contrary
notwithstanding, in no event shall the Indenture Trustee be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Indenture Trustee has
been advised of the likelihood of such loss or damage and regardless of the
form of action. This indemnity shall survive the termination of this
Indenture.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.7 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses or provides services after the occurrence of
a Default specified in Section 5.1(e) or (f) hereof with respect to the
Issuer, the expenses and fees for such services 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 6.8 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 acceptable to the Insurer pursuant to this
Section. The Indenture Trustee may resign at any time by so notifying the
Issuer and the Insurer. The Insurer or the Holders of a majority in
Outstanding Amount of the Notes (with the prior written consent of the
Insurer) may remove the Indenture Trustee by so notifying the Indenture
Trustee and the Insurer (if given by such Noteholders) and may appoint a
successor Indenture Trustee acceptable to the Insurer. The Issuer shall (with
the prior written consent of the Insurer) remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11 below;
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(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee with the consent
of the Insurer, which consent shall not be unreasonably withheld.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee, the Insurer 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 in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11 below, any
Noteholder may (with the consent of the Insurer) petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section 6.8, the Issuer's obligations under Section 6.7 above shall
continue for the benefit of the retiring Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving 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 below.
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
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predecessor hereunder or in the name of the successor to the Indenture
Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the 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 co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Noteholders and the Insurer, such title to the Trust Estate, or any part
hereof, and, subject to the other provisions of this Section 6.10, such
powers, duties, obligations, rights and trusts as the Indenture Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee
under Section 6.11 below and no notice to Noteholders of the appointment of
any co-trustee or separate trustee shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust Estate or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, jointly
with the Indenture Trustee, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the
conduct of,
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affecting the liability of, or affording protection to, the Indenture Trustee.
Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee. The Indenture
Trustee shall remain primarily liable for all actions of a co-trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Indenture Trustee shall comply with TIA Section 310(b),
including the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
SECTION 6.13 Representations and Warranties. The Indenture Trustee
hereby represents and warrants that:
(a) The Indenture Trustee is duly organized, validly existing and in
good standing under the laws of State of [ ], with power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is currently conducted.
(b) 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.
(c) The consummation of the transactions contemplated by this
Indenture and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the certificate of
incorporation 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.
SECTION 6.14 Directions to Indenture Trustee. The Indenture Trustee
is hereby directed:
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(a) to accept the pledge of the Mortgage Loans and hold the assets of
the Trust in trust for the Noteholders and the Insurer;
(b) to authenticate and deliver the Notes substantially in the form
prescribed by Exhibit A in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and
addresses of the Noteholders as of such Record Date, (b) at such other times
as the Indenture Trustee and the Insurer 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 7.2 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 Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 above and the names and addresses of Noteholders 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 7.1 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
that the Issuer may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to
time by the Commission such additional information, documents and
reports with respect to compliance by the Issuer with the conditions
and covenants of this Indenture as may be required from time to time
by such rules and regulations; and
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(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i)
and (ii) of this Section 7.3(a) and by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA Section
313(a), within 60 days after each August 1, beginning with [ ], the
Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) and to the Insurer a brief report dated as of such date that complies
with TIA Section 313(a). The Indenture Trustee also shall comply with TIA
Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each securities
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any securities exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 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 herein.
SECTION 8.2 Accounts; Distributions.
(a) On or prior to the Closing Date, the Indenture Trustee shall
establish and maintain or cause to be established and maintained, in the name
of the Indenture Trustee for the benefit of the Noteholders, the Transferor
and the Insurer, the Distribution Account as provided in Article V of the Sale
and Servicing Agreement into which amounts shall be deposited in accordance
with the terms of the Sale and Servicing Agreement.
(b) The Indenture Trustee shall deposit any amounts representing
payments on and any collections in respect of the Mortgage Loans received by
it, if any, and any other amounts required by the terms of the Transaction
Documents to be deposited, immediately following receipt thereof, including,
without limitation, all amounts withdrawn by the Servicer from the Collection
Account pursuant to Section 3.03 of the Sale and Servicing Agreement for
deposit to the Distribution Account. Amounts on deposit in the Distribution
Account may be invested in Eligible Investments pursuant to Section 5.06 of
the Sale and Servicing Agreement.
(c) On each Payment Date and the Redemption Date, to the extent funds
are available in the Distribution Account, the Indenture Trustee shall make
the distributions and payments in the amounts and in the priority set forth in
Section 5.01 of the Sale and Servicing Agreement (except as otherwise provided
in Section 5.4(b) herein).
(d) On each Payment Date and the Redemption Date, to the extent of
the interest of the Indenture Trustee in the Distribution Account (as
described in Section 5.05 of the Sale and Servicing Agreement), the Indenture
Trustee hereby authorizes the Owner Trustee or the Paying Agent, as
applicable, to make the distributions from the Distribution Account as
required pursuant to Section 5.01 of the Sale and Servicing Agreement.
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SECTION 8.3 [Reserved].
SECTION 8.4 Servicer's Monthly Statements.
On each Payment Date, the Indenture Trustee shall deliver the
Servicing Certificate (as defined in the Sale and Servicing Agreement) with
respect to such Payment Date to DTC and the Rating Agencies.
SECTION 8.5 [Reserved].
SECTION 8.6 Opinion of Counsel. The Indenture Trustee shall receive
at least seven days notice when requested by the Issuer to take any action
pursuant to Section 2.9(a) herein, accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require with a copy to the
Insurer, as a condition to such action, an Opinion of Counsel, in form and
substance satisfactory to the Indenture Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair
the security for the Notes or the rights of the Noteholders or the Insurer in
contravention of the provisions of this Indenture; provided, however, that
such Opinion of Counsel shall not be required to express an opinion as to the
fair market value of a Trust Estate. Counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in
connection with any such action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time and only with
the prior written consent of the Insurer, 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 Noteholders or the Insurer, 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 or supplement any
provision herein or in any supplemental indenture that may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided, that such action shall not adversely affect the
interests of the Noteholders or the Insurer;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the
Notes and to add to or change any of the provisions of this Indenture
as shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI herein; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
53
The Indenture Trustee is hereby authorized to join in the execution
of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Noteholders but with
prior consent of the Rating Agencies and the Insurer, enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Noteholders under
this Indenture; provided, however, that such action shall not, as evidenced by
an Opinion of Counsel or satisfaction of the Rating Agency Condition,
adversely affect in any material respect the interests of any Noteholder or
the Insurer or cause the Issuer to be subject to entity level tax.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also
may, with prior consent of the Rating Agencies and the Insurer, and with the
consent of the Holders of not less than a majority of the Outstanding Amount
of the Notes, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder
of each Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the amount required to be paid on the Notes following the
exercise of the option set forth in Section 8.01 of the Sale and Servicing
Agreement, 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 herein, to the payment of any such amount
due on the Notes on or after the respective due dates thereof (or, in the case
of redemption, on or after the Redemption Date);
(b) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver
of compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(d) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.4 herein;
54
(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions
of this Indenture or the Transaction Documents cannot be modified or waived
without the consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of
any of the individual components of such calculation); or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust Estate
or, except as otherwise permitted or contemplated herein, terminate the lien
of this Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this Indenture
provided further, that such action shall not, as evidenced by an Opinion of
Counsel, cause the Issuer to be subject to an entity level tax.
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.
In connection with requesting the consent of the Noteholders pursuant
to this Section 9.2, the Indenture Trustee shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates a notice
setting forth in general terms the substance of such supplemental indenture at
the Issuer's expense. It shall not be necessary for any Act of Noteholders
under this Section 9.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
SECTION 9.3 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 6.1 and 6.2 herein, 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 all conditions
precedent to the execution of such supplemental indenture have been met. 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 9.4 Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
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
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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 9.5 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 9.6 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
REDEMPTION OF NOTES
SECTION 10.1 Redemption.
The Servicer may effect an early termination of the Notes pursuant to
Section 8.01 of the Sale and Servicing Agreement on or after any Payment Date
on which the Pool Principal Balance declines to [__%] or less of the aggregate
Cut-Off Date Principal Balance and the purchase price for the Mortgage Loans
together with all amounts due and owing to the Insurer for unpaid premiums and
unreimbursed Insured Payments and any other amounts then due and owing under
the Insurance and Reimbursement Agreement to the Insurer, together with
interest thereon as provided under the Insurance and Reimbursement Agreement,
have been paid, pursuant to the provisions of Section 8.01(b) of the Sale and
Servicing Agreement.
The Indenture Trustee shall furnish notice of any such redemption in
accordance with Section 8.01 of the Sale and Servicing Agreement.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer made 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 Insurer (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with and (iii) (if
required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section 11.1,
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or
condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as
is necessary to enable such signatory to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied
with.
(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
(except in the case of the release of Mortgage Loans in accordance with the
Sale and Servicing Agreement), the Issuer shall, in addition to any obligation
imposed in Section 11.1(a) herein 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.
58
(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 Collateral, other
property or securities to be so deposited and of all other such Collateral,
other property or securities made the basis of any such withdrawal or release
since the commencement of the then-current fiscal year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the aggregate Class A Note Principal Balance of
the Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set forth
in the related Officer's Certificate is less than either (A) $25,000 or (B)
one percent of the aggregate Class A Note Principal 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 or securities released from the lien of this Indenture since
the commencement of the then-current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10%
or more of the aggregate Class A Note Principal Balance of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then
aggregate Class A Note Principal Balance of the Notes.
SECTION 11.2 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 such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Servicer, the Transferor or the Issuer, stating
that
59
the information with respect to such factual matters is in the possession of
the Servicer, the Transferor 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 hereof.
SECTION 11.3 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
6.1 hereof) conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section 11.3.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the 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.
60
SECTION 11.4 Notices. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is to
be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: [ ]Home Equity Loan Trust
200_-_, in care of [ ], Attention: Corporate Trust Administration,
with copies to the Administrator addressed to: [ ], Attention:
Indenture Trust Administration and to the Servicer addressed to: [ ],
or at any other address previously furnished in writing to the Indenture
Trustee by the Issuer or the Administrator. The Issuer shall promptly transmit
any notice received by it from the Noteholders to the Indenture Trustee.
(c) the Insurer, by the Issuer, the Indenture Trustee or by any
Noteholders shall be sufficient for every purpose hereunder to in writing and
mailed, first-class postage pre-paid, or personally delivered or telecopied
to: [ ], Attention: [ ]. The Insurer 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 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
[ ], at the following address: [ ] and (ii) in the case of
[ ], at the following address: [ ]; or as to each of the
foregoing, at such other address as shall be designated by written notice to
the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the
Indenture Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
61
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder.
SECTION 11.6 Rights of the Insurer to Exercise Rights of Noteholders.
By accepting its Note, each Noteholder agrees that unless an Insurer
Default exists, the Insurer shall have the right to exercise all rights of the
Noteholders as specified under this Agreement without any further consent of
the Noteholders. Any right conferred to the Insurer hereunder shall be
suspended and shall run to the benefit of the Noteholders during any period in
which there exists an Insurer Default, provided, however, that during an
Insurer Default, the consent of the Insurer must be obtained with respect to
any amendments that may materially adversely affect the Insurer.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee
in this Indenture shall bind its successors, co-trustees and agents.
SECTION 11.10 Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, the
Insurer, and any other party secured hereunder, and any
62
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 11.12 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 11.13 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 11.14 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 11.15 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 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee
or the Indenture Trustee on the Notes or 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
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 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
63
institute against the Transferor (and any wholly-owned subsidiary thereof),
the Depositor, the Servicer or the Issuer, or join in any institution against
the Transferor (and any wholly-owned subsidiary thereof), the Depositor, the
Servicer or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Transaction
Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or the
Insurer, 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 and the Insurer (to the extent
described in the Insurance and Reimbursement Agreement) 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.
SECTION 11.19 Inconsistencies With the Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the provisions
of the Sale and Servicing Agreement, the parties hereto agree that the
provisions of the Sale and Servicing Agreement shall be controlling.
SECTION 11.20 Third-Party Beneficiaries. This Indenture will inure to
the benefit of and be binding upon the parties hereto, the Noteholders, the
Note Owners, the Insurer and their respective successors and permitted
assigns. Except as otherwise provided in this Indenture, no other person will
have any right or obligation hereunder.
64
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized and duly attested, all as of the day and year first above
written.
[ ] HOME EQUITY LOAN TRUST 200_-_
By: [ ],
not in its individual capacity
but solely as Owner Trustee
By:
Name:
Title:
[ ],
as Indenture Trustee
By:
Name:
Title:
STATE OF
COUNTY OF
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared _______________, known to me
to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said [
], not in its individual capacity, but solely as Owner Trustee on behalf
of [ ] HOME EQUITY LOAN TRUST 200_-_, a Delaware business trust, and
that such person executed the same as the act of said business trust for the
purpose and consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of [ ].
______________________________________________
Notary Public in and for the State of ________
(Seal)
My commission expires:
________________________
STATE OF
COUNTY OF
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ____________________, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of [ ], [a
state] banking corporation, and that such person executed the same as the act
of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this day of [ ].
______________________________________________
Notary Public in and for the State of ________
(Seal)
My commission expires:
SCHEDULE A
MORTGAGE LOAN SCHEDULE
EXHIBIT A
FORM OF 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.
No. CUSIP NO.
Aggregate Class Note Principal Balance: Denomination of this Class A
Note:
$ $
[ ] HOME EQUITY LOAN TRUST ______-_
[ ] HOME EQUITY LOAN ASSET-BACKED NOTES, SERIES _____-_, CLASS A
[ ] HOME EQUITY LOAN TRUST ____-_, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Trust"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of $____________ payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction
the numerator of which is the initial principal amount of this Class A Note
and the denominator of which is the aggregate principal amount of all Class A
Notes by (ii) the aggregate amount, if any, payable from the Distribution
Account in respect of principal on the Class A Note pursuant to Section 5.01
of the Sale and Servicing Agreement dated as of [ ] (the "Sale and
Servicing Agreement"), among the Trust, Bond Securitizaation, L.L.C., as
Depositor (the "Depositor"), [ ] as Seller and Servicer ("[
]"), and [ ], a banking corporation organized under the laws of
the State of [ ], as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall
be due and payable on the earliest to occur of (i) the Payment Date occurring
in [ ] (the "Final Maturity Date"), (ii) any termination date pursuant
to Section 8.01 of the Sale and Servicing Agreement or (iii) the date on which
an Event of Default under the Indenture dated as of [ ], between the
Trust and
A-1
the Indenture Trustee shall have occurred and be continuing, if the Indenture
Trustee or the Holders of Notes representing not less than a [ ] of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture.
Capitalized terms used but not defined herein are defined in Article I of the
Indenture, which also contains rules as to construction that shall be
applicable herein.
The Trust will pay interest on this Note at the rate per annum
described in the Sale and Servicing Agreement with respect to the Class A Note
on the principal amount of this Note outstanding on the preceding Payment Date
(after giving effect to all payments of principal made on the preceding
Payment Date) on each Payment Date until the principal of this Note is paid or
made available for payment in full. Interest on this Note will accrue for each
Payment Date during the [period from the preceding Payment Date to the day
preceding such Payment Date (or, in the case of the first Payment Date, the
period from the Closing Date to the day preceding the First Payment Date)]
(each, an "Interest Period"). Interest will be computed on the basis of the
[actual number of] days in each Interest Period and a [360-]day year. Such
principal of and interest on this Note shall be paid in the manner specified
on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Trust
with respect to this Note shall be applied first to interest due and payable
on this Note as provided above and then to the unpaid principal of this Note.
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.
A-2
IN WITNESS WHEREOF, the Trust has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date
set forth below.
Date: [ ]
[ ] HOME EQUITY LOAN TRUST ______-_
By: [ ],
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement
By: _________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: [ ]
[ ],
not in its individual capacity but
solely as Indenture Trustee,
By: _________________________
Authorized Signatory
A-3
(REVERSE OF NOTE)
This Note is one of a duly authorized issue of Notes of the Trust,
designated as its [ ] Home Equity Loan Asset-Backed Notes, Class A, 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 Trust, the Indenture Trustee and the Holders of
the Notes. The Class A Notes are subject to all terms of the Indenture.
The Class A Notes are and will be secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the [25]th day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing in [ ].
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Maturity Date and any
termination date pursuant to Section 8.01 of the Sale and Servicing Agreement.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default under the
Indenture shall have occurred and be continuing and the Indenture Trustee, at
the direction or upon the prior written consent of the Holders of the Notes
representing not less than a [majority] of the Outstanding Amount of the
Notes, shall have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture. All principal payments on the
Class A Notes shall be made pro rata to the Holders of the Class A Notes
entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the related installment of principal, if any, to the
extent not in full payment of this Note, shall be made by wire transfer of
immediately available funds to, or 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 Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Payment Date shall be binding upon all future Holders of this Note and
of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected
to be available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Payment Date, then the
Indenture Trustee, in the name of and on behalf of the Trust, will notify the
Person who was the 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 Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in New York, New York.
A-4
As provided in the Sale and Servicing Agreement, the Class A Notes
may be redeemed in whole, but not in part, at the option of the Servicer, on
any Payment Date on and after the date on which the Pool Principal Balance is
less than or equal to [ ]% of the initial Total Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note
Register upon surrender of this Note for registration of transfer at the
office or agency designated by the Trust pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the Trust may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that no recourse may be taken, directly or indirectly, with respect to the
obligations of the Trust, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Trust or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Trust, the Owner Trustee
or the Indenture Trustee or of any successor or assign of the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law,
for any unpaid consideration for stock, unpaid capital contribution or failure
to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Depositor or the Trust, or join in
any institution against the Depositor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Transaction
Documents.
The Trust has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Trust
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat
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the Notes for federal, state and local income, single business and franchise
tax purposes as indebtedness of the Trust.
Prior to the due presentment for registration of transfer of this
Note, the Trust, the Indenture Trustee and any agent of the Trust or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and none of the Trust, the Indenture Trustee or any such
agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Trust and the rights of the Holders of the Notes under the Indenture at
any time by the Trust with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes
representing specified percentages of the Outstanding Amount of the Notes, on
behalf of the Holders of all the Notes, to waive compliance by the Trust with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the 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.
The term "Trust" as used in this Note includes any successor to the
Trust 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 Trust, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Transaction Documents, none of the Trust in its individual
capacity, the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Trust, 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
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or indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Transaction
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 Trust
for any and all liabilities, obligations and undertakings contained in the
Indenture or in this Note.
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee: __________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
----------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints , attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:_____________________
______________________________*/
Signature Guaranteed:
______________________________*/
____________________
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
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