Document/Exhibit Description Pages Size
1: 8-K Current Report 6 22K
2: EX-4.1 Indenture 94 370K
3: EX-4.2 Trust Agreement 67 202K
4: EX-4.3 Sale and Servicing Agreement 585± 5.00M
5: EX-4.4 Instrument Defining the Rights of Security Holders 91± 814K
6: EX-4.5 Instrument Defining the Rights of Security Holders 126± 1.15M
DRAFT
AFC TRUST SERIES 1999-3
Issuer
and
LASALLE BANK NATIONAL ASSOCIATION
Indenture Trustee
-----------------------------------------
INDENTURE
Dated as of September 1, 1999
------------------------------------------
AFC MORTGAGE LOAN ASSET BACKED NOTES
Series 1999-3
TABLE OF CONTENTS
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Section Page
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ARTICLE I
DEFINITIONS
1.01. Definitions ..................................................... 3
1.02. Incorporation by Reference of Trust Indenture Act ............... 3
1.03. Rules of Construction. .......................................... 3
ARTICLE II
ORIGINAL ISSUANCE OF NOTES
2.01. Form ............................................................ 5
2.02. Execution, Authentication and Delivery .......................... 5
2.03. Acceptance of Mortgage Loans by Indenture Trustee ............... 5
ARTICLE III
COVENANTS
3.01. Collection of Payments with respect to the Mortgage Loans ....... 6
3.02. Maintenance of Office or Agency ................................. 6
3.03. Money for Payments To Be Held in Trust; Paying Agent ............ 6
3.04. Existence ....................................................... 7
3.05. Payment of Principal and Interest ............................... 8
3.06. Protection of Trust Estate ...................................... 9
3.07. Opinions as to Trust Estate ..................................... 9
3.08. Performance of Obligations ...................................... 10
3.09. Negative Covenants .............................................. 10
3.10. Annual Statement as to Compliance ............................... 11
3.11. [Reserved] ...................................................... 11
3.12. Representations and Warranties Concerning the Mortgage Loans .... 11
3.13. [Reserved] ...................................................... 12
3.14. Servicer as Agent and Bailee of the Indenture Trustee ........... 12
3.15. Investment Company Act .......................................... 12
3.16. Issuer May Consolidate, etc. .................................... 12
3.17. Successor or Transferee ......................................... 14
3.18. No Other Business ............................................... 14
3.19. No Borrowing .................................................... 14
3.20. Guarantees, Loans, Advances and Other Liabilities ............... 15
3.21. Capital Expenditures ............................................ 15
3.22. [Reserved] ...................................................... 15
3.23. Restricted Payments ............................................. 15
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3.24. Notice of Events of Default ..................................... 15
3.25. Further Instruments and Acts .................................... 15
3.26. Grant of the Subsequent Mortgage Loans. ......................... 15
ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
4.01. The Notes ....................................................... 16
4.02. Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Note Registrar and Certificate Registrar ......... 16
4.03. Mutilated, Destroyed, Lost or Stolen Notes ...................... 17
4.04. Persons Deemed Owners ........................................... 18
4.05. Cancellation .................................................... 18
4.06. Book-Entry Notes ................................................ 19
4.07. Notices to Depository ........................................... 19
4.08. Definitive Notes ................................................ 19
4.09. Tax Treatment ................................................... 20
4.10. Satisfaction and Discharge of Indenture ......................... 20
4.11. Application of Trust Money ...................................... 21
4.12. Subrogation and Cooperation ..................................... 21
4.13. Repayment of Monies Held by Paying Agent ........................ 22
4.14. Temporary Notes ................................................. 23
4.15. ERISA Deemed Representations .................................... 23
ARTICLE V
DEFAULT AND REMEDIES
5.01. Events of Default ............................................... 24
5.02. Acceleration of Maturity; Rescission and Annulment .............. 24
5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee .......................................... 25
5.04. Remedies; Priorities ............................................ 27
5.05. Optional Preservation of the Trust Estate ....................... 29
5.06. Limitation of Suits ............................................. 29
5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest ........................................ 30
5.08. Restoration of Rights and Remedies .............................. 30
5.09. Rights and Remedies Cumulative .................................. 30
5.10. Delay or Omission Not a Waiver .................................. 30
5.11. Control by Note Insurer ......................................... 30
5.12. Waiver of Past Defaults ......................................... 31
5.13. Undertaking for Costs ........................................... 31
5.14. Waiver of Stay or Extension Laws ................................ 32
5.15. Sale of Trust Estate ............................................ 32
5.16. Action on Notes ................................................. 34
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ARTICLE VI
THE INDENTURE TRUSTEE
6.01. Duties of Indenture Trustee ..................................... 35
6.02 Certain Matters Affecting the Indenture Trustee. ................ 37
6.03 Indenture Trustee Not Liable for Notes or Mortgage Loans. ....... 38
6.04 Indenture Trustee May Own Notes. ................................ 39
6.05 [Reserved]. ..................................................... 39
6.06 Eligibility Requirements for Indenture Trustee. ................. 39
6.07 Resignation and Removal of the Indenture Trustee. ............... 39
6.08 Successor Indenture Trustee. .................................... 41
6.09 Merger or Consolidation of Indenture Trustee. ................... 41
6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. ............................................ 41
6.11 Tax Returns. .................................................... 43
6.12 Appointment of Custodians. ...................................... 43
6.13 Indenture Trustee May Enforce Claims Without Possession of Notes. 43
6.14 Suits for Enforcement. .......................................... 43
6.15 Indenture Trustee's Fees and Expenses. .......................... 43
6.16 Year 2000 Compliance ............................................ 44
6.17 Representations and Warranties .................................. 44
6.18 Directions to Indenture Trustee ................................. 45
6.19 The Agents ...................................................... 45
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders ....................................... 46
7.02. Preservation of Information; Communications to Noteholders ....... 46
7.03. Reports of Issuer ................................................ 46
7.04. Reports by Indenture Trustee ..................................... 47
7.05. Statements to Noteholders ........................................ 47
ARTICLE VIII
ACCOUNTS, DISTRIBUTIONS, DISBURSEMENTS AND RELEASES
8.01. Collection of Money .............................................. 48
8.02. [Reserved] ....................................................... 48
8.03. Officer's Certificate ............................................ 48
8.04. Termination Upon Distribution to Noteholders ..................... 48
8.05. Release of Trust Estate .......................................... 48
8.06. Surrender of Notes Upon Final Payment ............................ 49
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8.07. No Redemption of the Notes ....................................... 49
ARTICLE IX
SUPPLEMENTAL INDENTURES
9.01. Supplemental Indentures Without Consent of Noteholders ........... 50
9.02. Supplemental Indentures With Consent of Noteholders .............. 51
9.03. Execution of Supplemental Indentures ............................. 52
9.04. Effect of Supplemental Indenture ................................. 53
9.05. Conformity with Trust Indenture Act .............................. 53
9.06. Reference in Notes to Supplemental Indentures .................... 53
ARTICLE X
MISCELLANEOUS
10.01. Compliance Certificates and Opinions, etc ........................ 54
10.02. Form of Documents Delivered to Indenture Trustee ................. 55
10.03. Acts of Noteholders .............................................. 56
10.04. Notices, etc., to Indenture Trustee, Note Insurer, Issuer
and Rating Agencies ............................................ 56
10.05. Notices to Noteholders; Waiver ................................... 57
10.06. Conflict with Trust Indenture Act ................................ 58
10.07. Effect of Headings ............................................... 58
10.08. Successors and Assigns ........................................... 58
10.09. Separability ..................................................... 58
10.10. Benefits of Indenture ............................................ 58
10.11. Legal Holidays ................................................... 58
10.12. GOVERNING LAW .................................................... 58
10.13. Counterparts ..................................................... 58
10.14. Recording of Indenture ........................................... 58
10.15. Issuer Obligation ................................................ 59
10.16. No Petition ...................................................... 59
10.17. Inspection ....................................................... 59
10.18. Limitation of Liability .......................................... 59
EXHIBITS
Exhibit A-1 - Form of Class 1A Notes
Exhibit A-2 - Form of Class 2A Notes
Exhibit B - Custodial Agreement
Exhibit C - Reserved Exhibit D - Reserved
Exhibit E - Certificate of Non-Foreign Status
This Indenture, dated as of September 1, 1999, between AFC Trust Series
1999-3, a Delaware business trust, as Issuer (the "Issuer") and LaSalle Bank
National Association, a national banking association, as Indenture Trustee (the
"Indenture Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's AFC Mortgage
Loan Asset Backed Notes, Series 1999-3 (the "Notes") and the Note Insurer.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on the Closing Date, as
trustee for the benefit of the Holders of the Notes and the Note Insurer, all of
the Issuer's right, title and interest in and to whether now existing or
hereafter created by (a) the Mortgage Loans and the proceeds thereof and all
rights under the Related Documents; (b) all funds on deposit from time to time
in the Principal and Interest Accounts allocable to the Mortgage Loans excluding
any investment income from such funds; (c) all funds on deposit from time to
time in the Note Distribution Account, the Trustee Expense Accounts, the
Pre-Funding Accounts, the Interest Coverage Accounts and the Reserve Account and
in all proceeds thereof excluding any investment income from such funds; (d) all
rights under the (i) Sale and Servicing Agreement and any Sub-Servicing
Agreements and (ii) any title, hazard and primary insurance policies with
respect to the Mortgaged Property; and (e) all present and future claims,
demands, causes and choses in action in respect of any or all of the foregoing
and all payments on or under, and all proceeds of every kind and nature
whatsoever in respect of, any or all of the foregoing and all payments on or
under, and all proceeds of every kind and nature whatsoever in the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, checks,
deposit accounts, rights to payment of any and every kind, and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Trust Estate" or the "Collateral"). The
Depositor's Yield and amounts received after the Cut-off Date in the case of the
Initial Mortgage Loans, or after the Subsequent Cut-off Date in the case of the
Subsequent Mortgage Loans, in respect of interest accrued on the Mortgage Loans
on or prior to the Cut-off Date or Subsequent Cut-off Date, as the case may be,
do not constitute a part of the Trust Estate or the Collateral.
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trust under this Indenture in accordance
with the provisions hereof and agrees to perform its duties as Indenture Trustee
as required herein. The Indenture Trustee agrees that it will hold the Note
Insurance Policy in trust and that it will hold any proceeds of any
claim upon the Note Insurance Policy, solely for the use and benefit of the
Noteholders in accordance with the terms hereof and of the Sale and Servicing
Agreement and the Note Insurance Policy.
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in Article I, Definitions of the Sale and Servicing Agreement,
dated as of September 1, 1999 among the Issuer, the Indenture Trustee and
Superior Bank FSB, as seller and servicer (the "Sale and Servicing Agreement").
All other capitalized terms used herein shall have the meanings specified
herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act (the "TIA"), the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rules have
the meanings assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
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(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 and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
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ARTICLE II
ORIGINAL ISSUANCE OF NOTES
Section 2.01. Form. The Notes, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibits A-1 and A-2, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders).
The terms of the Notes are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
the Class 1A and Class 2A Notes for original issue in an aggregate initial
principal amount of $315,000,000 with respect to Class 1A and $200,000,000 with
respect to Class 2A.
Each Class of Notes shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes and the Notes shall be issuable in
the minimum initial Note Principal Balances of $100,000 and in integral
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.
Section 2.03. Acceptance of Mortgage Loans by Indenture Trustee. (a) The
Indenture Trustee acknowledges receipt of, subject to the exceptions it notes
pursuant to the procedures described in the Sale and Servicing Agreement, the
documents (or certified copies thereof) referred to in Section 2.04 of the Sale
and Servicing Agreement and declares that it holds and will continue to hold
those documents and any amendments, replacements or supplements thereto and all
other assets of the Trust Estate as Indenture Trustee in trust for the use and
benefit of all present and future Holders of the Notes and the Note Insurer. The
Indenture Trustee agrees to review the Trustee's Mortgage File in accordance
with the terms of Section 2.04 of the Sale and Servicing Agreement.
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ARTICLE III
COVENANTS
Section 3.01. Collection of Payments with respect to the Mortgage Loans.
Pursuant to the terms of the Sale and Servicing Agreement, the Indenture Trustee
shall establish and maintain the Note Distribution Accounts in which the
Indenture Trustee shall deposit, on the same day as it is received from the
Servicer, each remittance received by the Indenture Trustee with respect to the
Mortgage Loans. The Indenture Trustee shall make all payments of principal of
and interest on the Notes, subject to Section 3.03, as provided in Section 3.05
herein and in the Sale and Servicing Agreement from monies on deposit in the
Note Distribution Accounts.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain an
office or agency where, subject to satisfaction of conditions set forth herein,
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. If at any time the
Issuer shall fail to maintain any such office or agency or shall fail to furnish
the Indenture Trustee with the address thereof, such surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Indenture
Trustee, and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
Section 3.03. Money for Payments To Be Held in Trust; Paying Agent. (a) As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Note
Distribution Accounts pursuant to Section 3.01 shall be made on behalf of the
Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so
withdrawn from the Note Distribution Accounts for payments of Notes shall be
paid over to the Issuer except as provided in this Section 3.03. The Issuer
initially appoints the Indenture Trustee to serve as Paying Agent and the
Indenture Trustee accepts such appointment.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such Paying
Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts
as Paying Agent it hereby so agrees), subject to the provisions of this Section
3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee and the Note Insurer notice of any
default by the Issuer of which it has actual knowledge in the making of any
payment required to be made with respect to the Notes;
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(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 Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment;
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; and
(vi) not commence a case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law against
the Issuer in connection with this Indenture.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Request
direct any Paying Agent to pay to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for one year after
such amount has become due and payable shall be discharged from such trust and
be repaid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
two newspapers published in the English language customarily published on each
Business Day and of general circulation in Chicago, Illinois, a notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The Indenture
Trustee may also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in monies due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of
record for each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of its jurisdiction of
organization and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall
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be necessary to protect the validity and enforceability of this Indenture, the
Notes, the Mortgage Loans and each other instrument or agreement included in the
Trust Estate.
Section 3.05. Payment of Principal and Interest. (a) The Issuer will duly
and punctually pay, but only to the extent of the Amount Available for each
Group on each Payment Date, the principal of and interest on the Notes in
accordance with the terms of such Notes, this Indenture and the Sale and
Servicing Agreement. Without limiting the foregoing, the Issuer will cause to be
distributed all amounts on deposit in the related Note Distribution Account on a
Payment Date deposited therein pursuant to the Sale and Servicing Agreement for
the benefit of the related Classes of Notes, to the applicable Noteholders.
Amounts properly withheld under the Code 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.
(b) Each distribution with respect to a Book-Entry Note shall be paid to
the Depository, as Holder thereof, and the Depository shall be responsible for
crediting the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the Note
Owners that it represents and to each indirect participating brokerage firm (a
"brokerage firm" or "indirect participating firm") for which it acts as agent.
Each brokerage firm shall be responsible for disbursing funds to the Note Owners
that it represents. None of the Indenture Trustee, the Note Registrar, the
Seller or the Servicer shall have any responsibility therefor except as
otherwise provided by this Agreement or applicable law.
(c) [Reserved].
(d) Any installment of interest or principal, if any, payable on any Note
that is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall, if such Holder shall have so requested at least five
Business Days prior to the related Record Date and such Holder holds Notes of an
aggregate initial Note Principal Balance of at least $5,000,000, be paid to each
Holder of record on the preceding Record Date, by wire transfer to an account
specified in writing by such Holder reasonably satisfactory to the Indenture
Trustee as of the preceding Record Date or in all other cases or if no such
instructions have been delivered to the Indenture Trustee, by check to such
Noteholder mailed to such Holder's address as it appears in the Note Register in
the amount required to be distributed to such Holder on such Payment Date
pursuant to such Holder's Notes; provided, however, that the Indenture Trustee
shall not pay to such Holders any amount required to be withheld from a payment
to such Holder by the Code.
(e) The principal of each Note shall be due and payable in full on the
Final Scheduled Payment Date for such Note as provided in the forms of Note set
forth in Exhibits A-1 and A-2. All principal payments on the Notes shall be made
to the Noteholders entitled thereto in accordance with the Percentage Interests
represented by such Notes. Upon notice to the Indenture Trustee by the Issuer,
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 Final Scheduled
Payment Date or other final Payment Date. Such notice shall to the extent
practicable be mailed no later than five Business Days prior to such Final
Scheduled Payment Date or other final Payment Date and shall specify that
payment of the principal amount and any interest due with respect to such Note
at the Final
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Scheduled Payment Date or other final Payment Date will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for such final payment. No interest shall
accrue on the Notes on or after the Final Scheduled Payment Date or any such
other final Payment Date.
Section 3.06. Protection of Trust Estate. (a) The Issuer will from time to
time prepare, execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) cause the Issuer or Servicer to enforce any of the rights to the
Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee, the Note Insurer and the Noteholders in such Trust
Estate against the claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture Trustee
shall not remove any portion of the Trust Estate that consists of money or is
evidenced by an instrument, certificate or other writing from the jurisdiction
in which it was held at the date of the most recent Opinion of Counsel delivered
pursuant to Section 3.07 hereof (or from the jurisdiction in which it was held
as described in the Opinion of Counsel delivered on the Closing Date pursuant to
Section 3.07(a) hereof, or if no Opinion of Counsel has yet been delivered
pursuant to Section 3.07(b) hereof unless the Indenture Trustee shall have first
received an Opinion of Counsel to the effect that the lien and security interest
created by this Indenture with respect to such property will continue to be
maintained after giving effect to such action or actions).
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to sign any financing statement, continuation statement or
other instrument required to be signed pursuant to this Section 3.06 upon the
Issuer's preparation thereof and delivery to the Indenture Trustee.
Section 3.07. Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee, the Note Insurer and the Owner
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing of
this Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the lien and first priority security interest in the Collateral and
reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and first priority
security interest effective.
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(b) On or before April 30 in each calendar year, beginning in April 2000,
the Issuer shall furnish to the Indenture Trustee and the Note Insurer an
Opinion of Counsel at the expense of the Issuer either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, 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 first priority security interest in the
Collateral 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 in the
Collateral until April 30 in the following calendar year.
Section 3.08. Performance of Obligations. (a) The Issuer will punctually
perform and observe all of its obligations and agreements contained in this
Indenture, the Basic Documents and in the instruments and agreements included in
the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer.
(c) The Issuer will not take any action or permit any action to be taken by
others which would release any Person from any of such Person's covenants or
obligations under any of the documents relating to the Mortgage Loans or under
any instrument included in the Trust Estate, or which would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any of the documents relating to the Mortgage
Loans or any such instrument, except such actions as the Servicer is expressly
permitted to take in the Sale and Servicing Agreement. The Indenture Trustee, as
pledgee of the Mortgage Loans and an assignee of the Issuer's rights under the
Sale and Servicing Agreement, shall be entitled to exercise all of the rights of
the Issuer to direct the actions of the Servicer pursuant to the Sale and
Servicing Agreement. So long as any Event of Servicer Default shall be
continuing under the Sale and Servicing Agreement, the Indenture Trustee, with
the consent of the Note Insurer, may exercise the remedies set forth in Section
10.01 of the Sale and Servicing Agreement. Unless granted or permitted by the
Note Insurer or the Holders of the Notes to the extent provided above, the
Issuer may not waive any such Event of Servicer Default or terminate the rights
and powers of the Servicer under the Sale and Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into contracts
with other Persons for the performance of the Issuer's obligations hereunder,
and performance of such obligations by such Persons shall be deemed to be
performance of such obligations by the Issuer.
Section 3.09. Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not:
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(i) except as expressly permitted by this Indenture, sell, transfer,
exchange or otherwise dispose of the Trust Estate, except as expressly
permitted by the Indenture or the Sale and Servicing Agreement;
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied
or assessed upon any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (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 or (C) permit the lien of this
Indenture not to constitute a valid first priority security interest in the
Trust Estate;
(iv) waive or impair, or fail to assert rights under, the Mortgage
Loans, or impair or cause to be impaired the Issuer's interest in the
Mortgage Loans, the Sale and Servicing Agreement or in any Basic Document,
if any such action would materially and adversely affect the interests of
the Noteholders or the Note Insurer; or
(v) dissolve or liquidate, in whole or in part, unless the Notes are
paid in full.
Section 3.10. Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee and the Note Insurer, by April 30 in each calendar year
(commencing with the year 2000), 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 3.11. [Reserved].
Section 3.12. Representations and Warranties Concerning the Mortgage Loans.
The Indenture Trustee, as pledgee of the Mortgage Loans, has the benefit of the
representations and
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warranties made by the Seller in the Sale and Servicing Agreement concerning the
Seller and the Mortgage Loans and the right to enforce the remedies against the
Seller provided in such Sale and Servicing Agreement to the same extent as
though such representations and warranties were made directly to the Indenture
Trustee. If the Indenture Trustee has actual knowledge of any breach of any
representation or warranty made by the Seller in the Sale and Servicing
Agreement, the Indenture Trustee shall promptly notify the Seller and the Note
Insurer of such finding and the Seller's obligation to cure such defect or
repurchase or substitute for the related Mortgage Loan.
Section 3.13. [Reserved].
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee. Solely
for purposes of perfection under Section 9-305 of the Uniform Commercial Code or
other similar applicable law, rule or regulation of the state in which such
property is held by the Servicer, the Issuer and the Indenture Trustee hereby
acknowledge that the Servicer is acting as agent and bailee of the Indenture
Trustee in holding amounts on deposit in the Principal and Interest Accounts, as
well as its agent and bailee in holding any Related Documents released to the
Servicer, and any other items constituting a part of the Trust Estate which from
time to time come into the possession of the Servicer. It is intended that, by
the Servicer's execution of the Sale and Servicing Agreement, the Indenture
Trustee, as a secured party of the Mortgage Loans, will be deemed to have
possession of such Related Documents, such documents, monies and such other
items for purposes of Section 9-305 of the Uniform Commercial Code of the state
in which such property is held by the Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section 3.15
if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.
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 and the Note Insurer, the due and
punctual payment of the principal of and interest on all Notes,
distributions made to the Certificate Paying Agent, on behalf of the
Certificateholders and the payment of the Monthly Premium and all other
payments to the Note Insurer 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;
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(ii) immediately after giving effect to such transaction, no Event of
Default shall have occurred and be continuing;
(iii) the Rating Agencies shall have confirmed in writing that such
transaction shall not cause the downgrade, withdrawal, suspension or
qualification of the rating of the Notes or caused the Notes to be
considered by either Rating Agency to be below investment grade without
taking into consideration the Note Insurance Policy;
(iv) the Issuer and the Note Insurer shall have received an Opinion of
Counsel (and shall have delivered a copy thereof to the Indenture Trustee)
to the effect that such transaction will not (A) result in a "substantial
modification" of the Notes under Treasury Regulation section 1.1001-3, or
adversely affect the status of the Notes as indebtedness for federal income
tax purposes, or (B) if 100% of the Certificates are not owned by Superior
Bank FSB, cause the Trust to be subject to an entity level tax for federal
income tax purposes;
(v) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and the
Note 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); and
(vii) the Note Insurer, so long as no default by the Note Insurer
exists, shall have given its prior written consent.
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer the conveyance or transfer of which is hereby
restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any state, (B)
expressly assumes, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee and the Note Insurer, the due and punctual payment of the principal
of and interest on all Notes, the payment of the Note Insurance Premium and
all other amounts payable to the Note Insurer 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 the Holders of the Notes and the Note Insurer,
(D) unless otherwise provided in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless the Issuer and the Note
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
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of Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange Act
in connection with the Notes;
(ii) immediately after giving effect to such transaction, no default
by the Issuer hereunder or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agencies shall have confirmed in writing that such
transaction shall not cause the downgrade, withdrawal, suspension or
qualification of the rating of the Notes without taking into account the
Note Insurance Policy;
(iv) the Issuer and the Note Insurer shall have received an Opinion of
Counsel (and shall have delivered a copy thereof to the Indenture Trustee)
to the effect that such transaction will not (A) result in a "substantial
modification" of the Notes under Treasury Regulation section 1.1001-3, or
adversely affect the status of the Notes as indebtedness for federal income
tax purposes, and (B) if 100% of the Certificates are not owned by Superior
Bank FSB, cause the Trust to be subject to an entity level tax for federal
income tax purposes;
(v) any action that is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee and the
Note 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); and
(vii) the Note Insurer, so long as no default by the Note Insurer
exists, shall have given its prior written consent.
Section 3.17. Successor or Transferee. (a) Upon any consolidation or merger
of the Issuer in accordance with Section 3.16(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.16(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee and the Note Insurer of such conveyance or
transfer.
Section 3.18. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning and selling and managing the
Mortgage Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
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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 and amounts due to the Note Insurer under this
Indenture and the Insurance Agreement.
Section 3.20. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the Basic Documents, the Issuer shall not make
any loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.
Section 3.21. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22. [Reserved]
Section 3.23. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (x) distributions to the Owner
Trustee, the Note Insurer and the Certificateholders as contemplated by, and to
the extent funds are available for such purpose under this Indenture and the
Sale and Servicing Agreement and (y) payments to the Servicer pursuant to the
terms of the Sale and Servicing Agreement. The Issuer will not, directly or
indirectly, make payments to or distributions from any Account except in
accordance with this Indenture and the Basic Documents.
Section 3.24. Notice of Events of Default. The Issuer, upon actual
knowledge thereof, shall give the Indenture Trustee, the Note Insurer and the
Rating Agencies prompt written notice of each Event of Default hereunder and
under the Trust Agreement.
Section 3.25. Further Instruments and Acts. Upon written request of the
Indenture Trustee or the Note 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 3.26. Grant of the Subsequent Mortgage Loans. In consideration of
the delivery on each Subsequent Transfer Date to or upon the order of the Issuer
of all or a portion of the amount on deposit in the related Pre-Funding Account,
the Issuer shall, to the extent of the availability thereof, on such Subsequent
Transfer Date during the Pre-Funding Period Grant to the Indenture Trustee all
of its rights, title and interest in the Subsequent Mortgage Loans and
15
simultaneously with the Grant of the Subsequent Mortgage Loans the Issuer will
cause the related Trustee's Mortgage File to be delivered to the Indenture
Trustee.
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ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.01. The Notes. The Notes shall be registered in the name of a
nominee designated by the Depository. Beneficial Owners will hold interests in
the Notes through the book-entry facilities of the Depository in minimum initial
Note Principal Balances of $100,000 and integral multiples of $1,000 in excess
thereof.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Holders of the Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08
hereof, Beneficial Owners shall not be entitled to definitive certificates for
the Notes as to which they are the Beneficial Owners. Requests and directions
from, and votes of, the Depository as Holder of the Notes shall not be deemed
inconsistent if they are made with respect to different Beneficial Owners. The
Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Noteholders and give notice to the
Depository of such record date. Without the consent of the Issuer and the
Indenture Trustee, no Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Note for the account of the
Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer by
the Owner Trustee, not in its individual capacity but solely as Owner Trustee,
authenticated by the Indenture Trustee and delivered by the Indenture Trustee to
or upon the order of the Issuer.
Section 4.02. Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Note Registrar and Certificate Registrar. The Issuer shall
cause to be kept at the Corporate Trust Office a Note Register in which, subject
to such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of Notes and of transfers and exchanges of Notes as
herein provided.
Subject to the restrictions and limitations set forth below, upon surrender
for registration of transfer of any Note at the Corporate Trust Office, the
Issuer shall execute and the Note Registrar shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Notes in
authorized initial Note Principal Balances evidencing the same aggregate
Percentage Interests.
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Subject to the foregoing, at the option of the Noteholders, Notes may be
exchanged for other Notes of like tenor and in authorized initial Note Principal
Balances evidencing the same aggregate Percentage Interests upon surrender of
the Notes to be exchanged at the Corporate Trust Office of the Note Registrar.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute and
the Indenture Trustee shall authenticate and deliver the Notes which the
Noteholder making the exchange is entitled to receive. Each Note presented or
surrendered for registration of transfer or exchange shall (if so required by
the Note Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Note Registrar
duly executed by the Holder thereof or his attorney duly authorized in writing
with such signature guaranteed by a commercial bank or trust company located or
having a correspondent located in the city of New York. Notes delivered upon any
such transfer or exchange will evidence the same obligations, and will be
entitled to the same rights and privileges, as the Notes surrendered.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
The Issuer hereby appoints the Indenture Trustee as (i) Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges thereof pursuant to
Section 3.05 of the Trust Agreement and (ii) Note Registrar under this
Indenture. The Indenture Trustee hereby accepts such appointments.
No Person shall become a Noteholder until it shall establish its
non-foreign status by submitting to the Note Registrar an IRS Form W-9 and the
Certificate of Non-Foreign Status in the form set forth in Exhibit E hereto,
acceptable to and in form and substance reasonably satisfactory to the Note
Registrar and the Issuer, which certificate shall not be an expense of the
Trust, the Owner Trustee, the Note Registrar, the Servicer or the Company. If
the Noteholder is unable to provide a Certificate of Non-Foreign Status, the
Noteholder must provide an Opinion of Counsel as to the non-foreign status of
such Person which Opinion of Counsel shall not be an expense of the Trust, the
Owner Trustee, the Indenture Trustee, the Note Registrar, the Servicer or the
Issuer. The Class A Noteholder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Trust, the Owner Trustee, the Note Registrar, the
Servicer and the Issuer against any liability that may result if the transfer is
not so exempt or is not made in accordance with such federal and state laws. So
long as the Class A Notes are Book-Entry Notes, any purchaser of a Class A Note
will be deemed to have represented by such purchase that such purchaser is a
U.S. Person under the Code.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer, the Note Insurer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
UCC are met, the Issuer shall execute, and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated,
18
destroyed, lost or stolen Note, a replacement Note; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer, the Note Insurer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Note Insurer, the
Indenture Trustee and any agent of the Issuer, the Note Insurer or the Indenture
Trustee may treat the Person in whose name any Note is registered (as of the day
of determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and neither the
Issuer, the Note Insurer, the Indenture Trustee nor any agent of the Issuer, the
Note Insurer or the Indenture Trustee shall be affected by notice to the
contrary.
Section 4.05. Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section 4.05, except as expressly permitted by
this Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Request that they
be destroyed or
19
returned to it; provided, however, that such Issuer Request is timely and the
Notes have not been previously disposed of by the Indenture Trustee.
Section 4.06. 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 Depository, by, or on
behalf of, the Issuer. The Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Depository, and
no Beneficial Owner will receive a Definitive Note representing such Beneficial
Owner's interest in such Note, except as provided in Section 4.08. With respect
to such Notes, unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Beneficial Owners pursuant to Section
4.08:
(i) the provisions of this Section 4.06 shall be in full force and
effect;
(ii) the Note Registrar, the Note Insurer and the Indenture Trustee
shall be entitled to deal with the Depository for all purposes of this
Indenture (including the payment of principal of and interest on the Notes
and the giving of instructions or directions hereunder) as the sole holder
of the Notes, and shall have no obligation to the Beneficial Owners of the
Notes;
(iii) to the extent that the provisions of this Section 4.06 conflict
with any other provisions of this Indenture, the provisions of this Section
4.06 shall control;
(iv) the rights of Beneficial Owners shall be exercised only through
the Depository and shall be limited to those established by law and
agreements between such Owners of Notes and the Depository and/or the
Depository Participants. Unless and until Definitive Notes are issued
pursuant to Section 4.08, the initial Depository will make book-entry
transfers among the Depository Participants and receive and transmit
payments of principal of and interest on the Notes to such Depository
Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Note Principal Balances of the Notes, the
Depository shall be deemed to represent such percentage with respect to the
Notes only to the extent that it has received instructions to such effect
from Beneficial Owners and/or Depository Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the Indenture
Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other
communication to the Note Holders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes. If (i) the Indenture Trustee determines
that the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the
20
Notes and the Indenture Trustee is unable to locate a qualified successor, (ii)
the Indenture Trustee elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of an Event of Default, Beneficial
Owners of Notes representing beneficial interests aggregating at least a
majority of the Note Principal Balances of the Notes advise the Depository in
writing that the continuation of a book-entry system through the Depository is
no longer in the best interests of the Beneficial Owners, then the Depository
shall notify all Beneficial Owners and the Indenture Trustee of the occurrence
of any such event and of the availability of Definitive Notes to Beneficial
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Depository,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note Registrar or the
Indenture Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
Section 4.09. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness. The Issuer and the Indenture Trustee, by entering into this
Indenture, and each Noteholder, by its acceptance of its Note (and each
Beneficial Owner by its acceptance of an interest in the applicable Book-Entry
Note), agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness.
Section 4.10. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders (and the Note
Insurer, as subrogee of the Noteholders) to receive payments of principal
thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09, 3.16, 3.18,
3.19 and 4.09, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the obligations of the Indenture Trustee under
Section 4.11) and (vi) the rights of Noteholders (and the Note Insurer, as
subrogee of the 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 and shall release and deliver the Collateral
to or upon the order of the Issuer, when
(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 4.03 hereof and (ii) Notes for whose payment
money has theretofore been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 3.03) have been delivered to the
Indenture Trustee for cancellation; or
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(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. have become due and payable,
b. will become due and payable at the Final Scheduled Payment
Date within one year, or
c. have been called for early redemption pursuant to Section
11.01 of the Sale and Servicing Agreement,
and the Issuer, in the case of a. or b. above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes then outstanding not theretofore
delivered to the Indenture Trustee for cancellation when due on the Final
Scheduled Payment Date or other final Payment Date, and the Issuer has
delivered to the Indenture Trustee and the Note Insurer a verification
report (complying with the applicable requirements of Section 10.01) from a
nationally recognized Independent accounting firm certifying that the
amounts deposited with the Indenture Trustee are sufficient to pay and
discharge the entire indebtedness of such Notes, or, in the case of c.
above all provisions of Section 11.01 of the Sale and Servicing Agreement
have been satisfied;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder and under the Sale and Servicing Agreement; and
(C) the Issuer has delivered to the Indenture Trustee and the Note
Insurer an Officer's Certificate and an Opinion of Counsel, each meeting
the applicable requirements of Section 10.01 hereof, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with and, if the Opinion of
Counsel relates to a deposit made in connection with Section 4.10(A)(2)b.
above, such opinion shall further be to the effect that such deposit will
constitute an "in-substance defeasance" within the meaning of Revenue
Ruling 85-42, 1985-1 C.B. 36, and in accordance therewith, the Issuer will
be the owner of the assets deposited in trust for federal income tax
purposes.
Section 4.11. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or the
Issuer, as applicable, as the Indenture Trustee may determine, to the Holders of
Notes, of all sums due and to become due thereon for principal and interest or
otherwise; but such monies need not be segregated from other funds except to the
extent required herein or required by law.
Section 4.12. Subrogation and Cooperation. The Issuer and the Indenture
Trustee acknowledge that (i) to the extent the Note Insurer makes payments under
the Note Insurance Policy
22
on account of principal of or interest on the Notes, the Note Insurer will be
fully subrogated to the rights of such Holders to receive such principal and
interest from the Issuer, and (ii) the Note Insurer shall be paid such principal
and interest but only from the sources and in the manner provided herein and in
the Sale and Servicing Agreement for the payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any reasonable
request by the Note Insurer for action to preserve or enforce the Note Insurer's
rights or interest under this Indenture or the Sale and Servicing Agreement,
consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the Indenture, including, without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions:
(i) institute any suit in equity, action at law or other judicial or
administrative proceeding (each, a "Proceeding") for the collection of all
amounts then payable on the Notes, or under this Indenture in respect to
the Notes and all amounts payable under the Insurance Agreement, enforce
any judgment obtained and collect from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private Sales called and
conducted in any manner permitted by law;
(iii) file or record all Assignments of Mortgage 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 Note Insurer hereunder;
provided, however, action shall be taken pursuant to this Section 4.12 by the
Indenture Trustee to preserve the Note Insurer's rights or interest under this
Agreement or the Insurance Agreement only to the extent such action is available
to the Noteholders or the Note Insurer under other provisions of this Indenture.
Notwithstanding any provision of this Indenture to the contrary, so long as
no default by the Note Insurer exists, the Note Insurer shall at all times be
treated as if it were the exclusive owner of all Notes Outstanding for the
purposes of all approvals, consents, waivers and the institution of any action
and the direction of all remedies, and the Indenture Trustee shall act in
accordance with the directions of the Note Insurer so long as it is indemnified
therefor to its reasonable satisfaction.
Section 4.13. Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such
23
Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be
held and applied according to Section 3.05 and thereupon such Paying Agent shall
be released from all further liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of any Definitive
Notes, the Issuer may execute and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Notes that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture Trustee
shall authenticate and make available for delivery, in exchange therefor,
Definitive Notes of authorized denominations and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as Definitive Notes.
Section 4.15. ERISA Deemed Representations. By acquiring a Note, each
purchaser will be deemed to represent that either (1) it is not acquiring the
Note with the assets of a Plan; or (2) the acquisition and holding of the note
will not give rise to a nonexempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code.
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ARTICLE V
DEFAULT AND REMEDIES
Section 5.01. Events of Default. 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) shall be an "Event of Default":
(i) a default in the payment of the Class A Interest Remittance Amount
or the Class A Principal Remittance Amount with respect to a Payment Date
on such Payment Date and such default continues for a period of five days
(for purposes of this clause, a payment on the Notes funded by the Note
Insurer shall be deemed to be a payment made by the Issuer); or
(ii) the failure by the Issuer on the Final Scheduled Payment Date to
reduce the related Note Principal Balance to zero and such default
continues for a period of five days; or
(iii) there occurs a default in the observance or performance of any
covenant or agreement of the Issuer made in the Indenture, or any
representation or warranty of the Issuer made in the Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the
time when the same shall have been made, and such default shall continue or
not be cured, or the circumstance or condition in respect of which such
representation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given,
by registered or certified mail, to the Issuer by the Indenture Trustee or
to the Issuer and the Indenture Trustee by the Note Insurer, or if a Note
Insurer default exists the Holders of at least 25% 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
(iv) there occurs the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate 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 60 consecutive days; or
(v) there occurs the commencement by the Issuer of a voluntary case
under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such law, or
the consent by the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the assets of the
Trust Estate, or the making by the Issuer of any general
25
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of any
action by the Issuer in furtherance of any of the foregoing.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee at the written direction of the Note Insurer or, if a Note
Insurer default exists, the Holders of Notes representing not less than a
majority of the Note Principal Balances of all Notes may declare the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee and the Note Insurer if given by Noteholders), and upon any
such declaration the unpaid Note Principal Balance of the 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 with respect
to an Event of Default has been made and before a judgment or decree for payment
of the money due has been obtained by the Indenture Trustee as hereinafter
provided in this Article V, the Note Insurer or, if a default by the Note
Insurer exists, the Holders of Notes representing a majority of the Note
Principal Balances of all Notes, by written notice to the Issuer and the
Indenture Trustee, may waive the related Event of Default and rescind and annul
such declaration and its consequences if:
(i) the Issuer has, or has caused to be, paid or deposited with the
Indenture Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on the Notes and
all other amounts that would then be due hereunder or upon the Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been
cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest (including the Class A Interest Remittance Amount) on
any Note when the same becomes due and payable, and such default continues for a
period of five days, or (ii) default is made in the payment of the principal
(including the Class A Principal Remittance Amount) of or any installment of the
principal of any Note when the same becomes due and payable, the Issuer shall,
upon demand of the Indenture Trustee, pay to the Indenture Trustee, for the
benefit of the Holders of Notes and the Note Insurer, the whole amount then due
and payable on the Notes in respect of principal and interest, with interest at
the Note Interest Rate upon the overdue principal, and in addition thereto such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable
26
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.16 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor the Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee,
subject to the provisions of Section 10.16 hereof may, as more particularly
provided in Section 5.04 hereof, in its discretion, proceed to protect and
enforce its rights and the rights of the Noteholders and the Note Insurer, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith), the Note Insurer
and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
27
(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders, the Note Insurer and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee, the Note 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, and
all amounts due to the Note Insurer.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes and the Note Insurer.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing and if an acceleration has been declared and not
rescinded pursuant to Section 5.02 hereof, the Indenture Trustee subject to the
provisions of Section 10.16 hereof shall, do one or more of the following
(subject to Section 5.05 hereof):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration or otherwise,
and all amounts payable under the Sale
28
and Servicing Agreement and enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee, the Holders of the Notes and the Note Insurer;
and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Note Insurer and the Holders of
100% of the aggregate Note Principal Balance, (B) the proceeds of such sale or
liquidation distributable to the Holders of the Notes are sufficient to
discharge in full all amounts then due and unpaid upon the Notes for principal
and interest and to reimburse the Note Insurer for any amounts paid under the
Note Insurance Policy and any other amounts due to the Note Insurer under the
Sale and Servicing Agreement or (C) the Indenture Trustee determines that the
Mortgage Loans will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the Indenture Trustee obtains
the consent of the Note Insurer and the Holders of a majority of the aggregate
Note Principal Balance. In determining such sufficiency or insufficiency with
respect to clause (B) and (C), the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Trust Estate for such purpose. Notwithstanding the
foregoing, so long as an Event of Servicer Default has not occurred, any Sale of
the Trust Estate shall be made subject to the continued servicing of the
Mortgage Loans by the Servicer as provided in the Sale and Servicing Agreement.
(b) Notwithstanding the priorities of payment provisions of Section 6.06 of
the Sale and Servicing Agreement, if the Indenture Trustee collects any money or
property pursuant to this Article V, it shall pay out the money or property in
the following order:
FIRST: to the Indenture Trustee for amounts due under Section 6.03 of the
Sale and Servicing Agreement hereof;
SECOND: to the Noteholders for amounts due and unpaid on the Notes with
respect to interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest
(including Class A Interest Remittance Amount) from amounts available in
the Trust Estate for the Noteholders;
29
THIRD: to Noteholders for amounts due and unpaid on the Notes with respect
to principal (including, but not limited to, any Class A Principal
Remittance Amount), from amounts available in the Trust Estate for such
Noteholders, and to each Noteholder ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for
principal, until the Note Principal Balance is reduced to zero;
FOURTH: to the payment of the remainder, if any to the Certificate Paying
Agent on behalf of the Issuer or to any other person legally entitled
thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. With respect to any
acceleration, the first payment date after the acceleration shall be the first
Payment Date after the acceleration. At least 15 days before such record date,
the Indenture Trustee shall mail to each Noteholder and the Note Insurer a
notice that states the record date, the payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Trust Estate. If the Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee shall elect to take and maintain possession of
the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes and other obligations of the Issuer including payments to
the Note Insurer, and the Indenture Trustee shall take such desire into account
when determining whether or not to take and maintain possession of the Trust
Estate. In determining whether to take and maintain possession of the Trust
Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless and subject to the provisions of Section 10.16 hereof:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Note Principal Balances
of the Notes have made a written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own
name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice of request and offer of indemnity has failed to institute such
Proceedings;
30
(v) 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 Note Principal Balances of the Notes; and
(vi) such Holder or Holders have obtained the written consent of the
Note Insurer, unless a Note Insurer default exists.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
Subject to the last paragraph of Section 4.12 herein, in the event the
Indenture Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of Notes, each representing less
than a majority of the Note Principal Balances of the Notes, the Indenture
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.07. Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture or the
Sale and Servicing Agreement and to institute suit for the enforcement of any
such payment, and such right shall not be impaired without the consent of such
Holder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee, the Note
Insurer or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee, the Note Insurer and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Note Insurer and the Noteholders shall continue as though
no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Note Insurer or any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of
31
any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article V or by law to the Indenture Trustee, the Note Insurer or
to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Indenture Trustee, the Note Insurer or by the
Noteholders, as the case may be.
Section 5.11. Control by Note Insurer. So long as no default by the Note
Insurer exists, the Note Insurer shall have the right (subject to the provisions
of Section 5.06) to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to the
Notes or exercising any trust or power conferred on the Indenture Trustee;
provided that:
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) any direction to the Indenture Trustee to sell or liquidate the
Trust Estate shall be by Holders of Notes representing not less than 100%
of the Note Principal Balances of Notes;
(iii) if the conditions set forth in Section 5.05 hereof have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Note Principal Balances
of Notes to sell or liquidate the Trust Estate shall be of no force and
effect; and
(iv) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
In the event that a default by the Note Insurer exists, the Majority Noteholders
of each Class shall have the foregoing rights. Notwithstanding the rights of
Noteholders set forth in this Section, subject to Section 6.01, the Indenture
Trustee need not take any action that it determines might involve it in
liability or might materially adversely affect the rights of any Noteholders not
consenting to such action.
Section 5.12. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02 hereof,
the Note Insurer, or if a default by the Note Insurer exists, the Holders of
Notes of not less than a majority of the Note Principal Balances of the Notes
may waive any past Event of Default and its consequences except an Event of
Default (a) with respect to payment of principal of or interest on any of the
Notes or (b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Note or (c) the
waiver of which would materially and adversely affect the interests of the
Indenture Trustee or, the Note Insurer or modify the Note Insurer's obligations
under the Note Insurance Policy. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Event of Default or impair any right consequent thereto.
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Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such 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 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee or the Note Insurer, (b) any suit instituted by any
Noteholder, or group of Noteholders, in each case holding in the aggregate more
than 10% of the Note Principal Balances of the Notes or (c) any suit instituted
by any Noteholder for the enforcement of the payment of principal of or interest
on any Note on or after the respective due dates expressed in such Note and in
this Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
Section 5.15. Sale of Trust Estate. (a) The power to effect any sale or
other disposition (a "Sale") of any portion of the Trust Estate pursuant to
Section 5.04 hereof is expressly subject to the provisions of Section 5.05
hereof and this Section 5.15. The power to effect any such Sale shall not be
exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate
shall have been sold or all amounts payable on the Notes and under this
Indenture shall have been paid. The Indenture Trustee may from time to time
postpone any public Sale by public announcement made at the time and place of
such Sale. The Indenture Trustee hereby expressly waives its right to any amount
fixed by law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless
(1) the Note Insurer or if a Note Insurer default exists, the Holders
of all Notes, consent to or direct the Indenture Trustee to make, such
Sale, or
(2) the proceeds of such Sale would not be less than the entire amount
which would be payable to the Noteholders under the Notes and the Note
Insurer under the Sale and Servicing Agreement on the Payment Date next
succeeding the date of such Sale; or
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(3) the Indenture Trustee determines, that the conditions for
retention of the Trust Estate set forth in Section 5.05 hereof cannot be
satisfied (in making any such determination, the Indenture Trustee may rely
upon an opinion of an Independent investment banking firm obtained and
delivered as provided in Section 5.05 hereof), and the Note Insurer or if a
Note Insurer default exists, the Holders of Notes representing at least
66-2/3% of the Note Principal Balances of the Notes consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the Note Insurer or if a Note Insurer default exists, the
Holders representing at least 66-2/3% of the Principal Balances of the Notes
have otherwise consented or directed the Indenture Trustee, at any public Sale
of all or any portion of the Trust Estate at which a minimum bid equal to or
greater than the amount described in paragraph (2) of subsection (b) of this
Section 5.15 has not been established by the Indenture Trustee and no Person
bids an amount equal to or greater than such amount, the Indenture Trustee, as
trustee for the benefit of the Holders of the Notes, shall bid an amount at
least $1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust Estate,
(1) any Holder or Holders of Notes may bid for the property offered
for sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability, and
may, in paying the purchase money therefor, deliver any Notes or claims for
interest thereon in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
Notes, in case the amounts so payable thereon shall be less than the amount
due thereon, shall be returned to the Holders thereof after being
appropriately stamped to show such partial payment;
(2) the Indenture Trustee may bid for and acquire the property offered
for Sale in connection with any Sale thereof, and, subject to any
requirements of, and to the extent permitted by, applicable law in
connection therewith, may purchase all or any portion of the Trust Estate
in a private sale, and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting the gross Sale price against
the sum of (A) the amount which would be distributable to the Holders of
the Notes and Holders of Certificates and the Note Insurer as a result of
such Sale in accordance with Section 5.04(b) hereof on the Payment Date
next succeeding the date of such Sale and (B) the expenses of the Sale and
of any Proceedings in connection therewith which are reimbursable to it,
without being required to produce the Notes in order to complete any such
Sale or in order for the net Sale price to be credited against such Notes,
and any property so acquired by the Indenture Trustee shall be held and
dealt with by it in accordance with the provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Trust Estate in connection with a Sale thereof;
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(4) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to
take all action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee, the Note Insurer or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the Trust
Estate or upon any of the assets of the Issuer. Any money or property collected
by the Indenture Trustee shall be applied in accordance with Section 5.04(b)
hereof.
Section 5.17. Performance and Enforcement of Certain Obligations. The
Indenture Trustee, as pledgee of the Mortgage Loans, may, and at the direction
(which direction shall be in writing or by telephone (confirmed in writing
promptly thereafter)) of the Note Insurer or, if a Note Insurer default exists,
the Holders of 66-2/3% of the Note Principal Balances of the Notes, 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 or the Servicer, as the case
may be, of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Sale and Servicing Agreement, and any right of the Issuer to take such action
shall not be suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
The Indenture Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture and the Sale and Servicing Agreement. If an Event of Default of which
a Responsible Officer of the Indenture Trustee shall have actual knowledge has
occurred and has not been cured or waived, the Indenture Trustee shall, except
in those cases in which it is required by the terms of this Indenture or the
Sale and Servicing Agreement to follow the direction of the Note Insurer or the
Rating Agencies, exercise such of the rights and powers vested in it by this
Indenture and the Sale and Servicing Agreement, and use the same degree of care
and skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
The Indenture Trustee, upon receipt of all resolutions, notes, statements,
opinions, reports, documents, orders or other instruments furnished to the
Indenture Trustee which are specifically required to be furnished pursuant to
any provision of this Indenture and the Sale and Servicing Agreement, shall
examine them to determine whether they conform to the requirements of this
Indenture and the Sale and Servicing Agreement, provided, however that the
Indenture Trustee shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Issuer, the Servicer or the Seller. If any such
instrument is found not to conform to the requirements of this Indenture or the
Sale and Servicing Agreement, the Indenture Trustee shall notify the Note
Insurer and request written instructions as to the action the Note Insurer deems
appropriate to have the instrument corrected, and if the instrument is not so
corrected, the Indenture Trustee will provide notice thereof to the Note Insurer
who shall then direct the Indenture Trustee as to the action, if any, to be
taken.
No provision of this Agreement shall be construed to relieve the Indenture
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Indenture Trustee shall be determined solely by the
express provisions of this Indenture and the Sale and Servicing Agreement,
the Indenture Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Indenture
and the Sale and Servicing Agreement, no implied covenants or obligations
shall be read into this Indenture and the Sale and Servicing Agreement
against the Indenture Trustee and, in the absence of bad faith on the part
of the Indenture Trustee, the Indenture Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any resolutions, certificates,
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statements or opinions, reports, documents, orders or instruments furnished
to the Indenture Trustee and conforming to the requirements of this
Agreement;
(ii) The Indenture Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or other officers
of the Indenture Trustee, unless it shall be proved that the Indenture
Trustee was negligent in ascertaining the pertinent facts;
(iii) The Indenture Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with this Indenture and the Sale and Servicing
Agreement or at the direction of the Note Insurer, the Class 1A Majority
Noteholders and the Class 2A Majority Noteholders or any of them relating
to the time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising or omitting to exercise
any trust or power conferred upon the Indenture Trustee, under this
Indenture and the Sale and Servicing Agreement;
(iv) The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default or Event of Default
(except a default or Event of Default set forth under Section 5.01(i) or
(ii) of this Indenture) unless a Responsible Officer of the Indenture
Trustee shall have actual knowledge thereof or have received written notice
thereof. In the absence of receipt of such notice, the Indenture Trustee
may conclusively assume that there is no default or Event of Default;
(v) The Indenture Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability for the performance of any
of its duties hereunder or the exercise of any of its rights or powers if
there is reasonable ground for believing that the 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 and
the Sale and Servicing Agreement 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 under the Sale and Servicing Agreement
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 Agreement;
(vi) Subject to any express requirement of this Indenture and the Sale
and Servicing Agreement and until such time as the Indenture Trustee shall
be the successor to the Servicer and without otherwise limiting the
generality of this Section, the Indenture Trustee shall have no duty (A) to
see to any recording, filing, or depositing of this Indenture or the Sale
and Servicing Agreement 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
37
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, (D) to confirm or verify the
contents of any reports or certificates of any Servicer delivered to the
Indenture Trustee pursuant to the Sale and Servicing Agreement believed by
the Indenture Trustee to be genuine and to have been signed or presented by
the proper party or parties; and
(vii) The Indenture Trustee shall not be deemed a fiduciary for the
Note Insurer in its capacity as such, except to the extent the Note Insurer
has made an Insured Payment and is thereby subrogated to the rights of the
Noteholders with respect thereto.
Section 6.02 Certain Matters Affecting the Indenture Trustee.
Except as otherwise provided in Section 6.01:
(i) The Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, Opinion
of Counsel, 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 party or parties;
(ii) The Indenture Trustee may consult with counsel and any advice or
opinion of counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion of counsel;
(iii) The Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Indenture and the Sale and
Servicing Agreement or to institute, conduct or defend by litigation
hereunder or in relation hereto at the request, order or direction of the
Note Insurer or any of the Noteholders, pursuant to the provisions of this
Indenture and the Sale and Servicing Agreement, unless such Noteholders or
the Note Insurer, as applicable, shall have offered to the Indenture
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; except in those cases
in which the Indenture Trustee is required by the terms of this Indenture
and the Sale and Servicing Agreement to follow the direction of the Note
Insurer, the Class 1A Majority Noteholders or the Class 2A Majority
Noteholders nothing contained herein shall, however, relieve the Indenture
Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
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(iv) The Indenture Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default under this
Indenture or the Sale and Servicing Agreement and after the curing of all
Events of Default which may have occurred, 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 Note Insurer, the Class 1A Majority
Noteholders or the Class 2A 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 Agreement, 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 Servicer or, if paid by the Indenture Trustee, shall
be repaid by the Servicer upon demand from such Servicer's own funds;
(vi) The right of the Indenture Trustee to perform any discretionary
act enumerated in this Indenture and the Sale and Servicing Agreement 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;
(vii) The Indenture Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted hereunder; and
(viii) 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.
Section 6.03 Indenture Trustee Not Liable for Notes or Mortgage Loans.
The recitals contained herein, in the Sale and Servicing Agreement and in
the Notes (other than the certificate of authentication on the Notes) shall be
taken as the statements of the Seller, the Servicer or the Issuer as applicable,
and the Indenture Trustee assumes no responsibility for their correctness. The
Indenture Trustee makes no representations as to the validity or sufficiency of
this Indenture, the Sale and Servicing Agreement or of the Notes or of any
Mortgage Loan or related document (including any document comprising a part of
the Mortgage File). The Indenture Trustee shall not be accountable for the use
or application by the Issuer of any of the Notes or of the proceeds of such
Notes, or for the use or application of any funds paid to the Servicer in
respect of the Mortgage Loans or deposited in or withdrawn by any Servicer from
the Principal and Interest
39
Accounts. The Indenture Trustee shall not be responsible for the legality or
validity of the Indenture or the Sale and Servicing Agreement or the validity,
priority, perfection or sufficiency of the security for the Notes issued or
intended to be issued hereunder. The Indenture Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder (unless the Indenture Trustee
shall have become the successor to the Servicer) or to prepare or file any
Securities and Exchange Commission filing for the Issuer or to record this
Indenture or the Sale and Servicing Agreement.
Section 6.04 Indenture Trustee May Own Notes.
The Indenture Trustee in its individual or any other capacity may become
the owner or pledgee of Notes with the same rights it would have if it were not
Indenture Trustee, and may otherwise deal with the parties hereto.
Section 6.05 [Reserved].
Section 6.06 Eligibility Requirements for Indenture Trustee.
The Indenture Trustee shall at all times satisfy the requirements of TIA
Section 310(a). The Indenture Trustee hereunder shall at all times be (i) a bank
organized and doing business under the laws of any state or the United States of
America, (ii) authorized under such laws to exercise corporate trust powers,
including taking title to the Trust Estate assets on behalf of the Noteholders,
(iii) having a combined capital and surplus of at least $50,000,000, (iv) whose
long-term deposits shall be rated at least "BBB" by S&P and Baa2 by Moody's
(except as provided herein) or such lower long-term deposit rating by S&P as may
be approved in writing by the Note Insurer and S&P or the Note Insurer and
Moody's, as the case may be (v) is subject to supervision or examination by
federal or state authority and (vi) is reasonably acceptable to the Note Insurer
as evidenced in writing. If such bank publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.06, the combined
capital and surplus of such bank shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.06, the Indenture Trustee shall resign
immediately in the manner and with the effect specified in Section 6.07 hereof.
Section 6.07 Resignation and Removal of the Indenture Trustee.
The Indenture Trustee may at any time resign and be discharged from the
trusts hereby and under the Sale and Servicing Agreement created by giving
written notice thereof to the Issuer, the Servicer, the Rating Agencies and the
Note Insurer, not less than 60 days before the date specified in such notice
when such resignation is to take effect. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor indenture trustee
which satisfies the eligibility requirements of Section 6.06 and acceptable to
the Note Insurer by written instrument, in duplicate, which instrument shall be
delivered to the resigning Indenture Trustee and to the successor indenture
trustee. A copy of such instrument shall be delivered to the Noteholders and the
Note Insurer by the Servicer. Unless a successor indenture trustee shall have
been so appointed and have accepted
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appointment within 60 days after the giving of such notice of resignation, the
resigning Indenture Trustee may petition any court of competent jurisdiction for
the appointment of a successor indenture trustee.
If at any time the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 6.06 and shall fail to resign after
written request therefor by any Servicer, or the Note Insurer, or if at any time
the Indenture Trustee shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or a receiver of the Indenture Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Indenture Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Servicer or the Note
Insurer may remove the Indenture Trustee and the Servicer shall, within 30 days
after such removal, appoint, subject to the approval of the Note Insurer, which
approval shall not be unreasonably withheld, a successor indenture trustee which
satisfies the eligibility requirements of Section 6.06 by written instrument, in
duplicate, which instrument shall be delivered to the Indenture Trustee so
removed and to the successor indenture trustee. A copy of such instrument shall
be delivered to the Noteholders, each Rating Agency and the Note Insurer by the
successor indenture trustee.
If the Indenture Trustee fails to perform in accordance with the terms of
this Agreement, the Class 1A Majority Noteholders and the Class 2A Majority
Noteholders (with the consent of the Note Insurer) or the Note Insurer may
remove the Indenture Trustee and appoint a successor indenture trustee
acceptable to the Note Insurer by written instrument or instruments, in
triplicate, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Servicer, one
complete set to the Indenture Trustee so removed and one complete set to the
successor Indenture Trustee so appointed. A copy of such instrument shall be
delivered to the Note Insurer by the Servicer.
The Seller may, in its discretion, remove the Indenture Trustee with the
consent of the Note Insurer, which consent shall not be unreasonably withheld,
without cause. The Servicer shall, within 30 days after such removal, appoint,
subject to the approval of the Note Insurer, which approval shall not be
unreasonably withheld, a successor indenture trustee which satisfies the
eligibility requirements of Section 6.06 by written instrument, in duplicate,
which instrument shall be delivered to the Indenture Trustee so removed and to
the successor indenture trustee. A copy of such instrument shall be delivered to
the Noteholders, each Rating Agency and the Note Insurer by the successor
indenture trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
successor indenture trustee pursuant to any of the provisions of this Section
shall become effective upon acceptance of appointment by the successor indenture
trustee which satisfies the eligibility requirements of Section 6.06 as provided
in Section 6.08.
Section 6.08 Successor Indenture Trustee.
Any successor indenture trustee appointed as provided in Section 6.07 shall
execute, acknowledge and deliver to the Servicer and to its predecessor
indenture trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor indenture trustee shall
become effective and such successor indenture trustee, without any further
41
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as indenture trustee herein. The predecessor indenture trustee
shall, to the extent necessary, deliver to the successor indenture trustee, or
Custodian, if any, all Mortgage Files and related documents and statements held
by it hereunder, and the Servicer and the predecessor indenture trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the successor
indenture trustee all such rights, powers, duties and obligations.
No successor indenture trustee shall accept appointment as provided in this
Section 6.08 unless at the time of such acceptance such successor indenture
trustee shall be eligible under the provisions of Section 6.06 and its
appointment shall not adversely affect the then current rating of the Notes.
Upon acceptance of appointment by a successor indenture trustee as provided
in this Section 6.08, the Servicer shall mail notice of the succession of such
indenture trustee hereunder to all Holders of Notes at their addresses as shown
in the Note Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor indenture trustee, the
successor indenture trustee shall cause such notice to be mailed at the expense
of the Servicer.
Section 6.09 Merger or Consolidation of Indenture Trustee.
Any Person into which the Indenture Trustee may be merged or converted or
with which it may be consolidated or any corporation or banking association
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation or bank succeeding to all or
substantially all of the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee hereunder, provided such
corporation or bank shall be eligible under the provisions of Section 6.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Written notice of any such merger or consolidation shall be given to the Note
Insurer.
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Indenture Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Indenture Trustee to act as co-indenture trustee or co-indenture trustees,
jointly with the Indenture Trustee, or separate indenture trustee or separate
indenture trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 6.10, such powers,
duties, obligations, rights and trusts as the Servicer and the Indenture Trustee
may consider necessary or desirable. Any such co-indenture trustee or separate
indenture trustee shall be approved by the Note Insurer. If the Servicer shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default shall have occurred and be
continuing, the Indenture Trustee alone shall have the power to make such
appointment. No co-indenture trustee or separate indenture
42
trustee hereunder shall be required to meet the terms of eligibility as a
successor indenture trustee under Section 6.06 and no notice to Holders of Notes
of the appointment of co-indenture trustee(s) or separate indenture trustee(s)
shall be required under Section 6.08.
In the case of any appointment of a co-indenture trustee or separate
indenture trustee pursuant to this Section 6.10, 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 indenture trustee or co-indenture trustee jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Indenture Trustee hereunder or as successor to the
Servicer hereunder), 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 Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate indenture trustee or co-indenture trustee at the direction of the
Indenture Trustee.
Any notice, request or other writing given to the Indenture Trustee shall
be deemed to have been given to each of the then separate indenture trustees and
co-indenture trustees, as effectively as if given to each of them. Every
instrument appointing any separate indenture trustee or co-indenture trustee
shall refer to this Agreement and the conditions of this Article XII. Each
separate indenture trustee and co-indenture trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee, and a copy thereof shall be forwarded by the Indenture Trustee to the
Note Insurer.
Any separate indenture trustee or co-indenture 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. The Indenture
Trustee shall not be responsible for any action or inaction of any such separate
indenture trustee or co-indenture trustee. If any separate indenture trustee or
co-indenture 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 indenture trustee.
Section 6.11 Tax Returns.
The Indenture Trustee, upon request, will promptly furnish the Issuer with
all such information the Indenture Trustee possesses as may reasonably be
required in connection with the Issuer's preparation of all tax returns or for
the purpose of the Issuer's responding to reasonable requests for information
made by Noteholders.
Section 6.12 Appointment of Custodians.
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The Indenture Trustee may, with the consent of the Servicer and the Note
Insurer, appoint one or more Custodians to hold all or a portion of the
Trustee's Mortgage Files as agent for the Indenture Trustee, by entering into a
Custodial Agreement substantially in the form attached as Exhibit B hereto.
Subject to this Article VI, the Indenture Trustee agrees to comply with the
terms of each Custodial Agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Noteholders and the Note
Insurer. Each Custodian shall be a depository institution subject to supervision
by federal or state authority and shall be qualified to do business in the
jurisdiction in which it holds any Indenture Trustee's Mortgage File. Each
Custodial Agreement may be amended only as provided in Section 14.02 of the Sale
and Servicing Agreement.
Section 6.13 Indenture Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture, the Sale and
Servicing Agreement or the Notes may be prosecuted and enforced by the Indenture
Trustee without the possession of any of the Notes or the production thereof in
any proceeding relating thereto, any such proceeding instituted by the Indenture
Trustee shall be brought in its own name or in its capacity as Indenture
Trustee. Any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel, be for the ratable benefit of the Noteholders
in respect of which such judgment has been recovered.
Section 6.14 Suits for Enforcement.
In case an Event of Servicer Default under the Sale and Servicing
Agreement or other default by the Servicer thereunder shall occur and be
continuing, the Indenture Trustee, in its discretion, but subject to Section
10.01 of the Sale and Servicing Agreement, may proceed to protect and enforce
its rights and the rights of the Noteholders under this Indenture and the Sale
and Servicing Agreement by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Indenture and the Sale and Servicing Agreement or in aid of
the execution of any power granted in this Indenture and the Sale and Servicing
Agreement or for the enforcement of any other legal, equitable or other remedy,
as the Indenture Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Indenture Trustee or the
Noteholders.
Section 6.15 Indenture Trustee's Fees and Expenses. The Indenture
Trustee shall be paid such fees and expenses as described in Section 12.01 of
the Sale and Servicing Agreement which shall be payable as described in Section
12.01 of the Sale and Servicing Agreement. Except as set forth in Section 12.01
of the Sale and Servicing Agreement, the Indenture Trustee shall have no claim
against the Issuer or the Trust Estate for any unpaid fees or expenses. In the
event of a default in the payment of such fees and expenses by the Seller or the
Servicer, the Indenture Trustee hereby agrees that it will continue to act as
Indenture Trustee hereunder and perform its duties hereunder and the duties of
the Indenture Trustee under the Basic Documents.
Section 6.16 Year 2000 Compliance.
The Indenture Trustee represents that it has used reasonable commercial
efforts to cure any deficiencies with regard to the manipulation or calculation
of dates beyond December 31, 1999 in
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the internally maintained computer software systems used by the Indenture
Trustee in the conduct of its trust business which would materially and
adversely affect its ability to perform its obligations under this Indenture and
the Sale and Servicing Agreement. The Indenture Trustee further represents that
it will use reasonable commercial best efforts to obtain reasonable assurances
from each third party vendor of licensed computer software systems used by the
Indenture Trustee in the conduct of its trust business that such vendors shall
use reasonable commercial efforts to cure any deficiencies with regards to the
manipulation or calculation of dates beyond December 31, 1999 in such systems
which would materially and adversely affect the ability of the Indenture Trustee
to perform its obligation under this Indenture and the Sale and Servicing
Agreement.
Section 6.17 Representations and Warranties. The Indenture Trustee hereby
represents that:
(i) The Indenture Trustee is duly organized and validly existing as a
national banking association in good standing under the laws of the United
States;
(ii) The Indenture Trustee has the power and authority to execute and
deliver this Indenture and to carry out its terms; and the execution,
delivery and performance of this Indenture have been duly authorized by all
necessary corporate action;
(iii) The consummation of the transactions contemplated by this
Indenture and the Sale and Servicing Agreement 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 of the Indenture Trustee under, its articles of organization or
bylaws or any agreement or other instrument to which the Indenture Trustee
is a party or by which it is bound; and
(iv) To the Indenture Trustee's best knowledge, there are no
proceedings or investigations concerning the Indenture Trustee, pending or
threatened before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over or its
properties: (A) asserting the invalidity of this Indenture, (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Indenture, or (C) seeking any determination or ruling that might
performance by of its obligations under, or the validity or enforceability
of, this Indenture.
Section 6.18 Directions to Indenture Trustee. The Indenture Trustee is
hereby directed by the Issuer:
(a) to accept the pledge of the Mortgage Loans and hold the assets of
the Trust Estate in trust for the Noteholders and the Note
Insurer;
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(b) to authenticate and deliver the Notes substantially in the form
prescribed by Exhibits A-1 and A-2 in accordance with the terms
of this Indenture; and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
Section 6.19 The Agents. The provisions of this Indenture relating to the
limitations of the Indenture Trustee's liability and to its indemnity shall
inure also to the Paying Agent and Note Registrar.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Note Registrar will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after each Record Date, a list, in
such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date, (b) at such other
times as the Indenture Trustee and the Note Insurer may request in writing,
within 30 days after receipt by the Note Registrar of any such request, a list
of similar form and content as of a date not more than 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 to the
Indenture Trustee.
Section 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01
hereof and the names and addresses of Holders of the Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss.312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA ss.312(c).
Section 7.03. Reports of Issuer. (a)(i) The Indenture Trustee shall file
with the Commission and the Note Insurer on behalf of the Issuer, with a copy to
the Issuer within 15 days before the Issuer is required to file the same with
the Commission, the annual reports and the information, documents and other
reports (or 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) The Indenture Trustee shall file with the Commission and the Note
Insurer, on behalf of the Issuer, in accordance with rules and regulations
prescribed from time to time by the Commission such additional information,
documents and reports with respect to compliance by the Issuer with the
conditions and covenants of this Indenture as may be required from time to
time by such rules and regulations; and
(iii) The Indenture Trustee shall supply (and the Indenture Trustee
shall transmit by mail to the Note Insurer and all Noteholders described in
TIA ss.313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of this
Section 7.03(a) and by rules and regulations prescribed from time to time
by the Commission.
47
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA ss.313(a),
within 60 days after each January 29 beginning with January 29, 2000, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss.313(c) a
brief report dated as of such date that complies with TIA ss.313(a). The
Indenture Trustee also shall comply with TIA ss.313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee and the Note Insurer if and when the Notes are listed on any stock
exchange.
Section 7.05. Statements to Noteholders. With respect to each Payment Date,
the Indenture Trustee shall deliver to each Noteholder, Certificateholder, the
Note Insurer, the Seller, the Owner Trustee, the Certificate Paying Agent and
each Rating Agency, copies of each Servicer's Certificate received pursuant to
Section 6.08 of the Sale and Servicing Agreement.
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ARTICLE VIII
ACCOUNTS, DISTRIBUTIONS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02. [Reserved].
Section 8.03. Officer's Certificate. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.05(a) hereof, accompanied by copies of any instruments to
be executed, and the Indenture Trustee shall also require, as a condition to
such action, an Officer's Certificate, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with.
Section 8.04. Termination Upon Distribution to Noteholders. This Indenture
and the respective obligations and responsibilities of the Issuer and the
Indenture Trustee created hereby shall terminate upon the distribution to
Noteholders, the Note Insurer, the Certificate Paying Agent on behalf of the
Certificateholders and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III and the Sale and Servicing Agreement;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
Section 8.05. Release of Trust Estate. (a) Subject to the payment of its
fees and expenses, the Indenture Trustee may, and when required by the
provisions of this Indenture or the Sale and Servicing Agreement shall, execute
instruments to release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee as provided in
Article VIII hereunder shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent, or see to
the application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no Notes
Outstanding, (ii) all sums due to the Note Insurer have been paid and (iii) all
sums due to the Indenture Trustee
49
pursuant to this Indenture have been paid, release any remaining portion of the
Trust Estate that secured the Notes from the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this
Indenture pursuant to Section 8.05(a) only upon receipt of a request from the
Issuer accompanied by an Officers' Certificate and an Opinion of Counsel stating
that all applicable requirements have been satisfied and, if required by the
TIA, Independent Certificates in accordance with TIA Section 314(c) and 314(d)
meeting the applicable requirements as described herein.
Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of any
Note, the Holder thereof agrees to surrender such Note to the Indenture Trustee
promptly, prior to such Noteholder's receipt of the final payment thereon.
Section 8.07. No Redemption of the Notes. The Issuer shall not have the
right to redeem the Notes. However, the Servicer or the Issuer, as
majorityholder of the Certificates, shall have the option to purchase the
Mortgage Loans and any properties acquired in respect thereof pursuant to the
terms of Section 11.01 of the Sale and Servicing Agreement, thereby effecting a
redemption in full of the Notes.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with prior consent of the
Note Insurer, notice to the Rating Agencies-, the Issuer and the Indenture
Trustee, when authorized by an Issuer Request, at any time and from time to
time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the TIA as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(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;
(vi) to make any other provisions with respect to matters or questions
arising under this Indenture or in any supplemental indenture; provided,
that such action shall not materially and adversely affect the interests of
the Holders of the Notes;
(vii) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI hereof; or
(viii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA;
provided, however, that no such indenture supplements shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel that
entering into such indenture supplement will
51
not result in a "substantial modification" of the Notes under Treasury
Regulation Section 1.1001.3 or adversely affect the status of the Notes as
indebtedness for federal income tax purposes.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Request, may, also without the consent of any of the Holders of the Notes but
with prior notice to the Note Insurer the Rating Agencies and the consent of the
Note 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 Holders of the Notes under this Indenture; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, (i) adversely
affect in any material respect the interests of any Noteholder or (ii) if 100%
of the Certificates are not owned by the Seller, cause the Issuer to be subject
to an entity level tax for federal income tax purposes.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and, with the consent of the Note
Insurer and the Holders of not less than a majority of the Note Principal
Balances of the Notes affected thereby, by Act (as defined in Section 10.03
hereof) of such Holders delivered to the Issuer and the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each Note
affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof or the
interest rate thereon, change the provisions of this Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Trust Estate to payment of principal of or interest on the Notes, or change
any place of payment where, or the coin or currency in which, any Note or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or after the respective due
dates thereof;
(ii) reduce the percentage of the Note Principal Balances 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;
(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding" or modify or alter the exception in the
definition of the term "Holder";
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(iv) reduce the percentage of the Note Principal Balances of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04 hereof;
(v) modify any provision of this Section 9.02 except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Note affected thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation of
any of the individual components of such calculation); or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien of this
Indenture; and provided, further, that such action shall not, as evidenced
by an Opinion of Counsel, cause the Issuer (if 100% of the Certificates are
not owned by the Seller) 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.
It shall not be necessary for any Act of Noteholders under this Section
9.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02 hereof, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Indenture Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
that affects the Indenture Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
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Section 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
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ARTICLE X
MISCELLANEOUS
Section 10.01. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and the Note 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 and (ii) an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with;
(4) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with; and
(5) if the signatory of such certificate or opinion is required to be
Independent, the statement required by the definition of the term
"Independent".
(b)(i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 10.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee and the Note
Insurer 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 and a report from a nationally recognized accounting firm verifying
such value.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Note Insurer 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
55
and the Note Insurer a certificate from a nationally recognized accounting
firm as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the
basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or more
of the Note Principal Balances of the Notes, but such a certificate need
not be furnished with respect to any securities so deposited, if the fair
value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Note
Principal Balances of the Notes.
(iii) Except in the event of servicing releases, whenever any property
or securities are to be released from the lien of this Indenture, the
Issuer shall also furnish to the Indenture Trustee and the Note Insurer 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 and the Note Insurer 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 and the
Note Insurer an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property, other than
property as contemplated by clause (v) below or securities released from
the lien of this Indenture since the commencement of the 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 Note Principal
Balances 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 Note Principal Balances of the Notes.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Seller or the
Issuer, stating that the information with respect to such factual matters is in
the possession of the Seller or the Issuer, unless such counsel knows, or in the
exercise
56
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01
hereof) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 10.03 hereof.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any manner that the Indenture Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 10.04. Notices, etc., to Indenture Trustee, Note Insurer, Issuer
and Rating Agencies. Any request, demand, authorization, direction, notice,
consent, waiver or Act of
57
Noteholders or other documents provided or permitted by this Indenture shall be
in writing and if such request, demand, authorization, direction, notice,
consent, waiver or act of Noteholders is to be made upon, given or furnished to
or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Indenture Trustee at the Corporate Trust Office.
The Indenture Trustee shall promptly transmit any notice received by it
from the Noteholders to the Issuer, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to: AFC Trust Series
1999-3, in care of OWNER TRUSTEE, Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, DE 19890, Attention: AFC Trust
Series 1999-3, or at any other address previously furnished in writing to
the Indenture Trustee by the Issuer. The Issuer shall promptly transmit any
notice received by it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies or the Note Insurer by
the Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered or mailed first-class postage pre-paid, to (i) in the case
of Standard & Poor's, at the following address: 55 Water Street, New York, N.Y.
10041, (ii) in the case of Moody's, at the following address: 99 Church Street,
New York, N.Y. 10007; or as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties and (iii) in the case
of the Note Insurer, at the following address: Financial Guaranty Insurance
Company, 115 Broadway, New York, New York 10006, Attention: Research and Risk
Management - AFC Trust Series 1999-3.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Person's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of
58
giving such notice as shall be satisfactory to the Indenture Trustee shall be
deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.
Section 10.06. 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 ss.ss.310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 10.07. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 10.08. Successors and Assigns. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.
Section 10.09. Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 10.10. Benefits of Indenture. The Note Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture. To the extent that this Indenture confers upon or gives or grants to
the Note Insurer any right, remedy or claim under or by reason of this
Indenture, the Note Insurer may enforce any such right, remedy or claim
conferred, given or granted hereunder. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders and the Note Insurer,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 10.11. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 10.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
59
Section 10.13. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 10.14. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense, upon the written request of the
Indenture Trustee and accompanied by an Opinion of Counsel (which may be counsel
to the Indenture Trustee or any other counsel reasonably acceptable to the
Indenture Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
Section 10.15. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
Section 10.16. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Depositor, the Seller or
the Issuer, or join in any institution against the Depositor, the Seller or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the Basic Documents. This Section 10.16 will
survive for one year following the termination of this Indenture.
Section 10.17. Inspection. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee and the Note
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 Note Insurer 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
60
to the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
Section 10.18. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee (in such capacity, the "Owner Trustee") under the Trust Agreement, in
the exercise of the powers and authority conferred and vested in it under the
Trust Agreement, (b) each of the representations, undertakings and agreements
herein made on the part of the Owner Trustee is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose for binding only the Owner
Trustee and (c) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of the Owner
Trustee or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Owner Trustee
under this Agreement or the other related documents.
61
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
AFC Trust Series 1999-3,
as Issuer
By: Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By: /s/ W. Chris Sponenberg
---------------------------
LaSalle Bank National Association,
as Indenture Trustee, as Paying Agent and as Note Registrar
By: /s/ Shashank Mishra
---------------------------
Name: Shashank Mishra
Title: First Vice President
62
STATE OF ___________ )
) ss.:
COUNTY OF ____________ )
On this _____ day of _______________________, before me personally appeared
_____________________ to me known, who being by me duly sworn, did depose and
say, that he is the ___________________________ of the Owner Trustee, one of the
corporations described in and which executed the above instrument; that she
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation; and that she signed her name thereto by like order.
Notary Public
___________________________________________
NOTARY PUBLIC
My Commission expires _____________________
[NOTARIAL SEAL]
STATE OF )
) ss.:
COUNTY OF )
On this _____ day of ____________________, before me personally appeared
____________________ to me known, who being by me duly sworn, did depose and
say, that he is the ____________________ of _____________________, as Indenture
Trustee, one of the corporations described in and which executed the above
instrument; that she knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation; and that she signed her name thereto
by like order.
Notary Public
_____________________________________________________
[NOTARIAL SEAL]
EXHIBIT A-1
FORM OF CLASS 1A NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS NOTE.
PRINCIPAL OF THIS NOTE IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
BY ACQUIRING A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT EITHER (1)
IT IS NOT ACQUIRING THE NOTE WITH THE ASSETS OF AN EMPLOYEE BENEFIT PLAN WITHIN
THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA") OR A PLAN WITHIN THE MEANING OF SECTION 4975(E)(1) OF
THE INTERNAL REVENUE CODE OF 1986 ("CODE"); OR (2) THE ACQUISITION AND HOLDING
OF THE NOTE WILL NOT GIVE RISE TO A NONEXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
AFC MORTGAGE LOAN ASSET BACKED NOTES, SERIES 1999-3
CLASS 1A
AGGREGATE NOTE PRINCIPAL
BALANCE:$
INITIAL NOTE PRINCIPAL
BALANCE OF THIS NOTE: NOTE NO.
$
PERCENTAGE INTEREST: ____% CUSIP NO.
65
AFC Trust Series 1999-3 (the "Issuer"), a Delaware business trust, for
value received, hereby promises to pay to CEDE & CO. or registered assigns, the
principal sum of______________________________($_________________) in monthly
installments on the twenty-fifth day of each month or, if such day is not a
Business Day, the next succeeding Business Day (each a "Payment Date"),
commencing in October 1999 and ending on or before September 28, 2029 and to pay
interest on the Note Principal Balance of this Class A Note (this "Note")
outstanding from time to time as provided below.
This Note is one of a duly authorized issue of the Issuer's AFC Mortgage
Loan Asset Backed Notes, Series 1999-3 (the "Notes"), issued under an Indenture
dated as of September 1, 1999 (the "Indenture"), between the Issuer and LaSalle
Bank National Association, as indenture trustee (the "Indenture Trustee", which
term includes any successor Indenture Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Indenture
Trustee, and the Holders of the Notes and the terms upon which the Notes are to
be authenticated and delivered. All terms used in this Note which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.
Payments of principal and interest on this Note will be made on each
Payment Date to the Noteholder of record as of the related Record Date. On each
Payment Date, Noteholders will be entitled to receive interest payments in an
aggregate amount equal to the Class 1A Interest Remittance Amount for such
Payment Date, together with principal payments in an aggregate amount equal to
the Class 1A Principal Remittance Amount, if any, for such Payment Date.
The principal of, and interest on, this Note are due and payable as
described in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Note shall
be equal to this Note's pro rata share of the aggregate payments on all Notes as
described above, and shall be applied as between interest and principal as
provided in the Indenture.
Financial Guaranty Insurance Company (the "Note Insurer"), in consideration
of the payment of the premium and subject to the terms of the financial guaranty
insurance policy (the "Note Insurance Policy") issued thereby, has
unconditionally and irrevocably guaranteed the payment of the Insured Payment
with respect to each Payment Date. The Note Insurance Policy will not cover any
Available Funds Cap Carry-Forward Amount.
All principal and interest accrued on the Notes, if not previously paid,
will become finally due and payable at the Final Scheduled Payment Date.
The Notes are subject to redemption in whole, but not in part, by the
Servicer on any Payment Date on which the aggregate Principal Balance of the
Mortgage Loans is less than or equal to 5% of (i) the aggregate Principal
Balance of the Group 1 Mortgage Loans as of the Cut-off Date and (ii) the amount
on deposit in the Group 1 Pre-Funding Account on the Closing Date.
The Issuer shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the
66
Notes. The assets included in the Trust Estate will be the sole source of
payments on the Notes, and each Holder hereof, by its acceptance of this Note,
agrees that (i) such Note will be limited in right of payment to amounts
available from the Trust Estate as provided in the Indenture and (ii) such
Holder shall have no recourse to the Issuer, the Seller, the Owner Trustee, the
Indenture Trustee, the Servicer or any of their respective affiliates, or to the
assets of any of the foregoing entities, except the assets of the Issuer pledged
to secure the Notes pursuant to the Indenture and the rights conveyed to the
Issuer under the Indenture.
Any payment of principal or interest payable on this Note which is
punctually paid on the applicable Payment Date shall be paid to the Person in
whose name such Note is registered at the close of business on the Record Date
for such Payment Date by check mailed to such person's address as it appears in
the Note Register on such Record Date, except for the final installment of
principal and interest payable with respect to such Note, which shall be payable
as provided below. Notwithstanding the foregoing, upon written request with
appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $5,000,000) delivered to the
Indenture Trustee at least five Business Days prior to the Record Date, any
payment of principal or interest, other than the final installment of principal
or interest, shall be made by wire transfer to an account in the United States
designated by such Holder. All reductions in the principal amount of a Note (or
one or more Predecessor Notes) effected by payments of principal made on any
Payment Date shall be binding upon all Holders of this Note and of any Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Note. The final
payment of this Note shall be payable upon presentation and surrender thereof on
or after the Payment Date thereof at the Corporate Trust Office or the office or
agency of the Issuer maintained by it for such purpose pursuant to Section 3.02
of the Indenture.
Subject to the foregoing provisions, each Note delivered under the
Indenture, upon registration of transfer of or in exchange for or in lieu of any
other Note shall carry the right to unpaid principal and interest that were
carried by such other Note.
If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Notes, the Notes may become or be declared due
and payable in the manner and with the effect provided in the Indenture. If any
such acceleration of maturity occurs prior to the payment of the entire unpaid
Note Principal Balance of the Notes, the amount payable to the Holder of this
Note will be equal to the sum of the unpaid Note Principal Balance of this Note,
together with accrued and unpaid interest thereon as described in the Indenture.
The Indenture provides that, notwithstanding the acceleration of the maturity of
the Notes, under certain circumstances specified therein, all amounts collected
as proceeds of the Trust Estate securing the Notes or otherwise shall continue
to be applied to payments of principal of and interest on the Notes as if they
had not been declared due and payable.
By acquiring a Note, the purchaser will be deemed to represent that either
(1) it is not acquiring the Note with the assets of an employee benefit plan
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986 ("Code"); or (2) the acquisition
and holding of the note will not give rise to a nonexempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
67
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the Note Register of the
Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Note at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Notes
of any authorized denominations and of a like aggregate initial Note Principal
Balance, will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note is registered as the owner
of such Note (i) on the applicable Record Date for the purpose of making
payments and interest of such Note, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer or the Holders of a
majority of all Notes at the time outstanding. The Indenture also contains
provisions permitting the Note Insurer or the Holders of Notes representing
specified percentages of the aggregate Note Principal Balance of the Notes on
behalf of the Holders of all the Notes (with the consent of the Note Insurer),
to waive any past Default under the Indenture and its consequences. Any such
waiver by the Note Insurer or the Holder, at the time of the giving thereof, of
this Note (or any one or more Predecessor Notes) shall bind the Holder of every
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 such
Note. The Indenture also permits the Issuer and the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Notes issued thereunder but with the consent of
the Note Insurer.
Initially, the Notes will be registered in the name of CEDE & Co. as
nominee of DTC, acting in its capacity as the Depository for the Notes. The
Notes will be delivered by the clearing agency in denominations as provided in
the Indenture and subject to certain limitations therein set forth. The Notes
are exchangeable for a like aggregate initial Note Principal Balance of Notes of
different authorized denominations, as requested by the Holder surrendering
same.
Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.
AS PROVIDED IN THE INDENTURE, THIS NOTE AND THE INDENTURE CREATING THIS
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
68
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by OWNER TRUSTEE, not in its individual capacity but solely as Owner
Trustee.
Dated: September __, 1999
AFC TRUST SERIES 1999-3
BY: Wilmington Trust Company, not in its
individual capacity but solely in its
capacity as Owner Trustee
By:_______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class 1A Notes referred to in the within-mentioned Indenture.
LaSalle Bank National Association,
as Indenture Trustee
By:______________________________________
Authorized Signatory
69
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of the Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -- ________ Custodian ___________________________
(Cust) (Minor)
under Uniform Gifts to Minor Act ______________
(State)
Additional abbreviations may also be used though not in the above list.
70
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:
___________________________________________
___________________________________________
___________________________________________
(Please print or typewrite name and address, including zip code, 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 by ______________________________________________________
NOTICE: The signature(s) to this assignment must correspond with the name
as it appears upon the face of the within Note in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange or another national securities exchange. Notarized or witnessed
signatures are not acceptable.
71
EXHIBIT A-2
FORM OF CLASS 2A NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT OF
PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST ESTATE AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS ON
THIS NOTE.
PRINCIPAL OF THIS NOTE IS PAYABLE OVER TIME AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
BY ACQUIRING A NOTE, THE PURCHASER WILL BE DEEMED TO REPRESENT THAT EITHER (1)
IT IS NOT ACQUIRING THE NOTE WITH THE ASSETS OF AN EMPLOYEE BENEFIT PLAN WITHIN
THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA") OR A PLAN WITHIN THE MEANING OF SECTION 4975(E)(1) OF
THE INTERNAL REVENUE CODE OF 1986 ("CODE"); OR (2) THE ACQUISITION AND HOLDING
OF THE NOTE WILL NOT GIVE RISE TO A NONEXEMPT PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
AFC MORTGAGE LOAN ASSET BACKED NOTES, SERIES 1999-3
CLASS 2A
AGGREGATE NOTE PRINCIPAL
BALANCE:$
INITIAL NOTE PRINCIPAL
BALANCE OF THIS NOTE: NOTE NO.
$
PERCENTAGE INTEREST: ____% CUSIP NO.
72
AFC Trust Series 1999-3 (the "Issuer"), a Delaware business trust, for
value received, hereby promises to pay to CEDE & CO. or registered assigns, the
principal sum of________________________________________($_________________) in
monthly installments on the twenty-fifth day of each month or, if such day is
not a Business Day, the next succeeding Business Day (each a "Payment Date"),
commencing in October 1999 and ending on or before September 28, 2029 and to pay
interest on the Note Principal Balance of this Class A Note (this "Note")
outstanding from time to time as provided below.
This Note is one of a duly authorized issue of the Issuer's AFC Mortgage
Loan Asset Backed Notes, Series 1999-3 (the "Notes"), issued under an Indenture
dated as of September 1, 1999 (the "Indenture"), between the Issuer and LaSalle
Bank National Association, as indenture trustee (the "Indenture Trustee", which
term includes any successor Indenture Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Indenture
Trustee, and the Holders of the Notes and the terms upon which the Notes are to
be authenticated and delivered. All terms used in this Note which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.
Payments of principal and interest on this Note will be made on each
Payment Date to the Noteholder of record as of the related Record Date. On each
Payment Date, Noteholders will be entitled to receive interest payments in an
aggregate amount equal to the Class 2A Interest Remittance Amount for such
Payment Date, together with principal payments in an aggregate amount equal to
the Class 2A Principal Remittance Amount, if any, for such Payment Date.
The principal of, and interest on, this Note are due and payable as
described in the Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Note shall
be equal to this Note's pro rata share of the aggregate payments on all Notes as
described above, and shall be applied as between interest and principal as
provided in the Indenture.
Financial Guaranty Insurance Company (the "Note Insurer"), in consideration
of the payment of the premium and subject to the terms of the financial guaranty
insurance policy (the "Note Insurance Policy") issued thereby, has
unconditionally and irrevocably guaranteed the payment of the Insured Payment
with respect to each Payment Date. The Note Insurance Policy will not cover any
Available Funds Cap Carry-Forward Amount.
All principal and interest accrued on the Notes, if not previously paid,
will become finally due and payable at the Final Scheduled Payment Date.
The Notes are subject to redemption in whole, but not in part, by the
Servicer on any Payment Date on which the aggregate Principal Balance of the
Mortgage Loans is less than or equal to 5% of (i) the aggregate Principal
Balance of the Group 2 Mortgage Loans as of the Cut-off Date and (ii) the
aggregate amounts on deposit in the Group 2 Pre-Funding Account on the Closing
Date.
The Issuer shall not be liable upon the indebtedness evidenced by the Notes
except to the extent of amounts available from the Trust Estate which
constitutes security for the payment of the
73
Notes. The assets included in the Trust Estate will be the sole source of
payments on the Notes, and each Holder hereof, by its acceptance of this Note,
agrees that (i) such Note will be limited in right of payment to amounts
available from the Trust Estate as provided in the Indenture and (ii) such
Holder shall have no recourse to the Issuer, the Seller, the Owner Trustee, the
Indenture Trustee, the Servicer or any of their respective affiliates, or to the
assets of any of the foregoing entities, except the assets of the Issuer pledged
to secure the Notes pursuant to the Indenture and the rights conveyed to the
Issuer under the Indenture.
Any payment of principal or interest payable on this Note which is
punctually paid on the applicable Payment Date shall be paid to the Person in
whose name such Note is registered at the close of business on the Record Date
for such Payment Date by check mailed to such person's address as it appears in
the Note Register on such Record Date, except for the final installment of
principal and interest payable with respect to such Note, which shall be payable
as provided below. Notwithstanding the foregoing, upon written request with
appropriate instructions by the Holder of this Note (holding an aggregate
initial Note Principal Balance of at least $5,000,000) delivered to the
Indenture Trustee at least five Business Days prior to the Record Date, any
payment of principal or interest, other than the final installment of principal
or interest, shall be made by wire transfer to an account in the United States
designated by such Holder. All reductions in the principal amount of a Note (or
one or more Predecessor Notes) effected by payments of principal made on any
Payment Date shall be binding upon all Holders of this Note and of any Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Note. The final
payment of this Note shall be payable upon presentation and surrender thereof on
or after the Payment Date thereof at the Corporate Trust Office or the office or
agency of the Issuer maintained by it for such purpose pursuant to Section 3.02
of the Indenture.
Subject to the foregoing provisions, each Note delivered under the
Indenture, upon registration of transfer of or in exchange for or in lieu of any
other Note shall carry the right to unpaid principal and interest that were
carried by such other Note.
If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Notes, the Notes may become or be declared due
and payable in the manner and with the effect provided in the Indenture. If any
such acceleration of maturity occurs prior to the payment of the entire unpaid
Note Principal Balance of the Notes, the amount payable to the Holder of this
Note will be equal to the sum of the unpaid Note Principal Balance of the Notes,
together with accrued and unpaid interest thereon as described in the Indenture.
The Indenture provides that, notwithstanding the acceleration of the maturity of
the Notes, under certain circumstances specified therein, all amounts collected
as proceeds of the Trust Estate securing the Notes or otherwise shall continue
to be applied to payments of principal of and interest on the Notes as if they
had not been declared due and payable.
By acquiring a Note, the purchaser will be deemed to represent that either
(1) it is not acquiring the Note with the assets of an employee benefit plan
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a plan within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986 ("Code"); or (2) the acquisition
and holding of the note will not give rise to a nonexempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
74
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the Note Register of the
Issuer. Upon surrender for registration of transfer of, or presentation of a
written instrument of transfer for, this Note at the office or agency designated
by the Issuer pursuant to the Indenture, accompanied by proper instruments of
assignment in form satisfactory to the Indenture Trustee, one or more new Notes
of any authorized denominations and of a like aggregate initial Note Principal
Balance, will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note is registered as the owner
of such Note (i) on the applicable Record Date for the purpose of making
payments and interest of such Note, and (ii) on any other date for all other
purposes whatsoever, as the owner hereof, whether or not this Note be overdue,
and neither the Issuer, the Indenture Trustee nor any such agent of the Issuer
or the Indenture Trustee shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer or the Holders of a
majority of all Notes at the time outstanding. The Indenture also contains
provisions permitting the Note Insurer or the Holders of Notes representing
specified percentages of the aggregate Note Principal Balance of the Notes on
behalf of the Holders of all the Notes (with the consent of the Note Insurer),
to waive any past Default under the Indenture and its consequences. Any such
waiver by the Note Insurer or the Holder, at the time of the giving thereof, of
this Note (or any one or more Predecessor Notes) shall bind the Holder of every
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 such
Note. The Indenture also permits the Issuer and the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Holders of the Notes issued thereunder but with the consent of
the Note Insurer.
Initially, the Notes will be registered in the name of CEDE & Co. as
nominee of DTC, acting in its capacity as the Depository for the Notes. The
Notes will be delivered by the clearing agency in denominations as provided in
the Indenture and subject to certain limitations therein set forth. The Notes
are exchangeable for a like aggregate initial Note Principal Balance of Notes of
different authorized denominations, as requested by the Holder surrendering
same.
Unless the Certificate of Authentication hereon has been executed by the
Indenture Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.
AS PROVIDED IN THE INDENTURE, THIS NOTE AND THE INDENTURE CREATING THIS
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
75
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by OWNER TRUSTEE, not in its individual capacity but solely as Owner
Trustee.
Dated: September __, 1999
AFC TRUST SERIES 1999-3
BY: Wilmington Trust Company, not in its
individual capacity but solely in its
capacity as Owner Trustee
By:_______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class 2A Notes referred to in the within-mentioned Indenture.
LaSalle Bank National Association,
as Indenture Trustee
By:______________________________________
Authorized Signatory
76
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of the Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -- _____________ Custodian ________________________
(Cust) (Minor)
under Uniform Gifts to Minor Act ________________
(State)
Additional abbreviations may also be used though not in the above list.
77
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:
___________________________________________
___________________________________________
___________________________________________
(Please print or typewrite name and address, including zip code, 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 by ______________________________________________________
NOTICE: The signature(s) to this assignment must correspond with the name
as it appears upon the face of the within Note in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by a commercial bank or by a member firm of the New York Stock
Exchange or another national securities exchange. Notarized or witnessed
signatures are not acceptable.
78
EXHIBIT B
CUSTODIAL AGREEMENT
Dated _____________, 199_
______________________________, a ____________________, as Indenture
Trustee (the "Indenture Trustee") and ___________________, a _________________
("________________"), agree as follows:
WHEREAS, concurrently herewith, the Indenture Trustee, AFC Trust Series
1999-3 (the "Issuer"), Superior Bank FSB (the "Seller") and Superior Bank FSB
(the AServicer) are entering into a Sale and Servicing Agreement, dated as of
September 1, 1999, relating to AFC Mortgage Loan Asset Backed Notes, Series
1999-3 (the "Sale Agreement", the terms defined therein being used herein with
the same meaning) pursuant to which the Seller shall transfer, assign, set-over
and otherwise convey to the Issuer, without recourse, all of the Seller's right,
title and interest in and to the mortgage loans consisting of Group 1 and Group
2 identified in Exhibits H-1 and H-2 to the Sale Agreement (the "Mortgage
Loans"), other than as to the Depositor's Yield;
WHEREAS, pursuant to the Indenture, dated as of September 1, 1999 between
the Issuer and the Indenture Trustee, the Issuer shall pledge and assign the
Mortgage Loans for the benefit of the Noteholder; and
WHEREAS, in connection with such transfer, pledge and assignment and
pursuant to the Indenture, the Indenture Trustee shall hold, directly or
pursuant to a custodial agreement, the Trustee's Mortgage Files;
WITNESSETH THAT, in consideration of the premises and of the mutual
agreements herein contained, _________________ and the Indenture Trustee agree
as follows:
1. Appointment as Custodian; Acknowledgment of Receipt; Fees. Subject to
the terms and conditions herein, the Indenture Trustee hereby appoints
________________, and ______________ hereby accepts such appointment, as its
Custodian to maintain custody of the Trustee's Mortgage Files.
__________________ hereby acknowledges receipt of the Mortgage Notes, the
Mortgages, the assignments and other documents relating to the Mortgage Loans
referred to in Section 2.04, except for the items referred to in Section
2.04(f), of the Sale Agreement. The Servicer shall be liable for all of
_______________________ fees under this Agreement.
2. Maintenance of Office. __________________ agrees to maintain each
Trustee's Mortgage File identified in Section 2.04 of the Sale Agreement, which
is incorporated herein by reference, at the office of
_________________________________________________ located at
__________________________________________________________ or at such other
office of _________________ in ____________________ as ________________ shall
designate from time to time after giving the Trustee 30 days' prior written
notice.
79
3. Duties of Custodian. As Custodian, _____________ shall have and
perform the following powers and duties:
(a) Safekeeping. To segregate the Trustee's Mortgage Files
from all other mortgages and mortgage notes and similar records in its
possession, to identify the Trustee's Mortgage Files as being held and
to hold the Trustee's Mortgage Files for and on behalf of the
Indenture Trustee for the benefit of all present and future
Noteholders, to maintain accurate records pertaining to each Trustee's
Mortgage Files as will enable the Indenture Trustee to comply with the
terms and conditions of the Sale Agreement, to maintain at all times a
current inventory thereof and to conduct periodic physical inspections
of the Trustee's Mortgage Files held by it under this Agreement in
such a manner as shall enable the Indenture Trustee and
_________________ to verify the accuracy of such record-keeping,
inventory and physical possession. _________________ will promptly
report to the Indenture Trustee any failure on its part to hold the
Trustee's Mortgage Files as herein provided and promptly take
appropriate action to remedy any such failure.
(b) Release of Documents. To release any Mortgage Note and
Mortgage in the Trustee's Mortgage Files as provided in the Sale
Agreement.
(c) Administration; Reports. In general, to attend to all
non-discretionary details in connection with maintaining custody of
the Trustee's Mortgage Files on behalf of the Indenture Trustee. In
addition, ________________ shall assist the Indenture Trustee
generally in the preparation of reports to Securityholders or to
regulatory bodies to the extent necessitated by ________________
custody of the Trustee's Mortgage Files.
4. Access to Records. __________________ shall permit the Indenture
Trustee or its duly authorized depositors, attorneys or auditors and those
persons permitted access pursuant to Section 5.13 of the Sale Agreement to
inspect the Trustee's Mortgage Files and the books and records maintained by
__________________ pursuant hereto at such times as they may reasonably request,
subject only to compliance with the terms of the Sale Agreement.
5. Instructions; Authority to Act. ______________ shall be deemed to
have received proper instructions with respect to the Trustee's Mortgage Files
upon its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee. A certified copy of a resolution of the Board of Directors of
the Indenture Trustee may be accepted by _______________ as conclusive evidence
of the authority of any such officer to act and may be considered as in full
force and effect until receipt of written notice to the contrary by
______________ from the Indenture Trustee. Such instructions may be general or
specific in terms.
6. Indemnification by . _________________ agrees to indemnify the Indenture
Trustee for any and all liabilities, obligations, losses, damages, payments,
costs or expenses, including attorneys fees, of any kind whatsoever which may be
imposed on, incurred by or asserted against the Indenture Trustee as the result
of any act or omission in any way relating to the maintenance and custody by
___________________ of the Trustee's Mortgage Files; provided,
80
however, that ___________________ shall not be liable for any portion of any
such amount resulting from the gross negligence or wilful misconduct of the
Indenture Trustee.
7. Advice of Counsel. __________________ and the Indenture Trustee further
agree that ____________________ shall be entitled to rely and act upon the
advice of counsel with respect to its performance hereunder as Custodian and
shall be without liability for any action reasonably taken pursuant to such
advice, provided that such action is not in violation of applicable Federal or
State law. This paragraph shall not negate _______________ obligations under
paragraph 6 above.
8. Effective Period, Termination and Amendment, and Interpretive and
Additional Provisions. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until terminated as
hereinafter provided, and may be amended at any time by mutual agreement of the
parties hereto. This Agreement may be terminated by either party in a writing
delivered or mailed, postage prepaid, to the other party, such termination to
take effect no sooner than sixty (60) days after the date of such delivery or
mailing. Concurrently with, or as soon as practicable after, the termination of
this Agreement, _________________ shall redeliver the Trustee's Mortgage Files
to the Indenture Trustee at such place as the Indenture Trustee may reasonably
designate. In connection with the administration of this Agreement,
________________ and the Indenture Trustee may agree from time to time upon the
interpretation of the provisions of this Agreement as may in their opinion by
consistent with the general tenor and purposes of this Agreement, any such
interpretation to be signed and annexed hereto.
9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
10. Notices. Notices and other writings shall be delivered or mailed,
postage prepaid, to the Indenture Trustee at, or to
____________________________________________________________________________ at,
____________________________________, Attention: ______________________; or to
such other address as the Indenture Trustee or ________________ may hereafter
specify in writing. Notices or other writings shall be effective only upon
actual receipt by the parties.
11. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the Indenture Trustee and ____________________ and their
respective successors and assigns. Concurrently with the appointment of a
successor trustee as provided in Section ___ of the Indenture, the Indenture
Trustee and ___________________ shall amend this Agreement to make said
successor trustee the successor to the Indenture Trustee hereunder.
12. Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
13. Fees and Expenses. All fees and expenses of the Custodian shall be paid
by the Indenture Trustee as have been separately agreed upon before the date
hereof pursuant to a
81
separate fee agreement between the Custodian and the Indenture Trustee. In no
event shall any fees and expenses of the Custodian become fees or expenses of
the Issuer, the Seller or Servicer.
82
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
LASALLE BANK NATIONAL ASSOCIATION,
as Indenture Trustee under the
Indenture referred to above
By: ____________________________________
_______________________________________,
as Custodian
By: ____________________________________
83
EXHIBIT C
[RESERVED]
84
EXHIBIT D
[RESERVED]
85
EXHIBIT E
CERTIFICATE OF NON-FOREIGN STATUS
This Certificate of Non-Foreign Status ("Certificate") is delivered
pursuant to Section 4.02 of the Indenture (the "Indenture"), dated as of
September 1, 1999, between AFC Trust Series 1999-3 and LaSalle Bank National
Association, in connection with the acquisition of, transfer to or possession by
the undersigned, whether as beneficial owner (the "Beneficial Owner"), or
nominee on behalf of the Beneficial Owner of the AFC Mortgage Loan Asset Backed
Notes, Series 1999-3, Class [1A][2A] Note (the "Note"). Capitalized terms used
but not defined in this certificate have the respective meanings given them in
the Indenture.
Each holder must complete Part I, Part II (if the holder is a nominee), and in
all cases sign and otherwise complete Part III.
In addition, each holder shall submit with the Certificate an IRS Form W-9
relating to such holder.
To confirm to the Indenture Trustee that the provisions of Sections 871, 881 or
1446 of the Internal Revenue Code (relating to withholding tax on foreign
partners) do not apply in respect of the Note held by the undersigned, the
undersigned hereby certifies:
Part I - Complete Either A or B
A. Individual as Beneficial Owner
1. [I am ][The Beneficial Owner is] not a non-resident alien for
purposes of U.S. income taxation;
2. [My][The Beneficial Owner's] name and home address are:
; and
3. [My][The Beneficial Owner's] [U.S. taxpayer identification
number][Social Security Number] is .
B. Corporate, Partnership or Other Entity as Beneficial Owner
1. [Name of the Beneficial Owner] is not a foreign corporation,
foreign partnership, foreign trust or foreign estate (as those
terms are defined in the Code and Treasury Regulations);
2. The Beneficial Owner's office address and place of incorporation
(if applicable) is
; and
86
3. The Beneficial Owner's U.S. employer identification number is .
Part II - Nominees
If the undersigned is the nominee for the Beneficial Owner, the undersigned
certifies that this certificate has been made in reliance upon information
contained in:
an IRS Form W-9
a form such as this or substantially similar
provided to the undersigned by an appropriate person and (i) the undersigned
agrees to notify the Indenture Trustee at least (30) days prior to the date that
the form relied upon becomes obsolete, and (ii) in connection with change in
Beneficial Owners, the undersigned agrees to submit a new Certificate of
Non-Foreign Status to the Indenture Trustee promptly after such change.
Part III - Declaration
The undersigned, as the Beneficial Owner or a nominee thereof, agrees to
notify the Indenture Trustee within sixty (60) days of the date that the
Beneficial Owner becomes a foreign person. The undersigned understands that this
certificate may be disclosed to the Internal Revenue Service by the Indenture
Trustee and any false statement contained therein could be punishable by fines,
imprisonment or both.
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Under penalties of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete and
will further declare that I will inform the Indenture Trustee of any change in
the information provided above, and, if applicable, I further declare that I
have the authority* to sign this document.
Name __________________________________________
Title (if applicable) __________________________________
Signature and Date _____________________________________
*Note: If signed pursuant to a power of attorney, the power of attorney must
accompany this certificate.]
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Dates Referenced Herein and Documents Incorporated by Reference
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