----------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
June 17, 1998
American Residential Eagle, Inc.
----------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-47311 33-0787975
- ---------------------------- ---------------- ------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
445 Marine View
Avenue, Suite 100
Del Mar, California 92014
- -------------------------------------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (619) 359-6082
No Change
----------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
A. The Registrant registered issuances of American Residential Eagle,
Inc. Mortgage-Backed Securities (including Collateralized Mortgage Bonds and
Mortgage-Backed Certificates) on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, as amended (the "Act"), by a Registration
Statement on Form S-3/S-11 (Registration File No. 333-47311) (the "Registration
Statement"). Pursuant to the Registration Statement, the Registrant issued
$422,092,000 in aggregate principal amount of Class A-1, ClassA-2 and Class M-1
of its American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed
Callable Certificates, Series 1998-1 (the "Registered Certificates") on June 17,
1998. This Current Report on Form 8-K is being filed to satisfy an undertaking,
contained in the definitive Prospectus dated June 5, 1998, as supplemented by
the Prospectus Supplement dated June 15, 1998 (the "Prospectus Supplement"), to
file a copy of (i) the Trust Agreement (as defined below) and other operative
agreements executed in connection with the issuance of the Registered
Certificates, a form of which, in certain cases, was filed as an exhibit to the
Registration Statement and (ii) the final Mortgage Pool underlying the
Certificates.
The Registered Certificates, together with certain privately offered
certificates of the same series (collectively, the "Certificates"), were issued
pursuant to a Trust Agreement (the "Trust Agreement"), attached hereto as
Exhibit 4.1, dated as of June 1, 1998, among American Residential Eagle, Inc.,
as Depositor, Norwest Bank Minnesota, National Association, as Master Servicer
and First Union National Bank, as Trustee. The Registered Certificates consist
of the following classes: Class A-1, Class A-2 and Class M-1. The Certificates
evidence all the beneficial ownership interest in a trust fund that consists of
a single Collaterized Callable Mortgage Bond (the "Underlying Bond") issued by
American Residential Eagle Bond Trust 1998-1. The Underlying Bond is secured by
a pool of conventional, adjustable rate mortgage loans secured by first liens on
one-to four-family residential properties with an aggregate outstanding
principal balance of $463,075,879.91 as of May 1, 1998, together with certain
other assets. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Trust Agreement.
<PAGE>
Item 7. Financial Statements; Pro Forma Financial Information
and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
*1.1 Underwriting Agreement, dated as of June
11, 1998, among American Residential Eagle,
Inc., American Residential Investment Trust,
Inc. ("AmREIT") and Lehman Brothers Inc.
*1.2 Terms Agreement, dated as of June 11,
1998, among American Residential Eagle, Inc.,
AmREIT and Lehman Brothers Inc.
** 4.1 Trust Agreement, dated as of June 1,
1998, among American Residential Eagle, Inc.,
as Depositor, Norwest Bank Minnesota,
National Association, as Master Servicer, and
First Union National Bank, as Certificate
Trustee.
** 4.2 Indenture, dated June 1, 1998, between
American Residential Eagle Bond Trust 1998-1,
as Issuer, and First Union National Bank, as
Indenture Trustee.
*4.3 Deposit Trust Agreement, dated as of
June 1, 1998, between American Residential
Eagle, Inc., as Depositor, and Wilmington
Trust Company, as Owner Trustee.
*99.1 Mortgage Loan Purchase Agreement, dated
as of June 1, 1998, among AmREIT, as Manager,
American Residential Eagle, Inc., as
Depositor, and American Residential Eagle
Bond Trust 1998-1, as Issuer.
*99.2 Servicing Agreement, dated as of
December 1, 1997, between Lehman Capital, A
Division of Lehman Brothers Holdings Inc.,
and Ocwen Federal Bank FSB, as Special
Servicer.
*99.3 Reconstituted Special Servicing
Agreement, dated as of June 1, 1998, among
Lehman Capital, A Division of Lehman Brothers
Holdings Inc., AmREIT and Ocwen Federal Bank
FSB, as Special Servicer.
*99.4 Flow Servicing Agreement, dated as of
September 1, 1997, between Lehman Capital, A
Division of Lehman Brothers Holdings Inc.,
and Aurora Loan Services Inc., as Servicer.
*99.5 Reconstituted Servicing Agreement,
dated as of June 1, 1998, among Lehman
Capital, A Division of Lehman Brothers
Holdings Inc., AmREIT and Aurora Loan
Services Inc., as Servicer.
*99.6 Management Agreement, dated as of June
1, 1998, between AmREIT, as Manager, and
American Residential Eagle Bond Trust 1998-1,
as the Issuer.
*99.7 Master Servicing Agreement, dated as of
June 1, 1998, among American Residential
Eagle Bond Trust, 1998-1, as Issuer, Norwest
Bank Minnesota, National Association, as
Master Servicer and First Union National
Bank, as Trustee.
*99.8 Final Mortgage Loan Schedule.
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* Previously filed with the Registrant's Form 8-K dated June 17, 1998, filed
with the Commission on July 2, 1998.
** Document originally filed with the Registrant's Form 8-K dated June 17,
1998, filed with the Commission on July 2, 1998. The document is now being
re-filed to reflect the correction of certain clerical errors.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN RESIDENTIAL EAGLE, INC.
By: /s/ Jay M. Fuller
-------------------------------
Name: Jay M. Fuller
Title: President
Dated:
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
*1.1 Underwriting Agreement, dated as of June 11, 1998, among
American Residential Eagle, Inc., American Residential
Investment Trust, Inc. ("AmREIT") and Lehman Brothers Inc.
*1.2 Terms Agreement, dated as of June 11, 1998, among American
Residential Eagle, Inc., AmREIT and Lehman Brothers Inc.
**4.1 Trust Agreement, dated as of June 1, 1998, among
American Residential Eagle, Inc., as Depositor,
Norwest Bank Minnesota, National Association, as
Master Servicer, and First Union National Bank,
as Certificate Trustee.
**4.2 Indenture, dated June 1, 1998, between American Residential
Eagle Bond Trust 1998-1, as Issuer and First Union National
Bank, as Indenture Trustee.
*4.3 Deposit Trust Agreement, dated as of June 1, 1998, between
American Residential Eagle, Inc., as Depositor, and Wilmington
Trust Company, as Owner Trustee.
*99.1 Mortgage Loan Purchase Agreement, dated as of
June 1, 1998, among AmREIT, as Manager, American
Residential Eagle, Inc., as Depositor, and
American Residential Eagle Bond Trust 1998-1, as
Issuer.
*99.2 Servicing Agreement, dated as of December 1,
1997, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and Ocwen Federal
Bank FSB, as Special Servicer.
*99.3 Reconstituted Special Servicing Agreement, dated as of June 1,
1998, among Lehman Capital, A Division of Lehman Brothers
Holdings Inc., AmREIT and Ocwen Federal Bank FSB, as Special
Servicer
*99.4 Flow Servicing Agreement, dated as of September
1, 1997, between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., and Aurora Loan
Services Inc., as Servicer.
*99.5 Servicing Agreement, dated as of June 1, 1998,
among Lehman Capital, A Division of Lehman
Brothers Holdings Inc., AmREIT and Aurora Loan
Services Inc., as Servicer.
*99.6 Management Agreement, dated as of June 1, 1998,
between AmREIT, as Manager, and American
Residential Eagle Bond Trust 1998-1, as the
Issuer.
*99.7 Master Servicing Agreement, dated as of June 1,
1998, among American Residential Eagle Bond
Trust, 1998-1, as Issuer, Norwest Bank
Minnesota, National Association, as Master
Servicer and First Union National Bank, as
Trustee.
*99.8 Final Mortgage Loan Schedule
- ------------------
* Previously filed with the Registrant's Form 8-K dated June 17, 1998, filed
with the Commission on July 2, 1998.
** Document originally filed with the Registrant's Form 8-K dated June 17,
1998, filed with the Commission on July 2, 1998. The document is now being
re-filed to reflect the correction of certain clerical errors.
EXHIBIT 4.1
EXECUTION
AMERICAN RESIDENTIAL EAGLE, INC., as Depositor,
FIRST UNION NATIONAL BANK, as Trustee
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Master Servicer
---------------------------
TRUST AGREEMENT
Dated as of June 1, 1998
---------------------------
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
Mortgage Backed Callable Certificates, Series 1998-1
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I.
DEFINITIONS
1.01. Definitions..........................................................2
1.02. Calculations Respecting Accrued Interest............................16
ARTICLE II.
DECLARATION OF TRUST; CONVEYANCE
OF THE UNDERLYING BOND; ISSUANCE OF CERTIFICATES
2.01. Conveyance of the Underlying Bond...................................17
2.02. Issuance of Certificates............................................17
ARTICLE III.
THE CERTIFICATES
3.01. The Certificates....................................................17
3.02. Registration........................................................18
3.03. Transfer and Exchange of Certificates...............................18
3.04. Cancellation of Certificates........................................21
3.05. Replacement of Certificates.........................................21
3.06. Persons Deemed Owners...............................................21
3.07. Temporary Certificates..............................................22
3.08. Appointment of Paying Agent.........................................22
3.09. Book-Entry Certificates.............................................22
ARTICLE IV.
ADMINISTRATION OF THE TRUST FUND
4.01. [Reserved]..........................................................24
4.02. [Reserved]..........................................................24
4.03. Reports to Certificateholders.......................................24
4.04. Certificate Account.................................................27
4.05. Determination of LIBOR..............................................27
4.06. [Reserved]..........................................................29
ARTICLE V.
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
5.01. Distributions Generally.............................................29
5.02. Distributions from the Certificate Account..........................29
5.03. Allocation of Losses................................................32
5.04. [Reserved]..........................................................33
5.05. [Reserved]..........................................................33
5.06. Reserve Fund........................................................33
ARTICLE VI.
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
6.01. Events of Default...................................................34
6.02. Acceleration of Maturity............................................35
6.03. Control by Certificateholders.......................................35
6.04. Waiver of Past Defaults.............................................35
6.05. Undertaking for Costs...............................................35
6.06. Sale of Trust Estate................................................36
6.07. Duties of Trustee...................................................36
6.08. Certain Matters Affecting the Trustee...............................37
6.09. Trustee Not Liable for Certificates.................................38
6.10. Trustee May Own Certificates........................................38
6.11. Eligibility Requirements for Trustee................................38
6.12. Resignation and Removal of Trustee..................................38
6.13. Successor Trustee...................................................39
6.14. Merger or Consolidation of Trustee..................................40
6.15. [Reserved] .........................................................40
6.16. Authenticating Agents...............................................40
6.17. Indemnification of Trustee..........................................40
6.18. Fees and Expenses of Trustee........................................41
6.19. Collection of Monies; Remedies......................................41
6.20. Limitation of Liability.............................................41
6.21. Trustee May Enforce Claims Without Possession of Certificates.......41
6.22. Waiver of Bond Requirement..........................................42
6.23. Waiver of Inventory, Accounting and Appraisal Requirement...........42
ARTICLE VII.
PURCHASE AND TERMINATION OF THE TRUST FUND; PURCHASE OF CERTIFICATES
7.01. Termination of Trust Fund Upon Maturity or
Redemption of the Underlying Bond...................................42
7.02. Special Purchase of Certificates....................................42
7.03. Procedure Upon Termination of Trust Fund............................43
ARTICLE VIII.
RIGHTS OF CERTIFICATEHOLDERS
8.01. Limitation on Rights of Holders.....................................44
8.02. Access to List of Holders...........................................45
8.03. Acts of Holders of Certificates.....................................45
ARTICLE IX.
[RESERVED]
ARTICLE X.
FASIT ADMINISTRATION
10.01. FASIT Administration................................................46
10.02. Compliance with FASIT Provisions; Further Assurances................49
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.01. Binding Nature of Agreement; Assignment.............................49
11.02. Entire Agreement....................................................49
11.03. Amendment...........................................................49
11.04. Voting Rights.......................................................50
11.05. Provision of Information............................................51
11.06. Governing Law.......................................................51
11.07. Notices.............................................................51
11.08. Severability of Provisions..........................................51
11.09. Indulgences; No Waivers.............................................51
11.10. Headings Not To Affect Interpretation...............................52
11.11. Benefits of Agreement...............................................52
11.12. Special Notices to the Rating Agencies..............................52
11.13. Counterparts........................................................53
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 [Reserved]
Exhibit B-2 [Reserved]
Exhibit B-3 [Reserved]
Exhibit B-4 [Reserved]
Exhibit C [Reserved]
Exhibit D-l Class O Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Class O Certificate Transfer Affidavit (Transferor)
Exhibit E [Reserved]
Exhibit F Form of Rule 144A Transfer Certificate
Exhibit G Form of Purchaser's Letter for Institutional Accredited Investors
Exhibit H Form of ERISA Transfer Affidavit
Exhibit I Form of Certificateholder Distribution Summary
Exhibit J [Reserved]
Exhibit K Special Servicing Compensation Agreement
This TRUST AGREEMENT, dated as of June 1, 1998 (the "Agreement"), is by
and between AMERICAN RESIDENTIAL EAGLE, INC., a Delaware corporation, as
depositor (the "Depositor"), FIRST UNION NATIONAL BANK, a national banking
association with its main office in Charlotte, North Carolina, as trustee (the
"Trustee") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Master Servicer
(solely for the purposes of Article IV and Article X hereof).
PRELIMINARY STATEMENT
(I) The Depositor has acquired the Underlying Bond from American
Residential Eagle Mortgage Bond Trust 1998-1 (the "Bond Issuer"), and at the
Closing Date is the owner of the Underlying Bond and other property being
conveyed by it to the Trustee for inclusion in the Trust Fund. On the Closing
Date, the Depositor will acquire the Certificates from the Trust Fund, as
consideration for its transfer to the Trust Fund of the Underlying Bond and the
other property constituting the Trust Fund. The Depositor has duly authorized
the execution and delivery of this Agreement to provide for the conveyance to
the Trustee of the Underlying Bond and the other property constituting the Trust
Fund. All covenants and agreements made by the Depositor and the Trustee herein
with respect to the Underlying Bond and the other property constituting the
Trust Fund are for the benefit of the Holders from time to time of the
Certificates. The Trustee is accepting the Trust Fund created hereby for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
(II) The Depositor and the Trustee intend that the Trust Fund be
treated as a FASIT for federal income tax purposes and an election of FASIT
status will be made with respect to the Trust Fund. The Class A-1, Class A-2,
Class M-1, Class M-2, Class B and Class X Certificates shall be "Regular
Interests" in the FASIT. The Class O Certificate shall be the sole class of
"Ownership Interest" in the FASIT.
(III) The following table sets forth (or describes) the Class
designation, Certificate Interest Rate, initial Class Certificate Principal
Amount and the minimum denomination for each Class of Certificates comprising
the interests in the Trust Fund created hereunder.
<TABLE>
<CAPTION>
Class Designation Certificate Interest Rate Initial Certificate Minimum
Principal Amount Denominations
<S> <C> <C> <C>
Class A-1 (1) $143,970,000.00 $100,000
Class A-2 (2) 232,093,000.00 100,000
Class M-1 (3) 46,029,000.00 100,000
Class M-2 (4) 17,365,000.00 250,000
Class B (5) 17,365,000.00 250,000
Class X (6) (6) (7)
Class O (6) (6) (7)
</TABLE>
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(1) The Certificate Interest Rate with respect to any Distribution Date for
the Class A-1 Certificates is a per annum rate equal to the least of
(i) the LIBOR plus 0.09% (the "Class A-1 Spread"), (ii) 9.50% per annum
and (iii) the Bond Interest Rate. On each Bond Distribution Date after
which the Bond Principal Balance is less than 35% of the initial Bond
Principal Balance, the Class A-1 Spread with respect to each succeeding
Distribution Date will be increased to 0.18%. The initial Certificate
Interest Rate of the Class A-1 Certificates will be 5.75%.
(2) The Certificate Interest Rate with respect to any Distribution Date for
the Class A-2 Certificates is a per annum rate equal to the least of
(i) LIBOR plus 0.21% (the "Class A-2 Spread"), (ii) 9.50% per annum and
(iii) the Bond Interest Rate. On each Bond Distribution Date after
which the Bond Principal Balance is less than 35% of the initial Bond
Principal Balance, the Class A-2 Spread with respect to each succeeding
Distribution Date will be increased to 0.42%. The initial Certificate
Interest Rate of the Class A-2 Certificates will be 5.87%.
(3) The Certificate Interest Rate with respect to any Distribution Date for
the Class M-1 Certificates is a per annum rate equal to the least of
(i) LIBOR plus 0.50% (the "Class M-1 Spread"), (ii) 9.50% per annum and
(iii) the Net Funds Cap. On each Bond Distribution Date after which the
Bond Principal Balance is less than 35% of the initial Bond Principal
Balance, the Class M-1 Spread with respect to each succeeding
Distribution Date will be increased to 1.00%. The initial Certificate
Interest Rate of the Class M-1 Certificates will be 6.16%.
(4) The Certificate Interest Rate with respect to any Distribution Date for
the Class M-2 Certificates is a per annum rate equal to the least of
(i) LIBOR plus 0.70% (the "Class M-2 Spread"), (ii) 9.50% and (iii) the
Net Funds Cap. On each Bond Distribution Date after which the Bond
Principal Balance is less than 35% of the initial Bond Principal
Balance, the Class M-2 Spread with respect to each succeeding
Distribution Date will be increased to 1.20%. The initial Certificate
Interest Rate of the Class M-2 Certificates is 6.36%.
(5) The Certificate Interest Rate with respect to any Distribution Date for
the Class B Certificates is a per annum rate equal to the least of (i)
LIBOR plus 1.40% (the "Class B Spread"), (ii) 9.50% and (iii) the Net
Funds Cap. On each Bond Distribution Date after which the Bond
Principal Balance is less than 35% of the initial Bond Principal
Balance, the Class B Spread with respect to each succeeding
Distribution Date will be increased to 1.90%. The initial Certificate
Interest Rate of the Class B Certificates is 7.06%
(6) The Class X and Class O Certificates will be issued without a
Certificate Principal Amount. The Class O Certificate will not bear
interest. The Class X Certificate is an interest-only certificate and
will have a notional principal balance equal at all times to the Bond
Principal Balance. For each Accrual Period, interest will accrue on
the Class X Certificate notional principal balance at a rate equal to
the excess, if any, of (i) the Bond Interest Rate over (ii) a rate
equal to LIBOR plus a spread that equals the weighted average of the
Class A-1 Spread, the Class A-2 Spread, the Class M-1 Spread, the
Class M-2 Spread and the Class B Spread; provided, however, that if
the Certificate Interest Rate of the Class A-1, Class A-2, Class M-1,
Class M-2 or Class B Certificates is calculated on the basis of clause
(ii) or (iii) of the applicable definition of Certificate Interest
Rate, the rate calculated pursuant to this clause (ii) shall be
calculated on the basis of the weighted average of such rate or rates.
(7) The Class X and Class O Certificates will each be issued as a single
Certificate evidencing the entire Percentage Interest in such Class.
As of the Cut-off Date, the Underlying Bond had a Principal Balance of
$456,822,000.
In consideration of the mutual agreements herein contained, the
Depositor and the Trustee hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. The following words and phrases, unless the
context otherwise requires, shall have the meanings set forth below. CAPITALIZED
TERMS THAT ARE USED BUT NOT DEFINED IN THIS TRUST AGREEMENT AND WHICH ARE
DEFINED IN THE INDENTURE OR THE MASTER SERVICING AGREEMENT SHALL HAVE THE
MEANING ASCRIBED TO THEM THEREIN:
Accountant: A person engaged in the practice of accounting whom (except
when this Agreement provides that an Accountant must be Independent) may be
employed by or affiliated with the Depositor or an Affiliate of the Depositor.
Accrual Period: With respect to any Distribution Date , the one-month
period beginning on the immediately preceding Distribution Date (or on the
Closing Date, in the case of the first Accrual Period) and ending on the day
immediately preceding the related Distribution Date.
Additional Collateral: None.
Adjusted Prepayment Interest Shortfalls: With respect to any
Distribution Date, Prepayment Interest Shortfalls for such Distribution Date
minus any Compensating Interest Payments for such Distribution Date.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Aggregate Loan Balance: The aggregate of the Scheduled Principal
Balances for all Mortgage Loans at the date of determination.
Aggregate Notional Amount: With respect to any Class of Notional
Certificates, the applicable aggregate notional amount set forth or described in
the Preliminary Statement hereto.
Aggregate Voting Interests: The aggregate of the Voting Interests of
all the Certificates under this Agreement.
Agreement: This Trust Agreement and all amendments and supplements
hereto.
Applied Loss Amount: With respect to any Distribution Date, the amount,
if any, by which (x) the aggregate Certificate Principal Amount after giving
effect to distributions on such date, but before giving effect to any
application of the Applied Loss Amount on such date, exceeds (y) the Stepped-up
Bond Balance as of the close of the related Collection Period.
Authenticating Agent: Any authenticating agent appointed by the Trustee
pursuant to Section 6.10.
Authorized Officer: Any Person who may execute an Officer's Certificate
on behalf of the Depositor.
Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief, or
seeking, consenting to or acquiescing in the appointment of a trustee, receiver
or liquidator, dissolution, or termination, as the case may be, of such Person
pursuant to the provisions of either the United States Bankruptcy Code of 1986,
as amended, or any other similar state laws.
Basis Risk Shortfall: With respect to any Distribution Date and each
Class of Certificates, the amount by which (a) the amount that would be payable
if clause (i) or (ii) of the definition of Certificate Interest Rate applicable
to such Class of Certificates were used to calculate interest on such Class of
Certificates exceeds (b) the amount that is payable on such Class of
Certificates calculated on the basis of the Bond Interest Rate.
Benefit Plan Opinion: An Opinion of Counsel satisfactory to the Trustee
to the effect that any proposed transfer will not (i) cause the assets of the
Trust Fund to be regarded as plan assets for purposes of the Plan Asset
Regulations or (ii) give rise to any fiduciary duty on the part of the Depositor
or the Trustee.
Bond Issuer: American Residential Eagle Bond Trust 1998-1, a Delaware
business trust.
Bond Overcollateralization Deficiency: With respect to any Distribution
Date, the amount by which the Targeted Overcollateralization Amount exceeds the
Bond Overcollateralization Amount (after giving effect to the distributions to
be made on such Distribution Date).
Bond Overcollateralization Excess Amount: With respect to each
Distribution Date, the excess of (i) the Bond Overcollateralization Amount for
such date, over (ii) the Targeted Overcollateralization Amount for such date.
Bond Trustee: First Union National Bank in its capacity as trustee
under the Indenture.
Book-Entry Certificates: Beneficial interests in Certificates
designated as "Book-Entry Certificates" in this Agreement, ownership and
transfers of which shall be evidenced or made through book entries by a Clearing
Agency as described in Section 3.09; provided, that after the occurrence of a
condition whereupon book-entry registration and transfer are no longer permitted
and Definitive Certificates are to be issued to Certificate Owners, such
Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of the
Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: the Class A-1, Class A-2, Class M-1, Class M-2 and Class B
Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday and (ii) a
day on which banking institutions in New York, New York or, if other than New
York, the city in which the Corporate Trust Office of the Trustee is located, or
the State of Maryland, the State of Minnesota or the State of North Carolina.
Carryforward Interest: With respect to any Distribution Date and each
Class of Class A-1, Class A-2, Class M-1, Class M-2 and Class B Certificates,
the sum of (i) the amount, if any, by which (x) the sum of (A) Current Interest
for such Class for the immediately preceding Distribution Date and (B) any
unpaid Carryforward Interest for such Class from previous Distribution Dates
exceeds (y) the amount distributed in respect of interest on such Class on such
immediately preceding Distribution Date, and (ii) interest on such amount for
the related Accrual Period at the applicable Certificate Interest Rate.
Certificate: Any one of the certificates signed and countersigned by
the Trustee in substantially the forms attached hereto as Exhibit A.
Certificate Account: The account maintained by the Trustee in
accordance with the provisions of Section 4.04.
Certificate Interest Rate: With respect to each Class of Certificates,
the applicable per annum rate set forth or described in the Preliminary
Statement hereto.
Certificate Owner: With respect to a Book-Entry Certificate, the Person
who is the owner of such Book-Entry Certificate, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
Certificate Principal Amount: With respect to any Certificate other
than a Class X or Class O Certificate, at the time of determination, the maximum
specified dollar amount of principal to which the Holder thereof is then
entitled hereunder, such amount being equal to the initial principal amount set
forth on the face of such Certificate, less the amount of all principal
distributions previously made with respect to such Certificate and all Applied
Loss Amounts previously allocated to such Certificate.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.02.
Certificateholder: The meaning provided in the definition of "Holder."
Class: All Certificates bearing the same class designation.
Class B Principal Distribution Amount: With respect to any Distribution
Date on or after the Stepdown Date and as long as a Trigger Event has not
occurred with respect to such Distribution Date, the amount, if any, by which
(x) the sum of (i) the Class Certificate Principal Amounts of the Class A-1,
Class A-2, Class M-1 and Class M-2 Certificates after giving effect to
distributions on such Distribution Date and (ii) the Class Certificate Principal
Amount of the Class B Certificates immediately prior to such Distribution Date
exceeds (y) the lesser of (A) the product of (i) 97.30% and (ii) the Stepped-up
Bond Balance and (B) the amount, if any, by which (i) the Stepped-up Bond
Balance exceeds (ii) $2,315,379.
Class Certificate Principal Amount: With respect to each Class of
Certificates other than the Class X and Class O Certificates, the aggregate of
the Certificate Principal Amounts of all Certificates of such Class at the date
of determination.
Class M-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
has not occurred with respect to such Distribution Date, the amount, if any, by
which (x) the sum of (i) the Class Certificate Principal Amount of the Class A-1
and Class A-2 Certificates after giving effect to distributions on such
Distribution Date and (ii) the Class Certificate Principal Amount of the Class
M-1 Certificates immediately prior to such Distribution Date exceeds (y) the
lesser of (A) the product of (i) 82.30% and (ii) the Stepped-up Bond Balance and
(B) the amount, if any, by which (i) the Stepped-up Bond Balance exceeds (ii)
$2,315,379.
Class M-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date and as long as a Trigger Event
has not occurred with respect to such Distribution Date, the amount, if any, by
which (x) the sum of (i) the Class Certificate Principal Amounts of the Class
A-1, Class A-2 and Class M-1 Certificates after giving effect to distributions
on such Distribution Date and (ii) the Class Certificate Principal Amount of the
Class M-2 Certificates immediately prior to such Distribution Date exceeds (y)
the lesser of (A) the product of (i) 89.80% and (ii) the Stepped-up Bond Balance
and (B) the amount, if any, by which (i) the Stepped-up Bond Balance exceeds
(ii) $2,315,379.
Class O Certificate: The Class O Certificate executed by the Trustee,
and authenticated by the Certificate Registrar, substantially in the form
annexed hereto as Exhibit A-3 and evidencing the sole class of Ownership
Interest in the FASIT.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. As
of the Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: June 17, 1998.
Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
Collection Period: With respect to any Distribution Date, the period
commencing on the second day of the month immediately preceding the month in
which such Distribution Date occurs and ending on the first day of the month in
which such Distribution Date occurs.
Corporate Trust Office: The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at 230 South Tryon
Street NC1179, Charlotte, North Carolina 28288, Attention: Structured Finance.
Current Interest: With respect to each Class of Certificates (other
than the Class O Certificates) and any Distribution Date, the aggregate amount
of interest accrued during the related Accrual Period at the applicable
Certificate Interest Rate on the Class Certificate Principal Amount (or notional
balance) of such Class immediately prior to such Distribution Date. Current
interest for each Class of Certificates with respect to any Distribution Date
shall be reduced by such Class's allocable share of Net Prepayment Interest
Shortfalls, which shall be allocated among the Classes of Certificates, pro
rata, on the basis of the amount of interest distributable in the absence of
such shortfalls.
Cut-off Date: May 1, 1998.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Deferred Amount: With respect to any Distribution Date and each Class
of Certificates, the aggregate of Applied Loss Amounts previously applied in
reduction of the Class Certificate Principal Amount thereof, less any amounts
previously reimbursed in respect thereof.
Definitive Certificate: A Certificate of any Class issued in
definitive, fully registered, certificated form.
Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the
Trust Fund pursuant to the terms of the Master Servicing Agreement or as to
which one or more Replacement Mortgage Loans are substituted therefor.
Depositor: American Residential Eagle, Inc., a Delaware corporation
having its principal place of business in New York, or its successors in
interest.
Determination Date: With respect to each Distribution Date, the 18th
day of the month in which such Distribution Date occurs, or, if such 18th day is
not a Business Day, the next succeeding Business Day.
Distribution Date: The 25th day of each month or, if such 25th day is
not a Business Day, the next succeeding Business Day, commencing in June 1998.
Eligible Account: Either (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company acceptable to
the Rating Agencies or (ii) an account or accounts the deposits in which are
insured by the FDIC to the limits established by such corporation, provided that
any such deposits not so insured shall be maintained in an account at a
depository institution or trust company whose commercial paper or other short
term debt obligations (or, in the case of a depository institution or trust
company which is the principal subsidiary of a holding company, the commercial
paper or other short term debt or deposit obligations of such holding company or
depository institution, as the case may be) have been rated by each Rating
Agency in its highest short-term rating category, or (iii) a segregated trust
account or accounts (which shall be a "special deposit account") maintained with
the Trustee or any other federal or state chartered depository institution or
trust company, acting in its fiduciary capacity, in a manner acceptable to the
Trustee and the Rating Agencies. Eligible Accounts may bear interest.
Eligible Corporation: Shall mean an eligible corporation within the
definition set out in Section 860L(a)(2) of the Code.
Eligible Investments: Any one or more of the following obligations or
securities:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America
("Direct Obligations");
(ii) federal funds, or demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository institution or
trust company (including U.S. subsidiaries of foreign depositories and the
Trustee or any agent of the Trustee, acting in its respective commercial
capacity) incorporated or organized under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal or state banking authorities, so long as at the time of investment or
the contractual commitment providing for such investment the commercial paper or
other short-term debt obligations of such depository institution or trust
company (or, in the case of a depository institution or trust company which is
the principal subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in its
highest short-term rating category or one of its two highest long-term rating
categories;
(iii) repurchase agreements collateralized by Direct Obligations or
securities guaranteed by GNMA, FNMA or FHLMC with any registered broker/dealer
subject to Securities Investors' Protection Corporation jurisdiction or any
commercial bank insured by the FDIC, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed obligation rated by each Rating Agency in
its highest short-term rating category;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof which have a credit rating from each Rating Agency, at the time of
investment or the contractual commitment providing for such investment, at least
equal to one of the two highest long-term credit rating categories of each
Rating Agency; provided, however, that securities issued by any particular
corporation will not be Eligible Investments to the extent that investment
therein will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust Fund to exceed 20% of the sum of
the Bond Principal Balance and the aggregate principal amount of all Eligible
Investments in the Certificate Account; provided, further, that such securities
will not be Eligible Investments if they are published as being under review
with negative implications from either Rating Agency;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than 180 days after the date of issuance thereof) rated by each
Rating Agency in its highest short-term rating category;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership interests
in future interest or principal payments on obligations of the United States of
America or its agencies or instrumentalities (which obligations are backed by
the full faith and credit of the United States of America) held by a custodian
in safekeeping on behalf of the holders of such receipts; and
(viii) any other demand, money market, common trust fund or time
deposit or obligation, or interest-bearing or other security or investment, (A)
rated in the highest rating category by each Rating Agency or (B) that would not
adversely affect the then current rating by either Rating Agency of any of the
Certificates; provided, however, that no such instrument shall be an Eligible
Investment if such instrument evidences either (i) a right to receive only
interest payments with respect to the obligations underlying such instrument, or
(ii) both principal and interest payments derived from obligations underlying
such instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a "permitted asset" within the meaning of Section 860L(c) of
the Code.
ERISA-Restricted Certificate: Any Subordinate Certificate.
Events of Default: The Events of Default with respect to the Underlying
Bond set forth in Section 5.01 of the Indenture.
Extra Principal Distribution Amount: With respect to any Distribution
Date, the lesser of (i) the Excess Mortgage Amount for such Distribution Date as
reduced by (x) amounts in respect thereof applied on such date to distributions
on the Underlying Bond pursuant to Section 2.03(b)(iii)(A) and (B) of the
Indenture and (ii) the Bond Overcollateralization Deficiency for such date.
FASIT: A "financial asset securitization investment trust" within the
meaning of section 860L of the Code.
FASIT Provisions: The provisions of the federal income tax law relating
to FASITs which appear at sections 860H through 86OL of Subchapter M of Chapter
1 of the Code, and related provisions, and regulations, including proposed
regulations and rulings, and administrative pronouncements promulgated
thereunder, as the foregoing may be in effect from time to time.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Final Distribution Date: May 25, 2028.
Financial Intermediary: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Clearing Agency Participant.
FNMA: The Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
GNMA: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.
Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee, the Master
Servicer, any Servicer or any Affiliate thereof shall be deemed not to be
outstanding in determining whether the requisite percentage necessary to effect
any such consent has been obtained, except that, in determining whether the
Trustee shall be protected in relying upon any such consent, only Certificates
which a Responsible Officer of the Trustee knows to be so owned shall be
disregarded. The Trustee may request and conclusively rely on certifications by
the Depositor, the Master Servicer and any Servicer in determining whether any
Certificates are registered to an Affiliate of the Depositor, the Master
Servicer or such Servicer.
HUD: The United States Department of Housing and Urban Development, or
any successor thereto.
Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission's Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
Indenture: The Indenture, dated as of June 1, 1998, between the Bond
Issuer and the Bond Trustee.
Interest Distribution Amount: With respect to any Distribution Date,
the amount of interest received by the Trustee from the Underlying Bond, which
will be equal to one month's interest (calculated on the basis of the actual
number of day elapsed and a year of 360 days) on the Bond Principal Balance at
the then applicable Bond Interest Rate plus any amounts received in respect of
Carryforward Interest, Basis Risk Shortfalls and any Unpaid Basis Risk
Shortfalls.
Interest Remittance Amount: With respect to any Distribution Date, the
sum of (i) all interest collected (other than Payaheads) or advanced in respect
of Scheduled Payments on the Mortgage Loans, including any prepayment premiums
or penalties, during the related Collection Period (less (x) expenses calculated
at the Expense Fee Rate and (y) unreimbursed Advances and other amounts due to
the Master Servicer, the Servicers or the Trustee, to the extent allocable to
interest), (ii) any amounts paid by the Servicers with respect to Prepayment
Interest Shortfalls and any Compensating Interest Payment with respect to the
related Prepayment Period, (iii) the portion of any Substitution Amount paid
during the related Prepayment Period allocable to interest and (iv) all Net
Liquidation Proceeds, Insurance Proceeds and other recoveries collected during
the related Prepayment Period, to the extent allocable to interest, as reduced
in each case by unreimbursed interest Advances and other amounts due the Master
Servicer, the Servicers or the Bond Trustee, to the extent allocable to
interest.
Lehman Capital: Lehman Capital, A Division of Lehman Brothers Holdings
Inc., or any successor in interest.
LIBOR: The per annum rate determined pursuant to Section 4.05 on the
basis of London interbank offered rate quotations for one-month Eurodollar
deposits, as such quotations may appear on the display designated as page
"LIUS01M" on the Bloomberg Financial Markets Commodities News (or such other
page as may replace such page on that service for the purpose of displaying
London interbank offered quotations of major banks).
LIBOR Certificate: Any Class A-1, Class A-2, Class M-1, Class M-2 or
Class B Certificate.
LIBOR Determination Date: The second London Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Certificates.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Master Servicer or the applicable Servicer has determined that all amounts that
it expects to recover on behalf of the Trust Fund from or on account of such
Mortgage Loan have been recovered.
Liquidation Expenses: Expenses that are incurred by the Master Servicer
or a Servicer in connection with the liquidation of any defaulted Mortgage Loan
and are not recoverable under the applicable Primary Mortgage Insurance Policy,
including, without limitation, foreclosure and rehabilitation expenses, legal
expenses and unreimbursed amounts expended pursuant to Sections 9.06, 9.16 or
9.22.
Liquidation Proceeds: Cash received in connection with the liquidation
of a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan, including any amounts remaining in the related Escrow
Account.
London Business Day: Any day on which banks are open for dealing in
foreign currency and exchange in London, England and New York City.
Master Servicer: Norwest Bank Minnesota, National Association, or any
successor in interest, or if any successor master servicer shall be appointed as
herein provided, then such successor master servicer.
Master Servicing Agreement: The Master Servicing Agreement, dated as of
June 1, 1998 among the Bond Issuer, the Master Servicer and the Bond Trustee.
Mortgage: A mortgage, deed of trust or other instrument encumbering a
fee simple interest in real property securing a Mortgage Note, together with
improvements thereto.
Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Bond Issuer pursuant to the Deposit Trust Agreement and
pledged to the Bond Trustee under the Indenture.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
the related Liquidation Proceeds net of unreimbursed expenses incurred in
connection with liquidation or foreclosure and unreimbursed Advances, if any,
received and retained in connection with the liquidation of such Mortgage Loan.
Net Prepayment Interest Shortfalls: With respect to any Distribution
Date, the excess of (i) Prepayment Interest Shortfalls for such Distribution
Date over (ii) the sum of Compensating Interest Payments and amounts distributed
pursuant to Section 5.02(b)(xiii) on such Distribution Date.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Notional Amount: With respect to any Notional Certificate and any
Distribution Date, such Certificate's Percentage Interest of the Aggregate
Notional Amount of such Class of Certificates for such Distribution Date.
Notional Certificate: The Class X Certificate.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by the Chairman of the
Board, any Vice Chairman, the President, any Vice President or any Assistant
Vice President of a Person, and in each case delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, reasonably acceptable
in form and substance to the Trustee, and who may be in-house or outside counsel
to the Depositor but which must be Independent outside counsel with respect to
any such opinion of counsel concerning the transfer of the Class O Certificate
or concerning certain matters with respect to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the taxation, or the federal
income tax status, of the Trust Fund as a FASIT.
Ownership Certificate: Any Class O Certificate.
Paying Agent: Any paying agent appointed pursuant to Section 3.08 of
this Agreement.
Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than the Class X and Class O Certificates, the
Percentage Interest evidenced thereby shall equal the initial Certificate
Principal Amount thereof divided by the initial Class Certificate Principal
Amount of all Certificates of the same Class. With respect to the Class X and
Class O Certificates, the Percentage Interest evidenced thereby shall be 100%.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Placement Agent: Lehman Brothers Inc.
Plan Asset Regulations: The Department of Labor regulations set forth
in 29 C.F.R. 2510.3-101.
Pool Delinquency Rate: With respect to any Collection Period, the
fraction, expressed as a percentage, the numerator of which is the aggregate
outstanding principal balance of all Mortgage Loans 60 or more days delinquent
(including all foreclosures and REO Properties) as of the close of business on
the last day of such Collection Period, and the denominator of which is the
Aggregate Loan Balance as of the close of business on the last day of such
Collection Period.
Principal Distribution Amount: With respect to any Distribution Date,
the sum of (i) the excess of the Principal Remittance Amount for such date over
the Bond Overcollateralization Excess Amount, if any, for such date, plus (ii)
the Extra Principal Distribution Amount, if any, for such date.
Principal Remittance Amount: With respect to any Distribution Date, the
sum of (i) all principal collected (other than Payaheads) or advanced in respect
of Scheduled Payments on the Mortgage Loans during the related Collection Period
(less unreimbursed Advances and other amounts due to the Master Servicer, the
Servicers or the Owner Trustee, the Bond Trustee or the Trustee, to the extent
allocable to principal), (ii) the outstanding principal balance of each Mortgage
Loan that was purchased from the Bond Trust during the related Prepayment
Period, (iii) the portion of any Substitution Amount paid during the related
Prepayment Period allocable to principal, and (iv) all Net Liquidation Proceeds,
Insurance Proceeds and other recoveries collected during the related Prepayment
Period, to the extent allocable to principal, as reduced in each case by
unreimbursed Advances and other amounts due to the Master Servicer, the
Servicers, the Owner Trustee, the Bond Trustee or the Trustee, to the extent
allocable to principal.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Prospectus: The prospectus supplement dated June 15, 1998, together
with the accompanying prospectus dated June 5, 1998, relating to the Class A-1,
Class A-2 and Class M-1.
Qualified GIC: A guaranteed investment contract or surety bond
providing for the investment of funds in the Certificate Account and insuring a
minimum, fixed or floating rate of return on investments of such funds, which
contract or surety bond shall:
(a) be an obligation of an insurance company or other
corporation whose long-term debt is rated by each Rating Agency in one of its
two highest rating categories or, if such insurance company has no long-term
debt, whose claims paying ability is rated by each Rating Agency in one of its
two highest rating categories, and whose short-term debt is rated by each Rating
Agency in its highest rating category;
(b) provide that the Trustee may exercise all of the rights
under such contract or surety bond without the necessity of taking any action by
any other Person;
(c) provide that if at any time the then current credit
standing of the obligor under such guaranteed investment contract is such that
continued investment pursuant to such contract of funds would result in a
downgrading of any rating of the Certificates, the Trustee shall terminate such
contract without penalty and be entitled to the return of all funds previously
invested thereunder, together with accrued interest thereon at the interest rate
provided under such contract to the date of delivery of such funds to the
Trustee;
(d) provide that the Trustee's interest therein shall be
transferable to any successor trustee hereunder: and
(e) provide that the funds reinvested thereunder and accrued
interest thereon be returnable to the Certificate Account, as the case may be,
not later than the Business Day prior to any Distribution Date.
Rating Agency: S&P and DCR.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
equal to (i) the unpaid principal balance of such Mortgage Loan as of the date
of liquidation, minus (ii) Liquidation Proceeds received, to the extent
allocable to principal, net of amounts that are reimbursable therefrom to the
Master Servicer or any Servicer with respect to such Mortgage Loan (other than
Advances of principal) including expenses of liquidation. In determining whether
a Realized Loss is a Realized Loss of principal, Liquidation Proceeds shall be
allocated, first, to payment of expenses related to such Liquidated Mortgage
Loan, then to accrued unpaid interest and finally to reduce the principal
balance of the Mortgage Loan.
Record Date: With respect to any Distribution Date, the close of
business on the Business Day immediately preceding such Distribution Date.
Reference Banks: As defined in Section 4.05 hereof.
REO Property: As defined in the Master Servicing Agreement.
Replacement Mortgage Loan: As defined in the Master Servicing
Agreement.
Required Reserve Fund Amount: With respect to any Distribution Date,
the amount, if any, by which the Targeted Overcollateralization Amount exceeds
the Bond Overcollateralization Amount (after giving effect to any payments to be
made on such Distribution Date).
Reserve Fund: The account established and maintained by the Trustee
pursuant to Section 5.06 hereof.
Reserve Fund Deferred Amount Deposit: As defined in Section 5.02(d)(v)
hereof.
Reserve Interest Rate: As defined in Section 4.05 hereof.
Responsible Officer: When used with respect to the Trustee, any Vice
President, Assistant Vice President, the Secretary, any assistant secretary, the
Treasurer, or any assistant treasurer, working in its corporate trust
department, or any other officer of the Trustee to whom a matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Restricted Certificate: The Class M-2, Class B, Class X and Class O
Certificates.
Rolling Three Month Delinquency Rate: With respect to any Distribution
Date, the fraction, expressed as a percentage, equal to the average of the Pool
Delinquency Rates for each of the three (or one and two, in the case of the
first and second Distribution Dates) immediately preceding Collection Periods.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor in interest.
Senior Enhancement Percentage: With respect to any Distribution Date,
the fraction, expressed as a percentage, the numerator of which is the sum of
the aggregate Certificate Principal Amount of the Subordinate Certificates and
the Bond Overcollateralization Amount, in each case after giving effect to
distributions on such Distribution Date, and the denominator of which is the
Stepped-up Bond Balance as of the last day of the related Collection Period.
Senior Principal Distribution Amount: With respect to any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event has
occurred with respect to such Distribution Date, the Principal Distribution
Amount and (b) on or after the Stepdown Date and as long as a Trigger Event has
not occurred with respect to such Distribution Date, the amount, if any, by
which (x) the aggregate Certificate Principal Amount of the Senior Certificates
immediately prior to such Distribution Date exceeds (y) the lesser of (A) the
product of (i) 62.42% and (ii) the Stepped-up Bond Balance and (B) the amount,
if any, by which (i) the Stepped-up Bond Balance exceeds (ii) $2,315,379.
Startup Day: The day designated as such pursuant to Section 10.01(c)
hereof.
Stepdown Date: The later to occur of (x) the Distribution Date in June
2001 and (y) the first Distribution Date on which the Senior Enhancement
Percentage (calculated for this purpose after giving effect to payments or other
recoveries in respect of the Mortgage Loans during the related Collection Period
but before giving effect to distributions on the Certificates on such
Distribution Date) is greater than to equal to 37.58%.
Subordinate Certificate: Any Class M-1, Class M-2, Class B or Class X
Certificate.
Substitution Amount: As defined in the Master Servicing Agreement.
Targeted Overcollateralization Amount: With respect to any Distribution
Date, (x) prior to the Stepdown Date, the product of 1.35% and the Aggregate
Loan Balance as of the Cut-Off Date and (y) on and after the Stepdown Date, the
greater of (i) the product of 2.70% and the Aggregate Loan Balance as of the
last day of the related Collection Period and (ii) $2,315,379.
Termination Price: As defined in Section 7.01 hereof.
Total Distribution Amount: With respect to any Distribution Date, the
sum of the Interest Distribution Amount for such date and the Principal
Distribution Amount for such date.
Trigger Event: With respect to any Distribution Date, if the Rolling
Three Month Delinquency Rate as of the last day of the immediately preceding
Collection Period equals or exceeds 50% of the Senior Enhancement Percentage for
such Distribution Date.
Trust Fund Assets: The corpus of the trust created pursuant to this
Agreement, consisting of the Underlying Bond, including all distribution thereon
after the Cut-off Date, the Certificate Account, the Reserve Fund and the other
items referred to in, and conveyed to the Trustee under, Section 2.01.
Trustee: First Union National Bank, or any successor in interest, or if
any successor trustee or any co-trustee shall be appointed as herein provided,
then such successor trustee and such co-trustee, as the case may be.
Trustee Fee: As to any Distribution Date, an amount equal to the
product of the Trustee Fee Rate and the Aggregate Loan Balance as of the first
day of the related Collection Period.
Trustee Fee Rate: 0.001% per annum.
Underlying Bond: The Collateralized Callable Mortgage Bond issued by
the Bond Issuer pursuant to the Indenture.
Unpaid Basis Risk Shortfall: With respect to any Distribution Date and
each Class of Certificates, the aggregate of all Basis Risk Shortfalls with
respect to such Class for all previous Distribution Dates, together with
interest thereon at the applicable Certificate Interest Rate, less all payments
made to the holders of the Certificates, of such Class in respect of Basis Risk
Shortfalls on or prior to such Distribution Date.
Voting Interests: The portion of the voting rights of all the
Certificates that is allocated to any Certificate for purposes of the voting
provisions of this Agreement. At all times during the term of this Agreement,
95% of all Voting Interests shall be allocated to the Certificates other than
the Class X Certificate, and 5% of all Voting Interests shall be allocated to
the Class X Certificate. Voting Interests shall be allocated among the other
Classes of Certificates (and among the Certificates within each such Class) in
proportion to their Class Certificate Principal Amounts (or Certificate
Principal Amounts).
Section 1Calculations Respecting Accrued Interest. Accrued interest, if any, on
any Certificate shall be calculated based upon a 360-day year and the actual
number of days in each Accrual Period.
ARTICLE II.
DECLARATION OF TRUST;
CONVEYANCE OF THE UNDERLYING BOND; ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Underlying Bond. The Depositor,
concurrently with the execution and delivery of this Agreement, does hereby
transfer, convey, sell and assign to the Trustee, on behalf of the Holders of
the Certificates, without recourse, all the right, title and interest of the
Depositor in and to the Underlying Bond, including all distributions thereon
payable on and after the Cut-off Date. In connection with such assignment, the
Depositor shall have caused the Underlying Bond to be registered in the name of,
or endorsed to the order of, First Union National Bank, as trustee, or in a
nominee name of the Trustee, and to be delivered or transferred to the Trustee.
The assignment of the Underlying Bond accomplished hereby is absolute and is
intended as a sale. The Depositor represents and covenants that the Underlying
Bond as of the Closing Date is free and clear of any right, charge, security
interest or lien or claim in favor of the Depositor or any person claiming
through the Depositor and that the Depositor has, as of the Closing Date, the
right to assign the Underlying Bond to the Trustee.
It is the intention of the Depositor that the transfer and assignment
of the Underlying Bond shall constitute a sale from the Depositor to the Trust
and that such Underlying Bond not be a part of the Depositor's estate in the
event of the insolvency of the Depositor. In the event the transfer and
assignment of the Underlying Bond contemplated by the Agreement is deemed to be
other than a sale notwithstanding the intent of the parties hereto, the
Agreement shall be deemed to be and in such event hereby is the grant of a
security interest from the Depositor to the Trustee, and the Trustee shall have
all the rights, powers and privileges of a secured party under the Uniform
Commercial Code in effect in the applicable jurisdiction. In such event, the
Depositor agrees to take such action and execute such documents as shall be
necessary in order to fully realize the benefits of such secured party status,
including, without limitations, powers of attorney, financing statements,
notices of lien or other instruments or documents.
Section 2.02. Issuance of Certificates. The Trustee acknowledges the
transfer and delivery to it of the Underlying Bond in the manner described in
Section 2.01 hereof and declares that the Trustee holds and will hold such
Underlying Bond in trust for the benefit of all present and future
Certificateholders and, concurrently with such transfer and delivery, has caused
to be duly executed, authenticated and delivered to or upon the order of the
Depositor the Certificates in authorized denominations, registered in such names
as the Depositor has requested.
ARTICLE III.
THE CERTIFICATES
Section 3.01. The Certificates. (a) The Certificates shall be issuable
in registered form only and shall be securities governed by Article 8 of the New
York Uniform Commercial Code. The Book-Entry Certificates will be evidenced by
one or more certificates, beneficial ownership of which will be held in the
dollar denominations in Certificate Principal Amount or Notional Amount, as
applicable, or in the Percentage Interests, specified herein. Each Class of
Certificates (other than the Class X and Class O Certificates) will be issued in
the minimum denominations in Certificate Principal Amount specified in the
Preliminary Statement hereto and in integral multiples of $1 in excess thereof.
The Class X and Class O Certificates will each be issued as a single Certificate
and maintained in definitive, fully registered form in a denomination equal to
100% of the Percentage Interest of such Class. The Certificates may be issued in
the form of typewritten certificates.
(b) The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee upon the order of the Depositor
upon receipt by the Trustee of the Underlying Bond described in Section 2.01. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein, executed by an
authorized officer of the Trustee or the Authenticating Agent, if any, by manual
signature, and such certification upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. At any time and from time to time after the execution
and delivery of this Agreement, the Depositor may deliver Certificates executed
by the Depositor to the Trustee or the Authenticating Agent for authentication
and the Trustee or the Authenticating Agent shall authenticate and deliver such
Certificates as in this Agreement provided and not otherwise.
Section 3.02. Registration. The Trustee is hereby appointed, and hereby
accepts its appointment as, Certificate Registrar in respect of the Certificates
and shall maintain books for the registration and for the transfer of
Certificates (the "Certificate Register"). The Trustee may appoint a bank or
trust company to act as Certificate Registrar. A registration book shall be
maintained for the Certificates collectively. The Certificate Registrar may
resign or be discharged or removed and a new successor may be appointed in
accordance with the procedures and requirements set forth in Sections 6.06 and
6.07 hereof with respect to the resignation, discharge or removal of the Trustee
and the appointment of a successor Trustee. The Certificate Registrar may
appoint, by a written instrument delivered to the Holders and the Master
Servicer, any bank or trust company to act as co-registrar under such conditions
as the Certificate Registrar may prescribe; provided, however, that the
Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment.
Section 3.03. Transfer and Exchange of Certificates. (a) A Certificate
(other than Book-Entry Certificates which shall be subject to Section 3.09
hereof) may be transferred by the Holder thereof only upon presentation and
surrender of such Certificate at the office of the Certificate Registrar duly
endorsed or accompanied by an assignment duly executed by such Holder or his
duly authorized attorney in such form as shall be satisfactory to the
Certificate Registrar. Upon the transfer of any Certificate in accordance with
the preceding sentence, the Trustee shall execute, and the Trustee or any
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any registration of transfer of Certificates.
(b) A Certificate may be exchanged by the Holder thereof for any number of new
Certificates of the same Class, in authorized denominations, representing in the
aggregate the same Certificate Principal Amount as the Certificate surrendered,
upon surrender of the Certificate to be exchanged at the office of the
Certificate Registrar duly endorsed or accompanied by a written instrument of
transfer duly executed by such Holder or his duly authorized attorney in such
form as is satisfactory to the Certificate Registrar. Certificates delivered
upon any such exchange will evidence the same obligations, and will be entitled
to the same rights and privileges, as the Certificates surrendered. No service
charge shall be made to a Certificateholder for any exchange of Certificates,
but the Certificate Registrar may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
exchange of Certificates. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, and the Trustee or the Authenticating Agent
shall authenticate, date and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
(c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein.
The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:
(i) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is (x) to the
Depositor or the Placement Agent, an affiliate (as defined in
Rule 144(a)(1) under the 1933 Act) of the Depositor or the
Placement Agent or (y) being made to a "qualified
institutional buyer" as defined in Rule 144A under the
Securities Act of 1933, as amended (the "Act") by a transferor
who has provided the Trustee with a certificate in the form of
Exhibit F hereto; and
(ii) The Certificate Registrar shall register the transfer of a
Restricted Certificate if the requested transfer is being made
to an "accredited investor" under Rule 501(a)(1), (2), (3) or
(7) under the Act by a transferor who furnishes to the Trustee
a letter of the transferee substantially in the form of
Exhibit G hereto. (d) No transfer of an ERISA-Restricted
Certificate in the form of a Definitive Certificate shall be
made to any Person unless the Trustee has received (A) a
certificate substantially in the form of Exhibit H hereto from
such transferee or (B) an Opinion of Counsel satisfactory to
the Trustee and the Depositor to the effect that the purchase
and holding of such a Certificate will not constitute or
result in the assets of the Trust Fund being deemed to be
"plan assets" subject to the prohibited transactions
provisions of ERISA or Section 4975 of the Code and will not
subject the Trustee or the Depositor to any obligation in
addition to those undertaken in the Agreement; provided,
however, that the Trustee will not require such certificate or
opinion in the event that, as a result of a change of law or
otherwise, counsel satisfactory to the Trustee has rendered an
opinion to the effect that the purchase and holding of an
ERISA-Restricted Certificate by a Plan or a Person that is
purchasing or holding such a Certificate with the assets of a
Plan will not constitute or result in a prohibited transaction
under ERISA or Section 4975 of the Code. The preparation and
delivery of the certificate and opinions referred to above
shall not be an expense of the Trust Fund, the Trustee or the
Depositor. Notwithstanding the foregoing, no opinion or
certificate shall be required for the initial issuance of the
ERISA-Restricted Certificates.
(e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of a Certificate.
(f) Notwithstanding anything to the contrary contained herein, no Class X or
Class O Certificate may be owned, pledged or transferred, directly or
indirectly, by or to any person that is not an Eligible Corporation.
Prior to and as a condition of the registration of any transfer, sale
or other disposition of a Class O Certificate, the proposed transferee shall
deliver to the Trustee an affidavit in substantially the form attached hereto as
Exhibit D-1 representing and warranting, among other things, that such
transferee is an Eligible Corporation or an agent or nominee acting on behalf of
an Eligible Corporation (any such transferee, a "Permitted Transferee"), and the
proposed transferor shall deliver to the Trustee an affidavit in substantially
the form attached hereto as Exhibit D-2. In addition, the Trustee may (but shall
have no obligation to) require, prior to and as a condition of any such
transfer, the delivery by the proposed transferee of an Opinion of Counsel,
addressed to the Depositor and the Trustee satisfactory in form and substance to
the Depositor, that such proposed transferee or, if the proposed transferee is
an agent or nominee, the proposed beneficial owner, is an Eligible Corporation .
Notwithstanding the registration in the Certificate Register of any transfer,
sale, or other disposition of a Class O Certificate to a transferee other than
an Eligible Corporation or an agent or nominee acting on behalf of a transferee,
such registration shall be deemed to be of no legal force or effect whatsoever
and such transferee (or such agent or nominee) shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class O Certificate. The Trustee shall not be
under any liability to any person for any registration or transfer of a Class O
Certificate to a transferee that is not a Permitted Transferee or for the
maturity of any payments due on such Class O Certificate to the Holder thereof
or for taking any other action with respect to such Holder under the provisions
of the Agreement, so long as the transfer was effected in accordance with this
Section 3.03(f), unless the Trustee shall have actual knowledge at the time of
such transfer or the time of such payment or other action that the transferee is
not a Permitted Transferee (or an agent or nominee thereof). The Trustee shall
be entitled to recover from any Holder of a Class O Certificate that was not a
Permitted Transferee (or an agent or nominee thereof) at the time it became a
Holder or any subsequent time it ceased to be an Eligible Corporation all
payments made on such Class O Certificate at and after either such times (and
all costs and expenses, including but not limited to attorneys' fees, incurred
in connection therewith). Any payment (not including any such costs and
expenses) so recovered by the Trustee shall be paid and delivered to the last
preceding Holder of such Class O Certificate.
If any purported transferee shall become a registered Holder of a Class
O Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Class O Certificate was not in fact permitted by this Section 3.03(f), the
last preceding Permitted Transferee shall be restored to all rights as Holder
thereof retroactive to the date of such registration of transfer of such Class O
Certificate. The Trustee shall be under no liability to any Person for any
registration of transfer of a Class O Certificate that is in fact not permitted
by this Section 3.03(f), for making any payment due on such Certificate to the
registered Holder thereof or for taking any other action with respect to such
Holder under the provisions of this Agreement so long as the transfer was
registered upon receipt of the affidavit described in the preceding paragraph of
this Section 3.03(f).
(g) Each Holder of a Class X Certificate or Class O Certificate, by
such Holder's acceptance thereof, shall be deemed for all purposes to have
consented to the provisions of this section.
Section 3.04. Cancellation of Certificates. Any Certificate
surrendered for registration of transfer or exchange shall be cancelled and
retained in accordance with normal retention policies with respect to cancelled
certificates maintained by the Trustee or the Certificate Registrar.
Section 3.05. Replacement of Certificates. If (i) any Certificate is
mutilated and is surrendered to the Trustee or any Authenticating Agent or (ii)
the Trustee or any Authenticating Agent receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and there is delivered to the
Trustee or the Authenticating Agent such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Depositor and any Authenticating Agent that such destroyed, lost or
stolen Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Trustee or any Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Certificate Principal
Amount. Upon the issuance of any new Certificate under this Section 3.05, the
Trustee and Authenticating Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
or the Authenticating Agent) connected therewith. Any replacement Certificate
issued pursuant to this Section 3.05 shall constitute complete and indefeasible
evidence of ownership in the applicable Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
Section 3.06. Persons Deemed Owners. Subject to the provisions of
Section 3.09 with respect to Book-Entry Certificates, the Depositor, the Master
Servicer, the Trustee, the Certificate Registrar and any agent of any of them
may treat the Person in whose name any Certificate is registered upon the books
of the Certificate Registrar as the owner of such Certificate for the purpose of
receiving distributions pursuant to Sections 5.01 and 5.02 and for all other
purposes whatsoever, and neither the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar nor any agent of any of them shall be
affected by notice to the contrary.
Section 3.07. Temporary Certificates. (a) Pending the preparation of
definitive Certificates, upon the order of the Depositor, the Trustee shall
execute and shall authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they are issued and with such variations as the
authorized officers executing such Certificates may determine, as evidenced by
their execution of such Certificates.
(b) If temporary Certificates are issued, the Depositor will cause
Definitive Certificates to be prepared without unreasonable delay. After the
preparation of Definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and authenticate and deliver in exchange
therefor a like aggregate Certificate Principal Amount of Definitive
Certificates of the same Class in the authorized denominations. Until so
exchanged, the temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as Definitive Certificates of the same Class.
Section 3.08. Appointment of Paying Agent. The Trustee may appoint a
Paying Agent (which may be the Trustee) for the purpose of making distributions
to Certificateholders hereunder. The Trustee shall cause such Paying Agent to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums held by
it for the payment to Certificateholders in an Eligible Account in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.
Section 3.09. Book-Entry Certificates. (a) Each Class of Book-Entry
Certificates, upon original issuance, shall be issued in the form of one or more
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a Definitive Certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Depositor, the Paying Agent, the Registrar and the Trustee
may deal with the Clearing Agency for all purposes (including the making of
distributions on the Book-Entry Certificates) as the authorized representatives
of the Certificate Owners and the Clearing Agency shall be responsible for
crediting the amount of such distributions to the accounts of such Persons
entitled thereto, in accordance with the Clearing Agency's normal procedures;
(iii) to the extent that the provisions of this Section 3.09 conflict
with any other provisions of this Agreement, the provisions of this Section 3.09
shall control; and
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and the Clearing Agency Participants and shall be limited to
those established by law and agreements between such Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants. Unless and until
Definitive Certificates are issued pursuant to Section 3.09(c), the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal of and interest
on the Book-Entry Certificates to such Clearing Agency Participants.
(b) Whenever notice or other communication to the Certificateholders
is required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Book-Entry Certificates to the Clearing Agency.
(c) If (i) (A) the Depositor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge properly its
responsibilities with respect to the Book-Entry Certificates, and (B) the
Trustee or the Depositor is unable to locate a qualified successor, (ii) the
Depositor, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, Certificate Owners representing beneficial
interests aggregating not less than 50% of the Class Certificate Principal
Amount of a Class of Book-Entry Certificates identified as such to the Trustee
by an Officer's Certificate from the Clearing Agency advise the Trustee and the
Clearing Agency through the Clearing Agency Participants in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Certificate Owners of a Class of Book-Entry
Certificates, the Trustee shall notify or cause the Certificate Registrar to
notify the Clearing Agency to effect notification to all Certificate Owners,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the Book-Entry Certificates by the
Clearing Agency, accompanied by registration instructions from the Clearing
Agency for registration, the Trustee shall issue the Definitive Certificates.
Neither the Depositor nor the 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 Certificates all
references herein to obligations imposed upon or to be performed by the Clearing
Agency shall be deemed to be imposed upon and performed by the Trustee, to the
extent applicable, with respect to such Definitive Certificates and the Trustee
shall recognize the holders of the Definitive Certificates as Certificateholders
hereunder. In addition, any Class M-2 or Class B Certificate transferred to an
entity other than a "Qualified Institutional Buyer" under the Securities Act of
1933, as amended, shall be made solely through delivery to the transferee of a
Definitive Certificate. ARTICLE IV.
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Reserved]
Section 4.02. [Reserved]
Section 4.03. Reports to Certificateholders. (a) On each Distribution
Date, the Trustee shall deliver or cause to be delivered by first class mail to
each Certificateholder a written report setting forth the following information,
which information the Master Servicer will determine (on the basis of
information obtained from the Servicers) and deliver to the Bond Trustee who in
turn, will deliver to the Trustee no later than one Business Day prior to such
Distribution Date:
(i) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates, to the extent
applicable, allocable to principal on the Underlying Bond;
(ii) the aggregate amount of the distribution to be made on such
Distribution Date to the Holders of each Class of Certificates (other than the
Class O Certificate) allocable to interest;
(iii) the amount, if any, of any distribution to the Holders of the
Class X Certificate and the Class O Certificate;
(iv) (A) the aggregate amount of any Advances required to be made by
or on behalf of the Master Servicer or any Servicer (or the Bond Trustee) with
respect to such Distribution Date, (B) the aggregate amount of such Advances
actually made, and (C) the amount, if any, by which (A) above exceeds (B) above;
(v) the Aggregate Loan Balance as of the close of business on the last
day of the related Collection Period, after giving effect to payments allocated
to principal reported under clause (i) above;
(vi) the Class Certificate Principal Amount (or Aggregate Notional
Amount) of each Class of Certificates, to the extent applicable, as of such
Distribution Date after giving effect to payments allocated to principal
reported under clause (i) above, separately identifying any reduction of any of
the foregoing Certificate Principal Amounts due to Applied Loss Amounts:
(vii) any Realized Losses realized with respect to the Mortgage Loans
(x) in the applicable Prepayment Period and (y) in the aggregate since the
Cut-off Date; (viii) the amount of the Master Servicing Fees, Servicing Fees and
Trustee Fees and expenses paid during the Collection Period to which such
distribution relates;
(ix) the number and aggregate Scheduled Principal Balance of Mortgage
Loans, as reported to the Bond Trustee by the Master Servicer, (a) remaining
outstanding (b) delinquent 30 to 59 days on a contractual basis, (c) delinquent
60 to 89 days on a contractual basis, (d) delinquent 90 or more days on a
contractual basis, and (e) as to which foreclosure proceedings have been
commenced as of the close of business on the last Business Day of the calendar
month immediately preceding the month in which such Distribution Date occurs;
(x) the deemed principal balance of each REO Property as of the close
of business on the last Business Day of the calendar month immediately preceding
the month in which such Distribution Date occurs;
(xi) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the principal balance of such Mortgage Loan
and the number of such Mortgage Loans as of the close of business on the
Distribution Date in such preceding month;
(xii) with respect to substitution of Mortgage Loans in the preceding
calendar month, the Scheduled Principal Balance of each Deleted Mortgage Loan,
and of each Replacement Mortgage Loan;
(xiii) the aggregate outstanding Carryforward Interest, Net Prepayment
Interest Shortfalls, Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls, if
any, if any, for each Class of Certificates, after giving effect to the
distribution made on such Distribution Date;
(xiv) the Certificate Interest Rate applicable to such Distribution
Date with respect to each Class of Certificates;
(xv) if applicable, the amount of any shortfall (i.e., the difference
between the aggregate amounts of principal and interest which Certificateholders
would have received if there were sufficient available amounts in the
Certificate Account and the amounts actually distributed); and
(xvi) any other "loan-level" information for any Mortgage Loans that
are delinquent 90 or more days on a contractual basis and any REO Property held
by the Trust that is reported by the Master Servicer to the Trustee;
(xvii) the Bond Principal Balance (after giving effect to payments to
be made on such Distribution Date in respect of the Underlying Bond);
(xviii) whether or not the Underlying Bond is to be redeemed on such
Distribution Date;
(xix) the Bond Overcollateralization Amount as of such Distribution
Date (after giving effect to distributions to be made in respect of the
Underlying Bond on such Distribution Date);
(xx) the Excess Mortgage Amount, if any, to be paid on such
Distribution Date;
(xxi) the Required Reserve Fund Amount for such Distribution Date
(after giving effect to any distributions to be made on such Distribution Date
but before giving effect to any deposit to be made to the Reserve Fund on such
Distribution Date);
(xxii) the amount, if any, to be deposited to the Reserve Fund on such
Distribution Date; and
(xxiii) the amount on deposit in the Reserve Fund (after giving effect
to any deposit to be made thereto on such Distribution Date).
In the case of information furnished pursuant to subclauses (i), (ii)
and (viii) above, the amounts shall be expressed as a dollar amount per $1,000
of original principal amount of Certificates.
In preparing or furnishing the foregoing information to the Trustee,
the Master Servicer shall be entitled to rely conclusively on the accuracy of
the information or data regarding the Mortgage Loans and the related REO
Property that has been provided to the Master Servicer by each Servicer, and the
Master Servicer shall not be obligated to verify, recompute, reconcile or
recalculate any such information or data.
On each Distribution Date, the Trustee shall also deliver or cause to
be delivered by first class mail a copy of the above-described written report,
to the following addresses: (i) American Residential Eagle, Inc., 445 Marine
View Avenue, Suite 230, Del Mar, California 92014, Attention: Mark Conger, or to
such other address as the Depositor may designate, (ii) Lehman Brothers Inc.,
Mortgage-Backed Securities Group, 3 World Financial Center, New York, New York
10285 and (iii) Bloomberg L.P., 499 Park Avenue, New York, New York 10022.
(b) Upon the reasonable advance written request of any Certificateholder that is
a savings and loan, bank or insurance company, which request, if received by the
Trustee, will be promptly forwarded to the Master Servicer, the Trustee will
cause the Master Servicer to provide, or cause to be provided, (or, to the
extent that such information or documentation is not required to be provided by
a Servicer under the applicable Servicing Agreement, shall use reasonable
efforts to obtain such information and documentation from such Servicer, and
provide) to such Certificateholder such reports and access to information and
documentation regarding the Mortgage Loans as such Certificateholder may
reasonably deem necessary to comply with applicable regulations of the Office of
Thrift Supervision or its successor or other regulatory authorities with respect
to an investment in the Certificates; provided, however, that the Master
Servicer shall be entitled to be reimbursed by such Certificateholder for such
Master Servicer's actual expenses incurred in providing such reports and access.
(c) Within 90 days, or such shorter period as may be required by statute or
regulation, after the end of each calendar year, the Trustee shall send to each
Person who at any time during the calendar year was a Certificateholder of
record, and make available to Certificate Owners (identified as such by the
Clearing Agency) in accordance with applicable regulations, a report summarizing
the items provided to Certificateholders pursuant to Section 4.03(a) on an
annual basis as may be required to enable such Holders to prepare their federal
income tax returns. Such information shall include the amount of original issue
discount accrued on each Class of Certificates and information regarding the
expenses of the Trust Fund. The Master Servicer shall provide the Trustee with
such information as is necessary for the Trustee to prepare such reports.
Section 4Certificate Account. (a) The Trustee shall establish and maintain in
its name, as trustee, a special deposit trust account (the "Certificate
Account"), to be held in trust for the benefit of the Certificateholders until
disbursed pursuant to the terms of this Agreement. The Certificate Account shall
be an Eligible Account. If the existing Certificate Account ceases to be an
Eligible Account, the Trustee shall establish a new Certificate Account that is
an Eligible Account within 20 Business Days and transfer all funds on deposit in
such existing Certificate Account into such new Certificate Account. The
Certificate Account shall relate solely to the Certificates issued hereunder and
funds in the Certificate Account shall be held separate and apart from and shall
not be commingled with any other monies including, without limitation, other
monies of the Trustee held under this Agreement.
(b) The Trustee shall cause to be deposited into the Certificate
Account on the day on which, or, if such day is not a Business Day, the Business
Day immediately following the day on which, any monies are remitted by the Bond
Trustee to the Trustee, all such amounts. The Trustee shall make withdrawals
from the Certificate Account only for the following purposes:
(i) to withdraw amounts deposited in the Certificate Account in error;
(ii) to pay itself any investment income earned with respect to funds
in the Certificate Account invested in Eligible Investments as set forth in
subsection (c) below, and to make payment to itself and others pursuant to any
provision of this Agreement;
(iii) to make distributions to the Certificateholders pursuant to
Article V; and
(iv) to clear and terminate the Certificate Account pursuant to
Section 7.02. (c) The Trustee shall invest, or cause to be invested, funds held
in the Certificate Account in Eligible Investments (which may be obligations of
the Trustee). All such investments must mature no later than the next
Distribution Date, and shall not be sold or disposed of prior to their maturity.
All such Eligible Investments will be made in the name of the Trustee (in its
capacity as such) or its nominee. All income and gain realized from any such
investment shall be compensation for the Trustee and shall be subject to its
withdrawal on order from time to time. The amount of any losses incurred in
respect of any such investments shall be paid by the Trustee for deposit in the
Certificate Account out of its own funds, without any right of reimbursement
therefor, immediately as realized.
Section 4.05. Determination of LIBOR. (a) If the outstanding
Certificates include any LIBOR Certificates, then on each LIBOR Determination
Date the Master Servicer shall determine LIBOR on the basis of the offered LIBOR
quotations of the Reference Banks as of 11:00 a.m. London time on such LIBOR
Determination Date as follows:
(i) If on any LIBOR Determination Date two or more of the Reference
Banks provide such offered quotations, LIBOR for the next Accrual Period will be
the arithmetic mean of such offered quotations (rounding such arithmetic mean if
necessary to the nearest five decimal places);
(ii) If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next Accrual
Period will be whichever is the higher of (x) LIBOR as determined on the
previous LIBOR Determination Date or (y) the Reserve Interest Rate. The "Reserve
Interest Rate" will be either (A) the rate per annum which the Master Servicer
determines to be the arithmetic mean (rounding such arithmetic mean if necessary
to the nearest five decimal places) of the one-month Eurodollar lending rates
that New York City banks selected by the Master Servicer are quoting, on the
relevant LIBOR Determination Date, to the principal London offices of at least
two leading banks in the London interbank market or (B) in the event that the
Master Servicer can determine no such arithmetic mean, the lowest one-month
Eurodollar lending rate that the New York City banks selected by the Master
Servicer are quoting on such LIBOR Determination Date to leading European banks;
and
(iii) If on any LIBOR Determination Date the Master Servicer is
required but is unable to determine the Reserve Interest Rate in the manner
provided in paragraph (ii) above, LIBOR for the next Accrual Period will be
LIBOR as determined on the previous LIBOR Determination Date or, in the case of
the first LIBOR Determination Date, the Initial LIBOR Rate.
(b) The establishment of LIBOR by the Master Servicer and the Master
Servicer's subsequent calculation of the Certificate Interest Rate or Rates
applicable to the LIBOR Certificates for the relevant Accrual Period, in the
absence of manifest error, will be final and binding. In all cases, the Master
Servicer may conclusively rely on quotations of LIBOR for the Reference Banks as
such quotations appear on the display designated "LIUS01M" on the Bloomberg
Financial Markets Commodities News.
(c) As used herein, "Reference Banks" shall mean four leading banks
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, England, (ii) whose
quotations appear on the "Bloomberg Screen LIUS01M Index Page" (as described in
the definition of LIBOR) on the applicable LIBOR Determination Date and (iii)
which have been designated as such by the Trustee and are able and willing to
provide such quotations to the Trustee on each LIBOR Determination Date. The
Reference Banks initially shall be: Barclay's plc, Bank of Tokyo, National
Westminster Bank and Trust Company and Bankers Trust Company. If any of the
initial Reference Banks should be removed from the Bloomberg Screen LIUS01M
Index Page or in any other way fail to meet the qualifications of a Reference
Bank, the Trustee shall use its best efforts to designate alternate Reference
Banks.
(d) If (i) with respect to any LIBOR Determination Date LIBOR is
determined pursuant to clause (a)(iii) of this Section and (ii) on the next
succeeding LIBOR Determination Date LIBOR would, without giving effect to this
paragraph (d), be determined pursuant to such clause (a)(iii), then the Trustee
shall select an alternative interest rate index over which the Trustee has no
control that is used for determining Eurodollar lending rates and is calculated
and published (or otherwise made available) by an independent third party, and
the Trustee shall direct the Master Servicer to use such alternative interest
rate index for calculating LIBOR for all purposes hereof.
Section 4.06. [Reserved]
ARTICLE V.
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally. (a) Subject to Section 7.01
respecting the final distribution on the Certificates, on each Distribution Date
the Trustee or the Paying Agent shall make distributions in accordance with this
Article V. Such distributions shall be made by check mailed to each
Certificateholder's address as it appears on the Certificate Register of the
Certificate Registrar (which shall initially be the Trustee) or, upon written
request made to the Trustee at least three Business Days prior to the related
Distribution Date by any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of a Class
X Certificate, a Percentage Interest of 100%, by wire transfer in immediately
available funds to an account specified in the request and at the expense of
such Certificateholder; provided, however, that the final distribution in
respect of any Certificate shall be made only upon presentation and surrender of
such Certificate at the Corporate Trust Office. Wire transfers will be made at
the expense of the Holder requesting such wire transfer by deducting a wire
transfer fee from the related distribution. Notwithstanding such final payment
of principal of any of the Certificates, the Ownership Certificates will remain
outstanding until the termination of the FASIT and the payment in full of all
other amounts due with respect to the Ownership Certificates and at such time
such final payment in retirement of any Ownership Certificates will be made only
upon presentation and surrender of such Certificate at the Corporate Trust
Office of the Trustee or at the office of the New York Presenting Agent. If any
payment required to be made on the Certificates is to be made on a day that is
not a Business Day, then such payment will be made on the next succeeding
Business Day.
(b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Class Certificate Principal Amounts (or initial
Notional Amounts).
Section 5.02. Distributions from the Certificate Account. (a) On each
Distribution Date the Trustee (or the Paying Agent on behalf of the Trustee)
shall withdraw from the Certificate Account the Total Distribution Amount for
such date and shall distribute such amount as specified in this Section.
(b) On each Distribution Date, the Interest Distribution Amount for
such date will be distributed in the following order of priority:
(i) pro rata, to the Class A-1 and Class A-2 Certificates, Current
Interest for each such Class and such Distribution Date and any Carryforward
Interest for each such Class and such Distribution Date;
(ii) to the Class M-1 Certificates, Current Interest for such Class
and such Distribution Date;
(iii) to the Class M-2 Certificates, Current Interest for such Class
and such Distribution Date;
(iv) to the Class B Certificates, Current Interest for such Class and
such Distribution Date;
(v) pro rata, to the Class A-1 and Class A-2 Certificates, any Basis
Risk Shortfall and Unpaid Basis Risk Shortfall for each such Class and such
Distribution Date;
(vi) to the Class M-1 Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date; (vii) to
the Class M-2 Certificates, any Basis Risk Shortfall and Unpaid Basis Risk
Shortfall for such Class and such Distribution Date;
(viii) to the Class B Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date;
(ix) to the Class M-1 Certificates, any Carryforward Interest for such
Class and such Distribution Date;
(x) to the Class M-2 Certificates, any Carryforward Interest for such
Class and such Distribution Date;
(xi) to the Class B Certificates, any Carryforward Interest for such
Class and such Distribution Date;
(xii) pro rata, to each Class of Certificates, any Adjusted Prepayment
Interest Shortfalls previously allocated thereto and remaining unpaid; and
(xiii) subject to the last paragraph of this Section 5.02(b), to the
Class X Certificate, Current Interest for such Class on such date.
To the extent a Bond Overcollateralization Deficiency exists after
distributions on the Underlying Bond required for such Distribution Date,
amounts otherwise distributable to the holder of the Class X Certificate
pursuant to clause (xiii) of this Section 5.02(b) shall be held on deposit in
the Reserve Fund until the amount in the Reserve Fund equals the Required
Reserve Fund Amount.
(c) On each Distribution Date, the Trustee shall distribute the
Principal Distribution Amount for such date as follows:
(i) On each Distribution Date (a) prior to the Stepdown Date or (b)
with respect to which a Trigger Event has occurred, the Principal Distribution
Amount for such date will be distributed in the following order of priority:
(1) to the Class A-1 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
(2) to the Class A-2 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
(3) to the Class M-1 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
(4) to the Class M-2 Certificates, until the Class
Certificate Principal Amount of such Class has been reduced to zero;
and
(5) to the Class B Certificates, until the Class Certificate
Principal Amount of such Class has been reduced to zero;
(ii) On each Distribution Date (a) on or after the Stepdown Date and
(b) with respect to which a Trigger Event has not occurred, the Principal
Distribution Amount for such date will be distributed in the following order of
priority:
(1) to the Class A-1 and Class A-2 Certificates, an amount
equal to the lesser of (x) the Principal Distribution Amount for such
Distribution Date and (y) the Senior Principal Distribution Amount for
such date, in the following order of priority:
first, to the Class A-1 Certificates, until the Class
Certificate Principal Amount of such Class has been
reduced to zero, and
second, to the Class A-2 Certificates, until the
Class Certificate Principal Amount of such Class has
been reduced to zero;
(2) to the Class M-1 Certificates, an amount equal to the
lesser of (x) the excess of (A) the Principal Distribution Amount for
such Distribution Date over (B) the amount distributed to the Class
A-1 and Class A-2 Certificates on such date pursuant to clause (1)
above and (y) the Class M-1 Principal Distribution Amount for such
date, until the Class Certificate Principal Amount of such Class has
been reduced to zero;
(3) to the Class M-2 Certificates, an amount equal to the
lesser of (x) the excess of (A) the Principal Distribution Amount for
such Distribution Date over (B) the amount distributed to the Class
A-1, Class A-2 and Class M-1 Certificates on such date pursuant to
clauses (1) and (2) above and (y) the Class M-2 Principal Distribution
Amount for such date, until the Class Certificate Principal Amount of
such Class has been reduced to zero; and
(4) to the Class B Certificates, an amount equal to the
lesser of (x) the excess of (A) the Principal Distribution Amount for
such Distribution Date over (B) the amount distributed to the Class
A-1, Class A-2, Class M-1 and Class M-2 Certificates on such date
pursuant to clauses (1), (2) and (3) above and (y) the Class B
Principal Distribution Amount for such date, until the Class
Certificate Principal Amount of such Class has been reduced to zero.
Notwithstanding the foregoing, on any Distribution Date on which the Class
Certificate Principal Amount of each Class of Certificates having a higher
priority of distribution has been reduced to zero, any remaining Principal
Distribution Amount will be distributed to the remaining Classes of
Certificates, in the order of priority set forth above, until the Class
Certificate Principal Amount of each such Class has been reduced to zero.
(d) On each Distribution Date, before the distribution of amounts
pursuant to subsection (c) above, any Bond Deferred Amounts received in respect
of the Underlying Bond shall be distributed in the following order of priority:
(i) pro rata, to the Class A-1 Certificates and Class A-2
Certificates, in respect of any Deferred Amounts previously allocated to such
Certificates and not previously reimbursed, until such Deferred Amounts so
allocated have been reduced to zero;
(ii) to the Class M-1 Certificates, in respect of any Deferred Amounts
previously allocated to the Class M-1 Certificates and not previously
reimbursed, until such Deferred Amounts so allocated have been reduced to zero;
(iii) to the Class M-2 Certificates and not previously reimbursed, in
respect of any Deferred Amounts previously allocated to the Class M-2
Certificates, until such Deferred Amounts so allocated have been reduced to
zero;
(iv) to the Class B Certificates and not previously reimbursed, in
respect of any Deferred Amounts previously allocated to the Class B
Certificates, until such Deferred Amounts so allocated have been reduced to
zero;
(v) to the Reserve Fund, up to an amount equal to the amount, if any,
by which the Required Reserve Fund Amount exceeds amounts on deposit in the
Reserve Fund, in respect of any amounts previously distributed from the Reserve
Fund in order to pay Deferred Amounts (any such amount so deposited in the
Reserve Fund, the "Reserve Fund Deferred Amount Deposit"); and (vi) subject to
maintenance of the Reserve Fund in an amount equal to the Required Reserve Fund
Amount, to the Class X Certificates, any remaining amount.
Section 5.03. Allocation of Losses. On each Distribution Date, the
Class Certificate Principal Amount of each Class of Certificates will be reduced
by the amount of any Applied Loss Amount for such date, in the following order
of priority:
(i) to the Class B Certificates, until the Class Certificate Principal
Amount thereof has been reduced to zero;
(ii) to the Class M-2 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero;
(iii) to the Class M-1 Certificates, until the Class Certificate
Principal Amount thereof has been reduced to zero; and
(iv) pro rata to the Class A-1 and Class A-2 Certificates, until the
Class Certificate Principal Balance of each such Class has been reduced to zero.
Section 5[Reserved]
Section 5.05. [Reserved]
Section 5.06. Reserve Fund (a) On the Closing Date, the Trustee shall
establish and maintain a trust account entitled "Reserve Fund for the benefit of
the holders of the Class A-1, Class A-2, Class M-1, Class M-2 and Class B
Certificates" (the "Reserve Fund"). The Reserve Fund shall be an Eligible
Account included as part of the Trust Fund Assets, and funds on deposit therein
shall be held separate and apart from, and shall not be commingled with, any
other moneys, including, without limitation, other moneys of the Trustee held
pursuant to this Agreement. The Reserve Fund shall not for any reason be an
asset of the FASIT created hereby. The Class X Certificateholder shall be
considered the owner of the Reserve Fund for federal income tax purposes.
(b) On each Distribution Date, to the extent of funds available
therefore pursuant to the last paragraph of Section 5.02(b) and Section
5.02(d)(v), the Trustee shall transfer from the Certificate Account to the
Reserve Fund, an amount equal to the sum of (i) the amount, if any, necessary to
cause the amounts on deposit in the Reserve Fund to equal the Required Reserve
Fund Amount and (ii) the Reserve Fund Deferred Amount Deposit. The Trustee shall
make withdrawals from the Reserve Fund to make distributions pursuant to
paragraph (d) of this Section 5.06.
(c) Funds on deposit in the Reserve Fund may be invested by the
Trustee in Permitted Investments at the written direction of the Class X
Certificateholder. Net investment earnings on such investments shall be
distributed to the Class X Certificateholder pursuant to Section 5.06(d)(xv).
(d) On each Distribution Date, amounts on deposit in the Reserve Fund
will be applied, to the extent that any of the amounts listed below remains
unpaid after distributions on such Distribution Date of the Interest
Distribution Amount and Principal Distribution Amount pursuant to Section
5.02(b) and Section 5.02(c) hereof, in the following order of priority:
(i) pro rata, to the Class A-1 and Class A-2 Certificates, any Current
Interest for each such Class and such Distribution Date and any Carryforward
Interest for each such Class and such Distribution Date;
(ii) to the Class M-1 Certificates, Current Interest for such Class
and such Distribution Date;
(iii) to the Class M-2 Certificates, Current Interest for such Class
and such Distribution Date;
(iv) to the Class B Certificates, Current Interest for such Class and
such Distribution Date;
(v) pro rata, to the Class A-1 and Class A-2 Certificates, any Basis
Risk Shortfall and Unpaid Basis Risk Shortfall for each such Class and such
Distribution Date;
(vi) to the Class M-1 Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date;
(vii) to the Class M-2 Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date;
(viii) to the Class B Certificates, any Basis Risk Shortfall and
Unpaid Basis Risk Shortfall for such Class and such Distribution Date;
(ix) to the Class M-1 Certificates, any Carryforward Interest for such
Class and such Distribution Date;
(x) to the Class M-1 Certificates, any Deferred Amounts previously
allocated to such Class;
(xi) to the Class M-2 Certificates, any Carryforward Interest for such
Class and such Distribution Date;
(xii) to the Class M-2 Certificates, any Deferred Amounts previously
allocated to such Class;
(xiii) to the Class B Certificates, any Carryforward Interest for such
Class and such Distribution Date;
(xiv) to the Class B Certificates, any Deferred Amounts previously
allocated to such Class; and
(xv) to the Class X Certificates, any remaining amount in excess of
the Required Reserve Fund Amount.
ARTICLE VI.
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Events of Default. Upon the occurrence of any Event of
Default, the Trustee, as the holder of the Underlying Bond, will follow the
procedures set forth in this Article.
Section 6.02. Acceleration of Maturity. The Trustee will promptly
furnish to the Depositor and the Certificateholders notice of any Event of
Default known to the Trustee. Upon the Trustee's receipt of a direction to take
such action from the Holders of Senior Certificates evidencing more than 66 2/3%
of all Voting Interests, the Trustee shall, as the holder of the Underlying
Bond, deliver a notice in writing to the Bond Issuer and the Bond Trustee
declaring the Underlying Bond to be immediately due and payable.
At any time after an acceleration of the Underlying Bond has been made,
the Trustee further agrees to deliver a notice in writing to the Bond Issuer and
the Bond Trustee rescinding and annulling such acceleration and its
consequences, upon the Trustee's receipt of a direction to take such action from
the Holders of Senior Certificates evidencing more than 66 2/3% of all Voting
Interests.
Section 6.03. Control by Certificateholders. The Trustee agrees, as
the holder of the Underlying Bond, to instruct the Bond Trustee as to the time,
method and place of conducting any proceeding for any remedy available to the
Bond Trustee or exercising any power or trust conferred on the Bond Trustee,
subject to the limitations and qualifications of Section 5.14 of the Indenture,
upon receipt by the Trustee of a direction to take such action from the Holders
of Senior Certificates evidencing more than 66 2/3% of all Voting Interests.
Section 6.04. Waiver of Past Defaults. The Holders of Senior
Certificates evidencing more than 66 2/3% of all Voting Interests may on behalf
of the Holders of all Certificates waive any past Event of Default and its
consequences, except an Event of Default:
(1) in payment of any installment of principal, or interest on, the
Underlying Bond; or
(2) in respect of a covenant or provision hereof which under Section
9.02 of the Indenture cannot be modified or amended without the consent of each
holder of the Underlying Bond affected.
Upon any such waiver, such Event of Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of the Indenture; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent therefrom.
Section 6.05. Undertaking for Costs. All parties to this Agreement
agree, and each Holder of any Certificate by his or her 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 the Indenture, or in any
suit against the Bond Trustee for any action taken, suffered or omitted by it as
Bond Trustee, the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Bond Trustee, to any suit
instituted by any Certificateholder, or group of Certificateholders, acting
through the Trustee as herein provided, holding in the aggregate Certificates
evidencing more than 10% of all Voting Interests.
Section 6.06. Sale of Trust Estate. The Trustee, as holder of the
Underlying Bond, agrees to deliver a notice in writing to the Bond Trustee of
the consent to, or a direction to the Bond Trustee to make, a private sale of
all or a portion of the collateral for the Underlying Bond, pursuant to Section
5.18(b) of the Indenture, upon receipt by the Trustee of a direction to take
such action by the Holders of Certificates evidencing 100% of all Voting
Interests.
The Trustee, as holder of the Underlying Bond, further agrees to
deliver a notice in writing to the Bond Trustee of the consent to, or a
direction to the Bond Trustee to make, a public sale of all or a portion of the
collateral for the Underlying Bond, pursuant to Section 5.18(c) of the
Indenture, upon receipt by the Trustee of a direction to take such action by the
Holders of Certificates evidencing 100% of all Voting Interests.
Section 6.07. Duties of Trustee. (a) The Trustee, except during the
occurrence of one or more of the Events of Default referred to in Section 6.01
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. In the case of the occurrence of one or more of the
Events of Default referred to in Section 6.01 above, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement and use the same
degree of care and skill in their exercise as a prudent investor would exercise
or use under the circumstances in the conduct of such investor's own affairs.
Any permissive right of the Trustee provided for in this Agreement shall not be
construed as a duty of the Trustee.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Master Servicer, to the Trustee pursuant to this Agreement or
the Master Servicing Agreement.
(c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful misconduct.
No provision of this Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct; provided, however, that:
(i) This paragraph (i) shall not be construed to limit the effect of
paragraph (a) of this Section 6.01.
(ii) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any event described in Section 6.01 other than a
payment default unless a Responsible Officer assigned to and working in the
Trustee's corporate trust division has actual knowledge thereof or unless
written notice of any event is required at the Corporate Trust Office, and such
notice references the Certificates and this Agreement.
(iii) The 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 the direction of Holders of Certificates as provided in Section 6.02 and
6.03 hereof;
(iv) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it; and
(v) The Trustee shall not be responsible for any act or omission of
the Bond Trustee or the Master Servicer.
(d) The 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 the direction of Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement.
(e) The Trustee shall pay, out of its own funds, any fees assessed by
the Rating Agencies after the Closing Date in connection with maintaining the
ratings of the Certificates.
Section 6.08. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 6.07 hereof:
(i) The Trustee may request, and may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, 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 Trustee may consult with counsel and any advice of its
counsel 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 Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(iv) Unless a payment default in respect of the Underlying Bond or
other event specified in Section 6.01 shall have occurred and be continuing and
in each case is known to a Responsible Officer of the Trustee, the 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 (provided the
same appears regular on its face), unless requested in writing to do so by
Holders of at least a majority in Class Certificate Principal Amount (or
Percentage Interest) of each Class of Certificates; provided, however, that, if
the payment within a reasonable time to the 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 Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability or payment of such
estimated expenses as a condition to proceeding. The reasonable expense thereof
shall be paid by the Holders requesting such investigation; and
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, which agents or attorneys shall have any or all of the rights,
powers, duties and obligations of the Trustee conferred on them by such
appointment provided that the Trustee shall continue to be responsible for its
duties and obligations hereunder.
Section 6.09. Trustee Not Liable for Certificates. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates)
or related document save that the Trustee represents that, assuming due
execution and delivery by the other parties hereto, this Agreement has been duly
authorized, executed and delivered by it and constitutes its valid and binding
obligation, enforceable against it in accordance with its terms except that such
enforceability may be subject to (A) applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of the rights of creditors
generally, and (B) general principles of equity regardless of whether such
enforcement is considered in a proceeding in equity or at law.
Section 6.10. Trustee May Own Certificates. The Trustee and any
Affiliate or agent of the Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates and may transact banking and trust
with the other parties hereto with the same rights it would have if it were not
Trustee or such agent.
Section 6.11. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (i) an institution insured by the FDIC and (ii)
a corporation or national banking association, organized and doing business
under the laws of any State or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state authority. If such corporation or national banking
association 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, the combined capital and surplus of such
corporation or national banking association 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 Trustee shall cease to be eligible in
accordance with provisions of this Section, the Trustee shall resign immediately
in the manner and with the effect specified in Section 6.12.
Section 6.12. Resignation and Removal of Trustee. (a) The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Depositor, the Master Servicer and mailing a copy
of such notice to all Holders of record. Upon receiving such notice of
resignation, the Depositor will promptly appoint a successor trustee by written
instrument, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee and one copy to the Master
Servicer. If no successor trustee shall have been so appointed and shall have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time (i) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.11 and shall fail to resign after
written request therefor by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, (iii) a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee is located, or (iv) the continued
use of the Trustee would result in a downgrading of the rating by the Rating
Agencies of any Class of Certificates with a rating, then the Depositor shall
remove the Trustee and appoint a successor trustee by written instrument, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(c) The Holders of more than 50% of the Class Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates may at any time
upon 30 days' written notice to the Trustee and to the Depositor remove the
Trustee by such written instrument, signed by such Holders or their
attorney-in-fact duly authorized, one copy of which instrument shall be
delivered to the Depositor and one copy to the Trustee so removed; the Depositor
shall thereupon use its best efforts to appoint a mutually acceptable successor
trustee in accordance with this Section.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 6.13.
Section 6.13. Successor Trustee. (a) Any successor trustee appointed
as provided in Section 6.06 shall execute, acknowledge and deliver to the
Depositor and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as trustee herein. The predecessor trustee shall
deliver to the successor trustee and shall duly assign, transfer, deliver and
pay over to the successor trustee the entire Trust Fund Assets, together with
all necessary instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and such of the record or copies
thereof maintained by the predecessor trustee in the administration hereof as
may be requested by the successor trustee and shall thereupon be discharged from
all duties and responsibilities under this Agreement.
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.11.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Depositor shall mail (or cause the Master Service to mail)
notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register and to the
Rating Agencies. The expenses of such mailing shall be borne by the Depositor.
Section 6.14. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Persons succeeding to the business of the
Trustee, shall be the successor to the Trustee hereunder, 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, provided that such
Person shall be eligible under the provisions of Section 6.05.
Section 6.15. [Reserved] .
Section 6.16. Authenticating Agents. (a) The Trustee may appoint one
or more Authenticating Agents which shall be authorized to act on behalf of the
Trustee in authenticating Certificates. Wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.16, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 6.16. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. Any Authenticating Agent shall be
entitled to reasonable compensation for its services and, if paid by the
Trustee, it shall be a reimbursable expense.
Section 6.17. Indemnification of Trustee. The Trustee and its
directors, officers, employees and agents shall be entitled to indemnification
from the Trust Fund for any loss, liability or expense incurred in connection
with any legal proceeding and incurred without negligence or willful misconduct
on their part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder, including the costs and expenses
of defending themselves against any claim in connection with the exercise or
performance of any of their powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall have given the
Depositor and the Holders written notice thereof promptly after the Trustee
shall have knowledge thereof;
(ii) while maintaining control over its own defense, the Trustee shall
cooperate and consult fully with the Depositor in preparing such defense; and
(iii) notwithstanding anything to the contrary in this Section 6.16,
the Trust Fund shall not be liable for settlement of any such claim by the
Trustee entered into without the prior consent of the Depositor, which consent
shall not be unreasonably withheld.
The provisions of this Section 6.17 shall survive any termination of
this Agreement and the resignation or removal of the Trustee and shall be
construed to include, but not be limited to any loss, liability or expense under
any environmental law.
Section 6.18. Fees and Expenses of Trustee. The Trustee shall be
entitled to receive, and is authorized to pay to itself the Trustee Fee and as
additional compensation any amount of income or gain earned from the investment
of funds in the Certificate Account.
Section 6.19. Collection of Monies; Remedies. Except as otherwise
expressly provided in this Agreement, the Trustee may demand payment or delivery
of, and shall receive and collect, all money and other property payable to or
receivable by the Trustee pursuant to this Agreement. The Trustee shall hold all
such money and property received by it as part of the Trust Fund Assets and
shall distribute it as provided in this Agreement. If the Trustee shall not have
timely received amounts to be remitted with respect to the Underlying Bond, the
Trustee shall request that such distribution be made as promptly as practicable
or legally permitted. If the Trustee shall subsequently receive any such amount,
it may withdraw such request.
Section 6.20. Limitation of Liability. The Certificates are executed
by the Trustee, not in its individual capacity but solely as Trustee of the
Trust, in the exercise of the powers and authority conferred and vested in it by
this Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 6.21. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such preceding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit or the Certificateholders in respect of which such
judgment has been recovered.
Section 6.22. Waiver of Bond Requirement. The Trustee shall be
relieved of, and each Certificateholder hereby waives, any requirement of any
jurisdiction in which the Trust, or any part thereof, may be located that the
Trustee post a bond or other surety with any court, agency or body whatsoever.
Section 6.23. Waiver of Inventory, Accounting and Appraisal
Requirement. The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
ARTICLE VII.
PURCHASE AND TERMINATION OF THE
TRUST FUND; PURCHASE OF CERTIFICATES
Section 7.01. Termination of Trust Fund Upon Maturity or Redemption of
the Underlying Bond. The obligations and responsibilities of the Trustee (other
than the obligation of the Trustee to make payments to Certificateholders as set
forth in Section 7.02) shall terminate in accordance with Section 7.02 or on the
final payment or earlier redemption of the Underlying Bond; provided, however,
that in no event shall the Trust Fund created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James's, living on the date hereof and provided further, that in no event shall
the Trust Fund created hereby continue beyond May 25, 2028.
Section 7.02. Special Purchase of Certificates. (a) On any
Distribution Date occurring on or after the Distribution Date on which the
aggregate Certificate Principal Amount of the Certificates (other than the Class
X Certificate) is less than 35% of their initial aggregate Certificate Principal
Amount, the Class O Certificateholder, so long as it holds such Certificate,
shall have the option to purchase all, but not less than all (other than the
Class X Certificate), of the Certificates remaining outstanding on such
Distribution Date for a purchase price equal to the sum of the outstanding
Certificate Principal Amounts of each such Certificate plus accrued but unpaid
interest thereon at the applicable Certificate Interest Rate (the "Acquisition
Price").
(i) In order to exercise such option, the Class O Certificateholder
must deliver to the Trustee written notice of its intent to purchase all of the
Certificates and of the Distribution Date on which it intends to do so not less
than 20 days prior to such Distribution Date.
(ii) On the Business Day preceding the final Distribution Date, the
Class O Certificateholder shall deposit with the Trustee cash, certificates of
deposit or a letter of credit in an amount sufficient to provide for payment of
the Acquisition Price. Such amount shall be paid by the Trustee to Holders of
Certificates upon surrender for purchase as provided below.
(iii) Notice of any purchase of the Certificates pursuant to the
provisions of this subsection, specifying the Distribution Date upon which such
purchase shall be made, shall be given promptly by the Trustee by first class
mail to Holders of the Certificates mailed no later than five Business Days
after the Trustee has received notice from the Class O Certificateholder of its
intent to exercise its right to purchase the Certificates. Such notice shall
specify (A) the Distribution Date upon which the Acquisition Price will be paid
upon transfer of the Certificates (the "Acquisition Date"), and the time and
place at which any Definitive Certificates must be surrendered for cancellation
and (B) that the Acquisition Price applicable to each Certificate constitutes
payment in full therefor, and that no further amounts in respect of interest or
principal will be distributable to the Holders from whom such Certificates are
purchased by the Class O Certificateholder. The Trustee shall give such notice
to the Master Servicer and the Certificate Registrar at the time such notice is
given to Holders of the Certificates.
(iv) On the Acquisition Date, the Trustee shall (A) make payment to
each Holder of a Certificate of the Acquisition Price therefor in the manner in
which distributions are effected under this Agreement and (B) effect the
transfer of each such Certificate (or interest therein) to the Class O
Certificateholder, which shall thereafter (unless it transfers such Certificate
in accordance with this Agreement) be the Holder (or Certificate Owner) of such
Certificate for all purposes. Notwithstanding the foregoing, in the event that
all of the Holders of Definitive Certificates do not surrender their
Certificates for purchase at the time specified in the above-mentioned written
notice, the Trustee shall give a second written notice to such remaining
Certificateholders to surrender their Certificates for purchase. If within ten
days after the second notice any Definitive Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to contact
the remaining Certificateholders concerning surrender of such Certificates, and
the cost thereof shall be paid out of the amounts distributable to such Holders.
Subject to applicable law, the Trustee shall hold all amounts payable to such
Holders for the benefit of such Holders. No interest shall accrue on any amount
held by the Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
Acquisition Price thereon in accordance with this Section. Notwithstanding that
any Definitive Certificate has not been surrendered after notice and deposit of
the Acquisition Price as provided above, on the Acquisition Date such
Certificate shall be deemed to be canceled and a transfer of such Certificate
(or interest therein) shall be deemed to be effected to the Class O
Certificateholder, which shall thereafter (unless it transfers such Certificate
in accordance with this Agreement) be the Holder (or Certificate Owner) of such
Certificate for all purposes.
Section 7.03. Procedure Upon Termination of Trust Fund. (a) Notice of
any termination pursuant to the provisions of Section 7.01, specifying the
Distribution Date upon which the final distribution shall be made, shall be
given promptly by the Trustee by first class mail to Certificateholders mailed
upon the final payment or earlier redemption of the Underlying Bond. Such notice
shall specify (A) the Distribution Date upon which final distribution on the
Certificates of all amounts required to be distributed to Certificateholders
pursuant to Section 5.02 will be made upon presentation and surrender of the
Certificates at the Corporate Trust Office, and (B) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distribution
being made only upon presentation and surrender of the Certificates at the
office or agency of the Trustee therein specified. The Trustee shall give such
notice to the Master Servicer and the Certificate Registrar at the time such
notice is given to Holders of the Certificates. Upon any such termination, the
duties of the Certificate Registrar with respect to the Certificates shall
terminate and the Trustee shall terminate the Certificate Account and any other
account or fund maintained with respect to the Certificates, subject to the
Trustee's obligation hereunder to hold all amounts payable to Certificateholders
in trust without interest pending such payment.
(b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give further written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after such notice any Certificates shall not have been surrendered for
cancellation, the Trustee may take appropriate steps to contact the remaining
Certificateholders concerning surrender of such Certificates, and the cost
thereof shall be paid out of the amounts distributable to such Holders. If
within two years after such notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall, subject to applicable state law
relating to escheatment, hold all amounts distributable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held by the
Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
final distribution thereon in accordance with this Section.
ARTICLE VIII.
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or this Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or take any action or proceeding
in any court for a partition or winding up of this Trust Fund, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them. Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association, nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
(b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Certificate Principal Amount (or Percentage Interest) of Certificates of each
Class affected thereby shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the cost, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for sixty days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding and no direction inconsistent with such written
request has been given such Trustee during such sixty-day period by such
Certificateholders; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue or by availing of any provision of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the benefit of all Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 8.02. Access to List of Holders. (a) If the Trustee is not
acting as Certificate Registrar, the Certificate Registrar will furnish or cause
to be furnished to the Trustee, within fifteen days after receipt by the
Certificate Registrar of a request by the Trustee in writing, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Certificateholders of each Class as of the most recent Record Date.
(b) If three or more Holders or Certificate Owners (hereinafter
referred to as "Applicants") apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Certificates and
is accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants reasonable access during the normal
business hours of the Trustee to the most recent list of Certificateholders held
by the Trustee or shall, as an alternative, send, at the Applicants' expense,
the written communication proffered by the Applicants to all Certificateholders
at their addresses as they appear in the Certificate Register.
(c) Every Holder or Certificate Owner, if the Holder is a Clearing
Agency, by receiving and holding a Certificate, agrees with the Depositor, the
Certificate Registrar and the Trustee that neither the Depositor, the
Certificate Registrar nor the Trustee shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 8.03. Acts of Holders of Certificates. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Holders or Certificate Owner,
if the Holder is a Clearing Agency, may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee. Such instrument or instruments (as the action
embodies therein and evidenced thereby) are herein sometimes referred to as an
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agents shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments or deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the individual
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The ownership of Certificates (whether or not such Certificates
shall be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee nor the Depositor shall be
affected by any notice to the contrary.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Trustee in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
ARTICLE IX.
[RESERVED]
ARTICLE X.
FASIT ADMINISTRATION
Section 10.01. FASIT Administration. (a) The Holder of the Class O
Certificate or, to the extent required by applicable Treasury Regulations, the
Trustee, shall timely elect to treat the Trust as a FASIT under the Code and,
if necessary, under applicable state law. Unless otherwise required by
applicable Treasury Regulations, such election will be made on the appropriate
federal or state tax returns for the taxable year of the Holder of the Class O
Certificate in which the Certificates are issued or in any other taxable year
as required by applicable Treasury Regulations.
(b) Each Certificate (except the Class O Certificate) is hereby
designated as a separate "regular interest" (within the meaning of Section
860L(b)(1) of the Code) in the FASIT. The Class O Certificate is hereby
designated as the single class of "ownership interest" (within the meaning of
Section 860L(b)(2) of the Code) in the FASIT. The Trustee shall not permit the
creation of any other "interests" in the FASIT (within the meaning of the FASIT
Provisions) except those contemplated herein.
(c) The date of this Agreement is hereby designated as the "startup
day" of the FASIT within the meaning of Section 860L(d)(1) of the Code. Solely
for purposes of the FASIT Provisions, May 25, 2028 has been designated the
"latest possible maturity date" of each Class of regular interests in the
FASIT. (d) Except as otherwise provided in Section 11.01 below, the Holder of
the Class O Certificate shall pay out of its own funds any tax-related expenses
of the FASIT (including, but not limited to, expenses related to audits or any
administrative or judicial proceedings with respect to the FASIT that involve
the Internal Revenue Service or state tax authorities). (e) Within 30 days
after the date of this Agreement the Trustee shall cause the Master Servicer to
prepare or cause to be prepared and submit to the Holder of the Class O
Certificate for filing with the Internal Revenue Service Form 8811,
"Information Return for Real Estate Mortgage Investment Conduits (REMIC) and
Issuers of Collateralized Debt Obligations" for the FASIT. The Holder of the
Class O Certificate and the Master Servicer shall prepare, execute and file, or
cause to be prepared, executed and filed, the tax returns which the Holder of
the Class O Certificate and the FASIT are respectively obligated to prepare and
file in accordance with the FASIT Provisions. The expenses of preparing and
filing such returns shall not be an expense of the Trust or to the holders of
the regular interests in the FASIT, but rather be borne by the Holder of the
Class O Certificate, without any right of reimbursement therefor. The Trustee
shall cause the Master Servicer to provide on a timely basis to the Holder of
the Class O Certificate or its designee, and the Master Servicer shall provide
on a timely basis to the Trustee or its designee, such information with respect
to the FASIT as is in its possession and reasonably required by the Holder of
the Class O Certificate or the Trustee, respectively, to enable it to perform
its obligations under this Article.
The Master Servicer shall provide on a timely basis to the Trustee or
its designee such information with respect to the Trust and the FASIT, in each
case, as is in its possession, which the Master Servicer has received or
prepared by virtue of its role as master Master Servicer under the Servicing
Agreement and reasonably required by the Trustee to enable it to perform its
obligations under this Section 11.01 and the Trustee shall provide such
information on a timely basis to the Holder of the Class O Certificate or its
designee, and each of the Trustee and the Holder of the Class O Certificate
shall be entitled to rely on such information in the performance of its
obligations under this Section 11.01. The Master Servicer shall indemnify the
Holder of the Class O Certificate and the Trustee for any liability or
assessment against the Holder of the Class O Certificate, the Trustee or the
FASIT and any expenses incurred in connection with such liability or assessment
(including reasonable attorney's fees) resulting from any error in any tax or
information returns resulting from errors in the information provided by the
Master Servicer as the case may be. Such indemnification shall survive the
termination of this Agreement and any resignation or termination of the Trustee
under this Agreement.
(f) The Trustee shall report all information to Certificateholders
that is the responsibility of the FASIT under the Code, the FASIT Provisions or
other compliance guidance issued by the Internal Revenue Service or any state
or local taxing authority including, without limitation, reports relating to
interest, original issue discount and market discount or premium. The Trustee
shall provide to the Internal Revenue Service, the name, title, address and
telephone number of the Person who will serve as the representative of the
FASIT.
(g) None of the Holder of the Class O Certificate, the Master
Servicer or the Trustee shall knowingly take (or cause the FASIT to take) any
action or fail to take (or failed to cause to be taken) any action within their
respective control and within the scope of their respective duties under this
Agreement, that, under the FASIT Provisions, if taken or not taken, as the case
may be, would (i) endanger the status of the Trust as a FASIT, or (ii) result
in the imposition of a tax upon the FASIT (including but not limited to the tax
on prohibited transactions as defined in Section 860L(e) of the Code) (any such
endangerment or imposition, an "Adverse FASIT Event"), unless the Trustee and
the Master Servicer shall have obtained or received an Opinion of Counsel (at
the expense of the party requesting such action or at the expense of the Trust
if the Trustee seeks to take such action or to refrain from acting for the
benefit of the Certificateholders) to the effect that the contemplated action
will not result in an Adverse FASIT Event. The Trustee shall not take any
actions (or fail to take any action, whether or not authorized hereunder) as to
which the Holder of the Class O Certificate or the Master Servicer has advised
it in writing that either the Holder of the Class O Certificate or the Master
Servicer has received or obtain an Opinion of Counsel to the effect that an
Adverse FASIT Event would occur with respect to such action or inaction. In
addition, prior to taking any action with respect to the FASIT, or causing the
FASIT to take any action, that is not expressly permitted under the terms of
this Agreement, the Holder of the Class O Certificate and the Master Servicer
shall consult with the Trustee or its designee, in writing, with respect to
whether such action would cause an Adverse FASIT Event to occur. The Holder of
the Class O Certificate shall not take any such action or cause the FASIT to
take any such action as to which the Trustee has advised it in writing that an
Adverse FASIT Event would occur, and the Holder of the Class O Certificate
shall not have any liability hereunder for any action taken by it in accordance
with the written instructions of the Trustee. The Trustee may consult with
counsel to obtain such written advice, and the Trustee may conclusively rely on
such advice of counsel, and the cost of same shall be borne by the party
seeking to take the action not permitted by this Agreement, but in no event at
the cost or expense of the Trust or the Trustee.
(h) If any "prohibited transactions" taxes, as defined in Section
860L(e) of the Code, or any other tax imposed by the Code or any applicable
provisions of state or local tax laws is imposed on the FASIT, such tax,
together with all incidental costs and expenses (including, without limitation,
penalties and reasonable attorneys' fees), shall be charged to and paid by (i)
the Master Servicer, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations or this Article X; or (ii) the Holder
of the Class O Certificate, if such tax arises out of a breach of any of its
obligations under this Article X.
(i) The Holder of the Class O Certificate and, to the extent that
records are maintained by the Master Servicer in the normal course of its
business, and the Master Servicer shall, for federal income tax purposes,
maintain books and records with respect to the FASIT on an accrual basis and a
taxable year corresponding to the taxable year of the Holder of the Class O
Certificate.
(j) Neither the Trustee nor the Master Servicer shall not enter into
any arrangement by which the FASIT will receive a fee or other compensation for
services (other than a fee received as a compensation for a waiver, amendment
or consent under permitted assets (other than foreclosure property) held by the
FASIT) nor permit the FASIT to receive any income from assets other than
"permitted assets" as defined in Section 860L(c) of the Code.
Section 10.02 Compliance with FASIT Provisions; Further Assurances.
(a) In order to facilitate compliance by the Trust with the FASIT
Provisions, the parties hereto agree that, insofar as the rights or
responsibilities of any party under, or actions required to be taken by any
party to, this Agreement are required to be modified as a result of the
promulgation of proposed, temporary or final Treasury Regulations or other
applicable authority, as evidenced by a notice from the Master Servicer to the
other parties hereto, based upon the advice of counsel, the parties hereto
agree (i) to enter into any amendments to this Agreement that are required to
bring this Agreement into compliance with such regulation or other authority
and/or to allow the Trust to continue to be classified as a FASIT for U.S.
federal income tax purposes or (ii) to take such actions or refrain from taking
such actions pursuant to the terms of this Agreement in a manner consistent
with such regulations or other authority necessary to maintain the status of
the Trust as a FASIT or to prevent the imposition of tax on the Trust or the
FASIT.
(b) The parties to this Agreement hereby agree to take such further
actions as may be required to effectuate this Section 10.02 and the intent that
this Trust be treated as a FASIT under the FASIT Provisions.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01 Binding Nature of Agreement; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.02. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof.
Section 11.03. Amendment. (a) This Agreement may be amended from time
to time by the Depositor and the Trustee, without notice to or the consent of
any of the Holders, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund or this Agreement in any
Offering Document, or to correct or supplement any provision herein which may
be inconsistent with any other provisions herein, (iii) to make any other
provisions with respect to matters or questions arising under this Agreement or
(iv) to add, delete, or amend any provisions to the extent necessary or
desirable to comply with any requirements imposed by the Code and the FASIT
Provisions. No such amendment effected pursuant to the preceding sentence
shall, as evidenced by an Opinion of Counsel, result in an Adverse FASIT Event,
nor shall such amendment effected pursuant to clause (iii) of such sentence
adversely affect in any material respect the interests of any Holder. Prior to
entering into any amendment without the consent of Holders pursuant to this
paragraph, the Trustee may require an Opinion of Counsel (at the expense of the
party requesting such amendment) to the effect that such amendment is permitted
under this paragraph. Any such amendment shall be deemed not to adversely
affect in any material respect any Holder, if the Trustee receives written
confirmation from each Rating Agency that such amendment will not cause such
Rating Agency to reduce the then current rating assigned to the Certificates
(and any Opinion of Counsel requested by the Trustee in connection with any
such amendment may rely expressly on such confirmation as the basis therefor).
(b) This Agreement may also be amended from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than
66-2/3% of the Class Certificate Principal Amount (or Percentage Interest) of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall be made unless the Trustee
receives an Opinion of Counsel, at the expense of the party requesting the
change, that such change will not result in an Adverse FASIT Event, and
provided further, that no such amendment may (i) reduce in any manner the
amount of, or delay the timing of, payments received on the Underlying Bond
which are required to be distributed on any Certificate, without the consent of
the Holder of such Certificate or (ii) reduce the aforesaid percentages of
Class Certificate Principal Amount (or Percentage Interest) of Certificates of
each Class, the Holders of which are required to consent to any such amendment
without the consent of the Holders of 100% of the Class Certificate Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby.
For purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of any Class of Book-Entry Certificates, the
related Certificate Owners.
(c) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Holder, the Depositor and to the Rating Agencies.
(d) It shall not be necessary for the consent of Holders under this
Section 11.03 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
(e) Notwithstanding anything to the contrary in any Servicing
Agreement, the Trustee shall not consent to any amendment of any Servicing
Agreement except pursuant to the standards provided in this Section with
respect to amendment of this Agreement. Section 1Voting Rights. Except to the
extent that the consent of all affected Certificateholders is required pursuant
to this Agreement, with respect to any provision of this Agreement requiring
the consent of Certificateholders representing specified percentages of
aggregate outstanding Certificate Principal Amount (or Percentage Interest),
Certificates owned by the Depositor, the Master Servicer, the Trustee or any
Servicer or Affiliates thereof are not to be counted so long as such
Certificates are owned by the Depositor, the Master Servicer, the Trustee or
any Servicer or any Affiliate thereof.
Section 11.05. Provision of Information. (a) For so long as any of
the Certificates of any Series or Class are "restricted securities" within the
meaning of Rule 144(a)(3) under the Act, each of the Depositor and the Trustee
agree to cooperate with each other to provide to any Certificateholders and to
any prospective purchaser of Certificates designated by such Certificateholder,
upon the request of such Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser to
satisfy the condition set forth in Rule 144A(d)(4) under the Act. Any
reasonable, out-of-pocket expenses incurred by the Trustee in providing such
information shall be reimbursed by the Depositor.
(b) The Trustee will provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or documents
requested, (i) a copy (excluding exhibits) of any report on Form 8-K or Form
10-K filed with the Securities and Exchange Commission pursuant to Section 3(i)
of the Master Servicing Agreement and (ii) a copy of any other document
incorporated by reference in the Prospectus. Any reasonable out-of-pocket
expenses incurred by the Trustee in providing copies of such documents shall be
reimbursed by the Depositor.
(c) On each Distribution Date, the Trustee shall deliver or cause to
be delivered by first class mail to the Depositor, Attention: Contract Finance,
a copy of the report delivered to Certificateholders pursuant to Section 4.03.
Section 1Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 11.07. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
received by (a) in the case of the Depositor, American Residential Eagle, Inc.,
415 Marine View Avenue, Suite 230, Del Mar, California 92014, Attention: Mark
Conger, and (b) in the case of the Trustee, First Union National Bank, 230
South Tryon Street NC1179, Charlotte, North Carolina 28288, Attention:
Structured Finance, or as to each party such other address as may hereafter be
furnished by such party to the other parties in writing. Any notice required or
permitted to be mailed to a Holder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice.
Section 11.08. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.09. Indulgences; No Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.
Section 11.10. Headings Not To Affect Interpretation. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 11.11. Benefits of Agreement. Nothing in this Agreement or in
the Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of the
Certificates, any benefit or any legal or equitable right, power, remedy or
claim under this Agreement.
Section 11.12. Special Notices to the Rating Agencies. (a) The
Depositor shall give prompt notice to the Rating Agencies of the occurrence of
any of the following events of which it has notice:
(i) any amendment to this Agreement pursuant to Section 11.03;
(ii) the making of a final payment pursuant to Section 7.02; and
(iii) any termination of the rights and obligations of any
Servicer under the applicable Servicing Agreement.
(b) All notices to the Rating Agencies provided for this Section
shall be in writing and sent by first class mail, telecopy or overnight
courier, as follows:
Standard & Poor's Rating Services
26 Broadway, 15th Floor
New York, New York 10004
Attention: Residential Mortgages
And
Duff & Phelps Credit Rating Company
55 East Monroe
38th Floor
Chicago, Illinois 60603
Attention: Residential Mortgage-Backed Securities
(c) The Trustee shall deliver to the Rating Agencies reports prepared
pursuant to Section 4.03.
Section 11.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their
names to be signed hereto by their respective officers hereunto duly authorized
as of the day and year first above written.
AMERICAN RESIDENTIAL EAGLE, INC.,
as Depositor
By: ___________________________
Name: _____________________
Title: ____________________
FIRST UNION NATIONAL BANK,
as Trustee.
By: ___________________________
Name: _____________________
Title: ____________________
ACKNOWLEDGED BY:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
(solely for purposes of Article IV
and Article X hereof).
By: ___________________________
Name: _____________________
Title: ____________________
EXHIBIT A
FORMS OF CERTIFICATES
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
THIS CERTIFICATE IS A FASIT REGULAR INTEREST CERTIFICATE. THIS CERTIFICATE DOES
NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE
DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF THIS
CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ON THE FACE HEREOF.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.]
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATES, SERIES 1998-1
CLASS A-1
Evidencing a beneficial interest in a single Collateralized
Callable Mortgage Bond issued by American Residential Eagle
Bond Trust 1998-1 and other assets in a trust fund
established by
AMERICAN RESIDENTIAL EAGLE, INC.
Initial Aggregate Certificate Initial Certificate
Principal Amount of the Class A-1 Principal Amount of this
Certificates: $143,970,000.00 Certificate: $143,970,000.00
Certificate Cut-off Date: May 1, 1998
Interest Rate: Variable
NUMBER 1 CUSIP: 02926PAA9
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the initial Certificate
Principal Amount of this Certificate by the initial aggregate Certificate
Principal Amount of all Class A-1 Certificates, both as specified above) in (i)
certain distributions of principal and interest on a Collateralized Callable
Mortgage Bond issued by American Residential Eagle Bond Trust 1998-1 acquired
from American Residential Eagle, Inc. (the "Depositor"), a Delaware
corporation, (ii) such amounts and investments as from time to time may be held
in the Trust Fund established pursuant to the Trust Agreement (as defined on
the reverse hereof) and (iii) certain other assets, if any, as described in the
Trust Agreement (the foregoing assets hereinafter collectively referred to as
the "Trust Fund").
Distributions on this Certificate will be made monthly on the 25th day of
each month or, if such a day is not a Business Day, then the next succeeding
Business Day, commencing on June 25, 1998 (each, a "Distribution Date"), to the
Person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding the related Distribution Date (the
"Record Date"), in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount, if any, required to be
distributed to all the Certificates of the Class represented by this
Certificate. All sums distributable on this Certificate are payable in the coin
or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Trust Agreement or
be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
TRUSTEE'S CERTIFICATE AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
(REVERSE)
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATE, SERIES 1998-1
This Certificate is one of a duly authorized issue of certificates designated
as American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed Callable
Certificates, Series 1998-1 (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement"), between American
Residential Eagle, Inc., as Depositor, and First Union National Bank, as
Trustee, to which terms, provisions and conditions thereof the Holder of this
Certificate by virtue of the acceptance hereof assents, and by which such
Holder is bound. The Certificates consist of the following Classes: the Class
A-1 and Class A-2 Certificates (the "Senior Certificates"), the Class M-1,
Class M-2, Class B, and Class X Certificates (the "Subordinate Certificates"),
and the Class O Certificate (the "Ownership Certificate").
On each Distribution Date, the Total Distribution Amount will be distributed
from the Certificate Account to Holders of each Class of Certificates according
to the terms of the Trust Agreement. All distributions or allocations made with
respect to each Class of Certificates on each Distribution Date shall be
allocated among the outstanding Certificates of such Class based on the
Certificate Principal Amount (or Percentage Interest) of each such Certificate.
Distributions on this Certificate will be made by check mailed to the Holder of
record of this Certificate on the immediately preceding Record Date at the
address of such Holder as it appears on the Certificate Register (except that
with respect to a Certificate registered in the name of a Clearing Agency or
its nominee, distributions will be made by wire transfer of immediately
available funds) or, with respect to any Holder of a Certificate evidencing not
less than $2,500,000 in initial Certificate Principal Amount (or 100% of the
Percentage Interest in such Class), by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and surrender of
Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Trustee at 230 South Tryon Street NC 1179, Charlotte, North
Carolina 28288-1179, Attention: Structured Finance. The Trustee may designate
another address from time to time by notice to the Holders of the Certificates
and the Depositor.
The Trust Agreement permits the amendment thereof from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than 66
2/3% of the aggregate outstanding Certificate Principal Amount (or Percentage
Interest) of each Class for the purpose of adding, changing or eliminating any
provisions of the Trust Agreement or modifying the rights of the Holders of the
Certificates thereunder; provided, however, that (i) no such amendment may be
made unless the Trustee receives an opinion of counsel as to certain tax
matters specified in the Trust Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Certificate Principal Amount (or
Percentage Interest) of each Class the Holders of which are required to consent
to any such amendment, without the consent of the Holders of 100% of the
aggregate Certificate Principal Amount (or Percentage Interest) of each Class
affected thereby. Any consent by the Holder of this Certificate will be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Trust Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or Percentage Interest) as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Certificates to the extent provided in the Trust Agreement, will be subject
to purchase by the holder of the Class O Certificate for the price specified in
the Trust Agreement, on any Distribution Date on which the aggregate
Certificate Principal Amount of the Certificates is less than 35% of the
aggregate Certificate Principal Amount thereof as of the Closing Date, as
provided in the Trust Agreement. The Certificates will also be subject to
mandatory redemption in accordance with the Trust Agreement on any Distribution
Date on which the Underlying Bond is redeemed. In no event will the trust
created by the Trust Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living at the date of the
Trust Agreement of a certain person named in the Trust Agreement.
The Depositor, the Trustee and the Certificate Registrar and any agent of any
of them may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
As provided in the Trust Agreement, this Certificate and the Trust Agreement
shall be construed in accordance with and governed by the laws of the State of
New York, without regard to the conflict of laws principles applied in the
State of New York. In the event of any conflict between the provisions of this
Certificate and the Trust Agreement, the Trust Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the Trust
Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate
of the same Class of like principal to the above-named assignee and deliver
such Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- --------------------------
Authorized Officer __________________________________________
Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this assignment
must correspond with the name(s) on the
face of this Certificate without alteration
or any change whatsoever. The signature
must be guaranteed by a participant in the
Securities Transfer Agents Medallion
Program, the New York Stock Exchange
Medallion Signature Program or the Stock
Exchanges Medallion Program. Notarized or
witnessed signatures are not acceptable as
guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- -------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- -----------------------------------------------------------------------------.
Applicable reports and statements should be mailed to ________________________
- -----------------------------------------------------------------------------
This information is provided by_________________________________________
the assignee named above, or ____________________________________ as its agent.
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
THIS CERTIFICATE IS A FASIT REGULAR INTEREST CERTIFICATE. THIS CERTIFICATE DOES
NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE
DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF THIS
CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ON THE FACE HEREOF.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.]
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATES, SERIES 1998-1
CLASS A-2
Evidencing a beneficial interest in a single Collateralized
Callable Mortgage Bond issued by American Residential Eagle
Bond Trust 1998-1 and other assets in a trust fund
established by
AMERICAN RESIDENTIAL EAGLE, INC.
Initial Aggregate Certificate Initial Certificate
Principal Amount of the Class A-2 Principal Amount of this
Certificates: $232,093,000.00 Certificate: $232,093,000.00
Certificate Cut-off Date: May 1, 1998
Interest Rate: Variable
NUMBER 1 CUSIP: 02926PAB7
THIS CERTIFIES THAT [ ]is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the initial Certificate
Principal Amount of this Certificate by the initial aggregate Certificate
Principal Amount of all Class A-2 Certificates, both as specified above) in (i)
certain distributions of principal and interest on a Collateralized Callable
Mortgage Bond issued by American Residential Eagle Bond Trust 1998-1 (the
"Underlying Bond") acquired from American Residential Eagle, Inc. (the
"Depositor"), a Delaware corporation, (ii) such amounts and investments as from
time to time may be held in the Trust Fund established pursuant to the Trust
Agreement (as defined on the reverse hereof) and (iii) certain other assets, if
any, as described in the Trust Agreement (the foregoing assets hereinafter
collectively referred to as the "Trust Fund").
Distributions on this Certificate will be made monthly on the 25th day of
each month or, if such a day is not a Business Day, then the next succeeding
Business Day, commencing on June 25, 1998 (each, a "Distribution Date"), to the
Person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding the related Distribution Date (the
"Record Date"), in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount, if any, required to be
distributed to all the Certificates of the Class represented by this
Certificate. All sums distributable on this Certificate are payable in the coin
or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Trust Agreement or
be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
TRUSTEE'S CERTIFICATE AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
(REVERSE)
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATE, SERIES 1998-1
This Certificate is one of a duly authorized issue of certificates designated
as American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed Callable
Certificates, Series 1998-1 (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement"), between American
Residential Eagle, Inc., as Depositor, and First Union National Bank, as
Trustee, to which terms, provisions and conditions thereof the Holder of this
Certificate by virtue of the acceptance hereof assents, and by which such
Holder is bound. The Certificates consist of the following Classes: the Class
A-1 and Class A-2 Certificates (the "Senior Certificates"), the Class M-1,
Class M-2, Class B, and Class X Certificates (the "Subordinate Certificates"),
and the Class O Certificate (the "Ownership Certificate").
On each Distribution Date, the Total Distribution Amount will be distributed
from the Certificate Account to Holders of each Class of Certificates according
to the terms of the Trust Agreement. All distributions or allocations made with
respect to each Class of Certificates on each Distribution Date shall be
allocated among the outstanding Certificates of such Class based on the
Certificate Principal Amount (or Percentage Interest) of each such Certificate.
Distributions on this Certificate will be made by check mailed to the Holder of
record of this Certificate on the immediately preceding Record Date at the
address of such Holder as it appears on the Certificate Register (except that
with respect to a Certificate registered in the name of a Clearing Agency or
its nominee, distributions will be made by wire transfer of immediately
available funds) or, with respect to any Holder of a Certificate evidencing not
less than $2,500,000 in initial Certificate Principal Amount (or 100% of the
Percentage Interest in such Class), by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and surrender of
Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Trustee at 230 South Tryon Street NC 1179, Charlotte, North
Carolina 28288-1179, Attention: Structured Finance. The Trustee may designate
another address from time to time by notice to the Holders of the Certificates
and the Depositor.
The Trust Agreement permits the amendment thereof from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than 66
2/3% of the aggregate outstanding Certificate Principal Amount (or Percentage
Interest) of each Class for the purpose of adding, changing or eliminating any
provisions of the Trust Agreement or modifying the rights of the Holders of the
Certificates thereunder; provided, however, that (i) no such amendment may be
made unless the Trustee receives an opinion of counsel as to certain tax
matters specified in the Trust Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Certificate Principal Amount (or
Percentage Interest) of each Class the Holders of which are required to consent
to any such amendment, without the consent of the Holders of 100% of the
aggregate Certificate Principal Amount (or Percentage Interest) of each Class
affected thereby. Any consent by the Holder of this Certificate will be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Trust Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or Percentage Interest) as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Certificates will, to the extent provided in the Trust Agreement, be
subject to purchase by the holder of the Class O Certificate for the price
specified in the Trust Agreement, on any Distribution Date on which the
aggregate Certificate Principal Amount of the Certificates is less than 35% of
the aggregate Certificate Principal Amount thereof as of the Closing Date, as
provided in the Trust Agreement. The Certificates will also be subject to
mandatory redemption in accordance with the Trust Agreement on any Distribution
Date on which the Underlying Bond is redeemed. In no event will the trust
created by the Trust Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living at the date of the
Trust Agreement of a certain person named in the Trust Agreement.
The Depositor, the Trustee and the Certificate Registrar and any agent of any
of them may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
As provided in the Trust Agreement, this Certificate and the Trust Agreement
shall be construed in accordance with and governed by the laws of the State of
New York, without regard to the conflict of laws principles applied in the
State of New York. In the event of any conflict between the provisions of this
Certificate and the Trust Agreement, the Trust Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the Trust
Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate
of the same Class of like principal to the above-named assignee and deliver
such Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- -------------------------- ----------------------------------------
Authorized Officer Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this assignment
must correspond with the name(s) on the
face of this Certificate without alteration
or any change whatsoever. The signature
must be guaranteed by a participant in the
Securities Transfer Agents Medallion
Program, the New York Stock Exchange
Medallion Signature Program or the Stock
Exchanges Medallion Program. Notarized or
witnessed signatures are not acceptable as
guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- ------------------------------------------------------------------------------
Applicable reports and statements should be mailed to ________________________
- ------------------------------------------------------------------------------
This information is provided by _____________________________________
the assignee named above, or ____________________________________ as its agent
EXHIBIT A-3
FORM OF CLASS M-1 CERTIFICATE
THIS CERTIFICATE IS A FASIT REGULAR INTEREST CERTIFICATE. THIS CERTIFICATE DOES
NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE
DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF THIS
CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE TRUST
AGREEMENT REFERRED TO HEREIN.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.]
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A CERTIFICATION TO
THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN SUBJECT
TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY SUCH PLAN OR A PERSON ACTING
ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN OR
(2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL
ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e) OF THE PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR (B) AN OPINION OF COUNSEL (A
"BENEFIT PLAN OPINION") SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON
WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE PLAN ASSETS
AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR THE CODE AND
WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN BY SUCH ENTITIES IN THE TRUST AGREEMENT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE OR THE DEPOSITOR.
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATES, SERIES 1998-1
CLASS M-1
Evidencing a beneficial interest in a single Collateralized
Callable Mortgage Bond issued by American Residential Eagle
Bond Trust 1998-1 and other assets in a trust fund
established by
AMERICAN RESIDENTIAL EAGLE, INC.
Initial Aggregate Certificate Initial Certificate
Principal Amount of the Class M-1 Principal Amount of this
Certificates: $46,029,000.00 Certificate: $46,029,000.00
Certificate Cut-off Date: May 1, 1998
Interest Rate: Variable
NUMBER 1 CUSIP: 02926PAC5
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the initial Certificate
Principal Amount of this Certificate by the initial aggregate Certificate
Amount of all Class M-1 Certificates, both as specified above) in (i) certain
distributions of principal and interest on a Collateralized Callable Mortgage
Bond issued by American Residential Eagle Bond Trust 1998-1 (the "Underlying
Bond") acquired from American Residential Eagle, Inc. (the "Depositor"), a
Delaware corporation, (ii) such amounts and investments as from time to time
may be held in the Trust Fund established pursuant to the Trust Agreement (as
defined on the reverse hereof) and (iii) certain other assets, if any, as
described in the Trust Agreement (the foregoing assets hereinafter collectively
referred to as the "Trust Fund").
Distributions on this Certificate will be made monthly on the 25th day of each
month or, if such a day is not a Business Day, then the next succeeding
Business Day, commencing on June 25, 1998 (each, a "Distribution Date"), to the
Person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding the related Distribution Date (the
"Record Date"), in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount, if any, required to be
distributed to all the Certificates of the Class represented by this
Certificate. All sums distributable on this Certificate are payable in the coin
or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Trust Agreement or
be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
TRUSTEE'S CERTIFICATE AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
(REVERSE)
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATE, SERIES 1998-1
This Certificate is one of a duly authorized issue of certificates designated
as American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed Callable
Certificates, Series 1998-1 (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement"), between American
Residential Eagle, Inc., as Depositor, and First Union National Bank, as
Trustee, to which terms, provisions and conditions thereof the Holder of this
Certificate by virtue of the acceptance hereof assents, and by which such
Holder is bound. The Certificates consist of the following Classes: the Class
A-1 and Class A-2 Certificates (the "Senior Certificates"), the Class M-1,
Class M-2, Class B, and Class X Certificates (the "Subordinate Certificates"),
and the Class O Certificate (the "Ownership Certificate").
On each Distribution Date, the Total Distribution Amount will be distributed
from the Certificate Account to Holders of each Class of Certificates according
to the terms of the Trust Agreement. All distributions or allocations made with
respect to each Class of Certificates on each Distribution Date shall be
allocated among the outstanding Certificates of such Class based on the
Certificate Principal Amount (or Percentage Interest) of each such Certificate.
Distributions on this Certificate will be made by check mailed to the Holder of
record of this Certificate on the immediately preceding Record Date at the
address of such Holder as it appears on the Certificate Register (except that
with respect to a Certificate registered in the name of a Clearing Agency or
its nominee, distributions will be made by wire transfer of immediately
available funds) or, with respect to any Holder of a Certificate evidencing not
less than $2,500,000 in initial Certificate Principal Amount (or 100% of the
Percentage Interest in such Class), by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and surrender of
Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Trustee at 230 South Tryon Street NC 1179, Charlotte, North
Carolina 28288-1179, Attention: Structured Finance. The Trustee may designate
another address from time to time by notice to the Holders of the Certificates
and the Depositor.
The Trust Agreement permits the amendment thereof from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than 66
2/3% of the aggregate outstanding Certificate Principal Amount (or Percentage
Interest) of each Class for the purpose of adding, changing or eliminating any
provisions of the Trust Agreement or modifying the rights of the Holders of the
Certificates thereunder; provided, however, that (i) no such amendment may be
made unless the Trustee receives an opinion of counsel as to certain tax
matters specified in the Trust Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Certificate Principal Amount (or
Percentage Interest) of each Class the Holders of which are required to consent
to any such amendment, without the consent of the Holders of 100% of the
aggregate Certificate Principal Amount (or Percentage Interest) of each Class
affected thereby. Any consent by the Holder of this Certificate will be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Trust Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or Percentage Interest) as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Certificates, to the extent provided in the Trust Agreement, will be
subject to purchase by the holder of the Class O Certificate for the price
specified in the Trust Agreement, on any Distribution Date on which the
aggregate Certificate Principal Amount of the Certificates is less than 35% of
the aggregate Certificate Principal Amount thereof as of the Closing Date, as
provided in the Trust Agreement. The Certificates will also be subject to
mandatory redemption in accordance with the Trust Agreement on any Distribution
Date on which the Underlying Bond is redeemed. In no event will the trust
created by the Trust Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living at the date of the
Trust Agreement of a certain person named in the Trust Agreement.
The Depositor, the Trustee and the Certificate Registrar and any agent of any
of them may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
As provided in the Trust Agreement, this Certificate and the Trust Agreement
shall be construed in accordance with and governed by the laws of the State of
New York, without regard to the conflict of laws principles applied in the
State of New York. In the event of any conflict between the provisions of this
Certificate and the Trust Agreement, the Trust Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the Trust
Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate
of the same Class of like principal to the above-named assignee and deliver
such Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- -------------------------- ------------------------------------------
Authorized Officer Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this assignment
must correspond with the name(s) on the
face of this Certificate without alteration
or any change whatsoever. The signature
must be guaranteed by a participant in the
Securities Transfer Agents Medallion
Program, the New York Stock Exchange
Medallion Signature Program or the Stock
Exchanges Medallion Program. Notarized or
witnessed signatures are not acceptable as
guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- -----------------------------------------------------------------------------.
Applicable reports and statements should be mailed to ________________________
- -----------------------------------------------------------------------------.
This information is provided by _____________________________________
the assignee name
EXHIBIT A-4
FORM OF CLASS M-2 CERTIFICATE
THIS CERTIFICATE IS A FASIT REGULAR INTEREST CERTIFICATE. THIS CERTIFICATE DOES
NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE
DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF THIS
CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE TRUST
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A CERTIFICATION TO
THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN SUBJECT
TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY SUCH PLAN OR A PERSON ACTING
ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN OR
(2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL
ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e) OF THE PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR (B) AN OPINION OF COUNSEL (A
"BENEFIT PLAN OPINION") SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON
WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE PLAN ASSETS
AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR THE CODE AND
WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN BY SUCH ENTITIES IN THE TRUST AGREEMENT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE OR THE DEPOSITOR.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG
AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE
501 UNDER THE 1933 ACT THAT IS ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE 1933 ACT, SUBJECT TO THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE TRUST AGREEMENT.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.]
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATES, SERIES 1998-1
CLASS M-2
Evidencing a beneficial interest in a single Collateralized
Callable Mortgage Bond issued by American Residential Eagle
Bond Trust 1998-1 and other assets in a trust fund
established by
AMERICAN RESIDENTIAL EAGLE, INC.
Initial Aggregate Certificate Initial Certificate
Principal Amount of the Class M-2 Principal Amount of this
Certificates: $17,365,000.00 Certificate: $17,365,000.00
Certificate Cut-off Date: May 1, 1998
Interest Rate: Variable
NUMBER 1 CUSIP: 02926PAD3
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the initial Certificate
Principal Amount of this Certificate by the initial aggregate Certificate
Amount of all Class M-2 Certificates, both as specified above) in (i) certain
distributions of principal and interest on a Collateralized Callable Mortgage
Bond issued by American Residential Eagle Bond Trust 1998-1 (the "Underlying
Bond") acquired from American Residential Eagle, Inc. (the "Depositor"), a
Delaware corporation, (ii) such amounts and investments as from time to time
may be held in the Trust Fund established pursuant to the Trust Agreement (as
defined on the reverse hereof) and (iii) certain other assets, if any, as
described in the Trust Agreement (the foregoing assets hereinafter collectively
referred to as the "Trust Fund").
Distributions on this Certificate will be made monthly on the 25th day of each
month or, if such a day is not a Business Day, then the next succeeding
Business Day, commencing on June 25, 1998 (each, a "Distribution Date"), to the
Person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding the month in which the related
Distribution Date (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount, if any,
required to be distributed to all the Certificates of the Class represented by
this Certificate. All sums distributable on this Certificate are payable in the
coin or currency of the United States of America which at the time of payment
is legal tender for the payment of public and private debts.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Trust Agreement or
be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
TRUSTEE'S CERTIFICATE AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
(REVERSE)
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATE, SERIES 1998-1
This Certificate is one of a duly authorized issue of certificates designated
as American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed Callable
Certificates, Series 1998-1 (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement"), between American
Residential Eagle, Inc., as Depositor, and First Union National Bank, as
Trustee, to which terms, provisions and conditions thereof the Holder of this
Certificate by virtue of the acceptance hereof assents, and by which such
Holder is bound. The Certificates consist of the following Classes: the Class
A-1 and Class A-2 Certificates (the "Senior Certificates"), the Class M-1,
Class M-2, Class B, and Class X Certificates (the "Subordinate Certificates"),
and the Class O Certificate (the "Ownership Certificate").
On each Distribution Date, the Total Distribution Amount will be distributed
from the Certificate Account to Holders of each Class of Certificates according
to the terms of the Trust Agreement. All distributions or allocations made with
respect to each Class of Certificates on each Distribution Date shall be
allocated among the outstanding Certificates of such Class based on the
Certificate Principal Amount (or Percentage Interest) of each such Certificate.
Distributions on this Certificate will be made by check mailed to the Holder of
record of this Certificate on the immediately preceding Record Date at the
address of such Holder as it appears on the Certificate Register (except that
with respect to a Certificate registered in the name of a Clearing Agency or
its nominee, distributions will be made by wire transfer of immediately
available funds) or, with respect to any Holder of a Certificate evidencing not
less than $2,500,000 in initial Certificate Principal Amount (or 100% of the
Percentage Interest in such Class), by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and surrender of
Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Trustee at 230 South Tryon Street NC 1179, Charlotte, North
Carolina 28288-1179, Attention: Structured Finance. The Trustee may designate
another address from time to time by notice to the Holders of the Certificates
and the Depositor.
The Trust Agreement permits the amendment thereof from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than 66
2/3% of the aggregate outstanding Certificate Principal Amount (or Percentage
Interest) of each Class for the purpose of adding, changing or eliminating any
provisions of the Trust Agreement or modifying the rights of the Holders of the
Certificates thereunder; provided, however, that (i) no such amendment may be
made unless the Trustee receives an opinion of counsel as to certain tax
matters specified in the Trust Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Certificate Principal Amount (or
Percentage Interest) of each Class the Holders of which are required to consent
to any such amendment, without the consent of the Holders of 100% of the
aggregate Certificate Principal Amount (or Percentage Interest) of each Class
affected thereby. Any consent by the Holder of this Certificate will be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registerable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
Corporate Trust Office, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of the same Class of
authorized denominations evidencing the same initial Certificate Principal
Amount (or Percentage Interest) will be issued to the designated transferee or
transferees. As provided in the Trust Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or Percentage Interest) as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Certificates, to the extent provided in the Trust Agreement, will be
subject to purchase by the holder of the Class O Certificate for the price
specified in the Trust Agreement, on any Distribution Date on which the
aggregate Certificate Principal Amount of the Certificates is less than 35% of
the aggregate Certificate Principal Amount thereof as of the Closing Date, as
provided in the Trust Agreement. The Certificates will also be subject to
mandatory redemption in accordance with the Trust Agreement on any Distribution
Date on which the Underlying Bond is redeemed. In no event will the trust
created by the Trust Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living at the date of the
Trust Agreement of a certain person named in the Trust Agreement.
The Depositor, the Trustee and the Certificate Registrar and any agent of any
of them may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
As provided in the Trust Agreement, this Certificate and the Trust Agreement
shall be construed in accordance with and governed by the laws of the State of
New York, without regard to the conflict of laws principles applied in the
State of New York. In the event of any conflict between the provisions of this
Certificate and the Trust Agreement, the Trust Agreement shall be controlling.
Any term used herein and not otherwise defined shall be as defined in the Trust
Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate
of the same Class of like principal to the above-named assignee and deliver
such Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- -------------------------- ------------------------------------------
Authorized Officer Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this assignment
must correspond with the name(s) on the
face of this Certificate without alteration
or any change whatsoever. The signature
must be guaranteed by a participant in the
Securities Transfer Agents Medallion
Program, the New York Stock Exchange
Medallion Signature Program or the Stock
Exchanges Medallion Program. Notarized or
witnessed signatures are not acceptable as
guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- -----------------------------------------------------------------------------.
Applicable reports and statements should be mailed to ________________________
- -----------------------------------------------------------------------------.
This information is provided by _____________________________________
the assignee name
EXHIBIT A-5
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS A FASIT REGULAR INTEREST CERTIFICATE. THIS CERTIFICATE DOES
NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE
DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF THIS
CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE TRUST
AGREEMENT REFERRED TO HEREIN.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG
AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE
501 UNDER THE 1933 ACT THAT IS ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE 1933 ACT, SUBJECT TO THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE TRUST AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A CERTIFICATION TO
THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN SUBJECT
TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY SUCH PLAN OR A PERSON ACTING
ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN OR
(2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL
ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e) OF THE PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR (B) AN OPINION OF COUNSEL (A
"BENEFIT PLAN OPINION") SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON
WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE PLAN ASSETS
AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR THE CODE AND
WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN BY SUCH ENTITIES IN THE TRUST AGREEMENT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE OR THE DEPOSITOR.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
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.]
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATES, SERIES 1998-1
CLASS B
Evidencing a beneficial interest in a single Collateralized
Callable Mortgage Bond issued by American Residential Eagle
Bond Trust 1998-1 and other assets in a trust fund
established by
AMERICAN RESIDENTIAL EAGLE, INC.
Initial Aggregate Certificate Initial Certificate
Principal Amount of the Class B Principal Amount of this
Certificates: $17,365,000.00 Certificate: $17,365,000.00
Certificate Cut-off Date: May 1, 1998
Interest Rate: Variable
NUMBER 1 CUSIP: 02926PAE1
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage Interest
evidenced by this Certificate (obtained by dividing the initial Certificate
Principal Amount of this Certificate by the initial aggregate Certificate
Principal Amount of all Class B Certificates, both as specified above) in (i)
certain distributions of principal and interest on a Collateralized Callable
Mortgage Bond issued by American Residential Eagle Bond Trust 1998-1 (the
"Underlying Bond") acquired from American Residential Eagle, Inc. (the
"Depositor"), a Delaware corporation, (ii) such amounts and investments as from
time to time may be held in the Trust Fund established pursuant to the Trust
Agreement (as defined on the reverse hereof) and (iii) certain other assets, if
any, as described in the Trust Agreement (the foregoing assets hereinafter
collectively referred to as the "Trust Fund").
Distributions on this Certificate will be made monthly on the 25th day of
each month or, if such a day is not a Business Day, then the next succeeding
Business Day, commencing on June 25, 1998 (each, a "Distribution Date"), to the
Person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding the month in which the related
Distribution Date (the "Record Date"), in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount, if any,
required to be distributed to all the Certificates of the Class represented by
this Certificate. All sums distributable on this Certificate are payable in the
coin or currency of the United States of America which at the time of payment
is legal tender for the payment of public and private debts.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Trust Agreement or
be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
TRUSTEE'S CERTIFICATE AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
(REVERSE)
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATE, SERIES 1998-1
This Certificate is one of a duly authorized issue of certificates designated
as American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed Callable
Certificates, Series 1998-1 (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement"), between American
Residential Eagle, Inc., as Depositor, and First Union National Bank, as
Trustee, to which terms, provisions and conditions thereof the Holder of this
Certificate by virtue of the acceptance hereof assents, and by which such
Holder is bound. The Certificates consist of the following Classes: the Class
A-1 and Class A-2 Certificates (the "Senior Certificates"), the Class M-1,
Class M-2, Class B, and Class X Certificates (the "Subordinate Certificates"),
and the Class O Certificate (the "Ownership Certificate").
On each Distribution Date, the Total Distribution Amount will be
distributed from the Certificate Account to Holders of each Class of
Certificates according to the terms of the Trust Agreement. All distributions
or allocations made with respect to each Class of Certificates on each
Distribution Date shall be allocated among the outstanding Certificates of such
Class based on the Certificate Principal Amount (or Percentage Interest) of
each such Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register (except
that with respect to a Certificate registered in the name of a Clearing Agency
or its nominee, distributions will be made by wire transfer of immediately
available funds) or, with respect to any Holder of a Certificate evidencing not
less than $2,500,000 in initial Certificate Principal Amount (or 100% of the
Percentage Interest in such Class), by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and surrender
of Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Trustee at 230 South Tryon Street NC 1179, Charlotte, North
Carolina 28288-1179, Attention: Structured Finance. The Trustee may designate
another address from time to time by notice to the Holders of the Certificates
and the Depositor.
The Trust Agreement permits the amendment thereof from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than 66
2/3% of the aggregate outstanding Certificate Principal Amount (or Percentage
Interest) of each Class for the purpose of adding, changing or eliminating any
provisions of the Trust Agreement or modifying the rights of the Holders of the
Certificates thereunder; provided, however, that (i) no such amendment may be
made unless the Trustee receives an opinion of counsel as to certain tax
matters specified in the Trust Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Certificate Principal Amount (or
Percentage Interest) of each Class the Holders of which are required to consent
to any such amendment, without the consent of the Holders of 100% of the
aggregate Certificate Principal Amount (or Percentage Interest) of each Class
affected thereby. Any consent by the Holder of this Certificate will be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Certificate
Registrar, duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same initial Certificate
Principal Amount (or Percentage Interest) will be issued to the designated
transferee or transferees. As provided in the Trust Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or Percentage Interest) as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Certificates, to the extent provided in the Trust Agreement, will be
subject to purchase by the holder of the Class O Certificate for the price
specified in the Trust Agreement, on any Distribution Date on which the
aggregate Certificate Principal Amount of the Certificates is less than 35% of
the aggregate Certificate Principal Amount thereof as of the Closing Date, as
provided in the Trust Agreement. The Certificates will also be subject to
mandatory redemption in accordance with the Trust Agreement on any Distribution
Date on which the Underlying Bond is redeemed. In no event will the trust
created by the Trust Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living at the date of the
Trust Agreement of a certain person named in the Trust Agreement.
The Depositor, the Trustee and the Certificate Registrar and any agent of
any of them may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
nor the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
As provided in the Trust Agreement, this Certificate and the Trust
Agreement shall be construed in accordance with and governed by the laws of the
State of New York, without regard to the conflict of laws principles applied in
the State of New York. In the event of any conflict between the provisions of
this Certificate and the Trust Agreement, the Trust Agreement shall be
controlling. Any term used herein and not otherwise defined shall be as defined
in the Trust Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate
of the same Class of like principal to the above-named assignee and deliver
such Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- -------------------------- ------------------------------------------
Authorized Officer Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this assignment
must correspond with the name(s) on the
face of this Certificate without alteration
or any change whatsoever. The signature
must be guaranteed by a participant in the
Securities Transfer Agents Medallion
Program, the New York Stock Exchange
Medallion Signature Program or the Stock
Exchanges Medallion Program. Notarized or
witnessed signatures are not acceptable as
guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- ------------------------------------------------------------------------------
Applicable reports and statements should be mailed to ________________________
- ------------------------------------------------------------------------------
This information is provided by _____________________________________
the assignee name
EXHIBIT A-6
FORM OF CLASS X CERTIFICATE
THIS CERTIFICATE IS A FASIT HIGH YIELD REGULAR INTEREST CERTIFICATE. THIS
CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND
IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
THIS CERTIFICATE IS NOT ENTITLED TO DISTRIBUTIONS OF PRINCIPAL AND WILL NOT
ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED TO CERTAIN
DISTRIBUTION AS PROVIDED IN THE TRUST AGREEMENT. THIS CERTIFICATE IS
SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE TRUST AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE IS NOT ENTITLED TO DISTRIBUTIONS OF PRINCIPAL AND WILL NOT
ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED ONLY TO
CERTAIN LIMITED DISTRIBUTIONS AS PROVIDED IN THE TRUST AGREEMENT.
NEITHER THIS CERTIFICATE, NOR ANY BENEFICIAL INTEREST IN THIS CERTIFICATE, MAY
BE TRANSFERRED, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS PRIOR TO SUCH
DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE AN AFFIDAVIT
STATING (i) THAT THE PROPOSED TRANSFEREE IS AND ELIGIBLE CORPORATION WITHIN THE
MEANING OF SECTION 860L(A)(2) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE") AND WILL BE AN ELIGIBLE CORPORATION AS OF THE DATE OF TRANSFER,
AND THAT THE PROPOSED TRANSFEREE IS NOT ACQUIRING THIS CERTIFICATE FOR THE
ACCOUNT OF, OR AS AGENT (INCLUDING A BROKER, NOMINEE, OR OTHER MIDDLEMAN) FOR,
ANY PERSON OR ENTITY FROM WHICH IT HAS NOT RECEIVED AN AFFIDAVIT SUBSTANTIALLY
IN THE FORM EXHIBIT D-1 TO THE TRUST AGREEMENT. FOR THESE PURPOSES, AN ELIGIBLE
CORPORATION IS ANY DOMESTIC C CORPORATION OTHER THAN (I) A CORPORATION THAT IS
EXEMPT FROM OR IS NOT SUBJECT TO FEDERAL INCOME TAX, (II) AN INVESTMENT COMPANY
THAT COULD QUALIFY AS A REGULATED INVESTMENT COMPANY UNDER SECTION 851(A) OF
THE CODE, (III) A REMIC (AS DEFINED IN THE CODE), OR (IV) A COOP TO WHICH
SUBCHAPTER T OF THE CODE APPLIES.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 19933, AS
AMENDED, (THE "1933 ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG
AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE
501 UNDER THE 1933 ACT THAT IS ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE 1933 ACT, SUBJECT TO THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE TRUST AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A CERTIFICATION TO
THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN SUBJECT
TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY SUCH PLAN OR A PERSON ACTING
ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN OR
(2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL
ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e) OF THE PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR (B) AN OPINION OF COUNSEL (A
"BENEFIT PLAN OPINION") SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON
WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE PLAN ASSETS
AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR THE CODE AND
WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN BY SUCH ENTITIES IN THE TRUST AGREEMENT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE OR THE DEPOSITOR.
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATES, SERIES 1998-1
CLASS X
Evidencing a beneficial interest in a single Collateralized
Callable Mortgage Bond issued by American Residential Eagle
Bond Trust 1998-1 and other assets in a trust fund
established by
AMERICAN RESIDENTIAL EAGLE, INC.
Percentage Interest: 100% Cut-off Date: May 1, 1998
NUMBER 1
THIS CERTIFIES THAT [ ]is the registered owner of the Percentage Interest
evidenced by this Certificate in (i) certain distributions on a Collateralized
Callable Mortgage Bond issued by American Residential Eagle Bond Trust 1998-1
(the "Underlying Bond") acquired from American Residential Eagle, Inc. (the
"Depositor"), a Delaware corporation, (ii) such amounts and investments as from
time to time may be held in the Trust Fund established pursuant to the Trust
Agreement (as defined on the reverse hereof) and (iii) certain other assets, if
any, as described in the Trust Agreement (the foregoing assets hereinafter
collectively referred to as the "Trust Fund").
Distributions on this Certificate will be made monthly on the 25th day of
each month or, if such a day is not a Business Day, then the next succeeding
Business Day, commencing on June 25, 1998 (each, a "Distribution Date"), to the
Person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding the related Distribution Date (the
"Record Date"), in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount, if any, required to be
distributed to all the Certificates of the Class represented by this
Certificate. All sums distributable on this Certificate are payable in the coin
or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Trust Agreement or
be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
TRUSTEE'S CERTIFICATE AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
(REVERSE)
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATE, SERIES 1998-1
This Certificate is one of a duly authorized issue of certificates designated
as American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed Callable
Certificates, Series 1998-1 (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement"), between American
Residential Eagle, Inc., as Depositor, and First Union National Bank, as
Trustee, to which terms, provisions and conditions thereof the Holder of this
Certificate by virtue of the acceptance hereof assents, and by which such
Holder is bound. The Certificates consist of the following Classes: the Class
A-1 and Class A-2 Certificates (the "Senior Certificates"), the Class M-1,
Class M-2, Class B, and Class X Certificates (the "Subordinate Certificates"),
and the Class O Certificate (the "Ownership Certificate").
On each Distribution Date, the Total Distribution Amount will be
distributed from the Certificate Account to Holders of each Class of
Certificates according to the terms of the Trust Agreement. All distributions
or allocations made with respect to each Class of Certificates on each
Distribution Date shall be allocated among the outstanding Certificates of such
Class based on the Certificate Principal Amount (or Percentage Interest) of
each such Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register (except
that with respect to a Certificate registered in the name of a Clearing Agency
or its nominee, distributions will be made by wire transfer of immediately
available funds) or, with respect to any Holder of a Certificate evidencing not
less than $2,500,000 in initial Certificate Principal Amount (or 100% of the
Percentage Interest in such Class), by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and surrender
of Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Trustee at 230 South Tryon Street NC 1179, Charlotte, North
Carolina 28288-1179, Attention: Structured Finance. The Trustee may designate
another address from time to time by notice to the Holders of the Certificates
and the Depositor.
The Trust Agreement permits the amendment thereof from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than 66
2/3% of the aggregate outstanding Certificate Principal Amount (or Percentage
Interest) of each Class for the purpose of adding, changing or eliminating any
provisions of the Trust Agreement or modifying the rights of the Holders of the
Certificates thereunder; provided, however, that (i) no such amendment may be
made unless the Trustee receives an opinion of counsel as to certain tax
matters specified in the Trust Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Certificate Principal Amount (or
Percentage Interest) of each Class the Holders of which are required to consent
to any such amendment, without the consent of the Holders of 100% of the
aggregate Certificate Principal Amount (or Percentage Interest) of each Class
affected thereby. Any consent by the Holder of this Certificate will be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Certificate
Registrar, duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same initial Certificate
Principal Amount (or Percentage Interest) will be issued to the designated
transferee or transferees. As provided in the Trust Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or Percentage Interest) as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Certificates, to the extent provided in the Trust Agreement, will be
subject to purchase by the holder of the Class O Certificate for the price
specified in the Trust Agreement, on any Distribution Date on which the
aggregate Certificate Principal Amount of the Certificates is less than 35% of
the aggregate Certificate Principal Amount thereof as of the Closing Date, as
provided in the Trust Agreement. The Certificates will also be subject to
mandatory redemption in accordance with the Trust Agreement on any Distribution
Date on which the Underlying Bond is redeemed. In no event will the trust
created by the Trust Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living at the date of the
Trust Agreement of a certain person named in the Trust Agreement.
The Depositor, the Trustee and the Certificate Registrar and any agent of
any of them may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
nor the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
As provided in the Trust Agreement, this Certificate and the Trust
Agreement shall be construed in accordance with and governed by the laws of the
State of New York, without regard to the conflict of laws principles applied in
the State of New York. In the event of any conflict between the provisions of
this Certificate and the Trust Agreement, the Trust Agreement shall be
controlling. Any term used herein and not otherwise defined shall be as defined
in the Trust Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate
of the same Class of like principal to the above-named assignee and deliver
such Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- -------------------------- ------------------------------------------
Authorized Officer Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this assignment
must correspond with the name(s) on the
face of this Certificate without alteration
or any change whatsoever. The signature
must be guaranteed by a participant in the
Securities Transfer Agents Medallion
Program, the New York Stock Exchange
Medallion Signature Program or the Stock
Exchanges Medallion Program. Notarized or
witnessed signatures are not acceptable as
guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- -----------------------------------------------------------------------------.
Applicable reports and statements should be mailed to ________________________
- -----------------------------------------------------------------------------.
This information is provided by _____________________________________
the assignee name
EXHIBIT A-7
FORM OF CLASS O CERTIFICATE
THIS CERTIFICATE IS A FASIT OWNERSHIP INTEREST CERTIFICATE. THIS CERTIFICATE
DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED
BY, THE DEPOSITOR, THE TRUSTEE, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.
THIS CERTIFICATE IS NOT ENTITLED TO DISTRIBUTIONS OF PRINCIPAL AND WILL NOT
ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED ONLY TO
CERTAIN LIMITED DISTRIBUTIONS AS PROVIDED IN THE TRUST AGREEMENT.
NEITHER THIS CERTIFICATE, NOR ANY BENEFICIAL INTEREST IN THIS CERTIFICATE, MAY
BE TRANSFERRED, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS PRIOR TO SUCH
DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE AN AFFIDAVIT
STATING (i) THAT THE PROPOSED TRANSFEREE IS AND ELIGIBLE CORPORATION WITHIN THE
MEANING OF SECTION 860L(A)(2) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE") AND WILL BE AN ELIGIBLE CORPORATION AS OF THE DATE OF TRANSFER,
AND THAT THE PROPOSED TRANSFEREE IS NOT ACQUIRING THIS CERTIFICATE FOR THE
ACCOUNT OF, OR AS AGENT (INCLUDING A BROKER, NOMINEE, OR OTHER MIDDLEMAN) FOR,
ANY PERSON OR ENTITY FROM WHICH IT HAS NOT RECEIVED AN AFFIDAVIT SUBSTANTIALLY
IN THE FORM EXHIBIT D-1 TO THE TRUST AGREEMENT. FOR THESE PURPOSES, AN ELIGIBLE
CORPORATION IS ANY DOMESTIC C CORPORATION OTHER THAN (I) A CORPORATION THAT IS
EXEMPT FROM OR IS NOT SUBJECT TO FEDERAL INCOME TAX, (II) AN INVESTMENT COMPANY
THAT COULD QUALIFY AS A REGULATED INVESTMENT COMPANY UNDER SECTION 851(A) OF
THE CODE, (III) A REMIC (AS DEFINED IN THE CODE), OR (IV) A COOP TO WHICH
SUBCHAPTER T OF THE CODE APPLIES.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG
AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE
501 UNDER THE 1933 ACT THAT IS ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE 1933 ACT, SUBJECT TO THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE TRUST AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A CERTIFICATION TO
THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN SUBJECT
TO SECTION 406 OR SECTION 407 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THE TRUSTEE OF ANY SUCH PLAN OR A PERSON ACTING
ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN OR
(2) IF SUCH TRANSFEREE IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS PURCHASING
SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL
ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(e) OF THE PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60; OR (B) AN OPINION OF COUNSEL (A
"BENEFIT PLAN OPINION") SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON
WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE PLAN ASSETS
AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA OR THE CODE AND
WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO
THOSE UNDERTAKEN BY SUCH ENTITIES IN THE TRUST AGREEMENT, WHICH OPINION OF
COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE OR THE DEPOSITOR.
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATES, SERIES 1998-1
CLASS O
Evidencing a beneficial interest in a single Collateralized
Callable Mortgage Bond issued by American Residential Eagle
Bond Trust 1998-1 and other assets in a trust fund
established by
AMERICAN RESIDENTIAL EAGLE, INC.
Percentage Interest: 100% Cut-off Date: May 1, 1998
NUMBER 1
THIS CERTIFIES THAT [ ] is the registered owner of the Percentage Interest
evidenced by this Certificate in (i) certain distributions on a Collateralized
Callable Mortgage Bond issued by American Residential Eagle Bond Trust 1998-1
(the "Underlying Bond") acquired from American Residential Eagle, Inc. (the
"Depositor"), a Delaware corporation, (ii) such amounts and investments as from
time to time may be held in the Trust Fund established pursuant to the Trust
Agreement (as defined on the reverse hereof) and (iii) certain other assets, if
any, as described in the Trust Agreement (the foregoing assets hereinafter
collectively referred to as the "Trust Fund").
Distributions on this Certificate will be made monthly on the 25th day of
each month or, if such a day is not a Business Day, then the next succeeding
Business Day, commencing on June 25, 1998 (each, a "Distribution Date"), to the
Person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding the related Distribution Date (the
"Record Date"), in an amount equal to the product of the Percentage Interest
evidenced by this Certificate and the amount, if any, required to be
distributed to all the Certificates of the Class represented by this
Certificate. All sums distributable on this Certificate are payable in the coin
or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Certificate.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, whose name appears below by manual signature, this
Certificate shall not be entitled to any benefit under the Trust Agreement or
be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
TRUSTEE'S CERTIFICATE AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
FIRST UNION NATIONAL BANK,
as Trustee
By:________________________________
Authorized Signatory
Dated: June 17, 1998
(REVERSE)
AMERICAN RESIDENTIAL EAGLE CERTIFICATE TRUST 1998-1
MORTGAGE-BACKED CALLABLE CERTIFICATE, SERIES 1998-1
This Certificate is one of a duly authorized issue of certificates designated
as American Residential Eagle Certificate Trust 1998-1 Mortgage-Backed Callable
Certificates, Series 1998-1 (the "Certificates"), representing all or part of a
beneficial ownership interest in a Trust Fund established pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement"), between American
Residential Eagle, Inc., as Depositor, and First Union National Bank, as
Trustee, to which terms, provisions and conditions thereof the Holder of this
Certificate by virtue of the acceptance hereof assents, and by which such
Holder is bound. The Certificates consist of the following Classes: the Class
A-1 and Class A-2 Certificates (the "Senior Certificates"), the Class M-1,
Class M-2, Class B, and Class X Certificates (the "Subordinate Certificates"),
and the Class O Certificate (the "Ownership Certificate").
On each Distribution Date, the Total Distribution Amount will be
distributed from the Certificate Account to Holders of each Class of
Certificates according to the terms of the Trust Agreement. All distributions or
allocations made with respect to each Class of Certificates on each Distribution
Date shall be allocated among the outstanding Certificates of such Class based
on the Certificate Principal Amount (or Percentage Interest) of each such
Certificate.
Distributions on this Certificate will be made by check mailed to the
Holder of record of this Certificate on the immediately preceding Record Date
at the address of such Holder as it appears on the Certificate Register (except
that with respect to a Certificate registered in the name of a Clearing Agency
or its nominee, distributions will be made by wire transfer of immediately
available funds) or, with respect to any Holder of a Certificate evidencing not
less than $2,500,000 in initial Certificate Principal Amount (or 100% of the
Percentage Interest in such Class), by wire transfer in immediately available
funds, upon written request made to the Trustee or as otherwise permitted by
the Trustee. Wire transfers will be made at the expense of the Holder
requesting the same by deducting a wire transfer fee from the related
distribution. The final distribution on this Certificate will be made, after
due notice to the Holder of the pendency of such distribution, only upon
presentation and surrender of this Certificate at the Corporate Trust Office
(as defined below).
The Corporate Trust Office with respect to the presentment and surrender
of Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Trustee at 230 South Tryon Street NC 1179, Charlotte, North
Carolina 28288-1179, Attention: Structured Finance. The Trustee may designate
another address from time to time by notice to the Holders of the Certificates
and the Depositor.
The Trust Agreement permits the amendment thereof from time to time by the
Depositor and the Trustee with the consent of the Holders of not less than 66
2/3% of the aggregate outstanding Certificate Principal Amount (or Percentage
Interest) of each Class for the purpose of adding, changing or eliminating any
provisions of the Trust Agreement or modifying the rights of the Holders of the
Certificates thereunder; provided, however, that (i) no such amendment may be
made unless the Trustee receives an opinion of counsel as to certain tax
matters specified in the Trust Agreement and (ii) no such amendment may (a)
reduce the amount or delay the timing of distributions required to be made on
any Certificate without the consent of the Holder of such Certificate, or (b)
reduce the percentage of aggregate outstanding Certificate Principal Amount (or
Percentage Interest) of each Class the Holders of which are required to consent
to any such amendment, without the consent of the Holders of 100% of the
aggregate Certificate Principal Amount (or Percentage Interest) of each Class
affected thereby. Any consent by the Holder of this Certificate will be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Certificate
Registrar, duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same initial Certificate
Principal Amount (or Percentage Interest) will be issued to the designated
transferee or transferees. As provided in the Trust Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial
Certificate Principal Amount (or Percentage Interest) as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Certificates, to the extent provided in the Trust Agreement will be
subject to purchase by the holder of the Class O Certificate for the price
specified in the Trust Agreement, on any Distribution Date on which the
aggregate Certificate Principal Amount of the Certificates is less than 35% of
the aggregate Certificate Principal Amount thereof as of the Closing Date, as
provided in the Trust Agreement. The Certificates will also be subject to
mandatory redemption in accordance with the Trust Agreement on any Distribution
Date on which the Underlying Bond is redeemed. In no event will the trust
created by the Trust Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living at the date of the
Trust Agreement of a certain person named in the Trust Agreement.
The Depositor, the Trustee and the Certificate Registrar and any agent of
any of them may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
nor the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
As provided in the Trust Agreement, this Certificate and the Trust
Agreement shall be construed in accordance with and governed by the laws of the
State of New York, without regard to the conflict of laws principles applied in
the State of New York. In the event of any conflict between the provisions of
this Certificate and the Trust Agreement, the Trust Agreement shall be
controlling. Any term used herein and not otherwise defined shall be as defined
in the Trust Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s) and assign(s) and
transfer(s) unto
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee
and social security number or employer identification number)
- ------------------------------------------------------------------------------
the within Certificate stating in the names of the undersigned in the
Certificate Register and does hereby irrevocably constitute and appoint
- ------------------------------------------------------------------------------
to transfer such Certificate in such Certificate Register of the Trust.
I [we] further direct the Certificate Registrar to issue a new Certificate
of the same Class of like principal to the above-named assignee and deliver
such Certificate to the following address:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Dated:____________________ __________________________________________
Signature by or on behalf of Assignor
- -------------------------- ------------------------------------------
Authorized Officer Signature Guaranteed
- -------------------------- ------------------------------------------
Name of Institution NOTICE: The signature(s) of this assignment
must correspond with the name(s) on the
face of this Certificate without alteration
or any change whatsoever. The signature
must be guaranteed by a participant in the
Securities Transfer Agents Medallion
Program, the New York Stock Exchange
Medallion Signature Program or the Stock
Exchanges Medallion Program. Notarized or
witnessed signatures are not acceptable as
guaranteed signatures.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Registrar. Distributions shall be made by wire transfer in
immediately available funds to
- ------------------------------------------------------------------------------
for the account of ___________________________________________________________
account number __________________ or, if mailed by check, to _________________
- -----------------------------------------------------------------------------.
Applicable reports and statements should be mailed to ________________________
- -----------------------------------------------------------------------------.
This information is provided by _____________________________________
the assignee name
EXHIBIT B-1
[RESERVED]
EXHIBIT B-2
[RESERVED]
EXHIBIT B-3
[RESERVED]
EXHIBIT B-4
[RESERVED]
EXHIBIT C
[RESERVED]
EXHIBIT D-1
FORM OF CLASS O CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)
STATE OF )
) ss.:
COUNTY OF )
[NAME OF OFFICER], _________________ being first duly sworn, deposes
and says:
1. That he [she] is [title of officer] ___________ _____________ of
[name of Purchaser] ________________________ _________________ (the
"Purchaser"), a corporation duly organized and existing under the laws of the
State of __________, on behalf of which he [she] makes this affidavit.
2. That the Purchaser's Taxpayer Identification Number is [ ].
3. That the Purchaser is and Eligible Corporation within the
meaning of Section 860L(a)(2) of the Internal Revenue Code of
1986, as amended (the "Code") and will be an Eligible
Corporation as of [date of transfer], and that the Purchaser is
not acquiring the Class O Certificate (as defined in the
Agreement) for the account of, or as agent (including a broker,
nominee, or other middleman) for, any person or entity from
which it has not received an affidavit substantially in the form
of this affidavit. For these purposes, an Eligible Corporation
is any domestic C corporation other than (i) a corporation that
is exempt from or is not subject to federal income tax, (ii) an
investment company that could qualify as a regulated investment
company under section 851(a) of the Code, (iii) a REMIC, or (iv)
a coop to which subchapter T of the Code applies.
4. That the Purchaser is not, and on __________ [insert date of
transfer of Class O Certificate to Purchaser] will not be, and
is not and on such date will not be investing the assets of, an
employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a plan subject to
Code Section 4975 or a person or entity that is using the assets
of any employee benefit plan or other plan to acquire the Class
O Certificate.
5. That the Purchaser hereby acknowledges that under the terms of the
Trust Agreement (the "Agreement") among American Residential Eagle, Inc., and
First Union National Bank, as Trustee, dated as of June 1, 1998, no transfer of
the Class O Certificate shall be permitted to be made to any person unless the
Trustee has received a certificate from such transferee to the effect that such
transferee is an Eligible Corporation and not an employee benefit plan subject
to ERISA or a plan subject to Section 4975 of the Code and is not using the
assets of any employee benefit plan or other plan to acquire Class O
Certificates.
6. That the Purchaser does not hold Class O Certificate as nominee to
facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (such entity, a
"Book-Entry Nominee").
7. That the Purchaser does not have the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to such Class O Certificate.
8. That the Purchaser will not transfer the Class O Certificate to
any person or entity (i) as to which the Purchaser has actual knowledge that
the requirements set forth in paragraph 3, paragraph 6 or paragraph 10 hereof
are not satisfied or that the Purchaser has reason to believe does not satisfy
the requirements set forth in paragraph 7 hereof, and (ii) without obtaining
from the prospective Purchaser an affidavit substantially in this form and
providing to the Trustee a written statement substantially in the form of
Exhibit G to the Agreement.
9. That the Purchaser understands that, as the holder of the Class O
Certificate, the Purchaser may incur tax liabilities in excess of any cash
flows generated by the interest and that it intends to pay taxes associated
with holding such Class O Certificate as they become due.
10. That the Purchaser agrees to such amendments of the Trust
Agreement as may be required to further effectuate the restrictions on transfer
of the Class O Certificate to a person other than an Eligible Corporation or a
book-Entry Nominee, or a person that does not satisfy the requirements of
paragraph 7 and paragraph 10 hereof.
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[title of officer] this _____ day of __________, 19__.
---------------------------------
[name of Purchaser]
By:______________________________
Name:
Title:
Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.
Subscribed and sworn before me this _____ day of __________, 19__.
NOTARY PUBLIC
- ------------------------------
COUNTY OF_____________________
STATE OF______________________
My commission expires the _____ day of __________, 19__.
EXHIBIT D-2
CLASS O CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
_______________
Date
Re: American Residential Eagle Certificate Trust 1998-1
Mortgage Backed Callable Certificates, Series 1998-1
_______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no
actual knowledge that such affidavit is not true and has no reason to believe
that the information contained in paragraph 7 thereof is not true, and has no
reason to believe that the Transferee has the intention to impede the
assessment or collection of any federal, state or local taxes legally required
to be paid with respect to the Class O Certificate. In addition, the Transferor
has conducted a reasonable investigation at the time of the transfer and found
that the Transferee had historically paid its debts as they came due and found
no significant evidence to indicate that the Transferee will not continue to
pay its debts as they become due.
Very truly yours,
-------------------------------
Name:
Title:
EXHIBIT E
[RESERVED]
EXHIBIT F
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: American Residential Eagle Certificate Trust 1998-1
Mortgage Backed Callable Certificates, Series 1998-1
Reference is hereby made to the Trust Agreement dated as of June 1,
1998 (the "Trust Agreement") among American Residential Eagle, Inc., as
Depositor, and First Union National Bank, as Trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the Trust
Agreement.
This letter relates to $_________ initial Certificate Balance of
Class Certificates which are held in the form of Definitive Certificates
registered in the name of (the "Transferor"). The Transferor has requested a
transfer of such Definitive Certificates for Definitive Certificates of such
Class registered in the name of [insert name of transferee].
In connection with such request, and in respect of such Certificates,
the Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Trust Agreement
and the Certificates and (ii) Rule 144A under the Securities Act to a purchaser
that the Transferor reasonably believes is a "qualified institutional buyer"
within the meaning of Rule 144A purchasing for its own account or for the
account of a "qualified institutional buyer," which purchaser is aware that the
sale to it is being made in reliance upon Rule 144A, in a transaction meeting
the requirements of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Placement Agent and the Depositor.
-------------------------------------
[Name of Transferor]
By:__________________________________
Name:
Title:
Dated: ___________, ____
EXHIBIT G
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
________________
Date
Dear Sirs:
In connection with our proposed purchase of $______________ principal
amount of Mortgage Backed Callable Certificates, Series 1998-1 (the "Privately
Offered Certificates") of American Residential Eagle, Inc. (the "Depositor"),
we confirm that:
(1) We understand that the Privately Offered Certificates have not been,
and will not be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be sold except as
permitted in the following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Privately Offered Certificates
within three years of the later of the date of original issuance of
the Privately Offered Certificates or the last day on which such
Privately Offered Certificates are owned by the Depositor or any
affiliate of the Depositor (which includes the Placement Agent) we
will do so only (A) to the Depositor, (B) to "qualified institutional
buyers" (within the meaning of Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act ("QIBs"), (C)
pursuant to the exemption from registration provided by Rule 144
under the Securities Act, or (D) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act that is not a QIB (an
"Institutional Accredited Investor") which, prior to such transfer,
delivers to the Trustee under the Trust Agreement dated as of June 1,
1998 among the Depositor and First Union National Bank, as Trustee
(the "Trustee"), a signed letter in the form of this letter; and we
further agree, in the capacities stated above, to provide to any
person purchasing any of the Privately Offered Certificates from us a
notice advising such purchaser that resales of the Privately Offered
Certificates are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited
Investor, we will be required to furnish to the Trustee and the
Depositor a certification from such transferee in the form hereof to
confirm that the proposed sale is being made pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act. We further understand that the
Privately Offered Certificates purchased by us will bear a legend to
the foregoing effect.
(3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in
the Privately Offered Certificates, and we and any account for which
we are acting are each able to bear the economic risk of such
investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or
for one or more accounts (each of which is an Institutional
Accredited Investor) as to each of which we exercise sole investment
discretion.
(5) We have received such information as we deem necessary in order to
make our investment decision.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Trust Agreement.
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
----------------------------------
[Purchaser]
By________________________________
Name:
Title:
EXHIBIT H
[FORM OF ERISA TRANSFER AFFIDAVIT]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is the ______________________ of (the "Investor"),
a [corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.
2. The Investor either (x) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"), the Trustee of any such plan or a person acting
on behalf of any such plan nor a person using the assets of any such plan or
(2) if the Investor is an insurance company, such Investor is purchasing such
Certificates with funds contained in an "Insurance Company General Account" (as
such term is defined in Section v(e) of the Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of such
Certificates are covered under PTCE 95-60; or (y) shall deliver to the Trustee
and the Depositor an opinion of counsel (a "Benefit Plan Opinion") satisfactory
to the Trustee and the Depositor, and upon which the Trustee and the Depositor
shall be entitled to rely, to the effect that the purchase or holding of such
Certificate by the Investor will not result in the assets of the Trust Fund
being deemed to be plan assets and subject to the prohibited transaction
provisions of ERISA or the Code and will not subject the Trustee or the
Depositor to any obligation in addition to those undertaken by such entities in
the Trust Agreement, which opinion of counsel shall not be an expense of the
Trustee or the Depositor.
3. The Investor hereby acknowledges that under the terms of the Trust
Agreement (the "Agreement") among American Residential Eagle, Inc., as
Depositor, and First Union National Bank, as Trustee, dated as of June 1, 1998,
no transfer of the ERISA-Restricted Certificates shall be permitted to be made
to any person unless the Depositor and Trustee have received a certificate from
such transferee in the form hereof.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to proper authority, by its duly authorized
officer, duly attested, this ____ day of _______________, 199 .
---------------------------------
[Investor]
By:______________________________
Name:
Title:
EXHIBIT I
FORM OF CERTIFICATEHOLDER DISTRIBUTION SUMMARY
<TABLE>
<CAPTION>
American Residential Eagle Series 1998-1
Certificateholder Distribution Summary
- -------- ----------- ------------ ------------ -------------- ------------- -------- ------------- ------------- ----------------
Certificate Certificate Beginning Current Ending Cumulative
Class Pass-Through Certificate Interest Realized Certificate Total Realized
Class CUSIP Description Rate Balance Distribution Loss Balance Distribution Losses
- -------- ----------- ------------ ------------ -------------- ------------- -------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1 02926PAA9 SEQ 5.75000 % 143,970,000.00 0.00
A-2 02926PAB7 SEQ 5.87000 % 232,093,000.00 0.00
M-1 02926PAC5 SEQ 6.16000 % 46,029,000.00 0.00
M-2 ARE9801M2 SEQ 6.36000 % 17,365,000.00 0.00
B ARE98001B SEQ 7.06000 % 17,365,000.00 0.00
OC ARE9801OC OC 0.00000 % 6,253,879.91 0.00
X ARE0900IX REQ 0.00000 % 0.00 0.00
O ARW0900I0 REQ 0.00000 % 0.00 0.00
- -------- ----------- ------------ -------------------------- ------------- -------- ------------- ------------- ----------------
Totals 463,075,879.91 0.00
- -------- ----------- ------------ ------------ -------------- ------------- -------- ------------- ------------- ----------------
</TABLE>
All distributions required by the Pooling and Servicing Agreement have been
calculated by the Certificate Administrator on behalf of the Trustee,
Edward M. Ferro, Jr.
Vice President, Norwest Bank Minnesota, N.A.
<TABLE>
<CAPTION>
American Residential Eagle Series 1998-1
Principal Distribution Statement
- ---------- ------------------- ------------------ -------------- --------------- -------------- --------------
Original Beginning Scheduled Unscheduled
Face Certificate Principal Principal Realized
Class Amount Balance Distribution Distribution Accretion Loss
- ---------- ------------------- ------------------ -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
A-1 143,970,000.00 143,970,000.00
A-2 232,093,000.00 232,093,000.00
M-1 46,029,000.00 46,029,000.00
M-2 17,365,000.00 17,365,000.00
B 17,365,000.00 17,365,000.00
OC 6,253,879.91 6,253,879.91
X 0.00 0.00
O 0.00 0.00
- ---------- ------------------- ------------------ -------------- --------------- -------------- --------------
Totals 463,075,879.91 463,075,879.91
- ---------- ------------------- ------------------ -------------- --------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
cont.
- ------------------ --------------- -------------- -----------------
Total Principal Ending Ending Total Principal
Reductions Certificate Certificate Distribution
Balance Percentage
- ------------------ --------------- -------------- -----------------
<S> <C> <C> <C>
- ------------------ --------------- -------------- -----------------
- ------------------ --------------- -------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
American Residential Eagle Series 1998-1
Principal Distribution Factors Statement
- --------------- ------------------ ---------------- -------------- -------------- -------------- --------------
Original Beginning Scheduled Unscheduled
Face Certificate Principal Principal Realized
Class (1) Amount Balance Distribution Distribution Accretion Loss
- --------------- ------------------ ---------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
A-1 143,970,000.00 1000.00000000
A-2 232,093,000.00 1000.00000000
M-1 46,029,000.00 1000.00000000
M-2 17,365,000.00 1000.00000000
B 17,365,000.00 1000.00000000
OC 6,253,879.91 1000.00000000
X 0.00 0.00000000
O 0.00 0.00000000
- --------------- ------------------ ---------------- -------------- -------------- -------------- --------------
(1) All denominations are per $1,000.
</TABLE>
<TABLE>
<CAPTION>
cont.
- -------------- -------------- ------------- --------------
Total Ending Ending Total
Principal Certificate Certificate Principal
Reductions Balance Percentage Distribution
- --------------- -------------- ------------- --------------
<S> <C> <C> <C>
- -------------- -------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
American Residential Eagle Series 1998-1
Interest Distribution Statement
- --------------- ---------------- ------------ ---------------- ------------ ------------- ------------- -------------
Beginning Payment of Non-Supported
Original Current Certificate/ Current Unpaid Current Interest
Class Face Certificate Notional Accrued Interest Interest Shortfall
Amount Rate Balance Interest Shortfall Shortfall
- --------------- ---------------- ------------ ---------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 143,970,000.00 5.75000 % 143,970,000.00
A-2 232,093,000.00 5.87000 % 232,093,000.00
M-1 46,029,000.00 6.16000 % 46,029,000.00
M-2 17,365,000.00 6.36000 % 17,365,000.00
B 17,365,000.00 7.06000 % 17,365,000.00
OC 6,253,879.91 0.00000 % 6,253,879.91
X 0.00 0.00000 % 455,008,859.15
O 0.00 0.00000 % 0.00
- --------------- ---------------- ------------ ---------------- ------------ ------------- ------------- ------------ -
463,075,879.91
- --------------- ---------------- ------------ ---------------- ------------ ------------- ------------- ------------ -
</TABLE>
<TABLE>
<CAPTION>
cont.
- ------------- ------------ ------------- -------------
Total Remaining Ending
Realized Interest Unpaid Certificate/
Losses Distribution Interest Notional
Shortfall Balance
- ------------- ------------ ------------- -------------
<S> <C> <C> <C>
- ------------ ------------ ------------- -------------
- ------------ ------------ ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
American Residential Eagle Series 1998-1
Interest Distribution Factors Statement
- ---------- ----------------- ------------ ------------------ ------------- ------------ ------------- -------------
Beginning Payment of Non-Supported
Current Certificate/ Current Unpaid Current Interest
Original Face Certificate Notional Accrued Interest Interest Shortfall
Class (2) Amount Rate Balance Interest Shortfall Shortfall
- ---------- ----------------- ------------ ------------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1 143,970,000.00 5.75000 % 1000.00000000
A-2 232,093,000.00 5.87000 % 1000.00000000
M-1 46,029,000.00 6.16000 % 1000.00000000
M-2 17,365,000.00 6.36000 % 1000.00000000
B 17,365,000.00 7.06000 % 1000.00000000
OC 6,253,879.91 0.00000 % 1000.00000000
X 0.00 0.00000 % 982.57950563
O 0.00 0.00000 % 0.00000000
- ---------- ----------------- ------------ ------------------ ------------- ------------ ------------- -------------
(2) All denominations are per $1,000.
</TABLE>
<TABLE>
<CAPTION>
CONT.
- ------------- ------------- ------------- -------------
Remaining Ending
Total Unpaid Certificate/
Realized Interest Interest Notional
Losses Distribution Shortfall Balance
- ------------- ------------- ------------- -------------
<S> <C> <C> <C>
- ------------- ------------- ------------- -------------
</TABLE>
American Residential Eagle Series 1998-1
- -------------------------------------------------------------------------
COLLATERAL STATEMENT
Collateral Description
6 Month LIBOR ARM
Weighted Average Gross Coupon
Weighted Average Net Coupon
Weighted Average Pass-Through Rate
Weighted Average Maturity (Stepdown Calculation)
Beginning Scheduled Collateral Loan Count
Number of Loans Paid in Full
Ending Scheduled Collateral Loan Count
Beginning Scheduled Collateral Balance
Ending Scheduled Collateral Balance
Ending Actual Collateral Balance at 29-May-1998
Monthly P&I Constant
Ending Scheduled Balance for Premium Loans
Required Overcollateralized Amount
Overcollateralized Increase Amount
Overcollateralized Reduction Amount
Specified O/C Amount
Overcollateralized Amount
Overcollateralized Deficiency Amount
Base Overcollateralization Amount
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Bond Scheduled/Unscheduled Principal
Bond Interest and Interest Rate
Ending Bond Balance
Excess Mortgage Amount
Bond Overcollateralization Amount
- -----------------------------------------------------------------------------
AMERICAN RESIDENTIAL EAGLE SERIOUS 1998-1
CERTIFICATEHOLDER ACCOUNT STATEMENT
<TABLE>
<CAPTION
- ------------------------------------------------------------- -----------------------------------------------------------------
CERTIFICATE ACCOUNT PREPAYMENT / CURTAILMENT INTEREST SHORTFALL
<S> <C>
Beginning Balance
Total Prepayment/Curtailment Interest Shortfall
Deposits Servicing Fee Support ___________
Payments of Interest and Principal
Liquidations, Insurance Proceeds, Reserve Funds Non-Supported Prepayment/ Curtailment Interest
Proceeds from Repurchased Loans Shortfall
Other Amounts (Servicer Advances) ===========
Realized Losses __________ -----------------------------------------------------------------
Total Deposits -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SERVICING FEES
<S> <C>
Gross Servicing Fee
Withdrawals
Reimbursement for Servicer Advances Certificate Administration Fee
Payment of Service Fee Trustee Fee
Payment of Interest and Principal __________
Master Servicing Fee
Total Withdrawals (Pool Distribution Amount)
Supported Payment/Curtailment Interest Shortfall ___________
Ending Balance ========== Net Servicing Fee ===========
- ------------------------------------------------------------- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
OTHER ACCOUNTS
Account Type Beginning Current Current Ending
Balance Withdrawals Deposits Balance
- -------------------------------- --------------------- --------------------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Reserve Fund
- -------------------------------- --------------------- --------------------- ------------------ ---------------------
</TABLE>
<TABLE>
<CAPTION>
American Residential Eagle Series 1998-1
- ----------------------------------------------------------------------------------------------------------------------------------
Certificateholder Delinquency/Credit Enhancement Statement
DELINQUENCY STATUS
Percentage Delinquent
Based On
Current Unpaid
Number Principal Number Unpaid
of Loans Balance of Loans Balance
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
30 days
60 days
90+ days
Foreclosure
REO ----------------------- ------------- ---------- ----------
Totals
Current Period Realized Loss (Includes Interest Shortfall)
Cumulative Realized Losses (Includes Interest Shortfall)
Current Period Class A Insufficient Funds
Principal Balance of Contaminated Properties
Periodic Advance
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT J
[RESERVED]
EXHIBIT K
SPECIAL SERVICING COMPENSATION AGREEMENT
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC., a Delaware
corporation ("Lehman Capital"), AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
("AmReit") and OCWEN FEDERAL BANK FSB, a federal savings bank ("the Special
Servicer"), hereby agree that the Special Servicer shall be entitled, for its
services under the Reconstituted Special Servicing Agreement dated as of June
1, 1998 (the "Special Servicing Agreement"), to compensation as provided
herein.
1. Definitions. Capitalized terms used and not defined in this Special
Servicing Compensation Agreement (this "Agreement"), shall have the meanings
ascribed to such terms in the Special Servicing Agreement and the Trust
Agreement, dated June 1, 1998, between American Residential Eagle, Inc., as
Depositor, and First Union National Bank, as Trustee (the "Trust Agreement").
Extended Special Servicing Fee: For each Severely Delinquent Mortgage
Loan, $166 each month from the date such Transferred Mortgage Loan
becomes a Severely Delinquent Mortgage Loan for a period of twelve
months (as provided in Section 2(b)). Any Extended Special Servicing
Fee due following a Reconstitution Date shall be payable from the
Excess Mortgage Amount (as defined in the Indenture) in the priority
provided in the Indenture and from any remaining cash flows after all
distributions of the Interest Distributable Amount (as defined in the
Trust Agreement) and Principal Distributable Amount (as defined in
the Trust Agreement) have been made to Certificateholders (other than
the Class X and Class O Certificateholders) in the priorities
provided in the Trust Agreement.
Incentive Fee: Upon the conversion of a Severely Delinquent Loan to a
Resolved Loan, the product of (a) 50% and (b) the excess if any, of
the loss that would have resulted assuming a Loss Severity Percentage
of 20% of the unpaid principal balance of the Transferred Mortgage
Loan as of the Conversion Date over the actual loss resulting from
the conversion of a Severely Delinquent Loan to a Resolved Loan based
upon the actual Net Resolution Proceeds obtained upon Resolution of
such Mortgage Loan.
Loss Severity Percentage: With respect to a Transferred Mortgage
Loan, the difference between (a) one (1) minus (b) the Net Resolution
Proceeds divided by the unpaid principal balance of the related
Transferred Mortgage Loan as of the Conversion Date.
Special Servicing Fee: $166 per Transferred Mortgage Loan to be paid
on the first day of the month for a total of two months commencing
with the month following the related Transfer Date. Any Special
Servicing Fee due following a Reconstitution Date shall be payable
from cash flows after payments are made to Certificateholders (other
than Class X and Class O Certificateholders) and after funds required
for overcollateralization have been deducted, as provided in the
Indenture.
2. Compensation. (a) As consideration for servicing the Transferred
Mortgage Loans subject to the Special Servicing Agreement, the Special Servicer
shall be entitled to (i) retain the Base Servicing Fee equal to one-twelfth of
(x) the Servicing Fee Rate and (y) the outstanding principal balance of such
Transferred Mortgage Loan during any month or part thereof (unless otherwise
specified in the Special Servicing Agreement), and (i) be paid the Special
Servicing Fee equal to $166 per month per Transferred Mortgage Loan, for a
period of two months, on the first day of each such month following the related
Transfer Date. The Base Servicing Fee shall be payable monthly, computed on the
basis of the outstanding principal balance of Transferred Mortgage Loans
subject to this Agreement. The obligation of the Owner to pay the Base
Servicing Fee is limited to, and such Base Servicing Fee is payable solely
from, the interest portion (including recoveries with respect to late payments,
Insurance Proceeds and/or Liquidation Proceeds to the extent permitted by
Section 3.04 of the Special Servicing Agreement) of such Monthly Payment
collected by the Special Servicer, or as otherwise provided under the Special
Servicing Agreement. To the extent such amount is not sufficient to cover the
Base Servicing Fee, the Special Servicer shall send to the Master Servicer an
invoice detailing the amount of the unpaid Base Servicing Fee owed to the
Special Servicer and such amount shall be payable to the extent provided in the
Master Servicing Agreement. Any Special Servicing Fee shall be payable from the
Excess Mortgage Amount (as defined in the Indenture) in the priority provided
in the Indenture and from any remaining cash flows after all distributions of
the Interest Distributable Amount (as defined in the Trust Agreement) and
Principal Distributable Amount (as defined in the Trust Agreement) have been
made to Certificateholders (other than the Class X and Class O
Certificateholders) in the priorities provided in the Trust Agreement.
(b) Extended Special Servicing Fee. If a Transferred Mortgage Loan
becomes a Severely Delinquent Mortgage Loan, the Special Servicer shall receive
the Extended Special Servicing Fee equal to $166 per Transferred Mortgage Loan
for an additional twelve months following the date on which such Transferred
Mortgage Loan becomes a Severely Delinquent Mortgage Loan regardless of the
ultimate disposition of such Transferred Mortgage Loan. After the Special
Servicer is eligible to receive the Extended Special Servicing Fee with respect
to a Severely Delinquent Mortgage Loan, the Special Servicer shall not be
entitled to any other Transferred Mortgage Loan Servicing Fee other than the
Base Servicing Fee and an Incentive Fee, if applicable, with respect to such
Severely Delinquent Mortgage Loan. The Special Servicer shall not be eligible
to receive another Extended Special Servicing Fee with respect to a Transferred
Mortgage Loan for which it has already received such a fee. Any Extended
Special Servicing Fee due following a Reconstitution Date shall be payable from
the Excess Mortgage Amount (as defined in the Indenture) in the priority
provided in the Indenture and from any remaining cash flows after all
distributions of the Interest Distributable Amount (as defined in the Trust
Agreement) and Principal Distributable Amount (as defined in the Trust
Agreement) have been made to Certificateholders (other than the Class X and
Class O Certificateholders) in the priorities provided in the Trust Agreement.
(c) Incentive Fee. The Special Servicer will be entitled to an
Incentive Fee upon the conversion of a Severely Delinquent Loan to a Resolved
Loan (other than as a result of a refinancing of such Transferred Mortgage Loan
by the Special Servicer). Such Incentive Fee will be paid upon the Conversion
Date solely from the proceeds of such conversion or, if such proceeds from such
conversion are not sufficient to cover the Incentive Fee in any month, from the
proceeds of conversions of Severely Delinquent Loans to Resolved Loans in
subsequent months.
With respect to any Transferred Mortgage Loan that meets the definitional
requirements of a Reinstated Mortgage Loan or a Modified Mortgage Loan, other
than the requirement that the Mortgagor make three consecutive payments at or
above the contractually required amount, before such Mortgage Loan becomes a
Severely Delinquent Loan, the Special Servicer will not be entitled to the
Incentive Fee if such a loan were to subsequently meet the definitional
requirements of a Reinstated Loan or a Modified Mortgage Loan and become a
Resolved Loan.
(d) Expenses. The Special Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement thereof except as specifically
provided for herein or in the Special Servicing Agreement.
3. Notices. All notices and communications between or among the parties
hereto shall be in writing and shall be deemed received or given when mailed
first-class mail, postage prepaid, addressed to each other party at its address
specified below. Each party may designate to the other parties in writing, from
time to time, other addresses to which notices and communications hereunder
shall be sent.
4. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, NOTWITHSTANDING NEW YORK OR
OTHER CHOICE OF LAW RULES TO THE CONTRARY.
5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all of which counterparts shall together constitute but one and the same
instrument.
Executed as of the day and year first above written.
LEHMAN CAPITAL, A DIVISION OF
LEHMAN BROTHERS HOLDINGS INC.
By:_____________________________________________
Name:
Title:
AMERICAN RESIDENTIAL INVESTMENT
TRUST, INC.
By:_____________________________________________
Name:
Title:
OCWEN FEDERAL BANK FSB
By:_____________________________________________
Name:
Title:
EXHIBIT 4.2
EXECUTION
AMERICAN RESIDENTIAL EAGLE BOND
TRUST 1998-1
Issuer
and
FIRST UNION NATIONAL BANK,
Trustee
INDENTURE
Dated as of June 1, 1998
Relating to
AMERICAN RESIDENTIAL EAGLE
BOND TRUST 1998-1
COLLATERALIZED CALLABLE MORTGAGE BONDS
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.......................................................1
SECTION 1.01. General Definitions....................................1
Accountant.............................................................1
Accrual Period.........................................................1
Act....................................................................1
Advance................................................................1
Affiliate..............................................................1
Agent..................................................................2
Aggregate Loan Balance.................................................2
Aggregate Master Servicing Compensation................................2
AmREIT.................................................................2
Applied Loss Amount....................................................2
Assignments............................................................2
Authenticating Agent...................................................2
Authorized Officer.....................................................2
Bank...................................................................3
Bankruptcy Code........................................................3
Basis Risk Shortfall...................................................3
Bond Account...........................................................3
Bond Deferred Amounts..................................................3
Bond Expense Rate......................................................3
Bond Interest Rate.....................................................3
Bond Overcollateralization Amount......................................3
Bond Principal Balance.................................................4
Bond Register..........................................................4
Bonds..................................................................4
Business Day...........................................................4
Carryforward Interest..................................................4
Certificates...........................................................4
Certificate Principal Amount...........................................4
Certificate Trust Agreement............................................4
Certificate Trustee....................................................4
Certificate Trustee Fee................................................5
Class..................................................................5
Closing Date...........................................................5
Code...................................................................5
Collection Period......................................................5
Commission.............................................................5
Compensating Interest Payment..........................................5
Controlling Class......................................................5
Corporate Trust Office.................................................5
Current Interest.......................................................5
Custodial Agreements...................................................5
Custodians.............................................................5
Cut-off Date...........................................................6
Default................................................................6
Denomination...........................................................6
Deposit Date...........................................................6
Deposit Trust Agreement................................................6
Depositor..............................................................6
Distribution Account...................................................6
Distribution Date......................................................6
Distribution Date Statement............................................6
Duff & Phelps..........................................................6
Event of Default.......................................................6
Excess Mortgage Amount.................................................6
Excess Mortgage Interest...............................................7
Excess Mortgage Principal..............................................7
Expense Fee Rate.......................................................7
FDIC...................................................................7
FHLMC..................................................................7
FIRREA.................................................................7
FNMA...................................................................7
Grant..................................................................7
Highest Lawful Rate....................................................7
Holder.................................................................8
Highest Lawful Rate....................................................8
Independent............................................................8
Individual Bond........................................................8
Interest Remittance Amount.............................................8
Investor Certificate...................................................9
Issuer Order...........................................................9
Issuer.................................................................9
LIBOR..................................................................9
Management Agreement...................................................9
Management Fee.........................................................9
Master Servicer........................................................9
Master Servicing Agreement.............................................9
Master Servicing Fee...................................................9
Maturity...............................................................9
Mortgage...............................................................9
Mortgage Documents.....................................................9
Mortgage Loans........................................................10
Mortgage Note.........................................................10
Mortgage Rate.........................................................10
Mortgaged Property....................................................10
Mortgagor.............................................................10
Net Funds Cap.........................................................10
Net Liquidation Proceeds..............................................10
Net Mortgage Rate.....................................................10
Officers' Certificate.................................................10
Officer's Certificate of the Master Servicer..........................10
Opinion of Counsel....................................................11
Original Class A Principal Balance....................................11
Original Pool Principal Balance.......................................11
OTS...................................................................11
Outstanding...........................................................11
Outstanding Mortgage Loan.............................................12
Owner Trustee Fee.....................................................12
Owner Trustee.........................................................12
Payaheads.............................................................12
Paying Agent..........................................................12
Permitted Encumbrance.................................................12
Person................................................................13
Pledged Accounts......................................................13
Pool Principal Balance................................................13
Predecessor Bonds.....................................................13
Prepayment Interest Shortfall.........................................13
Prepayment Period.....................................................13
Principal Prepayment in Full..........................................13
Principal Prepayment..................................................13
Principal Remittance Amount...........................................14
Proceeding............................................................14
Prospectus Supplement.................................................14
Purchase and Sale Agreement...........................................14
Rating Agency.........................................................14
Record Date...........................................................14
Reconstituted Special Servicing Agreement.............................14
Redemption Date.......................................................14
Redemption Price......................................................15
Request for Release...................................................15
Responsible Officer...................................................15
S&P...................................................................15
SAIF..................................................................15
Sale..................................................................15
Scheduled Payment.....................................................15
Scheduled Principal Balance...........................................15
Securities Act........................................................15
Senior Enhancement Percentage.........................................15
Stated Maturity.......................................................16
Special Servicer......................................................16
Stepdown Date.........................................................16
Stepped-up Bond Balance...............................................16
Subordinate Certificate Principal Amount..............................16
Successor Master Servicer.............................................16
Targeted Overcollateralization Amount.................................16
Trust Estate..........................................................16
Trust Indenture Act...................................................17
Trustee...............................................................17
Trustee Fee...........................................................17
Trustee's Fee Rate....................................................17
Trustee Mortgage File.................................................17
Unpaid Basis Risk Shortfall...........................................17
Voting Rights.........................................................17
ARTICLE II. THE BONDS.......................................................18
SECTION 2.01. Forms Generally.......................................18
SECTION 2.02. Forms of Bonds and Certificate of Authentication......18
SECTION 2.03. Bonds Issuable in Classes; Provisions with
Respect to Principal and Interest Payments............19
SECTION 2.04. Denominations.........................................22
SECTION 2.05. Execution, Authentication, Delivery and Dating........22
SECTION 2.06. Temporary Bonds.......................................22
SECTION 2.07. Registration, Registration of Transfer and Exchange...23
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Bonds............24
SECTION 2.09. Payments of Principal and Interest; Principal and
Interest Rights Reserved..............................25
SECTION 2.10. Persons Deemed Owners.................................26
SECTION 2.11. Cancellation..........................................26
SECTION 2.12. Authentication and Delivery of Bonds..................26
SECTION 2.13. [Reserved]............................................29
SECTION 2.14. [Reserved.............................................29
SECTION 2.15. Advances by the Trustee...............................29
ARTICLE III. COVENANTS......................................................31
SECTION 3.01. Payment of Bonds......................................31
SECTION 3.02. Maintenance of Office or Agency.......................31
SECTION 3.03. Money for Bond Payments to Be Held in Trust...........31
SECTION 3.04. Corporate Existence of Trustee........................33
SECTION 3.05. Protection of Trust Estate............................34
SECTION 3.06. Opinions as to Trust Estate...........................35
SECTION 3.07. Performance of Obligations; Master Servicing
Agreement.............................................35
SECTION 3.08. Investment Company Act................................37
SECTION 3.09. Negative Covenants....................................37
SECTION 3.10. Annual Statement as to Compliance.....................38
SECTION 3.11. Recording of Assignments..............................38
SECTION 3.12. Limitation of Liability of Wilmington Trust Company...38
ARTICLE IV. SATISFACTION AND DISCHARGE......................................39
SECTION 4.01. Satisfaction and Discharge of Indenture...............39
SECTION 4.02. Application of Trust Money............................40
ARTICLE V. DEFAULTS AND REMEDIES............................................41
SECTION 5.01. Event of Default......................................41
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment....42
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Trustee................................43
SECTION 5.04. Remedies..............................................44
SECTION 5.05. [Reserved] ...........................................45
SECTION 5.06. Trustee May File Proofs of Claim......................45
SECTION 5.07. Trustee May Enforce Claims without Possession
of Bonds..............................................45
SECTION 5.08. Application of Money Collected........................46
SECTION 5.09. Limitation on Suits...................................46
SECTION 5.10. Unconditional Rights of Bondholders to Receive
Principal and Interest................................47
SECTION 5.11. Restoration of Rights and Remedies....................47
SECTION 5.12. Rights and Remedies Cumulative........................47
SECTION 5.13. Delay or Omission Not Waiver..........................48
SECTION 5.14. Control by Bondholders................................48
SECTION 5.15. Waiver of Past Defaults...............................48
SECTION 5.16. Undertaking for Costs.................................49
SECTION 5.17. Waiver of Stay or Extension Laws......................49
SECTION 5.18. Sale of Trust Estate..................................49
SECTION 5.19. Action on Bonds.......................................51
ARTICLE VI. THE TRUSTEE.....................................................52
SECTION 6.01. Duties of Trustee.....................................52
SECTION 6.02. Notice of Default.....................................54
SECTION 6.03. Rights of Trustee.....................................54
SECTION 6.04. Not Responsible for Recitals or Issuance of Bonds.....56
SECTION 6.05. May Hold Bonds........................................56
SECTION 6.06. Money Held in Trust...................................56
SECTION 6.07. Compensation and Reimbursement........................57
SECTION 6.08. Eligibility; Disqualification.........................57
SECTION 6.09. Trustee's Capital and Surplus.........................58
SECTION 6.10. Resignation and Removal; Appointment of Successor.....58
SECTION 6.11. Acceptance of Appointment by Successor................59
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business of Trustee................................59
SECTION 6.13. Preferential Collection of Claim Against Issuer.......60
SECTION 6.14. Co-trustees and Separate Trustees.....................60
SECTION 6.15. Authenticating Agents.................................61
SECTION 6.16. Payment of Certain Insurance Premiums.................62
SECTION 6.17. Limitation of Liability...............................63
SECTION 6.18. Trustee May Enforce Claims Without Possession
of Certificates.......................................63
SECTION 6.19. Suits for Enforcement.................................63
SECTION 6.20. Waiver of Bond Requirement............................64
SECTION 6.21. Waiver of Inventory, Accounting and
Appraisal Requirement.................................64
ARTICLE VII. BONDHOLDERS' LISTS AND REPORTS.................................65
SECTION 7.01. Issuer to Furnish Trustee Names and Addresses
of Bondholders........................................65
SECTION 7.02. Preservation of Information; Communications
to Bondholders........................................65
SECTION 7.03. Reports by Trustee....................................65
SECTION 7.04. Reports by Issuer.....................................66
SECTION 7.05. Notice to the Rating Agencies.........................66
ARTICLE VIII. ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES....67
SECTION 8.01. Collection of Moneys..................................67
SECTION 8.02. Distribution Account..................................67
SECTION 8.03. General Provisions Regarding Pledged Accounts.........68
SECTION 8.04. Purchases of Deleted Mortgage Loans...................69
SECTION 8.05. Grant of Replacement Mortgage Loan....................70
SECTION 8.06. Reports by Trustee to Bondholders.....................70
SECTION 8.07. Reports by Trustee....................................70
SECTION 8.08. Trust Estate; Release and Delivery of
Mortgage Documents....................................71
SECTION 8.09. Amendments to the Master Servicing Agreement..........71
SECTION 8.10. Servicers and Master Servicer as Agents and
Bailees of Trustee....................................71
SECTION 8.11. Opinion of Counsel....................................72
SECTION 8.12. Release of Mortgage Loans.............................72
ARTICLE IX. SUPPLEMENTAL INDENTURES.........................................74
SECTION 9.01. Supplemental Indentures Without Consent
of Bondholders........................................74
SECTION 9.02. Supplemental Indentures With Consent of
Bondholders...........................................75
SECTION 9.03. Execution of Supplemental Indentures..................76
SECTION 9.04. Effect of Supplemental Indentures.....................77
SECTION 9.05. Conformity with Trust Indenture Act...................77
SECTION 9.06. Reference in Bonds to Supplemental Indentures.........77
SECTION 9.07. Amendments to Deposit Trust Agreement or
Master Servicing Agreement............................77
ARTICLE X. REDEMPTION OF BONDS..............................................79
SECTION 10.01. Redemption............................................79
SECTION 10.02. Form of Redemption Notice.............................80
SECTION 10.03. Bonds Payable on Redemption Date......................80
SECTION 10.04. Retention of Bonds by Issuer..........................81
ARTICLE XI. MISCELLANEOUS...................................................82
SECTION 11.01. Compliance Certificates and Opinions..................82
SECTION 11.02. Form of Documents Delivered to Trustee................82
SECTION 11.03. Acts of Bondholders...................................83
SECTION 11.04. Notices, etc. to Trustee and Issuer...................84
SECTION 11.05. Notices and Reports to Bondholders; Waiver
of Notices............................................85
SECTION 11.06. Rules by Trustee and Agents...........................85
SECTION 11.07. Conflict with Trust Indenture Act.....................86
SECTION 11.08. Effect of Headings and Table of Contents..............86
SECTION 11.09. Successors and Assigns................................86
SECTION 11.10. Separability..........................................86
SECTION 11.11. Benefits of Indenture.................................86
SECTION 11.12. Legal Holidays........................................86
SECTION 11.13. Governing Law.........................................86
SECTION 11.14. Counterparts..........................................87
SECTION 11.15. Recording of Indenture................................87
SECTION 11.16. Issuer Obligation.....................................87
SECTION 11.17. Inspection............................................87
SECTION 11.18. Usury.................................................88
SECTION 11.19. No Petition...........................................88
TESTIMONIUM................................................................S-1
SIGNATURES AND SEALS.......................................................S-1
ACKNOWLEDGMENTS............................................................S-3
SCHEDULE A - Schedule of Mortgage Loans...................................A-1
EXHIBIT I - Form of Class A Bond
PARTIES
INDENTURE, dated as of June 1, 1998 (as amended or supplemented from
time to time as permitted hereby, the "Indenture"), between American
Residential Eagle Bond Trust 1998-1 (herein, together with its permitted
successors and assigns, called the "Issuer"), a statutory Delaware business
trust created under the Deposit Trust Agreement (as defined herein), and First
Union National Bank, a national banking association, as trustee (together with
its permitted successors in the trusts hereunder, the "Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for its Collateralized Callable Mortgage Bonds, (the
"Bonds"), issuable as provided in this Indenture. All covenants and agreements
made by the Issuer herein are for the benefit and security of the Holders of
the Bonds. The Issuer is entering into this Indenture, and the Trustee is
accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee, for the exclusive benefit
of the Holders of the Bonds and to First Union National Bank acting as trustee
(the "Certificate Trustee") for the benefit of holders of American Residential
Eagle Certificate Trust 1998-1, Mortgage-Backed Callable Certificates, Series
1998-1, for the benefit of the holders of such Certificates, for so long as
all of the Bonds are held by the Certificate Trustee, all of the Issuer's
right, title and interest in and to (a) the Mortgage Loans identified in
Schedule A to this Indenture, including the related Mortgage Documents, which
the Issuer has caused to be delivered to the Custodians herewith on behalf of
the Trustee, and all interest and principal received or receivable by the
Issuer on or with respect to the Mortgage Loans after the Cut-off Date and all
interest and principal payments on the Mortgage Loans received prior to the
Cut-off Date in respect of installments of interest and principal due
thereafter, but not including payments of interest and principal due and
payable on the Mortgage Loans on or before the Cut-off Date, and all other
proceeds received in respect of such Mortgage Loans, (b) the Issuer's rights
under the Mortgage Loan Purchase Agreement, the Management Agreement, the
Master Servicing Agreement, the Purchase and Sale Agreements and the Servicing
Agreements, (c) all cash, instruments or other property held or required to be
deposited in the Bond Account or the Distribution Account (exclusive of any
earnings on investments made with funds deposited in the Distribution Account
or the Bond Account), (d) property that secured a Mortgage Loan that has
become an REO property, and (e) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid assets,
including, without limitation, all Insurance Proceeds, Liquidation Proceeds
and condemnation awards. Such Grants are made, however, in trust, to secure
the Bonds equally and ratably without prejudice, priority or distinction
between any Bond and any other Bond by reason of difference in time of
issuance or otherwise, and to secure (i) the payment of all amounts due on the
Bonds in accordance with their terms, (ii) the payment of all other sums
payable under this Indenture with respect to the Bonds, and (iii) compliance
with the provisions of this Indenture, all as provided in this Indenture. All
terms used in the foregoing granting clauses that are defined in Section 1.01
are used with the meanings given in said Section.
The Trustee acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions of this Indenture and agrees to perform the
duties herein required to the best of its ability to the end that the
interests of the Holders of the Bonds may be adequately and effectively
protected.
ARTICLE I.
DEFINITIONS
SECTION 1.01. General Definitions.
Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture, and the definitions of such terms are
applicable to the singular as well as to the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
Whenever reference is made herein to an Event of Default or a Default known to
the Trustee or of which the Trustee has notice or knowledge, such reference
shall be construed to refer only to an Event of Default or Default of which
the Trustee is deemed to have notice or knowledge pursuant to Section 6.01(d).
Capitalized terms that are used but not defined in this Indenture and which
are defined in the Master Servicing Agreement or the Certificate Trust
Agreement have the meanings assigned to them therein. All other terms used
herein which are defined in the Trust Indenture Act (as hereinafter defined),
either directly or by reference therein, have the meanings assigned to them
therein.
"Accountant": A Person engaged in the practice of accounting who
(except when this Indenture provides that an Accountant must be Independent)
may be employed by or affiliated with the Issuer or an Affiliate of the
Issuer.
"Accrual Period": As to any Distribution Date, the period beginning
on the immediately preceding Distribution Date (or on the Closing Date in the
case of the first Accrual Period) and ending on the day immediately preceding
the related Distribution Date.
"Act": With respect to any Bondholder, as defined in Section 11.03.
"Advance": The payment of any principal or interest required to be
made by a Servicer with respect to any Distribution Date pursuant to the
related Servicing Agreement or required to be made by the Master Servicer
pursuant to Section 4 of the Master Servicing Agreement.
"Affiliate": With respect to any Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent": Any Bond Registrar, Paying Agent or Authenticating Agent.
"Aggregate Loan Balance ": The aggregate of the Scheduled Principal
Balances for all Mortgage Loans at the date of determination.
"Aggregate Master Servicing Compensation": As to any Distribution
Date, the sum of (x) the aggregate of the Master Servicing Fees payable to the
Master Servicer in respect of such Distribution Date and (y) all income and
gain realized from the investment of funds in the Bond Account during the
period from and including the Deposit Date in the calendar month immediately
preceding the month in which such Distribution Date occurs, to but excluding
the Deposit Date relating to such Distribution Date.
"AmREIT": American Residential Investment Trust, Inc., a Maryland
corporation.
"Applied Loss Amount"": With respect to any Distribution Date and
after giving effect to all Realized Losses incurred during the related
Collection Period and all distributions of principal on such date, the amount,
if any, by which the Bond Principal Balance exceeds the Pool Principal
Balance. Any such Applied Loss Amount will be allocated to (but will not
reduce) the Bond Principal Balance for the purpose of accounting for Bond
Deferred Amounts.
"Assignments": Collectively (i) the original instrument of
assignment of a Mortgage, including any interim assignments from the
originator or any other holder of any Mortgage Loan, and (ii) the original
instrument of assignment of such Mortgage, made by the Issuer to the Trustee
(which in either case may, to the extent permitted by the laws of the state in
which the related Mortgaged Property is located, be a blanket instrument of
assignment covering other Mortgages as well and which may also, to the extent
permitted by the laws of the state in which the related Mortgaged Property is
located, be an instrument of assignment running directly from the mortgagee of
record under the related Mortgage to the Trustee).
"Authenticating Agent": The Person, if any, appointed as
Authenticating Agent by the Trustee at the request of the Issuer pursuant to
Section 6.15, until any successor Authenticating Agent for the Bonds is named,
and thereafter "Authenticating Agent" shall mean such successor.
"Authorized Officer": Any officer of the Owner Trustee who is
authorized to act for the Owner Trustee in respect of the Issuer and whose
name appears on a list of such authorized officers furnished by the Owner
Trustee to the Trustee, as such list may be amended or supplemented from time
to time, and any officer of the Issuer who is authorized to act pursuant to
the Deposit Trust Agreement and whose name appears on a list furnished by the
Depositor to the Owner Trustee and the Trustee, as such list may be amended or
supplemented from time to time.
"Bank": Wilmington Trust Company, a Delaware banking corporation, in
its individual capacity and not as Owner Trustee.
"Bankruptcy Code": The United States Bankruptcy Reform Act of 1978,
as amended from time to time.
"Basis Risk Shortfall": With respect to any Distribution Date, the
amounts by which (a) the amount payable if clause (i) or (ii) of the
definition of Bond Interest Rate is used to calculate interest on the
Underlying Bond exceeds (b) the Net Funds Cap.
"Bond Account": The separate Eligible Account or Accounts created
and maintained by the Master Servicer pursuant to the Master Servicing
Agreement with a depository institution in the name of the Master Servicer for
the benefit of the Trustee on behalf of Bondholders and designated "Bond
Account in trust for the registered holders of American Residential Eagle Bond
Trust 1998-1 Collateralized Callable Mortgage Bonds."
"Bond Deferred Amounts": With respect to any Distribution Date, the
amount by which the aggregate of Applied Loss Amounts previously allocated to
the Bond Principal Balance exceeds the aggregate of amounts previously
distributed in reimbursement thereof.
"Bond Expense Rate": With respect to any Distribution Date, and as
to any Mortgage Loan, the sum of the Master Servicing Fee Rate, the Servicing
Fee Rate, the Basic Fee Rate, the Trustee's Fee Rate, and the Management Fee
(expressed as a per annum rate).
"Bond Interest Rate": A rate equal to (a) for the first Distribution
Date, 6.14% per annum, (b) (i) for each Distribution Date thereafter through
the first Distribution Date on which the Bond Principal Balance is greater
than or equal to 35% of the initial Bond Principal Balance, the least of (A) a
per annum floating rate equal to LIBOR for the related Accrual Period plus
0.48%, (B) 9.50% per annum and (C) the Net Funds Cap and (ii) for each
Distribution Date after the Distribution Date after which the Bond Principal
Balance is less than 35% of the initial Bond Principal Balance, the least of
(x) a per annum floating rate equal to LIBOR for the related Accrual Period
plus 1.90%, (y) 10.00% per annum and (z) the Net Funds Cap.
"Bond Overcollateralization Amount": With respect to any
Distribution Date, the amount, if any, by which the Aggregate Loan Balance as
of the last day of the related Collection Period exceeds the Bond Principal
Balance as of such Distribution Date (after giving effect to distributions to
be made on such Distribution Date).
"Bond Principal Balance": As of any date of determination, the
initial principal balance thereof as of the Closing Date reduced by all
payments of principal thereon prior to such date of determination.
"Bond Register" and "Bond Registrar": As defined in Section 2.07.
"Bondholder" or "Holder": The Person in whose name a Bond is
registered in the Bond Register.
"Bonds": Any bonds authorized by, and authenticated and delivered
under, this Indenture.
"Business Day": Any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions in the City of New York, New York,
the State of Maryland, the State of Minnesota, the State of North Carolina, or
the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to be closed.
"Carryforward Interest": With respect to any Distribution Date and
each Class of Bonds, the amount, if any, by which (x) the sum of (A) Current
Interest for such Class for the immediately preceding Distribution Date and
(B) any unpaid Carryforward Interest for such Class from previous Distribution
Dates exceeds (y) the amount distributed in respect of interest on such Class
on such immediately preceding Distribution Date, together with interest on
such excess at the Bond Interest Rate.
"Certificates": The Mortgage-Backed Callable Certificates, Series
1998-1, issued in separate classes pursuant to the Certificate.
"Certificate Principal Amount": As defined in the Certificate Trust
Agreement.
"Certificate Trust Agreement": The Trust Agreement, dated as of June
1, 1998, between the Depositor and First Union National Bank, as Certificate
Trustee.
"Certificate Trustee": First Union National Bank, in its capacity as
trustee under the Certificate Trust Agreement, and its successors and assigns
thereunder.
"Certificate Trustee Fee": The Trustee Fee as defined in the Trust
Agreement.
"Class": Collectively, all of the Bonds bearing the same class
designation. The Bonds issued in one Class as provided in Section 2.03.
"Closing Date": June 17, 1998.
"Code": The Internal Revenue Code of 1986, including any successor
or amendatory provisions.
"Collection Period": With respect to any Distribution Date, the
one-month period beginning on the second day of the calendar month immediately
preceding the month in which such Distribution Date occurs and ending on the
first day of the month in which such Distribution Date occurs.
"Commission": Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time under the Trust Indenture Act or similar legislation
replacing the Trust Indenture Act.
"Compensating Interest Payment": With respect to any Distribution
Date, the aggregate amount paid in respect of Prepayment Interest Shortfalls
by the Servicer and the Master Servicer on such Distribution Date.
"Controlling Class": The Class A Bonds.
"Corporate Trust Office": The principal corporate trust office of
the Trustee located at 230 South Tyron Street, 9th Floor, Charlotte, NC 28288,
or at such other address as the Trustee may designate from time to time by
notice to the Bondholders and the Issuer, or the principal corporate trust
office of any successor Trustee.
"Current Interest": With respect to any Distribution Date, the
aggregate amount of interest accrued during the related Accrual Period at the
Bond Interest Rate on the aggregate Bond Principal Balance immediately prior
to such Distribution Date.
"Custodial Agreements": The agreements between the Trustee and the
Custodians.
"Custodians": Bankers Trust Company of California, N.A. and Chase
Bank of Texas, N.A., each as custodian under a Custodial Agreement.
"Cut-off Date": With respect to the Mortgage Loans, May 1, 1998.
"Default": Any occurrence which is, or with notice or the lapse of
time or both would become, an Event of Default.
"Denomination": With respect to each Bond, the amount set forth on
the face thereof as the "Initial Principal Amount of this Bond".
"Deposit Date": With respect to each Distribution Date, the Business
Day immediately preceding such Distribution Date.
"Deposit Trust Agreement": The Deposit Trust Agreement, dated as of
June 1, 1998, between the Bank and the Depositor, creating the Issuer, as
amended or supplemented from time to time.
"Depositor": American Residential Eagle, Inc., a Delaware
corporation.
"Distribution Account": The separate Eligible Account created and
maintained by the Trustee pursuant to Section 8.02 in the name of the Trustee
for the benefit of the Bondholders and designated "First Union National Bank
in trust for registered holders of American Residential Eagle Bond Trust
1998-1, Collateralized Callable Mortgage Bonds." Funds in the Distribution
Account shall be held in trust for the Bondholders for the uses and purposes
set forth in this Indenture.
"Distribution Date": With respect to the Bonds, the 25th day of each
calendar month or, if such 25th day is not a Business Day, the next succeeding
Business Day, commencing in June 1998.
"Distribution Date Statement": The meaning specified in Section 3(i)
of the Master Servicing Agreement.
"Duff & Phelps": Duff & Phelps Credit Rating Company. For purposes
of Section 11.04, the address for notices to Duff & Phelps shall be Duff &
Phelps Credit Rating Company, 55 East Monroe Street, 38th Floor, Chicago,
Illinois 60603, Attention: Residential Mortgage-Backed Securities.
"Event of Default": The meaning specified in Section 5.01.
"Excess Mortgage Amount": With respect to any Distribution Date, the
sum of Excess Mortgage Interest and Excess Mortgage Principal for such
Distribution Date.
"Excess Mortgage Interest": As to any Distribution Date, the excess
of (i) the Interest Remittance Amount, over (ii) the sum of the amounts set
forth in Section 2.03(b)(i)(A)-(D).
"Excess Mortgage Principal": With respect to any Distribution Date,
the amount, if any, by which the Principal Remittance Amount exceeds the
amount necessary to repay the Bond Principal Balance in an amount necessary to
cause the Bond Overcollateralization Amount to equal the Targeted
Overcollateralization Amount.
"Expense Fee Rate": With respect to any Distribution Date, the sum
of the Bond Expense Rate and the Certificate Trustee's Fee Rate.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
"FIRREA": The Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
"FNMA": The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
"Grant": To grant, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, mortgage, pledge, create and grant a
security interest in, deposit, set-over and confirm. A Grant of a Mortgage
Loan and related Mortgage Documents, a Permitted Investment, the Master
Servicing Agreement, an Insurance Policy, or any other instrument shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including, without limitation, the immediate and
continuing right to claim for, collect, receive and give receipts for
principal and interest payments thereunder, insurance proceeds, condemnation
awards, purchase prices and all other moneys payable thereunder and all
proceeds thereof, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise, and generally to
do and receive anything which the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Highest Lawful Rate": The meaning specified in Section 11.18.
"Holder": The holder of Bonds issued pursuant to this Indenture.
"Indenture" or "this Indenture": This instrument as originally
executed and, if from time to time supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, as so supplemented or amended. All references in this
instrument to designated "Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this instrument as originally executed. The words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section, Subsection or
other subdivision.
"Independent": When used with respect to any specified Person means
such a Person who (i) is in fact independent of the Issuer and any other
obligor upon the Bonds, (ii) does not have any direct financial interest or
any material indirect financial interest in the Issuer or in any such other
obligor or in an Affiliate of the Issuer or such other obligor and (iii) is
not connected with the Issuer or any such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person
performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by an Issuer Order and with the approval of the
Trustee, which approval shall not be unreasonably withheld, and such opinion
or certificate shall state that the signer has read this definition and that
the signer is Independent within the meaning hereof.
"Individual Bond": A Bond of an original principal amount of $1,000;
a Bond of an original principal amount in excess of $1,000 shall be deemed to
be a number of Individual Bonds equal to the quotient obtained by dividing
such original principal amount by $1,000.
"Interest Remittance Amount": With respect to any Distribution Date,
the sum of (i) all interest collected (other than Payaheads) or advanced in
respect of Scheduled Payments on the Mortgage Loans, including any prepayment
premiums or penalties, during the related Collection Period (less (x) expenses
calculated at the Expense Fee Rate and (y) unreimbursed Advances and other
amounts due to the Servicers, the Master Servicer or the Trustee on a
loan-by-loan basis, to the extent allocable to interest), (ii) any
Compensating Interest payment made by any Servicer or Master Servicer with
respect to the related Prepayment Period, (iii) the portion of any
Substitution Amount paid during the related Prepayment Period allocable to
interest and (iv) all Net Liquidation Proceeds, insurance proceeds and other
recoveries collected during the related Prepayment Period, to the extent
allocable to interest, as reduced in each case by unreimbursed Advances and
other amounts due the Servicers, the Master Servicer or the Trustee on a
loan-by-loan basis, to the extent allocable to interest.
"Investor Certificate": The certificate(s) issued under the Deposit
Trust Agreement.
"Issuer Order" and "Issuer Request": A written order or request that
is dated and signed in the name of the Issuer by an Authorized Officer and
delivered to the Trustee.
"Issuer": American Residential Eagle Bond Trust 1998-1 formed
pursuant to the Deposit Trust Agreement.
"LIBOR": A rate, per annum, determined by the Master Servicer as
provided in the Master Servicing Agreement.
"Management Agreement": The Management Agreement dated as of June 1,
1998 between the Issuer and AmREIT, as manager.
"Management Fee": The compensation payable to AmREIT under the
Management Agreement of $1,000 per month.
"Master Servicer": Norwest Bank Minnesota, National Association, as
Master Servicer under the Master Servicing Agreement, and its permitted
successors and assigns thereunder.
"Master Servicing Agreement": The master servicing agreement dated
as of June 1, 1998, among the Issuer, the Trustee and the Master Servicer, as
such agreement may be amended or supplemented from time to time as permitted
thereby.
"Master Servicing Fee": As to any Distribution Date, the amount
specified in the Master Servicing Agreement as such.
"Maturity": With respect to any Bond, the date on which the entire
unpaid principal amount of such Bond becomes due and payable as therein or
herein provided, whether at the Stated Maturity of the final installment of
such principal or by declaration of acceleration, call for redemption or
otherwise.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
"Mortgage Documents": With respect to each Mortgage Loan, the
mortgage documents listed in the applicable Custodial Agreement pertaining to
such Mortgage Loan and any additional documents delivered to a Custodian to be
added to the Mortgage Documents pursuant to the Master Servicing Agreement or
the related Servicing Agreement.
"Mortgage Loans": Such of the mortgage loans Granted to the Trustee
pursuant to the provisions hereof as from time to time are held as a part of
the Trust Estate (including any REO Property), the mortgage loans so held
being identified in the Schedule of Mortgage Loans, notwithstanding
foreclosure or other acquisition of title of the related Mortgaged Property.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": The annual rate of interest borne by a Mortgage
Note from time to time.
"Mortgaged Property": The underlying property securing a Mortgage
Loan.
"Mortgagor": The obligor(s) on a Mortgage Note.
"Net Funds Cap": As to any Distribution Date, an amount equal to the
weighted average of the Net Mortgage Rates of the Mortgage Loans as of the
first day of the calendar month preceding the month of such Distribution Date.
"Net Liquidation Proceeds": All amounts, net of unreimbursed
expenses incurred in connection with liquidation or foreclosure and
unreimbursed Advances, if any, received and retained in connection with the
liquidation of defaulted Mortgage Loans, by foreclosure or otherwise, together
with any net proceeds received on a monthly basis with respect to any
properties acquired on behalf of Bondholders by foreclosure or deed in lieu of
foreclosure.
"Net Mortgage Rate": With respect to any Mortgage Loan, the Mortgage
Rate thereof, minus the related Expense Fee Rate.
"Officers' Certificate": A certificate signed by two Authorized
Officers.
"Officer's Certificate of the Master Servicer": A certificate (i)
signed by any of the Chairman of the Board, the Vice Chairman of the Board,
the President, a Managing Director, a Vice President (however denominated), an
Assistant Vice President, the Treasurer, the Secretary, or one of the
Assistant Treasurers or Assistant Secretaries of the Master Servicer, or (ii)
if provided for herein, signed by a Servicing Officer, as the case may be, and
delivered to the Trustee, as required hereby.
"Opinion of Counsel": A written opinion of counsel who may, except
as otherwise expressly provided in this Indenture, be counsel for the Issuer.
"Original Class A Principal Balance": $456,822,000.
"Original Pool Principal Balance": The Pool Principal Balance as of
the Cut-off Date.
"OTS": The Office of Thrift Supervision.
"Outstanding": As of the date of determination, all Bonds
theretofore authenticated and delivered under this Indenture except:
(i) Bonds theretofore cancelled by the Bond Registrar or
delivered to the Bond Registrar for cancellation;
(ii) Bonds or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Issuer) in trust for the
Holders of such Bonds; provided, however, that if such Bonds are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor, satisfactory to the Trustee, has been
made;
(iii) Bonds in exchange for or in lieu of which other Bonds
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Bonds are
held by a bona fide purchaser (as defined by the Uniform Commercial Code
of the applicable jurisdiction); and
(iv) Bonds alleged to have been destroyed, lost or stolen for
which replacement Bonds have been issued as provided for in Section 2.08;
provided, however, that in determining whether the Holders of the requisite
percentage of the aggregate Principal Amount of the Outstanding Bonds have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Bonds owned by the Issuer, any other obligor upon the Bonds or any
Affiliate of the Issuer or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Bonds which the Trustee knows to be
so owned shall be so disregarded. Bonds so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Bonds and that the pledgee is not the Issuer, any other obligor upon the Bonds
or any Affiliate of the Issuer or such other obligor.
"Outstanding Mortgage Loan": As of any date of determination, a
Mortgage Loan with a Scheduled Principal Balance greater than zero which was
not the subject of a principal prepayment in full prior to such date and which
did not become a Liquidated Mortgage Loan prior to such due date.
"Owner Trustee Fee": The initial fee and annual administration fee
payable to the Owner Trustee pursuant to a Fee Agreement between the Bank and
the Depositor dated as of June 1, 1998.
"Owner Trustee": Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Deposit Trust Agreement, until a successor Person shall have become the
Owner Trustee pursuant to the applicable provisions of the Deposit Trust
Agreement, and thereafter "Owner Trustee" shall mean such successor Person.
"Payaheads": Any Scheduled Payments intended by the related borrower
of a Mortgage Loan to be applied in a Collection Period subsequent to the
Collection Period in which such payment was received.
"Paying Agent": The Trustee or any other depository institution or
trust company that is authorized by the Issuer pursuant to Section 3.03 to pay
the principal of, or interest on, any Bonds on behalf of the Issuer.
"Permitted Encumbrance": Any lien, charge, security interest,
mortgage or other encumbrance Granted by the Issuer in the Trust Estate,
provided that:
(i) such lien, charge, security interest, mortgage or
encumbrance extends only to a portion of the Trust Estate which is
limited to cash deliverable or payable to the Issuer pursuant to Section
8.01 or Section 8.02(d);
(ii) such lien, charge, security interest, mortgage or other
encumbrance secures indebtedness which the Issuer is permitted to incur
under the terms of this Indenture; and
(iii) the beneficiary of such lien, charge, security interest,
mortgage or other encumbrance has agreed that in connection with the
enforcement thereof it will not bring any Proceeding seeking, or which
would result in, the sale of any portion of the Trust Estate and will not
file any petition for the commencement of insolvency proceedings with
respect to the Issuer under the federal bankruptcy laws, as now or
hereafter in effect, or any other present or future federal or state
bankruptcy, insolvency or similar law, or for the appointment of any
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or of any of its property, or seeking an
order for the winding up or liquidation of the affairs of the Issuer.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledged Accounts": The Bond Account and the Distribution Account
(exclusive of any earnings on investments made with funds deposited in the
Distribution Account or the Bond Account).
"Pool Principal Balance": As of any date of determination, the
aggregate outstanding principal balance of the Mortgage Loans.
"Predecessor Bonds": With respect to any particular Bond of a Class,
every previous Bond of that Class evidencing all or a portion of the same debt
as that evidenced by such particular Bond; and, for the purpose of this
definition, any Bond authenticated and delivered under Section 2.08 in lieu of
a lost, destroyed or stolen Bond shall be deemed to evidence the same debt as
the lost, destroyed or stolen Bond.
"Prepayment Interest Shortfall ": With respect to any full or
partial Principal Prepayment of a Mortgage Loan, the difference between (i)
one full month's interest at the applicable Mortgage Rate (giving effect to
any applicable Relief Act Reduction), as reduced by the Master Servicing Fee
Rate and the applicable Servicing Fee Rate, on the outstanding principal
balance of such Mortgage Loan immediately prior to such prepayment and (ii)
the amount of interest actually received with respect to such Mortgage Loan in
connection with such Principal Prepayment.
"Prepayment Period": The one-month period beginning on the Cut-Off
Date, in the case of the first Distribution Date, and on the second day of the
calendar month immediately preceding the month in which the related
Distribution Date occurs, in the case of each subsequent Distribution Date,
and ending on the first day of the month in which the Distribution Date
occurs.
"Principal Distribution Amount": As to any Distribution Date the sum
of distributions of principal made on the Class A Bonds pursuant to Sections
2.03 (b)(ii), (iii) and (iv) (if any) hereof.
"Principal Prepayment in Full": Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
"Principal Prepayment": Any payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment.
"Principal Remittance Amount": With respect to any Distribution
Date, the sum of (i) all principal collected (other than Payaheads) or
advanced in respect of Scheduled Payments on the Mortgage Loans during the
related Collection Period (less unreimbursed Advances and other amounts due to
the Master Servicer, the Servicers, the Owner Trustee, the Certificate Trustee
or the Trustee, to the extent allocable to principal), (ii) the outstanding
principal balance of each of the Mortgage Loans that was purchased from the
Trust Estate during the related Prepayment Period, (iii) the portion of any
Substitution Amount paid during the related Prepayment Period allocable to
principal, and (iv) all Net Liquidation Proceeds, Insurance Proceeds and other
recoveries collected during the related Prepayment Period, to the extent
allocable to principal, as reduced in each case by unreimbursed Advances and
other amounts due to the Master Servicer, the Servicers, the Owner Trustee,
the Certificate Trustee or the Trustee on a loan-by-loan basis, to the extent
allocable to principal.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Prospectus Supplement": The Prospectus Supplement dated June 15,
1998 relating to the Bonds and the Certificates.
"Purchase and Sale Agreement": A purchase and sale agreement between
AmREIT and any originator as seller of Mortgage Loans, a list of which appears
in Schedule VII to the Master Servicing Agreement.
"Rating Agency": Each of S&P and Duff & Phelps. If either such
organization or a successor is no longer in existence, "Rating Agency" shall
be such nationally recognized statistical rating organization, or other
comparable Person, as is designated by the Issuer, notice of which designation
shall be given to the Trustee. References herein to a given rating or rating
category of a Rating Agency shall mean such rating category without giving
effect to any modifiers.
"Record Date": With respect to any Distribution Date, the date on
which the Persons entitled to receive any payment of principal of, or interest
on, any Bonds (or notice of a payment in full of principal) due and payable on
such Distribution Date are determined; such date shall be the last day of the
month preceding the month of such Distribution Date.
"Reconstituted Special Servicing Agreement": The Reconstituted
Special Servicing Agreement (including Special Servicing Compensation
Agreement) among Lehman Capital, A Division of Lehman Brothers Holding Inc.,
AmREIT and the Special Servicer.
"Redemption Date": Any Distribution Date on which Bonds are to be
redeemed in full.
"Redemption Price": With respect to the Bonds to be redeemed, an
amount equal to 100% of the Bond Principal Balance, together with all unpaid
interest accrued thereon at the Bond Interest Rate and any unpaid Carryforward
Interest.
"Request for Release": The Request for Release submitted by a
Servicer to the applicable Custodian, substantially in the form attached as an
exhibit to the related Custodial Agreement.
"Responsible Officer": With respect to the Trustee, any officer in
the corporate trust department or similar group of the Trustee and also, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his or her knowledge of and familiarity with the
particular subject.
"S&P": Standard & Poor's Ratings Group, a division of McGraw-Hill
Inc. For purposes of Section 11.04, the address for notices to S&P shall be
Standard & Poor's Ratings Group, 26 Broadway, 15th Floor, New York, New York
10004, Attention: Mortgage Surveillance Monitoring, or such other address as
S&P may hereafter furnish to the Issuer and the Master Servicer.
"SAIF": The Savings Association Insurance Fund, or any successor
thereto.
"Sale": The meaning specified in Section 5.18(a).
"Scheduled Payment": The scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such
Mortgage Loan which, unless otherwise specified in the Master Servicing
Agreement, shall give effect to any related Debt Service Reduction and any
Deficient Valuation that affects the amount of the monthly payment due on such
Mortgage Loan.
"Scheduled Principal Balance": With respect to any Mortgage Loans as
of any date of determination an amount equal to its outstanding principal
balance as of the Cut-off Date, after giving effect to Scheduled Payments due
on or before such date, whether or not received, reduced by (i) the principal
portion of all Scheduled Payments due on or before the due date in the
Collection Period immediately preceding such date of determination, whether or
not received, and (ii) all amounts allocable to unscheduled principal payments
received on or before the last day of the Collection period immediately
preceding such date of determination.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Enhancement Percentage": With respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the sum
of the aggregate Subordinate Certificate Principal Amount and the Bond
Overcollateralization Amount, in each case after giving effect to
distributions on such Distribution Date, and the denominator of which is the
Stepped-up Bond Balance as of the last day of the related Collection Period.
"Stated Maturity": With respect to any and all Bonds, May 25, 2028.
"Special Servicer": Ocwen Federal Bank FSB, a federal savings bank.
"Stepdown Date": The later to occur of (x) the Distribution Date in
June 2001 and (y) the first Distribution Date on which the Senior Enhancement
Percentage (calculated for this purpose after giving effect to payments or
other recoveries in respect of the Mortgage Loans during the related
Collection Period but before giving effect to distributions on the Bonds on
such Distribution Date) is greater than or equal to 37.58%.
"Stepped-up Bond Balance": With respect to any Distribution Date,
the sum of the Bond Principal Balance after all distributions in respect
thereof have been made on such Distribution Date and the Bond
Overcollateralization Amount as of such Distribution Date.
"Subordinate Certificate Principal Amount": As to any Distribution
Date the aggregate Certificate Principal Amount of the Class M-1, Class M-2
and Class B Certificates issued pursuant to the Certificate Trust Agreement.
"Successor Master Servicer": A Person appointed by the Trustee who
succeeds either the Trustee or the Master Servicer, pursuant to the applicable
provisions of the Master Servicing Agreement.
"Targeted Overcollateralization Amount": With respect to any
Distribution Date will be equal to (x) prior to the Stepdown Date, the product
of 1.35% and the Original Pool Principal Balance and (y) on and after the
Stepdown Date, the greater of (i) the product of 2.70% and the Pool Principal
Balance, as of the last day of the related Collection Period and (ii)
$2,315,379.
"Trust Estate": All money, instruments and other property subject or
intended to be subject to the lien of this Indenture for the benefit of the
Bondholders as of any particular time (including, without limitation, all
property and interests Granted to the Trustee), including all proceeds
thereof.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as
amended, as in force at the Closing Date, unless otherwise specifically
provided.
"Trustee": First Union National Bank, a national banking
association, and any Person succeeding as Trustee hereunder pursuant to
Section 6.12 or any other applicable provision hereof.
"Trustee Fee": As to any Distribution Date, an amount equal to the
product of the Trustee's Fee Rate and the Aggregate Loan Balance as of the
first day of the related Collection Period.
"Trustee's Fee Rate": With respect to any Mortgage Loan, a per annum
rate equal to 0.00075%.
"Trustee Mortgage File": With respect to each Mortgage Loan, the
original documents and instruments relating thereto to be retained in the
custody and possession of the Custodian, as set forth and enumerated in the
Master Servicing Agreement.
"Unpaid Basis Risk Shortfall": With respect to any Distribution
Date, the aggregate of all Basis Risk Shortfalls for all previous Distribution
Dates, together with interest thereon at the Bond Interest Rate, less all
payments made to the holders of the Bonds in respect of Basis Risk Shortfalls
on or prior to such Distribution Date.
"Voting Rights": With respect to all of the provisions of this
Indenture requiring the consent, vote, resolution or similar action of the
Bondholders, the voting rights represented by each Bond as against the other
Bondholders, which voting rights shall be in the proportion borne by the
Principal Amount of such Bond to the aggregate Principal Amounts of the Bonds.
ARTICLE II.
THE BONDS
SECTION 2.01. Forms Generally.
The Bonds and the Trustee's certificate of authentication shall be
in substantially the form required by this Article II, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the
Bonds may be listed, or as may, consistently herewith, be determined by the
officers executing such Bonds, as evidenced by their execution thereof. Any
portion of the text of any Bond may be set forth on the reverse thereof with
an appropriate reference on the face of the Bond.
The definitive Bonds may be produced in any manner determined by the
officers executing such Bonds, as evidenced by their execution thereof;
provided, however, that in the event the Bonds are listed on any securities
exchange, the Bonds shall be produced in accordance with the rules of any
securities exchange on which the Bonds may be listed.
SECTION 2.02. Forms of Bonds and Certificate of Authentication.
(a) The form of Bond is attached hereto as Exhibit II.
(b) The form of the Trustee's certificate of authentication is as
follows:
"This is one of the Bonds referred to in the within-mentioned
Indenture.
______________________________________
as Trustee
By:___________________________________
Authorized Signatory"
(c) The form of assignment is as follows:
"FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________________________________________.
_______________________________
(Please insert Social Security or other
Identifying Number of Assignee)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print or type name and address of Assignee)
the within Bond of American Residential Eagle Bond Trust 1998-1, and does
hereby irrevocably constitute and appoint ______________________________
Attorney to transfer such Bond on the books of the within named trust, with
full power of substitution in the premises.
Dated:________________________________________________________________________
Notice: The signature to this
assignment must correspond with the
name as written upon the face of this
Bond in every particular without
alteration or enlargement or any
change whatever. The signature must be
guaranteed by a member of a signature
guaranty medallion program. Notarized
or witnessed signatures are not
acceptable."
SECTION 2.03. Bonds Issuable in Classes; Provisions with Respect to
Principal and Interest Payments.
(a) General.
The Bonds shall be designated generally as the American Residential
Eagle Bond Trust 1998-1, "Collateralized Callable Mortgage Bonds" of the
Issuer. Each Bond shall bear upon the face thereof the designation so selected
for the Class to which it belongs.
The Bonds shall be issued in a single Class, and shall be
denominated as the "Class A Bonds." The aggregate principal amount of Bonds
that may be authenticated and delivered under this Indenture is limited to
$456,822,000, except for Bonds authenticated and delivered upon registration
of, transfer of or in exchange for, or in lieu of Bonds pursuant to Sections
2.06, 2.07 and 2.08 hereof.
All of the Bonds shall be issued in the appropriate forms attached
as Exhibits hereto with such additions and completions as are appropriate for
each such Class.
The final installments of principal of the Classes of Bonds shall be
payable at the Stated Maturity. The principal of each Bond shall be payable in
installments ending no later than the Stated Maturity of the final installment
of the principal thereof unless the unpaid principal of such Bond becomes due
and payable at an earlier date by declaration of acceleration or call for
redemption or otherwise. For each Distribution Date prior to the Stated
Maturity, the aggregate amount of each installment of principal due and
payable on each Class of Bonds shall be equal to such Class's pro rata share
of principal distributable pursuant to Section 2.03 (b)(ii), (iii) and (iv)
(if any) for such Distribution Date.
(b) Payments of Principal of and Interest on the Bonds.
(i) On each Distribution Date, the Trustee shall distribute the
Interest Remittance Amount for such date in the following order of
priority:
(A) to the Certificate Trustee, the Owner Trustee and the
Trustee hereunder, as applicable, the Certificate Trustee Fee, the
Owner Trustee Fee (but only to the extent that such initial or
annual administrative fee has not been fully paid on a prior
Distribution Date) and the Trustee Fee, respectively;
(B) to the Master Servicer, to reimburse the Master Servicer
for expenses incurred and reimbursable pursuant to Section 3(b)(ii)
and Section 6(e) of the Master Servicing Agreement up to an amount
not to exceed $150,000 per annum in any calendar year, and to the
Trustee, to pay any indemnified amounts due to it pursuant to
Section 6.07 hereof up to an amount not to exceed $150,000 per annum
in any calendar year;
(C) to the Manager, the Management Fee; and
(D) to the Class A Bonds, Current Interest for such Class and
such Distribution Date, any Carryforward Interest for such Class and
such Distribution Date and any Basis Risk Shortfall and any Unpaid
Basis Risk Shortfall for such Class and such Distribution Date;
(ii) On each Distribution Date, the Trustee shall distribute
the Principal Remittance Amount for such date to the Class A Bonds, in an
amount up to the lesser of (A) the amount necessary to cause the Bond
Overcollateralization Amount to equal the Targeted Overcollateralization
Amount and (B) the amount necessary to reduce the Bond Principal Balance
to zero;
(iii) On each Distribution Date, the Trustee shall distribute
the Excess Mortgage Amount, if any, in the following order of priority,
to the payment of the following amounts for such Distribution Date to the
extent that any such amounts remain unpaid after the applications of the
Interest Remittance Amount pursuant to Subsections (b)(i)(A) through (D)
of this Section 2.03 and the Principal Remittance Amount pursuant to
Subsection (b)(ii) of this Section 2.03:
(A) the amount set forth in subsection (b)(i)(D) of this
Section 2.03;
(B) any amount necessary to cause the Bond
Overcollateralization Amount to equal the Targeted
Overcollateralization Amount on such Distribution Date;
(C) any Bond Deferred Amounts for such Distribution Date;
(D) the incentive fee compensation payable to the Special
Servicer pursuant to the Reconstituted Special Servicing Agreement
on such Distribution Date;
(E) (i) reimbursement to the Master Servicer for expenses
incurred and reimbursable to it pursuant to Section 3(b)(ii) and
Section 6(e) of the Master Servicing Agreement to the extent such
expenses have not been reimbursed pursuant to subsection (b)(i)(c)
of this Section 2.03; (ii) payment to the Trustee of any indemnified
amounts due to it pursuant to Section 6.07 hereof to the extent such
amounts have not been paid pursuant to subsection (b)(i)(c) of this
Section 2.03; (iii) reimbursement to the Owner Trustee for all
reasonable expenses incurred by it pursuant to Section 6.06(b) or
Section 6.06(c) of the Deposit Trust Agreement, but only to the
extent the that Issuer or the Depositor shall have failed to
reimburse the Owner Trustee for such reasonable expenses; and (iv)
payment to the Manager of any amounts due and owing to the Manager
under the Management Agreement other than the Management Fee; and
(F) any remaining Excess Mortgage Amount, to the holder of the
Investor Certificate; and
(iv) In addition to the payments of principal on the Class A
Bonds distributable pursuant to Subsection (b)(ii) and (b)(iii) of this
Section 2.03, on any Distribution Date there shall be due and payable on
the Class A Bonds an amount of principal equal to the excess of (a) the
Bond Principal Balance (after deducting the amounts distributable under
Subsection (b)(ii) and (iii) on such Distribution Date) over (B) the
Aggregate Loan Balance as of the last day of the Collection Period for
such Distribution Date.
SECTION 2.04. Denominations.
Each Class of Bonds shall be evidenced initially by a single Bond
representing the entire aggregate Bond Principal Balance of such Class of
Bonds as of the Closing Date.
SECTION 2.05. Execution, Authentication, Delivery and Dating.
The Bonds shall be executed by an Authorized Officer in the name and
on behalf of the Issuer. The signature of such officer on the Bonds may be
manual or facsimile.
Bonds bearing the manual or facsimile signature of an individual who
was at any time an Authorized Officer shall bind the Issuer, notwithstanding
that such individual has ceased to hold such office prior to the
authentication and delivery of such Bonds or did not hold such office at the
date of such Bonds.
At any time and from time to time after the execution and delivery
of this Indenture, the Issuer may deliver Bonds executed on behalf of the
Issuer to the Trustee for authentication; and the Trustee shall authenticate
and deliver such Bonds as in this Indenture provided and not otherwise.
Each Bond authenticated on the Closing Date shall be dated the
Closing Date. All other Bonds which are authenticated after the Closing Date
for any other purpose hereunder shall be dated the date of their
authentication.
No Bond shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or by any Authenticating Agent by the manual signature
of one of its authorized officers or employees, and such certificate upon any
Bond shall be conclusive evidence, and the only evidence, that such Bond has
been duly authenticated and delivered hereunder.
SECTION 2.06. Temporary Bonds.
The Bonds may be typewritten or in any other form acceptable to the
Issuer and the Trustee.
The Issuer may execute, and upon Issuer Order the Trustee shall
authenticate and deliver, temporary Bonds which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Bonds in lieu of
which they may be so issued and with such variations as the officers executing
such Bonds may determine, as evidenced by their execution of such Bonds.
If temporary Bonds are issued, the Issuer will cause definitive
Bonds to be prepared without unreasonable delay. After the preparation of
definitive Bonds, the temporary Bonds shall be exchangeable for definitive
Bonds upon surrender of the temporary Bonds at the office or agency of the
Issuer to be maintained as provided in Section 3.02, without charge to the
Holder. Upon surrender or cancellation of any one or more temporary Bonds, the
Issuer shall execute and the Trustee shall authenticate and deliver and
exchange therefor a like principal amount of definitive Bonds of the same
Class and of authorized denominations. Until so exchanged, the temporary Bonds
shall in all respects be entitled to the same benefits under this Indenture as
Definitive Bonds of the same Class.
SECTION 2.07. Registration, Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Bond Register")
in which, subject to such reasonable regulations as it may prescribe, the
Issuer shall provide for the registration of Bonds and the registration of
transfers of Bonds. The Trustee is hereby initially appointed "Bond Registrar"
for the purpose of registering Bonds and transfers of Bonds as herein
provided. Upon any resignation of any Bond Registrar appointed by the Issuer,
the Issuer shall promptly appoint a successor or, in the absence of such
appointment, shall assume the duties of Bond Registrar.
At any time the Trustee is not also the Bond Registrar, the Trustee
shall be a co-Bond Registrar. The Issuer shall cause each co-Bond Registrar to
furnish the Bond Registrar, promptly after each authentication of a Bond by
it, appropriate information with respect thereto for entry by the Bond
Registrar into the Bond Register. If the Trustee shall at any time not be
authorized to keep and maintain the Bond Register, the Trustee shall have the
right to inspect such Bond Register at all reasonable times and to rely
conclusively upon a certificate of the Person in charge of the Bond Register
as to the names and addresses of the Holders of the Bonds and the principal
amounts and numbers of such Bonds so held.
Upon surrender for registration of transfer of any Bond at the
office or agency of the Issuer to be maintained as provided in Section 3.02,
the Issuer shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Bonds of
any authorized denominations and of a like aggregate principal amount and
Class.
At the option of the Holder, Bonds may be exchanged for other Bonds
of any authorized denominations, and of a like aggregate initial principal
amount and Class, upon surrender of the Bonds to be exchanged at such office
or agency. Whenever any Bonds are so surrendered for exchange, the Issuer
shall execute, and the Trustee shall authenticate and deliver, the Bonds which
the Bondholder making the exchange is entitled to receive.
All Bonds issued upon any registration of transfer or exchange of
Bonds shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Bonds
surrendered upon such registration of transfer or exchange.
Every Bond presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Bonds, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge as may be imposed in connection
with any registration of transfer or exchange of Bonds, other than exchanges
pursuant to Section 2.08 not involving any transfer.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Bonds.
If (1) any mutilated Bond is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Bond and (2) there is delivered to the Trustee such security or
indemnity as may be required by the Trustee to hold the Issuer and the Trustee
harmless, then, in the absence of notice to the Issuer or the Trustee that
such Bond has been acquired by a bona fide purchaser, the Issuer shall execute
and upon its request the Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a new
Bond or Bonds of the same tenor, aggregate initial principal amount and Class
bearing a number not contemporaneously outstanding. If, after the delivery of
such new Bond, a bona fide purchaser of the original Bond in lieu of which
such new Bond was issued presents for payment such original Bond, the Issuer
and the Trustee shall be entitled to recover such new Bond from the person to
whom it was delivered or any person taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expenses incurred
by the Issuer or the Trustee in connection therewith. If any such mutilated,
destroyed, lost or stolen Bond shall have become or shall be about to become
due and payable, or shall have become subject to redemption in full, instead
of issuing a new Bond, the Issuer may pay such Bond without surrender thereof,
except that any mutilated Bond shall be surrendered.
Upon the issuance of any new Bond under this Section, the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Bond issued pursuant to this Section in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Bond 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 Bonds duly issued hereunder.
The provisions of this Section 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 Bonds.
SECTION 2.09. Payments of Principal and Interest; Principal and Interest
Rights Reserved.
(a) The Bonds of each Class shall bear interest for each Accrual
Period at the Bond Interest Rate for the Bonds of such Class, which interest
shall be due and payable on each Distribution Date on the unpaid principal
amount of the Bonds of such Class commencing on the Closing Date and
continuing on each Distribution Date thereafter until the entire unpaid
principal amount of the Bonds of such Class is paid, whether by acceleration
or otherwise, and (to the extent lawful and enforceable) shall bear interest
on overdue interest at the Bond Interest Rate for the Bonds of such Class all
as specified herein, in the forms of the Bonds and in the Master Servicing
Agreement.
The principal of the Bonds shall be payable as provided by Section
2.03(b).
(b) Each payment of principal of and interest on a Bond shall be
paid to the Person in whose name such Bond (or one or more Predecessor Bonds)
is registered at the close of business on the Record Date, for the applicable
Distribution Date by check mailed to such Person's address as it appears in
the Bond Register on such Record Date, except for the final installment of
principal payable with respect to such Bond, which shall be payable as
provided in Section 2.09(c).
All payments of principal of and interest on the Bonds shall be made
only from the Trust Estate and any other assets of the Issuer, and each Holder
of the Bonds, by its acceptance of the Bonds, agrees that it will have
recourse solely against such Trust Estate and such other assets of the Issuer
and that neither the Trustee, the Owner Trustee in its individual capacity,
nor any of either of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for any amounts payable, or performance due, under the Bonds or this
Indenture.
(c) All reductions in the principal amount of a Bond (or one or more
Predecessor Bonds) effected by payments of installments of principal made on
any Distribution Date shall be binding upon all Holders of such Bond and any
Bond issued upon transfer thereof or in exchange therefor or in lieu thereof.
The final installment of principal of each Bond (including the Redemption
Price of any Bond called for redemption), shall be payable only upon
presentation and surrender thereof on or after the Distribution Date therefor
at the office or agency of the Issuer maintained by it for such purpose in the
Borough of Manhattan, the City of New York, State of New York, pursuant to
Section 3.02. Whenever the Trustee expects that the entire remaining unpaid
principal amount of any Bond will become due and payable on the next
Distribution Date, it shall, no later than five days prior to such
Distribution Date, mail or cause to be mailed to the Holder of each Bond as of
the close of the business on such otherwise applicable Record Date a notice to
the effect that:
(i) the Trustee expects that funds sufficient to pay such final
installment will be available in the Distribution Account on such
Distribution Date; and
(ii) if such funds are available, such final installment will
be payable on such Distribution Date, but only upon presentation and
surrender of such Bond at the office or agency of the Issuer maintained
for such purpose pursuant to Section 3.02 (the address of which shall be
set forth in such notice).
Notices in connection with redemptions of Bonds shall be mailed to
Holders in accordance with Section 10.02.
SECTION 2.10. Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Bond,
the Issuer, the Trustee, any Agent and any other agent of the Issuer or the
Trustee shall treat the Person in whose name any Bond is registered as the
owner of such Bond (a) on the applicable Record Date for the purpose of
receiving payments of the principal of, and interest on, such Bond and (b) on
any other date for all other purposes whatsoever, whether or not such Bond is
overdue, and neither the Issuer, the Trustee, any Agent nor any other agent of
the Issuer or the Trustee shall be affected by notice to the contrary.
SECTION 2.11. Cancellation.
All Bonds surrendered for payment, registration of transfer,
exchange or redemption shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it.
The Issuer may at any time deliver to the Trustee for cancellation any Bond
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Bonds so delivered shall be
promptly cancelled by the Trustee. No Bonds shall be authenticated in lieu of
or in exchange for any Bonds cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Bonds held by the Trustee
shall be held by the Trustee in accordance with its standard retention policy,
unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it.
SECTION 2.12. Authentication and Delivery of Bonds.
The Bonds may be executed by the Issuer and delivered to the Trustee
for authentication, and thereupon the same shall be authenticated and
delivered by the Trustee, provided, that such execution and authentication may
be made in counterpart, upon Issuer Request and upon receipt by the Trustee of
the following:
(a) an Issuer Order authorizing the execution, authentication and
delivery of the Bonds and specifying the Classes, the Stated Maturity of the
final installment of principal, the principal amount and the Bond Interest
Rate, of each Class of such Bonds to be authenticated and delivered;
(b) an Issuer Order authorizing the execution and delivery of this
Indenture;
(c) one or more Opinions of Counsel addressed to the Trustee,
complying with the requirements of Section 11.01, reasonably satisfactory in
form and substance to the Trustee, and to the effect that:
(i) all instruments furnished to the Trustee by the Issuer
pursuant to this Section 2.12 in connection with the Bonds conform in all
material respects to the requirements of this Indenture and constitute
all the documents required to be delivered under this Section 2.12 for
the Trustee to authenticate and deliver the Bonds (counsel rendering such
opinion or opinions need not express any opinion as to whether the
Mortgage Loans Granted to the Trustee as security conform to the
requirements of this Indenture);
(ii) all conditions precedent provided for in this Indenture
relating to the authentication and delivery of the Bonds have been
complied with in all material respects (counsel rendering such opinion or
opinions need not express any opinion as to the matters set forth in the
parenthetical clause at the end of paragraph (i) above or as to whether
the amount of cash or other collateral, if any, delivered to the Trustee
pursuant to any subsection of this Section 2.12 is the requisite amount);
(iii) the Bank has corporate power to execute and deliver the
Deposit Trust Agreement, the Deposit Trust Agreement authorizes the
Issuer to execute and deliver the Bonds and this Indenture, and to issue
the Bonds, and the Owner Trustee has duly taken all necessary action
under the Deposit Trust Agreement for those purposes;
(iv) the Issuer is a statutory business trust created under the
laws of the State of Delaware and duly authorized by the Deposit Trust
Agreement;
(v) assuming due authorization, execution and delivery thereof
by the Trustee, this Indenture will be the legally valid and binding
obligation of the Issuer, enforceable against the Issuer in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws and equitable principles
relating to or limiting creditors' rights generally and such counsel need
express no opinion as to the availability of equitable remedies;
(vi) the Bonds, when issued, delivered, authenticated and paid
for, will be the legally valid and binding obligations of the Issuer,
entitled to the benefits of this Indenture, and enforceable against the
Issuer in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws and
equitable principles relating to or limiting creditors' rights generally
and such counsel need express no opinion as to the availability of
equitable remedies;
(vii) the Mortgage Notes included in the Mortgage Loans have
been duly and validly assigned, delivered and pledged to the Trustee to
the extent contemplated by this Indenture, and this Indenture together
with such assignment, delivery and pledge to the Trustee, creates as
security for the Bonds a valid and perfected security interest of first
priority in such Mortgage Notes, except to the extent limited in the
event (A) the Trustee relinquishes possession of any such Mortgage Note,
(B) the Depositor, the Issuer, the Master Servicer, the Servicer or the
Special Servicer transfers any such Mortgage Note or the related Mortgage
to a bona fide purchaser for value without notice prior to notification
to the Mortgagor of the assignment to the Trustee of such Mortgage Note
or due recordation of the Assignment to the Trustee of the related
Mortgage or (C) the Depositor, the Issuer, the Master Servicer, any
Servicer or the Special Servicer discharges any such Mortgage Note or the
related Mortgage prior to such notification or recordation; the Mortgages
delivered to the Trustee with the Mortgage Notes will continue to secure
the Mortgage Notes included in the Mortgage Loans, as though, and to the
same extent as if, such Mortgage Notes had not been assigned, delivered
and pledged; and it is not necessary to record or file this Indenture or
to take any other action, except as set forth above, in order to make
effective the lien and security interest created by this Indenture in the
Mortgage Notes included in the Mortgage Loans.
In rendering the opinions set forth above, such counsel may rely
upon officers' certificates of the Depositor, the Owner Trustee, the Issuer,
any Servicer, the Master Servicer and the Trustee, without independent
confirmation or verification, as to the following matters and as to such other
matters as shall be reasonably acceptable to the Trustee: (A) the accuracy of
the descriptions of the Mortgage Notes included in the Mortgage Loans and the
conformity thereof to the descriptions in this Indenture, (B) the ownership by
AmREIT, the Depositor and the Issuer of such Mortgage Notes free and clear of
any lien, claim, charge or interest of any kind of any third party, (C) the
physical delivery of such Mortgage Notes to the Trustee, (D) the absence of
any evidence appearing on any such Mortgage Note of any right or interest
inconsistent with the opinions expressed, and (E) the form of endorsement
approved by such counsel having been made on each such Mortgage Note. In
rendering the opinions set forth above, such counsel need express no opinion
as to (A) the perfection of the security interest in any collateral not
governed by Article 9 of the Uniform Commercial Code of the State of
California or New York, (B) the existence of, or the priority of the security
interest created by the Indenture against, any liens or other interests which
arise by operation of law and which do not require any filing or similar
action in order to take priority over a perfected security interest, (C) the
priority of the security interest created by this Indenture with respect to
any claim or lien in favor of the United States or any agency or
instrumentality thereof (including federal tax liens and liens arising under
Title IV of the Employee Retirement Income Security Act of 1974, as amended)
or (D) any matters governed by the laws of states other than California or New
York. In addition to the foregoing, such Opinion of Counsel may contain such
additional limitations and qualifications as shall be reasonably acceptable to
the Trustee.
(d) an Officers' Certificate complying with the requirements of
Section 11.01 and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Bonds will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Deposit
Trust Agreement or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may be bound or
to which it may be subject, and that all conditions precedent provided in
this Indenture relating to the authentication and delivery of the Bonds
have been complied with;
(ii) the Issuer is the owner of each Mortgage Loan, free and
clear of any lien, security interest or charge, has not assigned any
interest or participation in any such Mortgage Loan (or, if any such
interest or participation has been assigned, it has been released) and
has the right to Grant each such Mortgage Loan to the Trustee;
(iii) the information set forth in the Schedule of Mortgage
Loans attached as Schedule A to this Indenture is true and correct in all
material respects as of the Closing Date;
(iv) the Issuer has Granted to the Trustee all of its right,
title and interest in each Mortgage Loan; and
(v) as of the Closing Date, no lien in favor of the United
States described in Section 6321 of the Code, or lien in favor of the
Pension Benefit Guaranty Corporation described in Section 4068(a) of the
Employee Retirement Income Security Act of 1974, as amended, has been
filed as described in subsections 6323(f) and 6323(g) of the Code upon
any property belonging to the Issuer. (e) An executed counterpart of the
Master Servicing Agreement.
SECTION 2.13. [Reserved]
SECTION 2.14. [Reserved
SECTION 2.15. Advances by the Trustee.
In the event that the Master Servicer fails for any reason to make
an Advance required to be made pursuant to Section 4 of the Master Servicing
Agreement on or before the Deposit Date, the Trustee shall, on or before the
related Distribution Date, deposit in the Certificate Account an amount equal
to the excess of (a) Advances required to be made by the Master Servicer or
any Servicer that would have been deposited in such Certificate Account over
(b) the amount of any Advance made by the Master Servicer or any Servicer with
respect to such Distribution Date; provided, however, that the Trustee shall
be required to make such Advance only if it is not prohibited by law from
doing so and it has determined that such Advance would be recoverable from
amounts to be received with respect to such Mortgage Loan, including late
payments, Liquidation Proceeds, Insurance Proceeds, or otherwise. The Trustee
shall be entitled to be reimbursed from the Distribution Account for Advances
made by it pursuant to this Section 2.15.
ARTICLE III.
COVENANTS
SECTION 3.01. Payment of Bonds.
The Issuer will pay or cause to be duly and punctually paid the
principal of, and interest on, the Bonds (and, to the extent applicable,
Carryforward Interest accrued thereon) in accordance with the terms of the
Bonds and this Indenture.
SECTION 3.02. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, the City of
New York, the State of New York an office or agency where Bonds may be
presented or surrendered for payment or may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Bonds and this Indenture may be served. The Issuer will give
prompt written notice to the Trustee of the location and any change in the
location, of such office or agency. Until written notice of any change in the
location of such office or agency is delivered to the Trustee or if at any
time the Issuer shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, Bonds may be so
presented and surrendered, and such notices and demands may be made or served,
at 40 Broad Street, NY 5140, Fifth Floor, Suite 550, New York, New York 10004,
and the Issuer hereby appoints the Trustee as its agent to receive all such
surrenders, notices and demands.
The Issuer may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Bonds may
be presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that (i) no such
designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain an office or agency in the Borough of Manhattan, the
City of New York, the State of New York, for the purposes set forth in the
preceding paragraph, (ii) presentations or surrenders of Bonds for payment may
be made only in the City of New York, the State of New York or at the
Corporate Trust Office and (iii) any designation of an office or agency for
payment of Bonds shall be subject to Section 3.03. The Issuer will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
SECTION 3.03. Money for Bond Payments to Be Held in Trust.
All payments of amounts due and payable with respect to any Bonds
which are to be made from amounts withdrawn from the Distribution Account
pursuant to Section 8.02(d) or Section 5.08 shall be made on behalf of the
Issuer by the Trustee or by a Paying Agent, and no amounts so withdrawn from
the Distribution Account for payments of Bonds shall be paid over to the
Issuer under any circumstances except as provided in this Section 3.03 or in
Section 5.08.
If the Issuer shall have a Paying Agent that is not also the Bond
Registrar, it shall furnish, or cause the Bond Registrar to furnish to the
Paying Agent and the Trustee, no later than the fifth calendar day after each
Record Date or the first Business Day after a Record Date applicable to a
Distribution Date on which the Bonds will be redeemed in full, a list, in such
form as such Paying Agent may reasonably require, of the names and addresses
of the Holders of Bonds and of the number of Individual Bonds of each Class
held by each such Holder.
Whenever the Issuer shall have a Paying Agent other than the
Trustee, it will, on or before the Business Day immediately preceding each
Distribution Date, direct the Trustee to deposit with such Paying Agent an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the Distribution Account), such
sum to be held in trust for the benefit of the Persons entitled thereto. Any
moneys deposited with a Paying Agent in excess of an amount sufficient to pay
the amounts then becoming due on the Bonds with respect to which such deposit
was made shall, upon Issuer Order, be paid over by such Paying Agent to the
Trustee for application in accordance with Article VIII.
Any Paying Agent other than the Trustee shall be appointed by Issuer
Order. The Trustee is hereby appointed as the initial Paying Agent. The Issuer
shall not appoint any Paying Agent which is not, at the time of such
appointment, a depository institution or trust company whose obligations would
be Permitted Investments pursuant to clause (iv) of the definition of the term
"Permitted Investments" (as defined in the Master Servicing Agreement). The
Issuer will cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee (and if the Trustee acts as Paying Agent, it hereby so
agrees), subject to the provisions of this Section, that such Paying Agent
will:
(1) allocate all sums received for payment to the Holders of Bonds
on each Distribution Date among such Holders in the proportion specified
in the applicable Distribution Date Statement, as the case may be, in
each case to the extent permitted by applicable law;
(2) hold all sums held by it for the payment of amounts due with
respect to the Bonds 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;
(3) if such Paying Agent is not the Trustee, immediately resign as a
Paying Agent and forthwith pay to the Trustee all sums held by it in
trust for the payment of the Bonds if at any time it ceases to meet the
standards set forth above required to be met by a Paying Agent at the
time of its appointment;
(4) if such Paying Agent is not the Trustee, give the Trustee notice
of any Default by the Issuer (or any other obligor upon the Bonds) in the
making of any payment required to be made with respect to any Bonds for
which it is acting as Paying Agent;
(5) if such Paying Agent is not the Trustee, at any time during the
continuance of any such Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such Paying
Agent; and
(6) comply with all requirements of the Code, and all regulations
thereunder, with respect to the withholding from any payments made by it
on any Bonds of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith;
provided, however, that with respect to withholding and reporting
requirements applicable to original issue discount (if any) on any Class
of Bonds, the Issuer has provided the calculations pertaining thereto to
the Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Issuer
Order direct any Paying Agent, if other than the Trustee, to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
such Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Subject to applicable escheat laws, any money held by the Trustee or
any Paying Agent in trust for the payment of any amount due with respect to
any Bond and remaining unclaimed for six years after such amount has become
due and payable to the Holder of such Bond shall be discharged from such trust
and, upon its written request, paid to the Issuer; and the Holder of such Bond
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 Trustee or such Paying Agent with respect to
such trust money shall thereupon cease. The Trustee may, but shall not be
required to, adopt and employ, at the expense of the Issuer, any reasonable
means of notification of such repayment (including, but not limited to,
mailing notice of such repayment to Holders whose Bonds have been called but
have not been surrendered for redemption or whose right to or interest in
moneys due and payable but not claimed is determinable from the records of the
Trustee or any Agent, at the last address of record for each such Holder).
SECTION 3.04. Corporate Existence of Trustee.
(a) Any corporation or association into which the Trustee may be
merged or with which it may be consolidated, or any corporation or association
resulting from any merger or consolidation to which the Trustee shall be a
party, shall be the successor Trustee under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto, anything herein, or in any agreement relating to
such merger or consolidation, by which any such Trustee may seek to retain
certain powers, rights and privileges therefore obtaining for any period of
time following such merger or consolidation, to the contrary notwithstanding.
(b) Any successor to the Trustee appointed pursuant to Section 10.01
of the Certificate Trust Agreement shall be the successor Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Trustee in accordance with this Section 3.04, the Person formed by or
surviving such consolidation or merger (if other than the Issuer) or the
Person succeeding to the Trustee under the Certificate Trust Agreement may
exercise every right and power of the Owner Trustee, on behalf of the Issuer,
under this Indenture with the same effect as if such Person had been named as
the Trustee herein.
SECTION 3.05. Protection of Trust Estate.
(a) The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien of this Indenture or carry
out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Documents; or
(v) preserve and defend title to the Trust Estate and the
rights of the Trustee, and of the Bondholders, in the Mortgage Loans and
the other property held as part of the Trust Estate against the claims of
all Persons and parties.
The Issuer hereby designates the Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required pursuant to this Section 3.05; provided, however,
that such designation shall not be deemed to create a duty in the Trustee to
monitor the compliance of the Issuer with the foregoing covenants; and
provided further, however, that the duty of the Trustee to execute any
instrument required pursuant to this Section 3.05 shall arise only if the
Trustee has knowledge pursuant to Section 6.01(d) of the occurrence of a
failure of the Issuer to comply with provisions of this Section 3.05.
(b) Except as permitted by Section 8.08, the 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 3.06 (or from the jurisdiction in which it was held, or to
which it is intended to be removed, as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 2.12(c), if no Opinion of
Counsel has yet been delivered pursuant to Section 3.06) or cause or permit
ownership or the pledge of any portion of the Trust Estate that consists of
book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such time unless the Trustee shall have first received an
Opinion of Counsel to the effect that the lien and security interest created
by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
SECTION 3.06. Opinions as to Trust Estate.
On or before February 15 in each calendar year, beginning with the
first calendar year commencing more than three months after the Closing Date,
the Issuer shall furnish to the Trustee an Opinion of Counsel reasonably
satisfactory in form and substance to the Trustee either stating that, in the
opinion of such counsel, such action has been taken as is necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe all such actions, if any, that will, in
the opinion of such counsel, be required to be taken to maintain the lien and
security interest of this Indenture with respect to the Trust Estate until May
15 in the following calendar year.
SECTION 3.07. Performance of Obligations; Master Servicing Agreement.
(a) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in the Deposit Trust Agreement. The
Issuer and the Trustee shall punctually perform and observe all of their
respective obligations and agreements contained in the Master Servicing
Agreement.
(b) The Issuer shall not take any action and will use its reasonable
good faith efforts not to permit any action to be taken by others that would
release any Person from any of such Person's covenants or obligations under
any of the Mortgage Documents or under any instrument included in the Trust
Estate, or that would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
of the Mortgage Documents, except as expressly provided or permitted in this
Indenture and the Master Servicing Agreement and Servicing Agreements or such
Mortgage Document or other instrument or unless such action will not adversely
affect the interests of the Holders of the Bonds.
(c) The Issuer shall monitor the performance of the Master Servicer
under the Master Servicing Agreement, and shall use its reasonable good faith
efforts to cause the Master Servicer duly and punctually to perform all of its
duties and obligations thereunder. Upon the occurrence of a Master Servicing
Default of which an Authorized Officer of the Issuer has actual knowledge
under the Master Servicing Agreement, the Issuer shall promptly notify the
Trustee thereof, and shall specify in such notice the action, if any, the
Issuer is taking in respect of such Master Servicing Default. So long as any
such Master Servicing Default shall be continuing, the Trustee may (1)
terminate all of the rights and powers of the Master Servicer pursuant to the
applicable provisions of the Master Servicing Agreement; (ii) exercise any
rights it may have to enforce the Master Servicing Agreement against the
Master Servicer; and/or (iii) waive any such Master Servicing Default under
the Master Servicing Agreement or take any other action with respect to such
Master Servicing Default as is permitted thereunder.
(d) Upon any termination by the Trustee of the Master Servicer's
rights and powers pursuant to the Master Servicing Agreement, the rights and
powers of the Master Servicer with respect to the Mortgage Loans shall vest in
the Trustee and the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as Master Servicer with respect to such
Mortgage Loans under the Master Servicing Agreement, until the Trustee shall
have appointed, with the consent of the Issuer, such consent not to be
unreasonably withheld, and the Rating Agencies, and in accordance with the
applicable provisions of the Master Servicing Agreement a new Person to serve
as successor to the Master Servicer. With such consent, the Trustee may elect
to continue to serve as successor Master Servicer under the Master Servicing
Agreement. Upon appointment of a successor Master Servicer, the Trustee and
such successor Master Servicer shall enter into a master servicing agreement
in a form substantially similar to the Master Servicing Agreement. In
connection with any such appointment, the Trustee may make such arrangements
for the compensation of such successor as it and such successor shall agree,
but in no event shall such compensation of any successor Master Servicer
(including the Trustee) be in excess of that payable to the Master Servicer
under the Master Servicing Agreement.
(e) Upon any termination of the Master Servicer's rights and powers
by the Trustee pursuant to the Master Servicing Agreement, the Trustee shall
promptly notify the Issuer and the Rating Agencies, specifying in such notice
that the Trustee or any successor Master Servicer, as the case may be, has
succeeded the Master Servicer under the Master Servicing Agreement, which
notice shall also specify the name and address of any such successor Master
Servicer.
SECTION 3.08. Investment Company Act.
The Issuer shall at all times conduct its operations so as not to be
subject to the Investment Company Act of 1940, as amended (or any successor
statute), and the rules and regulations thereunder.
SECTION 3.09. Negative Covenants.
The Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate except as expressly permitted by this Indenture or the Master
Servicing Agreement;
(b) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Bonds by reason of the payment of any taxes
levied or assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than in connection
with, or relating to, the issuance of the Bonds and the Investor Certificate
pursuant to this Indenture and the Deposit Trust Agreement, respectively, or
amend Section 2.03 or Section 10.01 of the Deposit Trust Agreement as in
effect on the Closing Date without, in each case, the consent of the Holders
of 66-2/3% of the aggregate Principal Amount of the Bonds then Outstanding;
(d) incur any indebtedness or assume or guaranty any indebtedness of
any Person, except for such indebtedness as may be incurred by the Issuer in
connection with the issuance of the Bonds pursuant to this Indenture;
(e) dissolve or liquidate in whole or in part; or
(f) (1) permit the validity or effectiveness of this Indenture or
any Grant 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 under this Indenture, except as
may be expressly permitted hereby, (ii) permit any lien, charge, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture, the lien created by Section 8.04 of the Deposit Trust Agreement, as
in effect on the Closing Date, or any Permitted Encumbrance) to be created on
or extended to or otherwise arise upon or burden the Trust Estate or any part
thereof or any interest therein or the proceeds thereof or (iii) permit the
lien of this Indenture not to constitute a valid perfected first priority
security interest in the Trust Estate.
SECTION 3.10. Annual Statement as to Compliance.
On or before 120 days after the end of the first fiscal year of the
Issuer which ends more than three months after the Closing Date, and each
fiscal year thereafter, the Issuer shall deliver to the Trustee a written
statement, signed by an Authorized Officer, stating that:
(1) a review of the fulfillment by the Issuer during such year of
its obligations under this Indenture has been made under such
officer's supervision; and
(2) to the best of such officer's knowledge, based on such review,
the Issuer has fulfilled all of its obligations under this Indenture
throughout such year, or, if there has been a Default in the
fulfillment of any such obligation, specifying each such Default
known to such officer and the nature and status thereof.
SECTION 3.11. Recording of Assignments.
The Issuer shall cause the Assignments of the Mortgage Loans
securing the Bonds to be duly recorded in the manner specified in Section
2(a)(i) of the Master Servicing Agreement. If the Issuer fails to cause the
Assignments to be recorded within the time limit provided thereunder, the
Issuer shall purchase such corresponding Mortgage Loans pursuant to Section
8.04 and the applicable provisions of the Master Servicing Agreement.
SECTION 3.12. Limitation of Liability of Wilmington Trust Company.
It is expressly understood and agreed by the parties hereto that (a)
this Indenture is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of American Residential
Eagle Bond Trust 1998-1 under the Deposit Trust Agreement, in the exercise of
the powers and authority conferred and vested in it as Owner Trustee, (b) each
of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company, but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any being expressly waived by the Trustee and
the Bondholders and by any Person claiming by, through or under the Trustee
and the Bondholders and (d) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness or expenses
of the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under
this Indenture or the other Operative Agreements.
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied:
(1) either
(A) all Bonds theretofore authenticated and delivered (other
than (i) Bonds which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.08, and (ii)
Bonds for whose payment money has theretofore been deposited in
trust and thereafter repaid to the Issuer, as provided in Section
3.03) have been delivered to the Trustee for cancellation; or
(B) all Bonds not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at the Stated Maturity of the
final installment of the principal thereof within one year, or
(iii) are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of
the Issuer,
and the Issuer, in the case of clause (B)(i), (B)(ii) or (B)(iii) above,
has deposited or caused to be deposited with the Trustee, in trust for
such purpose, an amount sufficient to pay and discharge the entire
indebtedness on such Bonds not theretofore delivered to the Trustee for
cancellation, for principal and interest to the Stated Maturity of their
entire unpaid principal amount or to the applicable Redemption Date, as
the case may be, and in the case of Bonds which were not paid at the
Stated Maturity of their entire unpaid principal amount, for all overdue
principal and all interest payable on such Bonds to the next succeeding
Distribution Date therefor;
(2) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(3) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel reasonably satisfactory in form and substance
to the Trustee each stating that all conditions precedent herein
providing for the satisfaction and discharge of this Indenture have been
complied with;
then, upon Issuer Request, this Indenture and the lien, rights and interests
created hereby shall cease to be of further effect, and the Trustee and each
co-trustee and separate trustee, if any, then acting as such hereunder shall,
at the expense of the Issuer, execute and deliver all such instruments as may
be necessary to acknowledge the satisfaction and discharge of this Indenture
and shall pay, or assign or transfer and deliver, to the Issuer or upon Issuer
Order all Mortgage Loans, cash, securities and other property held by it as
part of the Trust Estate remaining after satisfaction of the conditions set
forth in clauses (1) and (2) above.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Issuer to the Trustee under Section 6.07, the
obligations of the Trustee to the Issuer and the Holders of Bonds under
Section 3.03, the obligations of the Trustee to the Holders of Bonds under
Section 4.02 and the provisions of Article II with respect to lost, stolen,
destroyed or mutilated Bonds, registration of transfers of Bonds and rights to
receive payments of principal of, and interest on, the Bonds shall survive.
SECTION 4.02. Application of Trust Money.
All money deposited with the Trustee pursuant to Sections 3.03 and
4.01 shall be held in trust and applied by it, in accordance with the
provisions of the Bonds and this Indenture, to the payment, either directly or
through any Paying Agent, as the Trustee may determine, to the Persons
entitled thereto, of the principal and interest for whose payment such money
has been deposited with the Trustee.
ARTICLE V.
DEFAULTS AND REMEDIES
SECTION 5.01. Event of Default.
"Event of Default", wherever used herein, means, with respect to
Bonds issued hereunder, any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(1) if the Issuer shall
(A) default in the payment when and as due of any installment
of principal of or interest on any Bond, or
(B) default in the payment of the Redemption Price of any Bond
which has been called for redemption pursuant to Article X;
(2) if the Issuer shall breach, or default in the due observance, of
any one or more of the covenants set forth in clauses (a) through (e) of
Section 3.09;
(3) if the Issuer shall breach, or default in any material respect
in the due observance or performance of, any other of its covenants in
this Indenture and such Default shall continue for a period of 30 days
(such 30 day period to be automatically extended for 30 days upon
delivery by the Issuer of an Officers' Certificate setting forth the
steps being taken and stating the default is curable, to the Trustee)
after there shall have been given, by registered or certified mail, to
the Issuer by the Trustee, or to the Issuer and the Trustee by the
Holders of Bonds representing more than 50% of the aggregate Principal
Amount of the Bonds, a written notice specifying such Default and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(4) if any representation or warranty of the Issuer made in this
Indenture, or any certificate or other writing delivered pursuant hereto
or in connection herewith shall prove to be incorrect in any material
respect as of the time when the same shall have been made and, within 30
days (such 30 day period to be automatically extended for 30 days upon
delivery by the Issuer of an Officers' Certificate setting forth the
steps being taken and stating the default is curable, to the Trustee)
after there shall have been given, by registered or certified mail,
written notice thereof to the Issuer by the Trustee, or to the Issuer and
the Trustee by the Holders of Bonds representing more than 50% of the
aggregate Principal Amount of the Bonds, the circumstance or condition in
respect of which such representation or warranty was incorrect shall not
have been eliminated or otherwise cured;
(5) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Issuer in an involuntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any
substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(6) the commencement by the Issuer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or the consent by the Issuer to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or of any substantial part of its
property or the making by the Issuer of an 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 corporate action by the Issuer in
furtherance of any of the foregoing.
(a) [Reserved]
(b) Notwithstanding the foregoing, the failure of the Issuer to pay
when and as due any installment of principal of (regardless of the lapse of
any grace period) any Bond shall not constitute an Event of Default hereunder
unless the Bond Principal Balance after application of all available amounts
on deposit in the Distribution Account on a Distribution Date exceeds the Pool
Principal Balance with respect to such Distribution Date or unless the
aggregate Bond Principal Balance is not paid in full on the Stated Maturity.
Subject to the foregoing, Section 5.01 of the Indenture shall otherwise apply
in all respects to the Bonds.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing with respect to the
Bonds, then and in every such case the Trustee or the Holders of Bonds
representing more than 50% of the aggregate Principal Amount of the Bonds may
declare all the Bonds to be immediately due and payable, and upon any such
declaration such Bonds shall become immediately due and payable in an amount
equal to:
(i) the aggregate Principal Amount of all Classes of Bonds,
(ii) accrued and unpaid interest at the Bond Interest Rate on
the aggregate Principal Amount through the date of acceleration, and
(iii) interest (but only to the extent payment thereof shall be
legally enforceable) on any overdue installments of interest on the Bonds
from the due date of any such installments to the date of the
acceleration at the Bond Interest Rate at which such interest accrued or
such lower rate at which payment of such interest shall be legally
enforceable.
At any time after such a declaration of acceleration of maturity of
the Bonds has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of Bonds representing more than 50% of the aggregate
Principal Amount of the Bonds, by written notice to the Issuer and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all payments of principal of, and interest on, all Bonds
and all other amounts which would then be due hereunder or upon such
Bonds if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the nonpayment of the
principal of Bonds which have become due solely by such acceleration,
have been cured or waived as provided in Section 5.15.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Issuer covenants that if an Event of Default shall occur and be
continuing in respect to the Bonds and the Bonds have been declared due and
payable and such declaration and its consequences have not been rescinded and
annulled, the Issuer will, upon demand of the Trustee, promptly pay to the
Trustee, for the benefit of the Holders of the Bonds:
(i) the amounts specified in the first paragraph of Section
5.02, and
(ii) in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust 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 any other obligor upon the Bonds and collect, out
of the Trust Estate (as defined in the Deposit Trust Agreement), wherever
situated, of the Issuer, the moneys adjudged or decreed to be payable in the
manner provided by law; provided, however, that neither the Bank nor any of
its agents, officers, directors, employees, successors or assigns shall be
personally liable for any amounts due under the Bonds or this Indenture.
The Trustee may proceed to protect and enforce its rights and the
rights of the Bondholders by any Proceedings the Trustee deems appropriate to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or enforce any other proper remedy, including, without
limitation, instituting a Proceeding prior to any declaration of acceleration
of the Stated Maturity of the Bonds for the collection of all amounts then due
and unpaid on such Bonds, prosecuting such Proceeding to final judgment or
decree, enforcing the same against the Issuer and collecting out of the
property, wherever situated, of the Issuer the moneys adjudged or decreed to
be payable in the manner provided by law.
SECTION 5.04. Remedies.
If an Event of Default shall have occurred and be continuing
and the Bonds have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Trustee (subject to
Section 5.18, to the extent applicable) may do one or more of the following:
(a) institute Proceedings for the collection of all amounts then
payable on the Bonds, or under this Indenture, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer moneys
adjudged due;
(b) in accordance with Section 5.18, sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or
private Sales called and conducted in any manner permitted by law;
(c) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate; and
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and enforce
the rights and remedies of the Trustee or the Holders of the Bonds hereunder,
provided, however, that prior to exercising the foregoing, the Trustee shall
have consulted with the Issuer concerning alternative pay down scenarios.
SECTION 5.05. [Reserved].
SECTION 5.06. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, composition or other
judicial Proceeding relative to the Issuer or any other obligor upon any of
the Bonds or the property of the Issuer or of such other obligor or their
creditors, the Trustee (irrespective of whether the Bonds shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Issuer
for the payment of any overdue principal or interest) shall be entitled and
empowered, by intervention in such Proceeding or otherwise to:
(i) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Bonds and file such other
papers or documents and take such other actions as it deems necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Bondholders allowed in
such Proceeding; and
(ii) collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same; and any
receiver, assignee, trustee, liquidator or sequestrator (or other similar
official) in any such Proceeding is hereby authorized by each Bondholder
to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Bondholders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Bondholder any
plan of reorganization, arrangement, adjustment or composition affecting any
of the Bonds or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Bondholder in any such Proceeding.
SECTION 5.07. Trustee May Enforce Claims without Possession of Bonds.
All rights of action and claims under this Indenture or any of the
Bonds may be prosecuted and enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any Proceeding relating thereto,
and any such Proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall be for
the ratable benefit of the Holders of the Bonds in respect of which such
judgment has been recovered. Any surplus shall be available, in accordance
with Section 5.08, for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 5.08. Application of Money Collected.
If the Bonds have been declared due and payable following an Event
of Default and such declaration and its consequences have not been rescinded
and annulled, any money collected by the Trustee with respect to the Bonds
pursuant to this Article or otherwise and any monies that may then be held or
thereafter received by the Trustee with respect to the Bonds shall be applied,
after payment to the Trustee of such amounts as may be payable to it under
Section 6.07, in the order, at the date or dates fixed by the Trustee and, in
case of the distribution of the entire amount due on account of principal of,
and interest on, such Bonds, upon presentation and surrender thereof:
First: To the payment of amounts then due and unpaid to any Servicer
or the Master Servicer in respect of Nonrecoverable Advances made by
such Servicer or the Master Servicer pursuant to the related
Servicing Agreement or the Master Servicing Agreement;
Second: To the payment of amounts of interest and principal then due
and unpaid upon the Outstanding Bonds in accordance with the
priorities set forth in Section 2.03(b); and
Third: To the payment of the remainder, if any, to the Issuer or any
other Person legally entitled thereto.
SECTION 5.09. Limitation on Suits.
No Holder of a Bond shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of Bonds representing more than 50% of the aggregate
Principal Amount of the Bonds shall have made written request to the
Trustee to institute Proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity in
full against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
Proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of Bonds
representing more than 50% of the aggregate Principal Amount of the
Bonds;
it being understood and intended that no one or more Holders of Bonds shall
have any right in any manner whatever by virtue of, or by availing themselves
of, any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holders of Bonds or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all the Holders of Bonds.
SECTION 5.10. Unconditional Rights of Bondholders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, other than
the provisions hereof limiting the right to recover amounts due on a Bond to
recovery from the property of the Issuer, the Holder of any Bond shall have
the right, to the extent permitted by applicable law, which right is absolute
and unconditional, to receive payment of each installment of interest on such
Bond on the respective stated maturities of such installments of interest, to
receive payment of each installment of principal of such Bond when due (or, in
the case of any Bond called for redemption, on the date fixed for such
redemption) and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
SECTION 5.11. Restoration of Rights and Remedies.
If the Trustee or any Bondholder 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 Trustee or to such Bondholder, then and in every such case the Issuer, the
Trustee and the Bondholders 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 Trustee and the
Bondholders shall continue as though no such Proceeding had been instituted.
SECTION 5.12. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee
or to the Bondholders 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 5.13. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Bond to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default
or an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Bondholders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Bondholders,
as the case may be.
SECTION 5.14. Control by Bondholders.
The Holders of Bonds representing more than 50% of the aggregate
Principal Amount of the Bonds shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee; provided, however,
that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) any direction to the Trustee to undertake a Sale of the Trust
Estate shall be by the Holders of Bonds representing the percentage of
the aggregate Principal Amount of the Bonds specified in Section
5.18(b)(1), unless Section 5.18(b)(2) is applicable; and
(3) [Reserved];
(4) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; provided, however,
that, subject to Section 6.01, the Trustee need not take any action which
it determines might involve it in liability or be unjustly prejudicial to
the Bondholders not consenting.
SECTION 5.15. Waiver of Past Defaults.
The Holders of Bonds representing more than 50% of the aggregate
Principal Amount of the Bonds may waive any past Default hereunder and its
consequences, except a Default:
(1) in the payment of any installment of principal of, or interest
on, any Bond; or
(2) in respect of a covenant or provision hereof which under Section
9.02 cannot be modified or amended without the consent of the Holder of
each Outstanding Bond affected.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 5.16. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Bond by
his or her 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 Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Bondholder, or group
of Bondholders, holding in the aggregate Bonds representing more than 10% of
the aggregate Principal Amount of the Bonds, or to any suit instituted by any
Bondholder for the enforcement of the payment of any installment of interest
on any Bond on or after the Stated Maturity thereof expressed in such Bond or
for the enforcement of the payment of any installment of principal of any Bond
when due (or, in the case of any Bond called for redemption, on or after the
applicable redemption date).
SECTION 5.17. 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 of law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants in, or the performance of, this Indenture; and the Issuer (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 5.18. Sale of Trust Estate.
(a) The power to effect any sale (a "Sale") of any portion of the
Trust Estate pursuant to Section 5.04 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 Bonds and under this Indenture with respect thereto
shall have been paid. The Trustee may from time to time postpone any public
Sale by public announcement made at the time and place of such Sale. The
Trustee hereby expressly waives its right to any amount fixed by law as
compensation for any Sale.
(b) To the extent permitted by law, the Trustee shall not in any
private Sale sell or otherwise dispose of the Trust Estate, or any portion
thereof, unless:
(1) the Holders of all Bonds consent to, or direct the Trustee to
make, such Sale; or
(2) the proceeds of such Sale would be not less than the entire
amount which would be distributable to the Holders of the Bonds, in full
payment thereof in accordance with Section 5.08, on the Distribution Date
next succeeding the date of such Sale.
(3) [Reserved] The purchase by the Trustee of all or any portion of
the Trust Estate at a private Sale shall not be deemed a Sale or
disposition thereof for purposes of this Section 5.18(b).
(c) Unless the Holders of all Bonds have otherwise consented or
directed the 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 5.18 has not been established
by the Trustee and no Person bids an amount equal to or greater than such
amount, the Trustee shall bid an amount at least $1.00 more than the highest
other bid.
(d) In connection with a Sale of all or any portion of the Trust
Estate:
(1) any Holder or Holders of Bonds may bid for and purchase the
property offered for Sale, and upon compliance with the terms of sale may
hold, retain and possess and dispose of such property, without further
accountability, and may, in paying the purchase money therefor, deliver
any Bonds 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 Bonds, in case the amount 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 Trustee may bid for and acquire the property offered for
Sale in connection with any public Sale thereof, and, in lieu of paying
cash therefor, may make settlement for the purchase price by crediting
the gross Sale price against the sum of (A) the amount which would be
distributable to the Holders of the Bonds as a result of such Sale in
accordance with Section 5.08 on the Distribution 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 Bonds in order to complete any such Sale or in
order for the net Sale price to be credited against such Bonds, and any
property so acquired by the Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
(3) the Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest in any portion of the Trust
Estate in connection with a Sale thereof;
(4) the 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 Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
SECTION 5.19. Action on Bonds.
The Trustee's right to seek and recover judgment under this
Indenture shall not be affected by the seeking, obtaining or application of
any other relief under or with respect to this Indenture. Neither the lien of
this Indenture nor any rights or remedies of the Trustee or the Holders of
Bonds shall be impaired by the recovery of any judgment by the Trustee against
the Issuer or by the levy of any execution under such judgment upon any
portion of the Trust Estate.
ARTICLE VI.
THE TRUSTEE
SECTION 6.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing and a
Responsible Officer of the Trustee has actual knowledge of such Event of
Default, the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others and no implied covenants or
obligations shall be read into this Indenture;
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. The Trustee shall, however, examine such certificates and
opinions to determine whether they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of subsection (b) of
this Section;
(2) 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 Trustee shall be determined solely by the express
provisions of this Indenture, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Indenture, no implied covenants or obligations shall be
read into this Indenture against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
(3) The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(4) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.14 or Section 5.18.
(d) Except with respect to duties of the Trustee prescribed by the
TIA, as to which this Section 6.01(d) shall not apply, for all purposes under
this Indenture, the Trustee shall not be deemed to have notice or knowledge of
any Event of Default described in Section 5.01(2), 5.01(5) or 5.01(6) or any
Default described in Section 5.01(3) or 5.01(4) or any Master Servicing
Default unless a Responsible Officer assigned to and working in the Trustee's
corporate trust department has actual knowledge thereof or unless written
notice of any event which is in fact such an Event of Default, or Master
Servicing Default or default is received by the Trustee at the Corporate Trust
Office, and such notice references the Bonds generally, the Issuer, the Trust
Estate or this Indenture.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. In determining that such repayment or
indemnity is not reasonably assured to it, the Trustee must consider not only
the likelihood of repayment or indemnity by or on behalf of the Issuer but
also the likelihood of repayment or indemnity from amounts payable to it from
the Trust Estate pursuant to Sections 6.07 and 8.02(d); provided, however,
that, except as provided in the first sentence of this Section 6.01(e), the
Trustee shall not refuse or fail to perform any of its duties hereunder solely
as a result of nonpayment of its reasonable fees and expenses; and provided
further, however, that nothing in this Section 6.01(e) shall be construed to
limit the exercise by the Trustee of any right or remedy permitted under this
Indenture or otherwise in the event of the Issuer's failure to pay the amounts
due the Trustee pursuant to Section 6.07.
(f) Every provision of this Indenture that in any way relates to the
Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right, title and
interest of the Issuer in and to the Trust Estate following an Event of
Default and a consequent declaration of acceleration of the Stated Maturity of
the Bonds, whether such extinguishment occurs through a Sale of the Trust
Estate to another Person, the acquisition of the Trust Estate by the Trustee
or otherwise, the rights, powers and duties of the Trustee with respect to the
Trust Estate (or the proceeds thereof) and the Bondholders and the rights of
Bondholders shall continue to be governed by the terms of this Indenture.
SECTION 6.02. Notice of Default.
Within 90 days after the occurrence of any Default known to the
Trustee, the Trustee shall transmit by mail to all Holders of Bonds notice of
each such Default, unless such Default shall have been cured or waived;
provided, however, that except in the case of a Default of the type described
in Section 5.01(1), the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Holders of the Bonds; and provided, further, that in the case of any Default
of the character specified in Section 5.01(3) or 5.01(4) no such notice to
Holders of the Bonds shall be given until at least 30 days after the
occurrence thereof. Concurrently with the mailing of any such notice to the
Holders of the Bonds, the Trustee shall transmit by mail a copy of such notice
to the Rating Agencies.
SECTION 6.03. Rights of Trustee.
Except as otherwise provided in Section 6.01 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order, and any
resolution of the board of directors may be sufficiently evidenced by a
written resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate or the Officer's Certificate
of the Master Servicer;
(d) the Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or to institute, conduct or
defend any litigation hereunder at the request or direction of any of the
Bondholders pursuant to this Indenture, unless such Bondholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction; the right of the Trustee to perform any discretionary
act enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its own negligence or willful
misconduct in the performance of any such act;
(f) the 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, direction, consent, order, bond,
note or other paper or document, but the Trustee, in its discretion may make
such further inquiry or investigation into such facts or matters as it may see
fit, and if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, on reasonable prior notice to the Issuer,
to examine the books, records and premises of the Issuer, personally or by
agent or attorney, during the Issuer's normal business hours; provided that
the Trustee shall and shall cause its agents to hold in confidence all such
information except to the extent disclosure may be required by law and except
to the extent that the Trustee, in its sole judgment, may determine that such
disclosure is consistent with its obligations hereunder;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, provided, however, that the Trustee shall remain
liable for the execution and performance of any powers and duties by the
Trustee directly or by or through agents or attorneys appointed and supervised
by the Trustee hereunder;
(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers;
(i) prior to the time that one of its Responsible Officers obtains
actual knowledge of a Master Servicing Default as defined in the Master
Servicing Agreement or a failure by the Master Servicer thereunder which with
notice and the passage of time will become a Master Servicing Default, the
Trustee shall not be responsible for taking action with respect thereto;
(j) the Trustee shall not be responsible for supervising, monitoring
or reviewing the Master Servicer's performance of its duties under the Master
Servicing Agreement except to the extent of determining (1) that the periodic
reports, certificates and opinions required to be delivered by the Master
Servicer to it thereunder are delivered in timely fashion and conform to the
requirements of the Master Servicing Agreement and (ii) that the amounts
received by it from the Master Servicer for deposit in the Distribution
Account during any month are as shown in the Master Servicer's report for such
month; and
(k) the provisions of this Section, other than clauses (e), (i) and
(j), and of Sections 6.01(b) and (c) shall apply to the Trustee as it may be
Successor Master Servicer under the Master Servicing Agreement.
SECTION 6.04. Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein and in the Bonds, except the
certificates of authentication on the Bonds, shall be taken as the statements
of the Issuer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations with respect to the Trust
Estate or as to the validity or sufficiency of this Indenture or of the Bonds.
The Trustee shall not be accountable for the use or application by the Issuer
of the Bonds or the proceeds thereof or any money paid to the Issuer or upon
Issuer Order pursuant to the provisions hereof. The Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any mortgage or the maintenance of any such
perfection and priority or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Bondholders under
this Indenture, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance; the validity of the assignment of any Mortgage Loan to the
Trustee or of any intervening assignment; the completeness of any Mortgage
Loan; the performance or enforcement of any Mortgage Loan; the compliance by
the Seller or the Master Servicer with any warranty or representation made
under this Indenture or in any related document or the accuracy of any such
warranty or representation; any investment of monies by or at the direction of
the Master Servicer or any loss resulting therefrom, it being understood that
the Trustee shall remain responsible for any Trust property that it may hold
in its individual capacity; the acts or omissions of any of the Issuer, the
Master Servicer, any subservicer or any Mortgagor; any action of the Master
Servicer or any subservicer taken in the name of the Trustee; the failure of
the Master Servicer or any subservicer to act or perform any duties acquired
of it as agent of the Trustee hereunder; or any action by the Trustee taken at
the instruction of the Master Servicer. The 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 Trustee
shall have become the successor Master Servicer).
SECTION 6.05. May Hold Bonds.
The Trustee, any Agent, or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Bonds
and, subject to Sections 6.08 and 6.13, may otherwise deal with the Issuer or
any Affiliate of the Issuer with the same rights it would have if it were not
the Trustee, Agent or such other agent. In particular, the Trustee may hold
the Bonds as Certificate Trustee pursuant to the Certificate.
SECTION 6.06. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by this Indenture or by law.
The Trustee shall be under no liability for interest on any money received by
it hereunder except as otherwise agreed with the Issuer and except to the
extent of income or other gain on investments which are obligations of the
Trustee, in its commercial capacity, and income or other gain actually
received by the Trustee on investments, which are obligations of others.
SECTION 6.07. Compensation and Reimbursement.
The Issuer agrees to indemnify the Trustee and its agents for, and
to hold them harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of, or in connection with,
the acceptance or administration of this trust, including the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided,
however that
(a) the Trustee shall have the right to consent to any counsel hired
to defend the Trustee (which consent of the Trustee shall not be unreasonably
withheld) and
(b) the Trustee shall have the right to consent to any settlement if
the amount of such settlement is less than full indemnification and the
Trustee would not be fully released from liability with respect to such action
as a result of such settlement. Any amounts payable to the Trustee and its
agents, in respect of indemnification provided by this paragraph, or pursuant
to any other right of reimbursement from the Bond Account that the Trustee and
its agents, may have hereunder in its capacity as such, including but not
limited to the following paragraph of this Section 6.07, may be withdrawn by
the Trustee from the Distribution Account as provided in Section 2(b).
As security for the performance of the obligations of the Issuer
under this Section, the Trustee shall have a lien ranking junior to the lien
of the Bonds with respect to which any claim of the Trustee under this Section
arose upon all property and funds held or collected as part of the Trust
Estate by the Trustee in its capacity as such payable pursuant to Section 2(b)
hereof. The Trustee shall not institute any Proceeding seeking the enforcement
of such lien against the Trust Estate unless such Proceeding is in connection
with a Proceeding in accordance with Article V for enforcement of the lien of
this Indenture after the occurrence of an Event of Default (other than an
Event of Default arising solely from the Issuer's failure to pay amounts due
the Trustee under this Section 6.07) and a resulting declaration of
acceleration of Stated Maturity of the Bonds which has not been rescinded and
annulled.
SECTION 6.08. Eligibility; Disqualification.
Irrespective of whether this Indenture is qualified under the TIA,
this Indenture shall always have a Trustee who satisfies the requirements of
TIA Sections 310(a)(1) and 310(a)(5). The Trustee shall always have a combined
capital and surplus as stated in Section 6.09. The Trustee shall be subject to
TIA Section 310(b).
SECTION 6.09. Trustee's Capital and Surplus.
The Trustee shall at all times have a combined capital and surplus
of at least $50,000,000 or shall be a member of a bank holding company system,
the aggregate combined capital and surplus of which is at least $50,000,000;
provided, however, that the Trustee's separate capital and surplus shall at
all times be at least the amount required by TIA Section 310(a)(2) if this
Indenture is qualified under the TIA. If the Trustee publishes annual reports
of condition of the type described in TIA Section 310(a)(2), its combined
capital and surplus for purposes of this Section 6.09 shall be as set forth in
the latest such report.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuer. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving
of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders
representing more than 50% of the aggregate Principal Amount of the Bonds.
(d) If at any time:
(1) the Trustee shall have a conflicting interest prohibited by
Section 6.08 and shall fail to resign or eliminate such conflicting
interest in accordance with Section 6.08 after written request therefor
by the Issuer or by any Bondholder; provided, however, that this Section
6.10(d)(1) shall not be operative as part of this Indenture unless and
until this Indenture is qualified under the TIA, and until such
qualification this Indenture shall be construed as if this Section
6.10(d)(1) were not contained herein; or
(2) the Trustee shall cease to be eligible under Section 6.09 or
shall become incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, (i) the Issuer by an Issuer Order may remove the
Trustee or (ii) subject to Section 5.16, any Bondholder who has been a bona
fide Holder of a Bond for at least six months may, on behalf of itself and all
others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee, unless
this Indenture is qualified under the TIA and the Trustee's duty to resign is
stayed as provided in Section 310(b) of the TIA.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any
cause, the Issuer, by an Issuer Order, shall promptly appoint a successor
Trustee. If within one year after such resignation, removal or incapability or
the occurrence of such vacancy a successor Trustee shall be appointed by Act
of the Holders of Bonds representing more than 50% of the aggregate Principal
Amount of the Bonds delivered to the Issuer and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Issuer. If no successor Trustee shall have been so appointed
by the Issuer or Bondholders and shall have accepted appointment in the manner
hereinafter provided any Bondholder who has been a bona fide Holder of a Bond
for at least six months may, on behalf of itself and all others similarly
situated petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders of Bonds. Each notice shall include the name of the successor Trustee
and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee. Notwithstanding the
foregoing, on request of the Issuer or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of
the retiring Trustee, and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder subject nevertheless to its lien, if any, provided for in Section
6.07. Upon request of any such successor Trustee, the Issuer shall execute and
deliver any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business
of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Bonds have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Bonds so authenticated with the same
effect as if such successor Trustee had authenticated such Bonds.
SECTION 6.13. Preferential Collection of Claim Against Issuer.
If this Indenture is qualified under the TIA, the Trustee shall be
subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b), and a Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
SECTION 6.14. Co-trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction in which any of the Trust
Estate may at the time be located, the Issuer and the Trustee shall have power
to appoint, and, upon the written request of the Trustee or of the Holders of
Bonds representing more than 50% of the aggregate Principal Amount of the
Bonds with respect to which a co-trustee or separate trustee is being
appointed, the Issuer shall for such purpose join with the Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Trustee
either to act as co-trustee, jointly with the Trustee, of all or any part of
the Trust Estate, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. If the Issuer does not join in such
appointment within 15 days after the receipt by it of a request to do so, or
in case an Event of Default has occurred and is continuing, the Trustee alone
shall have power to make such appointment.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and
all such instruments shall, on request, be executed, acknowledged and
delivered by the Issuer. Each notice shall include the name and address of any
such co-trustee or successor trustee.
Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms:
(1) The Bonds shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised
solely by the Trustee.
(2) The rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
by the Trustee or by the Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law
of any jurisdiction in which any particular act is to be performed, the
Trustee shall be incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee.
(3) The Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Issuer evidenced by an Issuer Order, may
accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, in case of an Event of Default has
occurred and is continuing, the Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Issuer. Upon the written request of the
Trustee, the Issuer shall join with the Trustee in the execution,
delivery and performance of all instruments and agreements necessary or
proper to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee which has resigned or has been removed may
be appointed in the manner provided in this Section.
(4) No co-trustee or separate trustee shall be required to satisfy
the eligibility requirements under Sections 6.08 and 6.09. No co-trustee
or separate trustee hereunder shall be personally liable by reason of any
act or omission of the Trustee, or any other such trustee hereunder.
(5) Any Act of Bondholders delivered to the Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
(6) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder.
SECTION 6.15. Authenticating Agents.
Upon the request of the Issuer, the Trustee shall appoint an
Authenticating Agent with power to act on its behalf and subject to its
direction in the authentication and delivery of the Bonds designated for such
authentication by the Issuer and containing provisions therein for such
authentication (or with respect to which the Issuer has made other
arrangements, satisfactory to the Trustee and such Authenticating Agent, for
notation on the Bonds of the authority of an Authenticating Agent appointed
after the initial authentication and delivery of such Bonds) in connection
with transfers and exchanges under Sections 2.06 and 2.07, if any, as fully to
all intents and purposes as though the Authenticating Agent had been expressly
authorized by those Sections to authenticate and deliver Bonds. For all
purposes of this Indenture (other than in connection with the authentication
and delivery of Bonds pursuant to Sections 2.05 and 2.12 in connection with
their initial issuance and for purposes of Section 2.08), the authentication
and delivery of Bonds by the Authenticating Agent pursuant to this Section
shall be deemed to be the authentication and delivery of Bonds "by the
Trustee". Such Authenticating Agent shall at all times be a Person that both
meets the requirements of Section 6.09 for the Trustee hereunder and has its
principal office in the Borough of Manhattan, City and State of New York.
Any Authenticating Agent shall also serve as Bond Registrar or
co-Bond Registrar, as provided in Section 2.07. Any Authenticating Agent
appointed by the Trustee pursuant to the terms of this Section 6.15 or
pursuant to the terms of any supplemental indenture shall deliver to the
Trustee as a condition precedent to the effectiveness of such appointment an
instrument accepting the trusts, duties and responsibilities of Authenticating
Agent and of Bond Registrar or co-Bond Registrar and indemnifying the Trustee
for and holding the Trustee harmless against, any loss, liability or expense
(including reasonable attorneys' fees) incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance,
administration of the trust or exercise of authority by such Authenticating
Agent, Bond Registrar or co-Bond Registrar.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust
business of any Authenticating Agent, shall be the successor of the
Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section, without the execution or filing of any further
act on the part of the parties hereto or the Authenticating Agent or such
successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and the Issuer. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and the Issuer. Upon receiving
such a notice of resignation or upon such a termination, or in case at any
time any Authenticating Agent shall cease to be eligible under this Section,
the Trustee shall promptly appoint a successor Authenticating Agent, shall
give written notice of such appointment to the Issuer and shall mail notice of
such appointment to all Holders of Bonds.
The Trustee agrees, subject to Section 6.01(e), to pay to any
Authenticating Agent from time to time reasonable compensation for its
services and the Trustee shall be entitled to be reimbursed for such payments,
subject to Section 6.07. The provisions of Sections 2.10, 6.04 and 6.05 shall
be applicable to any Authenticating Agent.
SECTION 6.16. Payment of Certain Insurance Premiums.
Notwithstanding anything to the contrary contained in this
Indenture, the Trustee agrees, for the benefit of the Holders of the Bonds,
that, should it fail to receive notice from any Servicer, or the applicable
insurer, within the time period required pursuant to the related Servicing
Agreement, to the effect that any premiums due with respect to any Insurance
Policies the premiums for which are required to be paid by the Servicer or the
Master Servicer from amounts on deposit in any related escrow account, or
required to be advanced by the related Servicer the Trustee shall proceed with
diligence to make inquiries of the related Servicer, the Master Servicer, the
Issuer and the applicable insurers as to whether such premiums have been paid
at the times set forth in the related Servicing Agreement. In the event such
premiums have not been paid and the coverage provided under the related
Insurance Policy may be interrupted or adversely affected, the Trustee agrees
promptly to pay such premiums from amounts on deposit in the Distribution
Account, pursuant to Section 8.02(d) and in accordance with its obligations
under the applicable provisions of the Master Servicing Agreement.
SECTION 6.17. Limitation of Liability. The Bonds are executed by the Trustee,
not in its individual capacity but solely as Trustee of the Trust, in the
exercise of the powers and authority conferred and vested in it by this
Indenture. Each of the undertakings and agreements made on the part of the
Trustee in the Bonds is made and intended not as a personal undertaking or
agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
SECTION 6.18. Trustee May Enforce Claims Without Possession of Certificates.
All rights of action and claims under this Indenture or the Bonds may be
prosecuted and enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any proceeding relating thereto, and such
preceding instituted by the Trustee shall be brought in its own name or in its
capacity as Trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursement and advances of
the Trustee, its agents and counsel, be for the ratable benefit or the
Bondholders in respect of which such judgment has been recovered.
SECTION 6.19. Suits for Enforcement. In case an Event of Default or other
default by the Issuer hereunder, the Trustee, in its discretion, may proceed
to protect and enforce its rights and the rights of the Holders of Bonds under
this Indenture 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 or in aid of the execution of any power granted in
this Indenture or for the enforcement of any other legal, equitable or other
remedy, as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee and the Bondholders.
SECTION 6.20. Waiver of Bond Requirement. The Trustee shall be relieved of,
and each Bondholder hereby waives, any requirement of any jurisdiction in
which the Trust, or any part thereof, may be located that the Trustee post a
bond or other surety with any court, agency or body whatsoever.
SECTION 6.21. Waiver of Inventory, Accounting and Appraisal Requirement. The
Trustee shall be relieved of, and each Bondholder hereby waives, any
requirement of any jurisdiction in which the Trust, or any part thereof, may
be located that the Trustee file any inventory, accounting or appraisal of the
Trust with any court, agency or body at any time or in any manner whatsoever.
ARTICLE VII.
BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Trustee Names and Addresses of Bondholders.
(a) The Issuer shall furnish or cause to be furnished to the Trustee
or, upon request, to the Master Servicer (1) semi-annually, not less than 45
days nor more than 60 days after the Distribution Date occurring closest to
six months after the Closing Date and each Distribution Date occurring at
six-month intervals thereafter, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Bonds and
(ii) at such other times, as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, a list of similar form
and content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Bond
Registrar, no such list shall be required to be furnished to the Trustee.
(b) In addition to furnishing to the Trustee the Bondholder lists,
if any, required under subsection (a), the Issuer shall also furnish all
Bondholder lists, if any, required under Section 3.03 at the times required by
Section 3.03.
SECTION 7.02. Preservation of Information; Communications to Bondholders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Bonds
contained in the most recent list, if any, furnished to the Trustee as
provided in Section 7.01 and the names and addresses of the Holders of Bonds
received by the Trustee in its capacity as Bond Registrar. The Trustee may
destroy any list furnished to it as provided in Section 7.01 upon receipt of a
new list so furnished.
(b) If this Indenture is qualified under the TIA, Bondholders may
communicate pursuant to TIA Section 312(b) with other Bondholders with respect
to their rights under this Indenture or under the Bonds.
(c) If this Indenture is qualified under the TIA, the Issuer, the
Trustee and the Bond Registrar shall have the protection of TIA Section
312(c).
SECTION 7.03. Reports by Trustee.
(a) If this Indenture is qualified under the TIA, then within 30
days after May 15 of each year (the "reporting date"), commencing with the
year after the issuance of the Bonds, (1) in the circumstance required by TIA
Section 313(a), the Trustee shall mail to all Holders a brief report dated as
of such reporting date that complies with TIA Section 313(a), (ii) the Trustee
shall also mail to Holders of Bonds with respect to which it has made advances
any reports with respect to such advances that are required by TIA Section
313(b)(2) and (iii) the Trustee shall also mail to Holders of Bonds any
reports required by TIA Section 313(b)(1). For purposes of the information
required to be included in any such reports pursuant to TIA Sections
313(a)(3), 313(b)(1) (if applicable) or 313(b)(2), the principal amount of
indenture securities outstanding on the date as of which such information is
provided shall be the aggregate Principal Amount of the then Bonds covered by
the report. The Trustee shall comply with TIA Section 313(c) with respect to
any reports required by this Section 7.03(a).
(b) If this Indenture is qualified under the TIA, a copy of each
report required under this Section 7.03 shall, at the time of such
transmission to Holders of Bonds be filed by the Trustee with the Commission
and with each securities exchange upon which the Bonds are listed. The Issuer
will notify the Trustee when the Bonds are listed on any securities exchange.
SECTION 7.04. Reports by Issuer.
If this Indenture is qualified under the TIA, the Issuer (a) shall
file with the Trustee, within 15 days after it files them with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the Commission
may by rules and regulations prescribe) which the Issuer is required to file
with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 and (b) shall also comply with the other provisions of TIA Section
314(a).
SECTION 7.05. Notice to the Rating Agencies.
The Issuer shall use its best efforts promptly to provide notice to
the Rating Agencies of any of the following events of which it has actual
knowledge:
(a) any material change to or amendment of this Indenture;
(b) the occurrence of any Default or Event of Default that has not
been cured;
(c) the resignation or termination of the Trustee;
(d) the substitution of Mortgage Loans; and
(e) the final payment of Bondholders.
ARTICLE VIII.
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
SECTION 8.01. Collection of Moneys.
Except as otherwise expressly provided herein, the 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 Trustee pursuant
to this Indenture. The Trustee shall hold all such money and property received
by it as part of the Trust Estate and shall apply it as provided in this
Indenture. Except as otherwise expressly provided herein, if any default
occurred in the making of any payment or performance under any agreement or
instrument that is part of the Trust Estate, the 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
hereunder and any right to proceed thereafter as provided in Article V.
SECTION 8.02. Distribution Account.
(a) On or prior to the Closing Date, the Issuer shall cause the
Master Servicer to establish and maintain, in the name of the Trustee, for the
benefit of the Bondholders and the Holder of the Investor Certificate, the
Pledged Accounts as provided in Section 3(g) of the Master Servicing
Agreement.
(b) [Reserved.]
(c) The Trustee shall establish and maintain, on behalf of the
Bondholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Master Servicer to the
Trustee pursuant to Section 3(g)(iv) of the Master Servicing Agreement;
and
(ii) any other amounts deposited hereunder which are required
to be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw
such amount from the Distribution Account, any provision herein to the
contrary notwithstanding. Such direction may be accomplished by delivering an
Officer's Certificate to the Trustee which describes the amounts deposited in
error in the Distribution Account. All funds deposited in the Distribution
Account shall be held by the Trustee in trust for the Bondholders until
disbursed in accordance with this Indenture or withdrawn in accordance with
Section 2.03(b). In no event shall the Trustee incur liability other than any
liability arising out of its recklessness, bad faith or willful misconduct,
for withdrawals from the Distribution Account at the direction of the Master
Servicer.
(d) Subject to Sections 5.02 and 5.08, on each Distribution Date and
Redemption Date, the Trustee shall distribute all amounts on deposit in the
Distribution Account to Bondholders in respect of the Bonds to the extent of
amounts due and unpaid on the Bonds for principal and interest in the amounts
and in accordance with Section 2.03(b).
SECTION 8.03. General Provisions Regarding Pledged Accounts.
(a) Each Pledged Account shall relate solely to the Bonds, the
Investor Certificate and to the Mortgage Loans, Permitted Investments and
other property securing the Bonds. Funds and other property in each Pledged
Account shall not be commingled with any other moneys or property of the
Issuer or any Affiliate thereof. Notwithstanding the foregoing, the Trustee
may hold any funds or other property received or held by it as part of a
Pledged Account, other than the Distribution Account, in collective accounts
maintained by it in the normal course of its business and containing funds or
property held by it for other Persons (which may include the Issuer or an
Affiliate), provided that such accounts are under the sole control of the
Trustee and the Trustee maintains adequate records indicating the ownership of
all such funds or property and the portions thereof held for credit to each
Pledged Account.
(b) So long as no Default or Event of Default shall have occurred
and be continuing, all or a portion of the funds in the Pledged Accounts shall
be invested in Permitted Investments and reinvested by the Trustee upon
written direction of the Master Servicer, subject to the provisions of Section
3(g) of the Master Servicing Agreement. The income and gain (net of any
losses) realized from any such investment of funds on deposit in the Pledged
Accounts shall be for the benefit of the Master Servicer as provided in
Section 3(g)(viii) of the Master Servicing Agreement and shall be remitted to
it monthly as provided in the Master Servicing Agreement. The amount of any
realized losses in the Pledged Accounts incurred in respect of any such
investments shall promptly be deposited by the Master Servicer in the
applicable Pledged Account without any right of reimbursement therefor. The
Master Servicer will not direct the Trustee to make any investment of any
funds or to sell any investment held in any of the Pledged Accounts unless the
security interest Granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any
direction to the Trustee to make any such investment or sale, if requested by
the Trustee, the Master Servicer shall deliver to the Trustee an Opinion of
Counsel, acceptable to the Trustee, to such effect.
(c) Subject to Section 6.01(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Pledged Accounts
resulting from any loss on any Permitted Investment included therein except
for losses attributable to the Trustee's failure to make payments on such
Permitted Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(d) If (1) the Master Servicer shall have failed to give investment
directions for any funds on deposit in the Pledged Accounts to the Trustee by
11:00 a.m. Eastern Time (or such other time as may be agreed by the Master
Servicer and Trustee) on any Business Day or (ii) a Default or Event of
Default shall have occurred and be continuing with respect to the Bonds but
the Bonds shall not have been declared due and payable pursuant to Section
5.02 or (iii) if such Bonds shall have been declared due and payable following
an Event of Default, amounts collected or receivable from the Trust Estate are
being applied in accordance with Section 5.05 as if there had not been such a
declaration, then the Trustee shall, to the fullest extent practicable, invest
and reinvest funds in the Pledged Accounts in one or more Permitted
Investments.
(e) The Trustee shall, at all times while any Bonds are outstanding,
maintain in its possession, or in the possession of an agent whose actions
with respect to such items are under the sole control of the Trustee, all
certificates or other instruments, if any, evidencing any investment of funds
in a Pledged Account. The Trustee shall relinquish possession of such items,
or direct its agent to do so, only for purposes of collecting the final
payment receivable on such investment or certificate or, in connection with
the sale of any investment held in a Pledged Account, against delivery of the
amount receivable in connection with any sale.
SECTION 8.04. Purchases of Deleted Mortgage Loans.
(a) If at any time the Issuer or the Trustee discovers or is
notified by the Master Servicer (1) that there has been a breach of any of
AmREIT's representations and warranties with respect to Mortgage Loans
contained in the Master Servicing Agreement that materially and adversely
affects the interests of the Bondholders in any Mortgage Loan, (ii) that any
of the Mortgage Documents for a Mortgage Loan has not been properly executed
by the Mortgagor or contains a material defect or (iii) that any Mortgage
Documents for a Mortgage Loan shall not have been received by the applicable
Custodian on behalf of the Trustee within the applicable time periods and in
the forms set forth in the Master Servicing Agreement, then the party
discovering such defect or omission or receiving notice thereof shall promptly
notify the other parties and the Master Servicer (other than in cases where
the Master Servicer has given notice thereof).
(b) If any defect, misrepresentation or omission described in
subsection (a) of this Section 8.04 materially and adversely affects the
interests of the Bondholders, then AmREIT, shall, pursuant to the applicable
provisions of the Master Servicing Agreement, either (1) cure any such defect,
misrepresentation or omission, (ii) remove such Mortgage Loan and substitute
in its place a Replacement Mortgage Loan or (iii) purchase the affected
Mortgage Loan, in each case at the times and in the manner set forth in the
Master Servicing Agreement.
(c) Upon any such purchase or substitution, the Issuer shall be
entitled to request a release of the Deleted Mortgage Loan from the lien of
this Indenture pursuant to Section 8.08(c) and Section 8.12.
(d) If the Issuer or AmREIT shall either (1) purchase any Mortgage
Loan it is required to purchase pursuant to the Master Servicing Agreement and
deposit the Purchase Price therefor in the Bond Account or (ii) (a) remove
such Mortgage Loan from the Trust Estate and substitute in its place a
Replacement Mortgage Loan and (b) deposit in the Bond Account any related
Substitution Amount, in each case in the manner set forth in the Master
Servicing Agreement, then the Issuer shall be deemed to have complied with all
requirements imposed upon it by this Section 8.04 with respect to such
Mortgage Loan.
(e) Each related Servicer shall, in its sole discretion, have the
right to purchase for its own account from the Trust Estate any Mortgage Loan
which is 91 days or more delinquent. Upon purchase of such Mortgage Loan by
the related Servicer, the Master Servicer and the Issuer shall have the right
to treat such Mortgage Loan as a Deleted Mortgage Loan and request the release
thereof from the lien of this Indenture pursuant to Section 8.12.
SECTION 8.05. Grant of Replacement Mortgage Loan.
The Issuer shall be permitted to substitute any Mortgage Loan for
any Mortgage Loan initially Granted to the Trustee on the Closing Date
pursuant to this Indenture as set forth in Sections 2(a)(ii) and 2(c)(iv) of
the Master Servicing Agreement.
SECTION 8.06. Reports by Trustee to Bondholders.
On each Distribution Date, upon receipt from the Master Servicer,
the Trustee shall deliver a Distribution Date Statement to each Holder of
Bonds.
SECTION 8.07. Reports by Trustee.
In addition to any statements required to be delivered or prepared
by the Trustee pursuant to Section 2.09, 8.02 or 10.01, the Trustee shall
deliver to the Issuer, within two Business Days after the request of the
Issuer, a written report setting forth the amount of each Pledged Account
established hereunder and the identity of the investments included therein.
Without limiting the generality of the foregoing, the Trustee shall, upon the
request of the Issuer, promptly transmit to the Issuer copies of all
accountings of, and information with respect to, collections furnished to it
by the Master Servicer and shall promptly notify the Issuer if on the
Distribution Date, the related Total Distribution Amount or any portion
thereof has not been received by the Trustee.
SECTION 8.08. Trust Estate; Release and Delivery of Mortgage Documents.
(a) The Trustee may, and when required by the provisions of this
Indenture shall, execute instruments in form supplied to it to release
property from the lien of this Indenture, or convey the Trustee's interest in
the same, in a manner and under circumstances which are not inconsistent with
the provisions of this Indenture and the TIA. No party relying upon an
instrument executed by the Trustee as provided in this Article VIII shall be
bound to ascertain the Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys.
(b) In order to facilitate the servicing of the Mortgage Loans by
the Servicers, the Master Servicer is authorized under the Master Servicing
Agreement for the benefit of the Trustee, the Bondholders and the Issuer, to
supervise, administer, monitor and oversee the servicing of the Mortgage Loans
by the Servicers and the observance and performance by the Servicers of all
services, duties, responsibilities and obligations which are to be observed or
performed by each Servicer pursuant to the respective Servicing Agreement.
(c) Upon request by a Servicer accompanied by a Request for Release
of Documents in the form of Exhibit Two to the applicable Custodial Agreement
to the effect that a Mortgage Loan has been the subject of a Prepayment in
Full or has otherwise been paid in full, together with any other items
required under Section 8.12, the Trustee shall promptly request that the
Custodian release the related Mortgage Documents and execute such other
documents as the Servicer may request to evidence satisfaction and discharge
of such Mortgage Loan.
(d) The Trustee shall, at such time as there are no Bonds
Outstanding, release all of the Trust Estate to the Issuer (other than any
cash held for the payment of the Bonds pursuant to Section 3.03 or Section
4.02), subject, however, to Section 4.01 and the rights of the Trustee under
Section 6.07.
SECTION 8.09. Amendments to the Master Servicing Agreement.
The Trustee may enter into or consent to any amendment or supplement
to the Master Servicing Agreement or waive any Master Servicing Default only
in accordance with the applicable provisions of the Master Servicing
Agreement. The Trustee may, in its discretion, decline to enter into or
consent to any such supplement or amendment or make any such waiver (i) unless
the Trustee receives an Opinion of Counsel that the interests of the Holders
would not be materially adversely affected or (ii) if its own rights, duties
or immunities would be adversely affected.
SECTION 8.10. Servicers and Master Servicer as Agents and Bailees of
Trustee.
In order to facilitate the servicing of the Mortgage Loans by the
each Servicer or by the Master Servicer, each Servicer shall deposit in a
Servicing Account proceeds of the Mortgage Loans in accordance with the
provisions of the Servicing Agreements and this Indenture, prior to the time
they are deposited into the Bond Account. In addition, on or before each
Withdrawal Date, each Servicer shall be required to remit to the Master
Servicer for deposit in the Bond Account all funds held in the related
Servicing Account that are required to be remitted to the Master Servicer in
accordance with the terms of the Servicing Agreement and the Master Servicing
Agreement. Solely for purposes of perfection under Section 9-305 of the
Uniform Commercial Code or similar provision of law in the state in which such
property is held by the Servicers or the Master Servicer, the Trustee hereby
designates the Master Servicer and each Servicer as its agents and bailees to
hold such funds with respect to the Mortgage Loans until they are deposited
into the Distribution Account as well as its agents and bailees in holding any
Mortgage Documents or other documents contained in a Trustee Mortgage File
released to it by the Custodian pursuant to Section 8.08(d), and any other
items constituting a part of the Trust Estate which from time to time come
into possession of any Servicer or the Master Servicer. It is intended that,
by the Servicers' and Master Servicer's acceptance of such agency pursuant to
the Servicing Agreements and the Master Servicing Agreement, the Trustee, as
secured party, will be deemed to have possession of such Mortgage Documents,
such moneys and such other items for purposes of Section 9-305 of the Uniform
Commercial Code or similar provision of law of the states in which such
property is held by such Servicer or the Master Servicer.
SECTION 8.11. Opinion of Counsel.
The Trustee shall be entitled to receive at least five Business
Days' notice of any action to be taken pursuant to Section 8.08(a) (other than
in connection with releases of Mortgage Loans which were the subject of a
Principal Prepayment in Full) accompanied by copies of any instruments
involved, and the Trustee shall be entitled to request an Opinion of Counsel,
in form and substance reasonably satisfactory to the Trustee, stating the
legal effect of any such action, outlining the steps required to complete the
same, and concluding that all conditions precedent to the taking of such
action have been complied with. Counsel rendering any such opinion may rely,
without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Trustee in connection with
any such action.
SECTION 8.12. Release of Mortgage Loans.
(a) The Issuer shall be entitled to request a release from the lien
of this Indenture of any Mortgage Loan at any time after such Mortgage Loan
has been the subject of a Principal Prepayment in Full or in accordance with
the requirements of Section 8.04 if:
(i) the related Servicer has complied with all requirements
imposed on it by Section 8.04 in connection with such Mortgage Loan (or
is deemed to have complied with such requirements by reason of the
provisions of Section 8.04(e));
(ii) at the time such release is requested, no Default or Event
of Default has occurred and is continuing; provided, however, that if a
Mortgage Loan has been the subject of a Principal Prepayment in Full,
then the Trustee shall release such Mortgage Loan from the lien of this
Indenture upon compliance with all other conditions of this subsection
(a), notwithstanding the existence of a Default or Event of Default;
(iii) the applicable Servicer, the Issuer or AmREIT delivers to
the Trustee an Officers' Certificate (A) identifying the Mortgage Loan to
be released, (B) requesting the release thereof, (C) setting forth the
amount deposited in the Bond Account with respect thereto, if any, and
(D) certifying that the conditions set forth in clauses (i) and (ii)
above have been satisfied; and
(iv) the Issuer delivers to the Trustee a certificate of fair
value if required by Section 314(d)(1) or Section 314(d)(3) of the TIA.
(b) Upon satisfaction of the conditions specified in subsection (a)
of this Section 8.12, the Trustee shall release from the lien of this
Indenture and deliver to or upon the order of the Issuer the Mortgage Loan to
be released (including all related Mortgage Documents) described in the
Request for Release.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Bondholders.
Without the consent of the Holders of any Bonds, the Issuer and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any
of the following purposes:
(1) 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 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;
(2) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of the issuance, authentication and
delivery of any Bonds, as herein set forth, additional conditions,
limitations and restrictions thereafter to be observed;
(3) to evidence the succession of another Person to the Issuer, and
the assumption by any such successor of the covenants of the Issuer
herein and in the Bonds contained;
(4) to add to the covenants of the Issuer, for the benefit of the
Holders of all Bonds or to surrender any right or power herein conferred
upon the Issuer;
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, which shall not be inconsistent
with the provisions of this Indenture, provided that such action shall
not adversely affect the interests of the Holders of the Bonds (any such
action shall be deemed not to adversely affect the interests of the
Bondholders if the Issuer delivers to the Trustee letters from each
Rating Agency to the effect that such action will not result in a
downgrading of the Bonds); or
(6) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted, and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The 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, but the Trustee shall not be
obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture
or otherwise except to the extent required by law.
The Trustee may in its discretion determine whether or not the
rights of the Holder of Bonds would be adversely affected by any supplemental
indenture, and any such determination shall be conclusive upon the Holders of
all Bonds, whether theretofore or thereafter authenticated and delivered
hereunder. In making such determination, a supplemental indenture shall be
conclusively deemed by the Trustee not to adversely affect the Bonds if (i)
the Trustee receives a letter or other writing from each Rating Agency rating
the Bonds to the effect that execution of the supplemental indenture will not
result in any change in the current rating assigned by that Rating Agency to
the Bonds (or in the case of clause (7) above; that will not result in the
Bonds not being assigned by each agency the highest credit rating of each
agency) and (ii) the supplemental indenture effects no change in principal
priority schedules, interest rates, Redemption Prices, substitution of
Mortgage Collateral, Distribution Dates, Record Dates, terms or redemption,
the application of surplus to the payment of the Bonds or other payment terms.
The Trustee shall not be liable for any such determination made in good faith.
SECTION 9.02. Supplemental Indentures With Consent of Bondholders.
With the consent of the Holders of Bonds representing not less than
two-thirds of the aggregate Principal Amount of the Bonds by Act of said
Holders delivered to the Issuer and the Trustee, the Issuer and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to, or changing in any manner or eliminating any of
the provisions of, this Indenture or of modifying in any manner the rights of
the Holders of the Bonds under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Bond affected thereby:
(1) change the Stated Maturity of the final installment of the
principal of, or any installment of interest on, any Bond or reduce the
principal amount thereof, the Bond Interest Rate thereon or the
Redemption Price with respect thereto, change the earliest date on which
any Bond may be redeemed at the option of the Issuer, change any place of
payment where, or the coin or currency in which, any Bond or any interest
thereon is payable, or impair the right to institute suit for the
enforcement of the payment of any installment of interest due on any Bond
on or after the Stated Maturity thereof or for the enforcement of the
payment of the entire remaining unpaid principal amount of any Bond on or
after the Stated Maturity of the final installment of the principal
thereof (or, in the case of redemption, on or after the applicable
Redemption Date);
(2) reduce the percentage of the aggregate Principal Amount of the
Bonds, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with provisions of this Indenture
or Defaults hereunder and their consequences provided for in this
Indenture;
(3) modify any of the provisions of this Section, Section 5.14 or
Section 5.18(b) except to increase any percentage specified therein or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding
Bond affected thereby;
(4) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(5) 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 (except for Permitted Encumbrances) or terminate the lien of this
Indenture on any property at any time subject hereto or deprive the
Holder of any Bond of the security afforded by the lien of this
Indenture; or
(6) modify any of the provisions of this Indenture in such manner as
to materially and adversely affect rights of the Holders of the Bonds to
the benefits of any provisions for the mandatory redemption of Bonds
contained herein.
The Trustee may in its discretion determine whether or not the
rights of the Holder of any Bonds would be materially and adversely affected
by any supplemental indenture and any such determination shall be conclusive
upon the Holders of all Bonds authenticated and delivered hereunder. The
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Bondholders under this
Section 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 Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Bonds to which such supplemental indenture relates a notice
setting forth in general terms the substance of such supplemental indenture.
Any failure of the 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, consenting to or accepting the additional trusts
created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and (subject to Section 6.01) 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
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise. Executed copies of any supplemental indenture
permitted by this Article shall be provided by the Trustee to the Rating
Agencies.
SECTION 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Bonds to which such supplemental indenture relates which
have theretofore been or thereafter are authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
SECTION 9.06. Reference in Bonds to Supplemental Indentures.
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Issuer shall so
determine, new Bonds so modified as to conform, in the opinion of the Trustee
and the Issuer, to any such supplemental indenture may be prepared and
executed by the Issuer and authenticated and delivered by the Trustee in
exchange for Bonds.
SECTION 9.07. Amendments to Deposit Trust Agreement or Master Servicing
Agreement.
The Trustee shall, upon Issuer Request, consent to any proposed
amendment to the Deposit Trust Agreement or Master Servicing Agreement, or an
amendment to or waiver of any provision of any other document relating to the
Deposit Trust Agreement or Master Servicing Agreement, such consent to be
given without the necessity of obtaining the consent of the Holders of any
Bonds upon receipt by the Trustee of:
(i) an Opinion of Counsel to the effect that such amendment or
waiver will not materially and adversely affect the interests of the
Holders of the Bonds and that all conditions precedent to such consent
specified in this Section 9.07 have been satisfied; provided, however,
that no such Opinion of Counsel shall be required if the Person
requesting the amendment obtains a letter from each Rating Agency stating
that the amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Bonds; it being understood
and agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will
represent a determination only as to the credit issues affecting any such
rating;
(ii) an Officers' Certificate, to which such proposed amendment
or waiver shall be attached, stating that such attached copy is the true
copy of the proposed amendment or waiver and that all conditions
precedent to such consent specified in this Section 9.07 have been
satisfied;
(iii) written confirmation from the Rating Agencies that the
implementation of the proposed amendment or waiver will not adversely
affect their rating of the Bonds; and
(iv) any other document required pursuant to Section 11.01;
provided, however, amendments to the definitions of Specified
Overcollateralization Amount, Base Specified Overcollateralization Amount,
Target Percentage and Serious Delinquencies, (each of which is contained in
the Master Servicing Agreement), may be made solely upon (i) the written
consent of the Issuer and (ii) advise of tax counsel to the Issuer.
Notwithstanding the foregoing, the Trustee may decline to consent to
a proposed waiver or amendment that adversely affects its own rights, duties
or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Trustee is not prohibited by
this Indenture or by the terms of the document that is the subject of the
proposed amendment or waiver.
ARTICLE X.
REDEMPTION OF BONDS
SECTION 10.01. Redemption.
(a) The Bonds shall not be subject to special redemption.
(b) The Bonds shall be subject to redemption by the Issuer, in whole
but not in part, at the option of the Issuer, on any Distribution Date on or
after the Distribution Date after which the Bond Principal Balance with
respect to such Distribution Date, is 35% or less than the initial Bond
Principal Balance, on the terms and conditions specified in this subsection
(b) at the Redemption Price. If the Issuer elects to so redeem the Bonds, it
shall, no later than 30 days prior to the Distribution Date selected for such
redemption (the "Redemption Date"), deliver notice of such election to the
Trustee and either (a) deposit the Redemption Price therefor in the
Distribution Account or (b) state in such notice that the Redemption Price
will be deposited in the Distribution Account not later than 10:00 A.M. New
York City time on the applicable Redemption Date.
(c) The Bonds will be subject to mandatory redemption and retirement
by the Issuer at the Redemption Price in the event that the Servicer exercises
its option to cause the Master Servicer to conduct an auction sale of the
Mortgage Loans upon completion of such sale. Such option may be exercised by
the Servicer on any Distribution Date after the Distribution Date with respect
to which the Pool Principal Balance is equal to 10% or less of the Initial
Pool Principal Balance. To conduct such auction, the Master Servicer shall
solicit and turn over to the Trustee at least three bids for the remaining
Mortgage Loans each from a nationally recognized dealer in mortgages specified
by notice in writing from the Issuer to the Master Servicer, which dealer must
be a Person that is not an affiliate of the Master Servicer. The Trustee shall
accept the highest such bid submitted provided, further, that the price to be
paid for the remaining Mortgage Loans shall not be less than the aggregate
outstanding principal balance of the Mortgage Loans plus accrued but unpaid
interest thereon to the sale date, plus all amounts due by the Issuer to the
Trustee, the Master Servicer, the Servicer, the Special Servicer, AmREIT and
plus the amount of any other claims against the Issuer then outstanding,
regardless of whether said claims are enforceable in a court of law or equity.
In addition, in order to exercise the option to cause the Master Servicer to
conduct an auction sale of the Mortgage Loans, in the manner set forth above,
prior to soliciting such bids, the Servicer shall provide the Issuer with
notice 90 days' prior to the exercise of such option. Prior to accepting the
highest bid as set forth in the second preceding sentence, the Trustee shall
first offer the Mortgage Loans to the Depositor at the same price as such
highest bid. In the event that no acceptable bids are received, the Trustee
shall reconduct an auction quarterly.
(d) In effecting any redemption pursuant to subsections (b) or (c),
concurrent with the notice provided for therein, the Issuer shall deliver an
Issuer Order directing the Trustee to effect such redemption, any
certification and opinion required pursuant to Section 11.01 and a form of
redemption notice. All Bonds so redeemed shall be due and payable on such
Redemption Date upon the giving of the notice thereof required by Section
10.02.
(e) If the Issuer elects to retain and resell the Bonds, other than
to an affiliate, following any redemption pursuant to subsection (b) of this
Section 10.01, the Issuer shall be required to provide, as a condition
precedent to such sale, the opinion set forth in Section 2.12(c).
SECTION 10.02. Form of Redemption Notice.
Notice of redemption shall be given by the Trustee in the name of
and at the expense of the Issuer by first class mail, postage prepaid, mailed
not less than thirty days prior to the applicable Redemption Date (but in no
event prior to the date on which the Redemption Price with respect to the
Bonds to be redeemed pursuant to Section 10.01 has been deposited in the
Distribution Account or the date on which the notice of such deposit referred
to in Section 10.01 has been received by the Trustee) to each Holder of Bonds
to be redeemed, such Holders being determined as of the Record Date with
respect to the Distribution Date on which such redemption is to occur.
All notices of redemption shall state:
(1) the Redemption Date; and
(2) the fact of such payment in full, or notice that payment shall
be made by 10:00 A.M., New York City time, on the Redemption Date, and
the place where such Bonds are to be surrendered for payment of the
Redemption Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.02). Failure to give notice of
redemption, or any defect therein, to any Holder of any Bond selected for
redemption shall not impair or affect the validity of the redemption of
any other Bond.
SECTION 10.03. Bonds Payable on Redemption Date.
Notice of redemption having been given as provided in Section 10.02,
the Bonds or portions thereof so to be redeemed shall, on the applicable
Redemption Date, become due and payable at the Redemption Price and (unless
the Issuer shall default in the payment of the Redemption Price or elect not
to retire the Bonds so redeemed, as provided in Section 10.04) no interest
shall accrue on such Redemption Price for any period after the last day
preceding the day on which such Redemption Date occurs.
SECTION 10.04. Retention of Bonds by Issuer.
In the event that the Issuer effects a redemption of the Bonds in
accordance with the provisions of Section 10.01(b), it may elect to cause the
Bonds to remain Outstanding and not release the lien of the Indenture with
respect to the Trust Estate securing such Bonds or terminate such Bonds. If
the Issuer so elects, the Bonds shall not merge with the security therefor,
but shall remain validly Outstanding, subject to the following paragraph and
Section 10.01(e).
Notwithstanding the foregoing, no redemption of any Bond shall be
permitted without retiring it unless the Issuer shall have delivered to the
Trustee an Opinion of Counsel that such redemption without retirement will not
adversely affect the status of any Bond, for federal income tax purposes, as
debt of the Person that is considered the beneficial owner of the Mortgage
Loans.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions.
Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.
Every certificate, opinion or letter with respect to compliance with
a condition or covenant provided for in this Indenture (including one
furnished pursuant to specific requirements of this Indenture relating to a
particular application or request) shall include:
(1) a statement that each individual signing such certificate,
opinion or letter has 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, opinion or letter are based;
(3) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 11.02. Form of Documents Delivered to 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 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 other certificate
or opinion is based are erroneous. Any such Issuer certificate or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer or
Officers of the Owner Trustee or a certificate of the officers of the
Depositor or the manager of the Issuer, stating that the information with
respect to such factual matters is in the possession of the Owner Trustee, or
the Depositor or the manager of the Issuer, unless such officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such
other counsel's opinion and shall include a statement to the effect that such
counsel believes that such counsel and the Trustee may reasonably rely upon
the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to the 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 Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as
provided in Section 6.01(b)(2).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Trustee at the request or
direction of the Issuer, then, notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer's right to make such request
or direction, the Trustee shall be protected in acting in accordance with such
request or direction if it does not have knowledge of the occurrence and
continuation of such Default or Event of Default as provided in Section
6.01(d).
SECTION 11.03. Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Bondholders may be embodied in any evidence by one or more instruments of
substantially similar tenor signed by such Bondholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the 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 Bondholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgements of deeds, certifying that the
individual signing such instrument or writing acknowledged to him or her the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his or
her authority.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Bonds shall bind the Holder of
every Bond issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered
to be done by the Trustee or the Issuer in reliance thereon, whether or not
any notation of such action is made upon such Bonds.
SECTION 11.04. Notices, etc. to Trustee and Issuer.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Bondholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Bondholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Trustee at its
Corporate Trust Office;
(2) the Issuer by the Trustee or by any Bondholder shall be
sufficient for every purpose hereunder (except as provided in
Sections 5.01(3) and (4)) if in writing and mailed, first-class,
postage prepaid, to the Issuer addressed to it c/o Wilmington Trust
Company, as Owner Trustee, Rodney Square North, 1100 N. Market
Street, Wilmington, DE 19890-0001, Attention: Corporate Trust
Administration, or at any other address previously furnished in
writing to the Trustee by the Issuer; or
(3) any Rating Agency by the Trustee, the Issuer or the Master
Servicer shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with and received by such
Rating Agency at the address specified therefor in the definition
corresponding to the name of such Rating Agency.
SECTION 11.05. Notices and Reports to Bondholders; Waiver of Notices.
Where this Indenture provides for notice to Bondholders of any event
or the mailing of any report to Bondholders, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class, postage prepaid, to each Bondholder affected by such event or to
whom such report is required to be mailed, at the address of such Bondholder
as it appears on the Bond Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to
Bondholders is mailed in the manner provided above, neither the failure to
mail such notice or report, nor any defect in any notice or report so mailed,
to any particular Bondholder shall affect the sufficiency of such notice or
report with respect to other Bondholders, and any notice or report which is
mailed in the manner herein provided shall be conclusively presumed to have
been duly given or provided.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waiver of notice by any Bondholder shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Bondholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to Bondholders of any
event, such notice shall also be sent to S&P, so long as S&P is a Rating
Agency and to Duff & Phelps so long as Duff & Phelps is a Rating Agency.
SECTION 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for any meeting of
Bondholders. Any Agent may make reasonable rules and set reasonable
requirements for its functions.
SECTION 11.07. Conflict with Trust Indenture Act.
If this Indenture is qualified under the TIA and any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this Indenture by any of the provisions of the TIA,
such required provision shall control.
SECTION 11.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.
SECTION 11.10. Separability.
In case any provision in this Indenture or in the Bonds shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 11.11. Benefits of Indenture.
Except as provided in Section 12.01(i) hereof, nothing in this
Indenture or in the Bonds, expressed or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, any separate
trustee or co-trustee appointed under Section 6.14 and the Bondholders, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 11.12. Legal Holidays.
In any case where the date of any Distribution Date, Redemption Date
or any other date on which principal of, or interest on, any Bond is proposed
to be paid shall not be a Business Day, then (notwithstanding any other
provision of the Bonds or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the nominal date of any such Distribution Date,
Redemption Date or other date for the payment of principal of, or interest on,
any Bond, as the case may be, and no interest shall accrue for the period from
and after any such nominal date, provided such payment is made in full on such
next succeeding Business Day.
SECTION 11.13. Governing Law.
THIS INDENTURE AND EACH BOND SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE BONDHOLDERS
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
SECTION 11.15. Recording of Indenture.
This Indenture is subject to recording in any appropriate public
recording office, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to
Section 2.12(c) or Section 3.06.
SECTION 11.16. Issuer Obligation.
No recourse may be taken, directly or indirectly, against (i) the
Bank, (ii) any incorporator, subscriber to the capital stock, stockholder,
officer or director of the Bank or of any predecessor or successor of the
Bank, (iii) any holder of a beneficial interest in the Issuer (solely in its
capacity as such), (iv) any incorporator, subscriber to the capital stock,
stockholder, partner, beneficiary, agent, officer, director, employee, or
successor or assign of a holder of a beneficial interest in the Issuer, (v)
the Depositor or any Affiliate thereof (other than the Issuer) or (vi) any
incorporator, subscriber to the capital stock, stockholder, officer, director
or employee of the Trustee or any predecessor or successor of the Trustee with
respect to the Issuer's obligation with respect to the Bonds or the obligation
of the Issuer or the Trustee under this Indenture or any certificate or other
writing delivered in connection herewith or therewith.
SECTION 11.17. Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit
any representative of the Trustee, during the Issuer's normal business hours,
to examine all 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 Accountants selected by the Trustee, as the case may
be, and to discuss its affairs, finances and accounts with its officers,
employees and Independent Accountants (and by this provision the Issuer hereby
authorizes its Accountants to discuss with such representatives such affairs,
finances and accounts), all at such reasonable times and as often as may be
reasonably requested. Any reasonable expense incident to the exercise by the
Trustee of any rights under this Section 11.17 shall be borne by the Issuer.
SECTION 11.18. Usury.
The amount of interest payable or paid on any Bond under the terms
of this Indenture shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the
United States or the State of New York (whichever shall permit the higher
rate), which could lawfully be contracted for, charged or received (the
"Highest Lawful Rate"). In the event any payment of interest on any Bond
exceeds the Highest Lawful Rate, the Issuer stipulates that such excess amount
will be deemed to have been paid as a result of an error on the part of both
the Trustee, acting on behalf of the Holder of such Bond, and the Issuer, and
the Holder receiving such excess payment shall promptly, upon discovery of
such error or upon notice thereof from the Issuer or the Trustee, refund the
amount of such excess or, at the option of the Trustee, apply the excess to
the payment of principal of such Bond, if any, remaining unpaid.
SECTION 11.19. No Petition.
The Trustee, by entering into this Indenture, and each Bondholder,
by accepting a Bond, hereby covenant and agree that they will not at any time
institute against the Depositor or the Issuer, or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Bonds, this Indenture or any of the
Operative Agreements.
24714/9 89 IN WITNESS WHEREOF, each party has caused this Indenture
to be executed by its duly authorized officer or officers as of the day and
year first above written.
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1998-1
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By: _______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK
as Trustee
By: _______________________________________
Authorized Officer
By: _______________________________________
Name:
Title:
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
On the _____ day of June in the year one thousand nine hundred and
ninety-eight before me personally came ___________________, to me known, who
being by me duly sworn did depose and say that she/he resides in
__________________________, that she/he is the _______________________ of
_____________________, the corporation described in and which executed the
above instrument and that she/he signed her/his name thereto by authority of
the Board of Directors of said corporation.
[NOTARIAL SEAL]
Notary Public
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF ________________ )
On the ______ day of June, 1998, before me, a notary public in and
for said State, personally appeared ________________________________, known to
me (or proved to me on the basis of satisfactory evidence) to be a
________________________ of _________________, the corporation that executed
the within instrument, and also known to me (or proved to me on the basis of
satisfactory evidence) to be the persons who executed it on behalf of said
__________________________ corporation, and acknowledged to me that such
__________________________ corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
Notary Public
SCHEDULE A
Schedule of Mortgage Loans
EXHIBIT I
FORM OF CLASS A BOND
PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE PRINCIPAL AMOUNT OF THIS BOND AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE PRINCIPAL AMOUNT OF THIS BOND
MAY BE ASCERTAINED ONLY BY OBTAINING A CONFIRMATION THEREOF FROM THE TRUSTEE
UNDER THE INDENTURE REFERRED TO BELOW.
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1998-1
a Delaware Statutory Business Trust
Collateralized Mortgage Bonds
CLASS A
STATED MATURITY: [[__________]]
ISSUE DATE: June [[__]], 1998
Initial Principal
Amount of this Bond:
$___________ CERTIFICATE NUMBER 1
American Residential Eagle Bond Trust 1998-1 (the "Issuer"), a
statutory business trust formed under a deposit trust agreement dated as of
June 1, 1998 and having Wilmington Trust Company, a Delaware banking
corporation, as Owner Trustee, for value received, hereby promises to pay to
[___________________] or registered assigns, the principal sum of
________________________ ($___________) in monthly installments on the
_____________ day of each month, commencing on [[_____]] 25, 1998 (each, a
"Distribution Date"), and ending on or before May 25, 2028, (the "Stated
Maturity" of such final installment of principal), and to pay interest
(computed on the basis of a 360-day year and actual number of days elapsed on
the Bond Principal Balance (as defined in the Indenture hereinafter referred
to) of this Bond on each Distribution Date for the related period, commencing
on the immediately preceding Distribution Date (or, in the case of the first
Accrual Period, commencing on the Closing Date) and ending on the date
immediately preceding such Distribution Date, as set forth herein and in the
Indenture and the Master Servicing Agreement referred to below. If any
Distribution Date shall not be a "Business Day" (as defined in the Indenture),
payment of the amount due will be made on the next succeeding Business Day.
Installments of principal of this Bond are due and payable as
described in the Indenture and in the master servicing agreement dated as of
June 1, 1998 (the "Master Servicing Agreement"), among the Issuer, the Trustee
and the Master Servicer, as such agreement may be amended or supplemented from
time to time as permitted thereby.
The principal of, and interest on, this Bond are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Bond shall be applied as set forth in the
Indenture. Any installment of principal or interest which is not paid when and
as due shall bear interest as described herein and in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Bond shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, American Residential Eagle Bond Trust 1998-1 has
caused this instrument to be duly executed by its duly authorized officer.
Dated: [[______]], 1998 AMERICAN RESIDENTIAL EAGLE BOND TRUST 1998-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:____________________________________
Title:_________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds referred to in the within-mentioned Indenture.
______________________________,
as Trustee
By:_______________________________
Authorized Signatory
This Bond is one of a duly authorized issue of Bonds of the Issuer,
designated as its Collateralized Mortgage Bonds (herein called the "Bonds").
The Bonds are issuable in one or more classes; the Bonds of a particular Class
being herein called the Class A, all issued and to be issued under the
Issuer's Indenture dated as of June 1, 1998 between the Issuer and First Union
National Bank (the "Trustee", which term includes any successor Trustee under
the Indenture), which authorized the Bonds, and reference is hereby made
thereto for a statement of the respective rights thereunder of the Issuer, the
Trustee and the Holders of the Bonds of each particular Class thereof and the
terms upon which the Bonds of each Class are, and are to be, authenticated and
delivered. The Bond is one of the Class A Bonds.
All terms used in this Bond which are defined in the Indenture shall
have the meanings assigned to them in the Indenture or, if not defined
therein, in the Master Servicing Agreement or the Trust Agreement, dated as of
June 1, 1998, between the Depositor and First Union National Bank, as
Certificate Trustee (the "Certificate Trust Agreement").
The interest rate for the Class A Bonds (the "Class A Interest
Rate") for the first Distribution Date will be equal to 6.14% per annum. The
Class A Interest Rate, (I) for each Distribution Date after the first
Distribution Date and on which the Bond Principal Balance is greater than or
equal to 35% of the initial Bond Principal Balance, will be equal to the least
of (A) a per annum floating rate equal to LIBOR for the related Accrual Period
plus 0.48%, (B) 9.50% per annum and (C) the Net Funds Cap and, (II) for each
Distribution Date after which the Bond Principal Balance is less than 35% of
the initial Bond Principal Balance, will be equal to the least of (X) a per
annum floating rate equal to LIBOR for the related Accrual Period of plus
1.90%, (Y) 10.00% per annum and (Z) the Net Funds Cap.
As provided in the Indenture, the Bonds are issuable in Classes
which may vary as is provided or permitted in the Indenture. Bonds of each
Class are equally and ratably secured by the collateral pledged as security
therefor to the extent provided by the Indenture.
For each Distribution Date, the aggregate amount of each installment
of interest due and payable on the Class A Bonds will be equal to the Class A
Interest Payment Amount for such Distribution Date.
The "Class A Interest Payment Amount" means, as of any Distribution
Date, the sum of (i) one month's interest at the Class A Interest Rate on the
then outstanding Bond Principal Balance of the Class A Bonds immediately prior
to such Distribution Date, (ii) the sum of the amounts, if any, by which the
amount described in clause (i) above on each prior Distribution Date exceeded
the amount actually distributed as interest on such Bonds on such prior
Distribution Dates and was not subsequently distributed, together with, to the
extent permitted by applicable law, interest on the amount described in clause
(ii) at the Class A Interest Rate and (iii) the sum of (a) the Basis Risk
Shortfall for such Distribution Date and (b) Unpaid Basis Risk Shortfall,
together with interest thereon at the Class A Interest Rate to the extent
permitted by law.
For each Distribution Date, the aggregate amount of each installment
of principal due and payable on the Class A Bonds will be equal to such
Class's pro rata share of the Principal Distribution Amount for such
Distribution Date. The entire unpaid principal amount of this Bond shall be
due and payable, if not then previously paid, on the Stated Maturity set forth
on the face hereof.
All payments of principal of, and interest on, the Bonds shall be
made only from the Trust Estate Granted as security for the Bonds and any
other assets of the Issuer that have not been Granted as security for any
other bonds or obligations of the Issuer, and each Holder hereof, by its
acceptance of this Bond, agrees that it will have recourse solely against such
Trust Estate and such other assets of the Issuer and that neither Wilmington
Trust Company in its individual capacity, any holder of a beneficial interest
in the Issuer nor any of their respective shareholders, partners,
beneficiaries, agents, officers, directors, employees, successors or assigns
shall be personally liable for any amounts payable, or performance due, under
this Bond or the Indenture.
Payment of the then remaining unpaid principal amount of this Bond
on the Stated Maturity of its final installment of principal or on such
earlier date as the Issuer shall be required to pay the then remaining unpaid
principal amount of this Bond or payment of the Redemption Price payable on
any date as of which this Bond has been called for redemption in full, shall
be made upon presentation of this Bond to the office or agency of the Issuer
maintained for such purpose. Payments of interest on this Bond due and payable
on each Distribution Date or on any Redemption Date, to the extent this Bond
is not being paid in full, together with any installment of principal of this
Bond due and payable on each Distribution Date or the Redemption Date, to the
extent not in full payment of this Bond, shall be made by check mailed to the
Person whose name appears as the registered Holder of this Bond (or one or
more Predecessor Bonds) on the Bond Register as of the last day of the month
preceding the month in which such Distribution Date occurs (each a "Record
Date").
Checks for amounts which include installments of principal due on
this Bond shall be mailed to the Person entitled thereto at the address of
such Person as it appears on the Bond Register as of the applicable Record
Date without requiring that this Bond be submitted for notation of payment and
checks returned undelivered will be held for payment to the Person entitled
thereto, subject to the terms of the Indenture, at the office or agency in the
United States of America designated by the Issuer for such purpose pursuant to
the Indenture. Any reduction in the principal amount of this Bond (or any one
or more Predecessor Bonds) effected by any payments made on any Distribution
Date shall be binding upon all Holders of this Bond and of any Bond issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon.
If funds are expected to be available, as provided in the Indenture,
for payment in full of the then remaining unpaid principal amount of this Bond
on a Distribution Date or Redemption Date which is prior to the Stated
Maturity of the final installment of principal hereof, then the Trustee, on
behalf of the Issuer, will notify the Person who was the registered Holder
hereof on the last day of the month prior to the month in which such
Distribution Date or Redemption Date occurs, and the amount then due and
payable shall, if sufficient funds therefor are available, be payable only
upon presentation of this Bond to the office or agency of the Issuer
maintained for such purpose.
The failure of the Issuer to pay when and as due any installment of
principal of (regardless of the lapse of any grace period) any Bond shall not
constitute an Event of Default under the Indenture unless the aggregate Bond
Principal Balance exceeds the Pool Principal Balance with respect to a
Distribution Date after application of all available amounts on deposit in the
Distribution Account on such Distribution Date or unless the Bonds are not
paid in full at their Stated Maturity.
If an Event of Default as defined in the Indenture shall occur and
be continuing with respect to the Bonds, the Bonds 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 Stated Maturity of
the final installment of principal of this Bond, the amount payable to the
Holder of this Bond will be equal to the Bond Principal Balance of this Bond
on the date this Bond becomes so due and payable, together with accrued
interest. Following the acceleration of the maturity of the Bonds, all amounts
collected as proceeds of the collateral securing the Bonds or otherwise shall
be applied as described in the Indenture. Following such acceleration,
interest on any overdue installments of interest on all Bonds shall be payable
at the rate set forth in the Indenture.
The Bonds are not prepayable or redeemable at the option or
direction of the Issuer except that the Bonds are subject to redemption in
whole, but not in part, at the option of the Issuer on any Distribution Date
after which the Bond Principal Balance with respect to such Distribution Date
is less than 35% of the initial Bond Principal Balance, at the Redemption
Price. The Bonds are also subject to redemption by the Issuer upon the
exercise by the Servicer of its right to cause the auction sale of the
Mortgage Loans on any Distribution Date after the Distribution Date with
respect to which the Pool Principal Balance is equal to 10% or less of the
Original Pool Principal Balance. Any redemption of the Bond shall be at a
price equal to 100% of the unpaid principal amount of this Bond plus accrued
and unpaid interest hereon to the date of interest redemption.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond may be registered on the Bond
Register of the Issuer, upon surrender of this Bond for registration of
transfer at the office or agency designated by the Issuer pursuant to the
Indenture, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Bonds of the same Class, of authorized denominations and in the same
aggregate initial principal amount, will be issued to the designated
transferee or transferees.
Prior to the due presentment for registration of transfer of this
Bond, the Issuer, the Trustee, and any agent of the Issuer shall treat the
Person in whose name this Bond is registered (i) on any Record Date, for
purposes of making payments, and (ii) on any other date for any other
purposes, as the owner hereof, whether or not this Bond be overdue, and
neither the Issuer, the Trustee nor any such agent shall be affected by notice
to the contrary.
The Indenture permits, subject to the rights of the Insurer and 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 Bonds under the Indenture at any time by the Issuer with the
consent of the Holders of Bonds representing two-thirds of the Principal
Amount of the Bonds. The Indenture also contains provisions permitting the
Holders of Bonds representing specified percentages of the aggregate Principal
Amount of the Bonds on behalf of the Holders of all the Bonds, subject to the
rights of the Insurer, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder, at the time of
the giving thereof, of this Bond (or any one or more Predecessor Bonds) shall
be conclusive and binding upon such Holder and upon all future holders of this
Bond and of any Bond issued upon the registration of transfer herefor or in
exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Bond. The Indenture also permits the Trustee, subject
to the rights of the Insurer, to amend or waive certain terms and conditions
set forth in the Indenture without the consent of the Holders of the Bonds of
any Series issued thereunder and also permits certain amendments without the
consent of Bondholders.
As provided in the Indenture, the Insurer shall have the right to
control the exercise of certain remedies set forth therein and to exercise
certain of the voting rights of the Holders of the Bonds and certain other
rights may only be exercised with the consent of the Insurer.
AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE 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.
No reference herein to the Indenture and no provision of this Bond
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional to the extent permitted by applicable law, to
pay the principal of, and interest on, this Bond at the times, place and rate,
and in the coin or currency herein prescribed.
