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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 24, 1998
Fund America Investors Corporation II
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(Exact Name of Registrant as Specified in Charter)
Delaware 333-33823 84-1218906
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
6400 S. Fiddler's Green Circle, Suite 1200B, Englewood, Colorado 80111
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (303) 290-6025
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(Former Name or Former Address if Changed Since Last Report)
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Item 5. Other Events.
The Registrant entered into an Underwriting Agreement, dated as of June
24, 1998, with Salomon Brothers Inc (the "Underwriter"), pursuant to which the
Underwriter agrees to purchase, and offer for sale to the public, approximately
$236,526,000 aggregate initial principal amount of the Registrant's
Collateralized Mortgage Obligations, Series 1998-NMC1, which will consist of
four classes of bonds (collectively, the "Bonds"), designated as the Class A
Bonds, the Class M-1 Bonds, the Class M-2 Bonds and the Class M-3 Bonds. The
Bonds are registered for sale under the Registrant's effective shelf
Registration Statement on Form S-3 (333-33823) and will be offered pursuant to a
Prospectus, dated June 24, 1998, and a related Prospectus Supplement, dated June
24, 1998, to be filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended, and Rule 424 thereunder.
Filed as Exhibit 4.1 to this Form 8-K is the form of Indenture to be
signed by the Indenture Trustee and the issuer of the Bonds, Fund America
Investors Trust 1998-NMC1.
Norwest Bank Minnesota, National Association, is expected to serve as
Indenture Trustee with respect to the Bonds, and the Registrant is filing
herewith as Exhibit 25.1 to this Form 8-K the Form T-1 Statement of Eligibility
for Norwest Bank.
Filed as Exhibits 5.1 and 8.1 to this Form 8-K are copies of opinions
of Hunton & Williams with respect to Registrant's Registration Statement on Form
S-3, as amended (333-33823).
Item 7. Exhibits.
4.1 Form of Indenture.
5.1 Opinion of Hunton & Williams regarding the legality of the
Securities (Bonds).
8.1 Opinion of Hunton & Williams regarding tax matters.
25.1 Form T-1 Statement of Eligibility.
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<PAGE> 3
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 thereunto duly authorized.
June 24, 1998 FUND AMERICA INVESTORS CORPORATION II
By: /s/ Peter R. Lang
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Name: Peter R. Lang
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Title: Vice President
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EXHIBIT INDEX
4.1 Form of Indenture relating to Fund America Investors Trust
1998-NMC1
5.1 Opinion of Hunton & Williams regarding the legality of the
Securities (Bonds).
8.1 Opinion of Hunton & Williams regarding tax matters.
25.1 Form T-1 Statement of Eligibility
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EXHIBIT 4.1
INDENTURE
BETWEEN
FUND AMERICA INVESTORS TRUST 1998-NMC1,
AS ISSUER,
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE
Dated as of June 1, 1998
Relating to
FUND AMERICA INVESTORS TRUST 1998-NMC1
COLLATERALIZED MORTGAGE OBLIGATIONS, SERIES 1998-NMC1
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................................2
Section 1.01. General Definitions.......................................................................2
ARTICLE II THE BONDS.............................................................................................20
Section 2.01. Forms Generally..........................................................................20
Section 2.02. Forms of Certificate of Authentication...................................................20
Section 2.03. General Provisions With Respect to Principal and Interest Payments.......................20
Section 2.04. Denominations............................................................................21
Section 2.05. Execution, Authentication, Delivery and Dating...........................................21
Section 2.06. Registration, Registration of Transfer and Exchange......................................22
Section 2.07. Mutilated, Destroyed, Lost or Stolen Bonds...............................................22
Section 2.08. Payments of Principal and Interest.......................................................23
Section 2.09. Persons Deemed Owners....................................................................24
Section 2.10. Cancellation.............................................................................24
Section 2.11. Authentication and Delivery of Bonds.....................................................25
Section 2.12. Book-Entry Bonds.........................................................................26
Section 2.13. Termination of Book Entry System.........................................................26
Section 2.14. Interest Payments on the Bonds...........................................................27
Section 2.15. Principal Payments on the Bonds..........................................................27
Section 2.16. Application of Excess Cashflow...........................................................28
Section 2.17. Payment of Prepayment Penalties to the Certificateholder.................................29
ARTICLE III COVENANTS............................................................................................29
Section 3.01. Payment of Bonds.........................................................................29
Section 3.02. Maintenance of Office or Agency..........................................................29
Section 3.03. Money for Bond Payments to Be Held In Trust..............................................29
Section 3.04. Existence of Issuer......................................................................31
Section 3.05. Protection of Trust Estate...............................................................31
Section 3.06. Opinions as to Trust Estate..............................................................32
Section 3.07. Performance of Obligations; Servicing Agreement..........................................32
Section 3.08. Investment Company Act...................................................................32
Section 3.09. Negative Covenants.......................................................................32
Section 3.10. Annual Statement as to Compliance........................................................33
Section 3.11. Restricted Payments......................................................................33
Section 3.12. Treatment of Bonds as Debt for Tax Purposes..............................................33
Section 3.13. Notice of Events of Default..............................................................34
Section 3.14. Further Instruments and Acts.............................................................34
ARTICLE IV SATISFACTION AND DISCHARGE............................................................................34
Section 4.01. Satisfaction and Discharge of Indenture..................................................34
Section 4.02. Application of Trust Money...............................................................35
ARTICLE V DEFAULTS AND REMEDIES..................................................................................35
Section 5.01. Event of Default.........................................................................35
Section 5.02. Acceleration of Maturity; Rescission and Annulment.......................................36
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee................37
Section 5.04. Remedies.................................................................................37
Section 5.05. Indenture Trustee May File Proofs of Claim...............................................38
Section 5.06. Indenture Trustee May Enforce Claims Without Possession of Bonds.........................38
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Section 5.07. Application of Money Collected...........................................................38
Section 5.08. Limitation on Suits......................................................................39
Section 5.09. Unconditional Rights of Bondholders to Receive Principal and Interest....................40
Section 5.10. Restoration of Rights and Remedies.......................................................40
Section 5.11. Rights and Remedies Cumulative...........................................................40
Section 5.12. Delay or Omission Not Waiver.............................................................40
Section 5.13. Control by Bondholders...................................................................41
Section 5.14. Waiver of Past Defaults..................................................................41
Section 5.15. Undertaking for Costs....................................................................41
Section 5.16. Waiver of Stay or Extension Laws.........................................................41
Section 5.17. Sale of Trust Estate.....................................................................42
Section 5.18. Action on Bonds..........................................................................43
Section 5.19. No Recourse to Other Trust Estates or Other Assets of the Issuer.........................43
Section 5.20. Application of the Trust Indenture Act...................................................43
Section 5.21. Appointment of New Trustee for the Mezzanine Bonds.......................................43
ARTICLE VI THE INDENTURE TRUSTEE.................................................................................43
Section 6.01. Duties of Indenture Trustee..............................................................43
Section 6.02. Notice of Default........................................................................45
Section 6.03. Rights of Indenture Trustee..............................................................45
Section 6.04. Not Responsible for Recitals or Issuance of Bonds........................................45
Section 6.05. May Hold Bonds...........................................................................45
Section 6.06. Money Held in Trust......................................................................45
Section 6.07. Eligibility; Disqualification............................................................45
Section 6.08. Indenture Trustee's Capital and Surplus..................................................46
Section 6.09. Resignation and Removal; Appointment of Successor........................................46
Section 6.10. Acceptance of Appointment by Successor...................................................47
Section 6.11. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee.........47
Section 6.12. Preferential Collection of Claims Against Issuer.........................................47
Section 6.13. Co-Indenture Trustees and Separate Indenture Trustees....................................48
Section 6.14. Authenticating Agents....................................................................49
Section 6.15. Review of Mortgage Files.................................................................49
Section 6.16. Indenture Trustee Fees and Expenses......................................................51
ARTICLE VII BONDHOLDERS' LISTS AND REPORTS.......................................................................51
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Bondholders...................51
Section 7.02. Preservation of Information; Communications to Bondholders...............................51
Section 7.03. Reports by Indenture Trustee.............................................................52
Section 7.04. Reports by Issuer........................................................................52
ARTICLE VIII ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES..........................................52
Section 8.01. Collection of Moneys.....................................................................52
Section 8.02. Bond Account.............................................................................53
Section 8.03. [Intentionally Omitted.].................................................................54
Section 8.04. General Provisions Regarding the Bond Account and Mortgage Loans.........................54
Section 8.05. Releases of Defective Mortgage Loans.....................................................55
Section 8.06. Reports by Indenture Trustee to Bondholders; Access to Certain Information...............55
Section 8.07. Trust Estate Mortgage Files..............................................................55
Section 8.08. Amendment to Servicing Agreement.........................................................56
Section 8.09. Delivery of the Mortgage Files Pursuant to Servicing Agreement...........................56
Section 8.10. Servicer as Agent........................................................................56
Section 8.11. Termination of Servicer..................................................................56
Section 8.12. Opinion of Counsel.......................................................................56
Section 8.13. Appointment of Custodians................................................................56
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ARTICLE IX SUPPLEMENTAL INDENTURES...............................................................................57
Section 9.01. Supplemental Indentures Without Consent of Bondholders..................................57
Section 9.02. Supplemental Indentures With Consent of Bondholders.....................................58
Section 9.03. Execution of Supplemental Indentures....................................................59
Section 9.04. Effect of Supplemental Indentures.......................................................59
Section 9.05. Conformity With Trust Indenture Act.....................................................59
Section 9.06. Reference in Bonds to Supplemental Indentures...........................................59
Section 9.07. Amendments to Governing Documents.......................................................59
ARTICLE X REDEMPTION OF BONDS....................................................................................60
Section 10.01. Redemption..............................................................................60
Section 10.02. Form of Redemption Notice...............................................................60
Section 10.03. Bonds Payable on Optional Redemption....................................................61
Section 10.04. Resale of Redeemed Bonds................................................................61
ARTICLE XI MISCELLANEOUS.........................................................................................61
Section 11.01. Compliance Certificates and Opinions....................................................61
Section 11.02. Form of Documents Delivered to Indenture Trustee........................................62
Section 11.03. Acts of Bondholders.....................................................................62
Section 11.04. Notices, etc. to Indenture Trustee and Issuer...........................................63
Section 11.05. Notices and Reports to Bondholders; Waiver of Notices...................................64
Section 11.06. Rules by Indenture Trustee..............................................................64
Section 11.07. Conflict With Trust Indenture Act.......................................................64
Section 11.08. Effect of Headings and Table of Contents................................................64
Section 11.09. Successors and Assigns..................................................................64
Section 11.10. Separability............................................................................64
Section 11.11. Benefits of Indenture...................................................................65
Section 11.12. Legal Holidays..........................................................................65
Section 11.13. Governing Law...........................................................................65
Section 11.14. Counterparts............................................................................65
Section 11.15. Recording of Indenture..................................................................65
Section 11.16. Issuer Obligation.......................................................................65
Section 11.17 No Petition.............................................................................66
Section 11.18. Inspection..............................................................................66
Section 11.19. Usury...................................................................................66
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SCHEDULES AND EXHIBITS
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Schedule I Mortgage Loan Schedule
Exhibit A-1 Form of Class A Bond
Exhibit A-2 Form of Class M-1 Bond
Exhibit A-3 Form of Class M-2 Bond
Exhibit A-4 Form of Class M-3 Bond
Exhibit B Mortgage Loan Sale Agreement
Exhibit C Mortgage Loan Contribution Agreement
Exhibit D Letter of Representations to The Depository Trust Company
Exhibit E-1 Form of Indenture Trustee's Initial Certification
Exhibit E-2 Form of Indenture Trustee's Final Certification
Exhibit F Servicing Agreement
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CROSS-REFERENCE TABLE
Cross-reference sheet showing the location in the Indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.*
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Trust Indenture Act of 1939 Indenture Section
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Section 310
(a) (1).................................................................. 6.07
(a) (2).................................................................. 6.07, 6.08
(a) (3).................................................................. 6.13
(a) (4).................................................................. Not Applicable
(a) (5).................................................................. 6.07
(b)...................................................................... 6.07, 6.09
(c)...................................................................... Not Applicable
Section 311
(a)...................................................................... 6.12
(b)...................................................................... 6.12
(c)...................................................................... Not Applicable
Section 312
(a)...................................................................... 7.01(a), 7.02(a)
(b)...................................................................... 7.02(b)
(c)...................................................................... 7.02(c)
Section 313
(a)...................................................................... 7.03(a)
(b)...................................................................... 7.03(a)
(c)...................................................................... 11.05
(d)...................................................................... 7.03(b)
Section 314
(a)(1)................................................................... 7.04
(a)(2)................................................................... 7.04
(a)(3)................................................................... 7.04
(a)(4)................................................................... 7.04
(b)(1)................................................................... 2.11(c), 11.01
(b)(2)................................................................... 3.06
(c)(1)................................................................... 2.11(d), 4.01,
8.02(d), 11.01
(c)(2)................................................................... 2.11(c), 4.01,
8.02(d), 11.01
(c)(3)................................................................... 8.02(d)
(d)(1)................................................................... 11.01(a)
(d)(2)................................................................... 11.01(a)
(d)(3)................................................................... 11.01(a)
(e)...................................................................... 11.01(b)
Section 315
(a)...................................................................... 6.01(b), 6.01(c)(1)
(b)...................................................................... 6.02, 11.05
(c)...................................................................... 6.01(a)
(d)(1)................................................................... 6.01(b), 6.01(c)
(d)(2)................................................................... 6.01(c)(2)
(d)(3)................................................................... 6.01(c)(3)
(e)...................................................................... 5.15
Section 316
(a)...................................................................... 5.20
(b)...................................................................... 5.09
(c)...................................................................... 5.20
Section 317
(a)(1)................................................................... 5.03
(a)(2)................................................................... 5.05
(b)...................................................................... 3.03
Section 318
(a)...................................................................... 11.07
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* This Cross-Reference Table is not part of the Indenture.
<PAGE> 7
THIS INDENTURE, dated as of June 1, 1998 (as amended or supplemented
from time to time as permitted hereby, this "Indenture"), is between FUND
AMERICA INVESTORS TRUST 1998-NMC1, a Delaware business trust (together with its
permitted successors and assigns, the "Issuer"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, as trustee (together with
its permitted successors in the trusts hereunder, the "Indenture Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for its Collateralized Mortgage Obligations, Series
1998-NMC1, which will consist of four classes of bonds (collectively the
"Bonds"), designated and 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
Indenture 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 Indenture Trustee, for the exclusive
benefit of the Holders of the Bonds, all of the Issuer's right, title and
interest in and to (a) the Mortgage Loans listed in Schedule I to this
Indenture (including property that secures a Mortgage Loan that becomes an REO
Property), including the related Mortgage Files delivered or to be delivered to
the Indenture Trustee pursuant to the Mortgage Loan Sale Agreement, all
payments of principal received, collected or otherwise recovered after the
Cut-off Date for each Mortgage Loan, all payments of interest accruing on each
Mortgage Loan after the Cut-off Date whenever received and all other proceeds
received in respect of such Mortgage Loans, and any Qualified Replacement
Mortgage Loan, (b) the Servicing Agreement, (c) the Mortgage Loan Sale
Agreement, (d) the Mortgage Loan Contribution Agreement, (e) the Management
Agreement, (f) the Insurance Policies, (g) all cash, instruments or other
property held or required to be deposited in the Collection Account and the
Bond Account, including all investments made with funds in such accounts (but
not including any income on funds deposited in, or investments made with funds
deposited in, the Collection Account, which income shall belong to and be for
the account of the Servicer, and not including any income on funds deposited
in, or investments made with funds deposited in the Bond Account, which income
shall belong to and be for the account of the Indenture Trustee), and (h) 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 and condemnation awards. Such Grants are made, however, in trust, to
secure the Bonds and to secure (x) the payment of all amounts due on the Bonds
in accordance with their terms, (y) the payment of all other sums payable under
this Indenture and (z) 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 Indenture 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 end that the interests of the Holders
of the Bonds may be adequately and effectively protected.
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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 genders of such terms. Whenever reference is made
herein to an Event of Default or a Default known to the Indenture Trustee or of
which the Indenture Trustee has notice or knowledge, such reference shall be
construed to refer only to an Event of Default or Default of which the
Indenture Trustee is deemed to have notice or knowledge pursuant to Section
6.01(d). All other terms used herein that 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.
"ACT": With respect to any Bondholder, as defined in Section 11.03.
"ADMINISTRATIVE FEE AMOUNT": For any Payment Date, the sum of the
Monthly Servicing Fee and the Indenture Trustee's Fee, each relating to such
Payment 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, relation to individuals or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"AGENT": Any Bond Registrar, Paying Agent, Authenticating Agent or
Custodian.
"AGGREGATE PRINCIPAL BALANCE": With respect to any Payment Date, the
aggregate of the Principal Balances of the Mortgage Loans as of the related
Determination Date (or other specified date).
"APPLICABLE SPREAD": For any Payment Date prior to the Clean-Up Call
Date, 0.180 per annum for the Class A Bonds, 0.400% per annum for the Class M-1
Bonds, 0.650% per annum for the Class M-2 Bonds, and 1.200% per annum for the
Class M-3 Bonds. For each Payment Date on or after the Clean-Up Call Date,
0.360% per annum for the Class A Bonds, 0.600% per annum for the Class M-1
Bonds, 0.975% per annum for the Class M-2 Bonds, and 1.800% per annum for the
Class M-3 Bonds.
"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 to the Indenture Trustee (that in each 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 and Mortgage Notes as well and that may also be an instrument
of assignment running directly from the mortgagee of record under the related
Mortgage to the Indenture Trustee).
"AUTHENTICATING AGENT": The Person, if any, appointed as
Authenticating Agent by the Issuer pursuant to Section 6.14, until any
successor Authenticating Agent for the Bonds is named, and thereafter
"Authenticating Agent" shall mean such successor. The initial Authenticating
Agent shall be the Indenture Trustee. Any Authenticating Agent other than the
Indenture Trustee shall sign an instrument under which it agrees to be bound by
all of the terms of this Indenture applicable to the Authenticating Agent.
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"AUTHORIZED OFFICER": With respect to the Indenture Trustee, any
Responsible Officer and with respect to any other Person, the Chairman of the
Board, Chief Operating Officer, President or any Vice President of such Person.
"AVAILABLE FUNDS": With respect to the Bonds and any Payment Date, the
sum of the amounts described in clauses (a) through (g) below, less (i) the
Administrative Fee Amount in respect of such Payment Date and (ii) Monthly
Advances and Servicing Advances previously made that are reimbursable to the
Servicer (other than those included in liquidation expenses for any Liquidated
Mortgage Loan and already reimbursed from the related Liquidation Proceeds) in
such Collection Period to the extent permitted by the Servicing Agreement:
(a) all scheduled payments of interest received with
respect to the Mortgage Loans and due during the related Due Period
and all other interest payments on or in respect of the Mortgage Loans
received by or on behalf of the Servicer during the related Collection
Period (including Payments Ahead that are allocable to interest for
the related Due Period), net of amounts representing interest accrued
on such Mortgage Loans in respect of any period prior to the Cut-off
Date, plus any Compensating Interest payments made by the Servicer in
respect of the related Mortgage Loans and any net income from related
REO Properties for such Collection Period;
(b) all scheduled payments of principal received with
respect to the Mortgage Loans and due during the related Due Period
and all other principal payments (including Principal Prepayments, but
excluding prepayment penalties amounts described elsewhere in this
definition) received or deemed to be received during the related
Collection Period (excluding Payments Ahead, except for Payments Ahead
that are allocable as principal for the related Due Period) in respect
of the Mortgage Loans;
(c) the aggregate of any Trust Insurance Proceeds
collected by the Servicer during the related Collection Period;
(d) the aggregate of any Net Liquidation Proceeds
collected by the Servicer during the related Collection Period;
(e) the aggregate of the Purchase Prices received in
respect of any Mortgage Loans that are required or permitted to be
repurchased, released, removed or substituted by the Mortgage Loan
Seller during or in respect of the related Collection Period, to the
extent such amounts are received by the Indenture Trustee on or before
the related Deposit Date;
(f) the amount of any Monthly Advances made by the
Servicer for such Payment Date; and
(g) the aggregate of amounts deposited in the Bond
Account during such Collection Period in connection with redemption of
the Bonds pursuant to Article X.
"AVAILABLE FUNDS CAP": The annualized weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the first day of the related
Collection Period.
"AVAILABLE FUNDS CAP CARRY FORWARD AMOUNT": With respect to each Class
of Bonds, for any Payment Date for which the Bond Interest Rate for such Class
of Bonds was equal to the Available Funds Cap, the difference between the
amount of Bond Interest that would have accrued on such Class of Bonds had the
Bond Interest Rate equaled the Bond Formula Rate, minus the amount of Bond
Interest that did accrue on such Class of Bonds for such Payment Date, plus
interest accrued on such difference from such Payment Date at the applicable
Bond Interest Rate for such Class of Bonds for each successive Interest Period
to but excluding the Payment Date on which such amount, with interest, is paid
in full.
"BANKRUPTCY CODE": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
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"BASIC DOCUMENTS": This Indenture, the Trust Agreement, the Servicing
Agreement, the Mortgage Loan Sale Agreement, the Mortgage Loan Contribution
Agreement and the Management Agreement.
"BENEFICIAL OWNER": With respect to a Book-Entry Bond, the Person who
is the beneficial owner of such Bond as reflected on the books of the Clearing
Agency for the Bonds 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).
"BEST EFFORTS": Efforts determined to be in good faith and reasonably
diligent by the Person performing such efforts, specifically the Issuer or the
Servicer, as the case may be, in its reasonable discretion. Such efforts do not
require the Issuer or the Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Issuer or the Servicer, as the case may be, to advance or expend
fees or sums of money in addition to those specifically set forth in this
Indenture and the Servicing Agreement.
"BOND ACCOUNT": The segregated trust account, which shall be an
Eligible Account, established and maintained pursuant to Section 8.02 and
entitled "Norwest Bank Minnesota, National Association, as Indenture Trustee
for Fund America Investors Trust 1998-NMC1 Collateralized Mortgage Obligations,
Series 1998-NMC1, Bond Account" on behalf of the Bondholders.
"BOND BALANCE": With respect to all of the Bonds, the aggregate of the
Current Bond Balances of all Bonds Outstanding at the time of determination.
"BONDHOLDER" or "HOLDER": The Person in whose name a Bond is
registered in the Bond Register, except that, solely for the purpose of taking
any action under Section 5.02 or giving of any consent pursuant to this
Indenture, any Bond registered in the name of the Issuer, the Mortgage Loan
Seller, the Servicer or the Transferor or any Persons actually known by a
Responsible Officer of the Indenture Trustee to be an Affiliate of the Issuer,
the Mortgage Loan Seller, the Servicer or the Transferor shall be deemed not to
be Outstanding and the percentage interest evidenced thereby shall not be taken
into account in determining whether Holders of the requisite percentage
interests necessary to take any such action or effect any such consent have
acted or consented unless the Issuer, the Mortgage Loan Seller, the Servicer,
the Transferor or any such Person is an owner of record of all of the Bonds.
"BOND FORMULA RATE": With respect to each Class of Bonds, one Month
LIBOR, as determined on the applicable LIBOR Determination Date, plus the
Applicable Spread for such Class of the Bonds.
"BOND INTEREST": With respect to each Class of Bonds, as to any
Payment Date, the amount of interest payable to Holders of the Bonds of such
Class on such Payment Date, which amount shall be equal to (a) with respect to
the initial Interest Period, interest for the number of days in the period
commencing on the Closing Date and ending on the day prior to the initial
Payment Date at the Bond Interest Rate for such Class of Bonds on the Original
Bond Balance for such Class of Bonds, and (b) with respect to any subsequent
Interest Period, interest for the number of days in such Interest Period at the
Bond Interest Rate for such Class of Bonds on the Bond Balance for such Class
of Bonds as of the preceding Payment Date (after giving effect to the payment,
if any, in reduction of principal made on such Class of Bonds on such preceding
Payment Date). All calculations of interest on the Bonds will be computed on
the basis of the actual number of days elapsed in the related Interest Period
and a year of 360 days.
"BOND INTEREST RATE": With respect to the Interest Period relating to
the initial Payment Date, 5.774% per annum for the Class A Bonds, 5.994% per
annum for the Class M-1 Bonds, 6.244% per annum for the Class M-2 Bonds, and
6.794% per annum for the Class M-3 Bonds. With respect to each Interest Period
thereafter, a per annum rate for each Class of Bonds equal to the lesser of (a)
the Bond Formula Rate for such Class of Bonds and (b) the Available Funds Cap.
"BOND REGISTER": As defined in Section 2.06.
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"BOND REGISTRAR": As defined in Section 2.06.
"BONDS": Any bonds authorized by, and authenticated and delivered
under, this Indenture, which shall be issued in four Classes: (i) the Class A
Bonds, (ii) the Class M-1 Bonds, (iii) the Class M-2 Bonds and (iv) the Class
M-2 Bonds.
"BOOK-ENTRY BONDS": Any Bonds registered in the name of a Clearing
Agency or its nominee, ownership of which is reflected on the books of such
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).
"BOOK-ENTRY TERMINATION": The time at which the book-entry
registration of the Book-Entry Bonds shall terminate, as specified in Section
2.13.
"BUSINESS DAY": Any day other than (i) a Saturday or Sunday or (ii) a
day that is either a legal holiday or a day on which banking institutions in
the State of Colorado, the State of New York, the State of Minnesota, or the
State of Delaware are authorized or obligated by law, regulation or executive
order to be closed.
"CERTIFICATE": As defined in the Trust Agreement.
"CERTIFICATE DISTRIBUTION ACCOUNT": As defined in the Trust Agreement.
"CERTIFICATEHOLDERS": As defined in the Trust Agreement.
"CLASS": Collectively, all of the Bonds bearing the same class
designation pursuant to this Indenture.
"CLASS A BOND BALANCE": With respect to all of the Class A Bonds, the
aggregate of the Current Bond Balances of all Class A Bonds Outstanding at the
time of determination.
"CLASS A BONDS": One of the Classes of Bonds authorized by this
Indenture.
"CLASS A PRINCIPAL PAYMENT AMOUNT": With respect to any Payment Date
on or after the Stepdown Date and on which a Trigger Event is not in effect, an
amount equal to the excess of (x) the Class A Bond Balance immediately prior to
such Payment Date over (y) the lesser of (A) the product of (i) 57.50% and (ii)
the Aggregate Principal Balance as of the last day of the related Due Period
and (B) the Aggregate Principal Balance as of the last day of the related Due
Period minus approximately $1,828,809.
"CLASS M-1 BOND BALANCE": With respect to all of the Class M-1 Bonds,
the aggregate of the Current Bond Balances of all Class M-1 Bonds Outstanding
at the time of determination.
"CLASS M-1 BONDS": One of the Classes of Bonds authorized by this
Indenture.
"CLASS M-1 PRINCIPAL PAYMENT AMOUNT": With respect to any Payment Date
on or after the Stepdown Date and on which a Trigger Event is not in effect, an
amount equal to the excess of (x) the sum of (i) the Class A Bond Balance
(after taking into account the payment of the Class A Principal Payment Amount
on such Payment Date) and (ii) the Class M-1 Bond Balance immediately prior to
such Payment Date over (y) the lesser of (A) the product of (i) 73.30% and (ii)
the Aggregate Principal Balance as of the last day of the related Due Period
and (B) the Aggregate Principal Balance as of the last day of the related Due
Period minus approximately $1,828,809.
"CLASS M-2 BOND BALANCE": With respect to all of the Class M-2 Bonds,
the aggregate of the Current Bond Balances of all Class M-2 Bonds Outstanding
at the time of determination.
"CLASS M-2 BONDS": One of the Classes of Bonds authorized by this
Indenture.
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"CLASS M-2 PRINCIPAL PAYMENT AMOUNT": With respect to any Payment Date
on or after the Stepdown Date and on which a Trigger Event is not in effect, an
amount equal to the excess of (x) the sum of (i) the Class A Bond Balance
(after taking into account the payment of the Class A Principal Payment Amount
on such Payment Date), (ii) the Class M-1 Bond Balance (after taking into
account the payment of the Class M-1 Principal Payment Amount on such Payment
Date) and (iii) the Class M-2 Bond Balance immediately prior to such Payment
Date over (y) the lesser of (A) the product of (i) 82.20% and (ii) the
Aggregate Principal Balance as of the last day of the related Due Period and
(B) the Aggregate Principal Balance as of the last day of the related Due
Period minus approximately $1,828,809.
"CLASS M-3 BOND BALANCE": With respect to all of the Class M-3 Bonds,
the aggregate of the Current Bond Balances of all Class M-3 Bonds Outstanding
at the time of determination.
"CLASS M-3 BONDS": One of the Classes of Bonds authorized by this
Indenture.
"CLASS M-3 PRINCIPAL PAYMENT AMOUNT": With respect to any Payment Date
on or after the Stepdown Date and on which a Trigger Event is not in effect, an
amount equal to the excess of (x) the sum of (i) the Class A Bond Balance
(after taking into account the payment of the Class A Principal Payment Amount
on such Payment Date), (ii) the Class M-1 Bond Balance (after taking into
account the payment of the Class M-1 Principal Payment Amount on such Payment
Date), (iii) the Class M-2 Bond Balance (after taking into account the payment
of the Class M-2 Principal Payment Amount on such date) and (iv) the Class M-3
Bond Balance immediately prior to such Payment Date over (y) the lesser of (A)
the product of (i) 94.00% and (ii) the Aggregate Principal Balance as of the
last day of the related Due Period and (B) the Aggregate Principal Balance as
of the last day of the related Due Period minus $1,828,809.
"CLEAN-UP CALL DATE": The earlier of (i) the Payment Date occurring
during April 2005 or (ii) the Payment Date on which, after taking into account
payments of principal made on such Payment Date, the aggregate Bond Balance is
less than 20% of the Original Bond Balance.
"CLEARING AGENCY": An organization registered as a "clearing agency"
pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended,
and the regulations of the Commission thereunder and shall initially be The
Depository Trust Company, the nominee for which is Cede & Co.
"CLEARING AGENCY PARTICIPANTS": The entities for whom the Clearing
Agency will maintain book-entry records of ownership and transfer of Book-Entry
Bonds, which may include securities brokers and dealers, banks and trust
companies and clearing corporations and certain other organizations.
"CLOSING DATE": June 29, 1998, the date of initial issuance of the
Bonds.
"CODE": The Internal Revenue Code of 1986, as amended, and as may be
further amended from time to time, as successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form and proposed regulations thereunder to the extent that,
by reason of their proposed effective date, such proposed regulations would
apply.
"COLLECTION ACCOUNT": The segregated trust account established by the
Servicer and maintained pursuant to Section 2.02(b) of the Servicing Agreement.
"COLLECTION PERIOD": As to any Payment Date, the period beginning on
the first day of the calendar month immediately preceding the month in which
such Payment Date occurs and ending on the last day of such calendar month.
"COMMISSION": The 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.
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"COMPENSATING INTEREST". As defined in the Servicing Agreement.
"CORPORATE TRUST OFFICE": The principal office of the Indenture
Trustee at which at any particular time its corporate trust business with
respect to this Indenture shall be principally administered, which office at
the date of the execution of this Indenture is located at Sixth Street and
Marquette Avenue, Minneapolis, MN 55479, Attention: Fund America Investors
Trust 1998-NMC1, Series 1998-NMC1, with a copy to the Indenture Trustee at
11000 Broken Land Parkway, Columbia, Maryland 21044, Attention: Fund America
Investors Trust 1998-NMC1, Series 1998-NMC1.
"CURRENT BOND BALANCE": With respect to any Bond as of any date of
determination, the original principal amount of such Bond, reduced by all prior
payments, if any, made with respect to principal of such Bond.
"CUSTODIAN": A Person who is at any time appointed by the Indenture
Trustee pursuant to Section 8.13 as a document custodian for the Mortgage
Files, which Person shall not be the Issuer or an Affiliate of the Issuer.
"CUT-OFF DATE": For any Mortgage Loan, June 1, 1998.
"DEFAULT": Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"DEFECTIVE MORTGAGE LOAN": Any Mortgage Loan that is required to be
repurchased or substituted by the Mortgage Loan Seller pursuant to the Mortgage
Loan Sale Agreement.
"DEFINITIVE BONDS": Bonds other than Book-Entry Bonds.
"DELETED MORTGAGE LOAN": A Mortgage Loan replaced or to be replaced by
a Qualified Replacement Mortgage Loan.
"DEPOSIT DATE": The date each month on which funds on deposit in the
Collection Account are remitted by the Servicer to the Indenture Trustee for
deposit into the Bond Account, which date shall be with respect to any Payment
Date, the 18th day of the month in which such Payment Date occurs, or the next
succeeding Business Day, if such 18th day is not a Business Day.
"DETERMINATION DATE": As to any Payment Date, the last day of the Due
Period relating to such Payment Date.
"DUE PERIOD": With respect to any Payment Date, the period commencing
on the second day of the calendar month immediately preceding the calendar
month in which such Payment Date occurs (or, with respect to the first Payment
Date, commencing the day following the Cut-off Date) and ending on the first
day of the calendar month in which such Payment Date occurs.
"ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated "AA" or
better by Standard & Poor's and Fitch and in the highest short term rating
category by Standard & Poor's and Fitch, and that is either (i) a federal
savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing
and in good standing under the federal banking laws, or (iv) a principal
subsidiary of a bank holding company, or (B) a trust account maintained with
the trust department of a federal or state chartered depository institution or
trust company, having capital and surplus of not less than $100,000,000, acting
in its fiduciary capacity. Any Eligible Accounts maintained with the Indenture
Trustee shall conform to the preceding clause (B).
"EVENT OF DEFAULT": As defined in Section 5.01.
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"EXCESS CASHFLOW": With respect to any Payment Date, the sum of the
Monthly Excess Interest Amount and the Overcollateralization Surplus.
"EXTRA PRINCIPAL PAYMENT AMOUNT": With respect to any Payment Date,
the lesser of (x) the Monthly Excess Interest Amount for such Payment Date and
(y) the Overcollateralization Deficiency for such Payment Date.
"FDIC": The Federal Deposit Insurance Corporation and its successors
in interest.
"FINAL CERTIFICATION": A certification as to the completeness of each
Mortgage File provided by the Indenture Trustee on or before the first
anniversary of the Closing Date pursuant to Section 6.15(b).
"FINAL MATURITY DATE": With respect to any Bond, the date specified in
such Bond as the fixed date on which the final installment of the principal of
such Bond is due and payable.
"FITCH": Fitch IBCA, Inc., and its successors in interest.
"FULL PREPAYMENT": With respect to any Mortgage Loan, when any one of
the following occurs: (i) payment is made by the Mortgagor to the Servicer of
100% of the outstanding principal balance of such Mortgage Loan, together with
all accrued and unpaid interest thereon at the Mortgage Interest Rate on such
Mortgage Loan, (ii) payment is made to the Indenture Trustee of the Purchase
Price of such Mortgage Loan in connection with the purchase of such Mortgage
Loan by the Mortgage Loan Seller or the Servicer, or (iii) payment is made to
the Servicer of all Insurance Proceeds and Liquidation Proceeds, and other
payments, if any, that have been determined by the Servicer in accordance with
the provisions of the Servicing Agreement to be finally recoverable, in the
Servicer's reasonable judgment, in respect of such Mortgage Loan.
"GRANT": To 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 Files, a Permitted Investment, the Servicing Agreement,
the Mortgage Loan Sale Agreement, the Mortgage Loan Contribution 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, 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 that the Granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"GROSS MARGIN": As defined in the Servicing Agreement.
"HIGHEST LAWFUL RATE": As defined in Section 11.19.
"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", "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.
"INDENTURE TRUSTEE": Norwest Bank Minnesota, National Association, a
national banking association, and any Person resulting from or surviving any
consolidation or merger to which it may be a party until a successor Person
shall have become the Indenture Trustee pursuant to the applicable provisions
of this Indenture, and thereafter "Indenture Trustee" shall mean such successor
Person.
"INDENTURE TRUSTEE'S FEE": The Indenture Trustee's monthly fee, equal
to 1/12th of the Indenture Trustee Fee Rate of the Aggregate Principal Balance
of the Mortgage Loans as of the first day of the related Due Period.
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"INDENTURE TRUSTEE FEE RATE": 0.009% per annum.
"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 Indenture Trustee, such Person shall
be appointed by an Issuer Order 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
(provided, however, one Bond may be less than that amount); 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.
"INITIAL CERTIFICATION": A certification as to the completeness of
each Mortgage File provided by the Indenture Trustee on the Closing Date
pursuant to Section 6.15(a).
"INSURANCE POLICIES": All insurance policies insuring any Mortgage
Loan or Mortgaged Property, to the extent the Issuer or the Indenture Trustee
has any interest therein.
"INSURANCE PROCEEDS": As defined in the Servicing Agreement.
"INTEREST CARRY FORWARD AMOUNT": With respect to any Class of Bonds
and any Payment Date, the sum of (a) the excess, if any, of the Bond Interest
and any Interest Carry Forward Amount on such Class of Bonds for the prior
Payment Date, over the amount in respect of interest actually paid on such
Class on such prior Payment Date and (b) interest on such excess at the
applicable Bond Interest Rate for such Class of Bonds for the actual number of
days elapsed since the prior Payment Date.
"INTEREST PERIOD": With respect to the first Payment Date, the period
beginning on the Closing Date and ending on the day preceding the Payment Date
in July 1998 and, as to any subsequent Payment Date, the period beginning on
the immediately preceding Payment Date and ending on the day prior to the
related Payment Date.
"INTEREST REMITTANCE AMOUNT": With respect to any Payment Date, the
sum, without duplication, of (i) all interest due and collected or advanced
during the related Due Period on the Mortgage Loans (less the Monthly Servicing
Fee, certain amounts available for reimbursement of Monthly Advances and
Servicing Advances and certain other reimbursable expenses pursuant to the
Servicing Agreement), (ii) all Compensating Interest Payments paid by the
Servicer with respect to such Payment Date, and (iii) the portion of any
payment in connection with any Purchase Price or Net Liquidation Proceeds
relating to interest on the Mortgage Loans.
"ISSUER": Fund America Investors Trust 1998-NMC1, a Delaware business
trust.
"ISSUER ORDER" and "ISSUER REQUEST": A written order or request of the
Issuer signed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee or, in the case of such order or request required by Section 2.11, by
an Authorized Officer of the holder of the Certificate and delivered to the
Indenture Trustee or the Authenticating Agent, as applicable.
"LETTER AGREEMENT": The Letter of Representations to The Depository
Trust Company from the Indenture Trustee and the Issuer dated June 29, 1998,
attached hereto as Exhibit D.
"LIBOR DETERMINATION DATE": With respect to any Interest Period after
the first Interest Period, the second London Business Day immediately preceding
the first day of such Interest Period.
"LIQUIDATED MORTGAGE LOAN": As defined in the Servicing Agreement.
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"LIQUIDATION DATE": With respect to any Mortgage Loan, the date of the
final receipt of all Liquidation Proceeds, Insurance Proceeds or other payments
with respect to such Mortgage Loan.
"LIQUIDATION PROCEEDS": As defined in the Servicing Agreement.
"LOAN-TO-VALUE RATIO": As defined in the Mortgage Loan Sale Agreement.
"LONDON BUSINESS DAY": A Business Day on which banks are open for
dealing in foreign currency and exchange in London and New York City.
"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 applicable Final Maturity Date or by
declaration of acceleration, call for redemption or otherwise.
"MANAGEMENT AGREEMENT": That certain Management Agreement, dated as of
June 1, 1998, between the Issuer and the Indenture Trustee, pursuant to which
the Indenture Trustee, as manager, will perform certain obligations of the
Issuer hereunder.
"MEZZANINE BOND" Any Class M-1 Bond, Class M-2 Bond or Class M-3 Bond.
"MINIMUM RATE": As defined in the Servicing Agreement.
"MONTHLY ADVANCE": As defined the Servicing Agreement.
"MONTHLY EXCESS INTEREST AMOUNT": With respect to any Payment Date,
the amount, if any, of the Interest Remittance Amount remaining after
application to pay the Bond Interest and any Interest Carry Forward Amounts
pursuant to Section 2.14 for such Payment Date.
"MONTHLY PAYMENT": With respect to any Mortgage Note, the amount of
each monthly payment payable under such Mortgage Note by the Mortgagor in
accordance with its terms, including one month's accrued interest on the
related Principal Balance at the then applicable Mortgage Interest Rate, but
net of any portion of such monthly payment that represents late payment
charges, prepayment or extension fees or collections allocable to payments to
be made by Mortgagors for payment of insurance premiums or similar items.
"MONTHLY SERVICING FEE": As defined in the Servicing Agreement.
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple in real property securing a Mortgage
Loan.
"MORTGAGE FILE": As defined in the Mortgage Loan Sale Agreement.
"MORTGAGE INTEREST RATE": With respect to each Mortgage Loan, the
adjustable rate per annum set forth in the related Mortgage Note from time to
time at which interest accrues on such Mortgage Loan as of the most recent
interest rate adjustment pursuant to the related Mortgage Note, in each case
after giving effect to any modification of a Mortgage Loan for any period in
connection with a bankruptcy or similar proceeding involving the related
Mortgagor or a modification, waiver or amendment of such Mortgage Loan granted
or agreed to by the Servicer in accordance with the Servicing Agreement.
"MORTGAGE LOAN": Each of the mortgage loans Granted to the Indenture
Trustee under this Indenture as security for the Bonds and that from time to
time comprise part of the Trust Estate, including any property that secures a
Mortgage Note that becomes REO Property. The Mortgage Loans are listed on the
Mortgage Loan Schedule annexed hereto as Schedule I.
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"MORTGAGE LOAN CONTRIBUTION AGREEMENT": That certain Mortgage Loan
Contribution Agreement, dated as of June 1, 1998, between the Transferor and
the Issuer, pursuant to which the Mortgage Loans will be acquired from the
Transferor by the Issuer for inclusion in the Trust Estate, a copy of which
agreement is attached hereto as Exhibit C.
"MORTGAGE LOAN SALE AGREEMENT": That certain Mortgage Loan Sale
Agreement, dated as of June 1, 1998, between the Mortgage Loan Seller and the
Transferor, pursuant to which the Mortgage Loans will be acquired from the
Mortgage Loan Seller by the Transferor, a copy of which agreement is attached
hereto as Exhibit B.
"MORTGAGE LOAN SCHEDULE": As of any date, the schedule of mortgage
loans included in the Trust Estate. Schedule I hereto identifies the Mortgage
Loans being Granted to the Indenture Trustee on the Closing Date. The Mortgage
Loan Schedule shall be amended by the Servicer as appropriate from time to time
to reflect the deletion and substitution of Mortgage Loans in accordance with
the terms of the Basic Documents. The Mortgage Loan Schedule shall identify
each Mortgage Loan by the Servicer's loan number and address (including the
state) of the related Mortgaged Property and shall set forth as to each
Mortgage Loan the initial Loan-to-Value Ratio, the Principal Balance as of the
Cut-off Date, the Gross Margin, the currently Monthly Payment amount and the
stated maturity date of the related Mortgage Note. The Issuer shall cause the
initial Mortgage Loan Schedule to be delivered by the Mortgage Loan Seller to
the Indenture Trustee in both physical and computer-readable form.
"MORTGAGE LOAN SELLER": National Mortgage Corporation, a Colorado
corporation.
"MORTGAGE NOTE": The note or other instrument evidencing the
indebtedness of a Mortgagor under the related Mortgage Loan.
"MORTGAGED PROPERTY": The underlying property securing a Mortgage
Note.
"MORTGAGOR": The obligor under a Mortgage Note.
"MOST SENIOR CLASS": The Class A Bonds or after the Class A Bonds have
been paid in full, the Class of Mezzanine Bonds then Outstanding with the
lowest numerical designation.
"NET LIQUIDATION PROCEEDS": As defined in the Servicing Agreement.
"NET MORTGAGE RATE": With respect to any Mortgage Loan, the then
applicable Mortgage Interest Rate thereon minus the sum of the Indenture
Trustee Fee Rate and the Servicing Fee Rate.
"NONRECOVERABLE ADVANCE": As defined in the Servicing Agreement.
"OFFICERS' CERTIFICATE": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, Chief Operating Officer
or a Vice President of the Mortgage Loan Seller, the Transferor, the Servicer
or, in the case of the Issuer, an authorized signatory of the Owner Trustee, as
the case may be, and delivered to the Indenture Trustee, or each Rating Agency,
as the case may be.
"ONE MONTH LIBOR": With respect to each Interest Period after the
initial Interest Period, the London interbank offered rate determined by the
Indenture Trustee on the LIBOR Determination Date immediately preceding such
Interest Period for one-month U.S. dollar deposits for such Interest Period on
the basis of the offered rates of the Reference Banks for one-month U.S. dollar
deposits, as such rates appear on Telerate Page 3750, as of 11:00 a.m. (London
time) on such LIBOR Determination Date. On each LIBOR Determination Date, One
Month LIBOR for the related Interest Period will be established by the
Indenture Trustee as follows:
(a) if on such LIBOR Determination Date two or more Reference
Banks provide such offered quotations, One Month LIBOR for the related
Interest Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole multiple
of 0.0625%); or
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(b) if on such LIBOR Determination Date fewer than two
Reference Banks provide such offered quotations, One Month LIBOR for
the related Interest Period shall be the higher of (x) One Month LIBOR
as determined on the previous LIBOR Determination Date or (y) the
Reserve Interest Rate.
The establishment of One Month LIBOR on each LIBOR
Determination Date by the Indenture Trustee and the Indenture
Trustee's calculation of the rate of interest applicable to the Bonds
for the related Interest Period shall (in the absence of manifest
error) be final and binding.
"OPINION OF COUNSEL": A written opinion of counsel reasonably
acceptable to the Indenture Trustee. Any expense related to obtaining an
Opinion of Counsel for an action requested by a party shall be borne by the
party required to obtain such opinion or seeking to effect the action that
requires the delivery of such Opinion of Counsel, except in such instances
where such opinion is at the request of the Indenture Trustee, in which case
such expense shall be an expense of the Issuer.
"ORIGINAL BOND BALANCE": The aggregate principal balance of all
Classes of the Bonds at the issue date thereof, equal to $236,526,000.
"ORIGINAL CLASS A BOND BALANCE": The principal balance of the Class A
Bonds at the issue date thereof, equal to $192,024,000.
"ORIGINAL CLASS M-1 BOND BALANCE": The principal balance of the Class
M-1 Bonds at the issue date thereof, equal to $19,264,000.
"ORIGINAL CLASS M-2 BOND BALANCE": The principal balance of the Class
M-2 Bonds at the issue date thereof, equal to $10,851,000.
"ORIGINAL CLASS M-3 BOND BALANCE": The principal balance of the Class
M-3 Bonds at the issue date thereof, equal to $14,387,000.
"OUTSTANDING": As of the date of determination, all Bonds theretofore
authenticated and delivered under this Indenture except:
(i) Definitive Bonds theretofore canceled 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 Indenture 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 Indenture 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 Indenture 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
that have been paid as provided for in Section 2.07;
provided, however, that in determining whether the Holders of the requisite
percentage of the Bond Balance 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, the Mortgage Loan Seller, the Servicer or the Transferor or such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon
any such request,
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demand, authorization, direction, notice, consent or waiver, only
Bonds that the Indenture Trustee knows to be so owned shall be so disregarded.
Bonds so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Indenture
Trustee the pledgee's right so to act with respect to such Bonds and that the
pledgee is not the Issuer, any other obligor upon the Bonds or any Affiliate of
the Issuer, the Mortgage Loan Seller, the Servicer or the Transferor or such
other obligor; provided, further, however, that Bonds that have been redeemed
pursuant to Section 10.04 shall be deemed to be Outstanding for the purposes of
this Indenture.
"OVERCOLLATERALIZATION AMOUNT": As to any Payment Date, the amount, if
any, by which (x) the Aggregate Principal Balance of the Mortgage Loans as of
the last day of the related Due Period exceeds (y) the aggregate Bond Balance
for such Payment Date, after taking into account the payments of principal to
be applied in reduction of the Bond Balance on such Payment Date. If the
Aggregate Principal Balance of the Mortgage Loans is less than the Bond Balance
for such Payment Date, determined as provided above, the Overcollateralization
Amount for such Payment Date shall be zero.
"OVERCOLLATERALIZATION DEFICIENCY": As to any Payment Date, the
excess, if any, of (x) the Required Overcollateralization Amount for such
Payment Date over (y) the Overcollateralization Amount for such Payment Date,
calculated for this purpose after taking into account the reduction on such
Payment Date of the Bond Balance resulting from the payments of the Principal
Remittance Amount (but not the Extra Principal Payment Amount) on such Payment
Date.
"OVERCOLLATERALIZATION SURPLUS": As to any Payment Date after the
Stepdown Date on which a Trigger Event is not in effect, the lesser of (i) the
Principal Remittance Amount for such Payment Date, and (ii) the excess, if any,
of (x) the Overcollateralization Amount for such Payment Date, assuming that
100% of the Principal Remittance Amount is applied as a principal payment on
the Bonds on such Payment Date, over (y) the Required Overcollateralization
Amount for such Payment Date.
"OWNER TRUSTEE": Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity, but solely as owner trustee under
the Trust Agreement, and any successor owner trustee thereunder.
"OWNER TRUSTEE FEE": As defined in the Trust Agreement.
"PAYING AGENT": The Indenture 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, which agent, if not the Indenture Trustee, shall have signed an
instrument agreeing to be bound by the terms of this Indenture applicable to
the Paying Agent.
"PAYMENT AHEAD": As defined in the Servicing Agreement.
"PAYMENT DATE": The 25th day of each month or, if any such day is not
a Business Day, the Business Day immediately following such 25th day, beginning
July 27, 1998.
"PAYMENT DATE STATEMENT": The statement prepared pursuant to Section
2.08(d) with respect to collection on or in respect of the Mortgage Loans and
other assets of the Trust Estate and payments on or in respect of the Bonds,
based upon the information contained in the Servicer Remittance Report prepared
pursuant to the Servicing Agreement, and setting forth the following
information with respect to each Payment Date (to the extent the Servicer makes
available the necessary Mortgage Loan information to the Indenture Trustee):
(i) the amount of such payment to Bondholders of each Class
on the related Payment Date allocable to principal (separately setting
forth Extra Principal Payment Amount, if any, for such Payment Date);
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<PAGE> 20
(ii) the amount of such payment to Bondholders of each Class
allocable to (x) Bond Interest, (y) the Interest Carry Forward Amount,
if any, and (z) Available Funds Cap Carry Forward Amount, if any;
(iii) the aggregate Bond Balance and the Class A Bond
Balance, the Class M-1 Bond Balance, the Class M-2 Bond Balance and
the Class M-3 Bond Balance, after giving effect to the payment of
amounts applied to reduce the applicable Bond Balance on such Payment
Date;
(iv) whether a Trigger Event has occurred and is continuing;
(v) the Overcollateralization Amount, the then applicable
Required Overcollateralization Amount, the Overcollateralization
Surplus, if any, and the Overcollateralization Deficiency, if any,
with respect to such Payment Date;
(vi) the Aggregate Principal Balance of the Mortgage Loans as
of the end of the related Due Period;
(vii) the amount of Monthly Advances made with respect to
such Payment Date, if any, and the aggregate amount of unreimbursed
Monthly Advances and Servicing Advances, if any;
(viii) the number and aggregate of the Principal Balances of
Mortgage Loans (including the Principal Balances of all Mortgage Loans
in foreclosure) contractually delinquent (i) one month, (ii) two
months and (iii) three or more months, as of the end of the related
Collection Period;
(ix) the number and aggregate of the Principal Balances of
the Mortgage Loans in foreclosure or subject to other similar
proceedings, and the number and aggregate of the Principal Balances of
Mortgage Loans, the Mortgagor of which is known by the Servicer to be
in bankruptcy as of the end of the related Collection Period and the
book value of any real estate acquired through foreclosure, grant of a
deed in lieu of foreclosure or other similar proceedings during the
related Collection Period;
(x) the aggregate of the Principal Balances of the Mortgage
Loans repurchased by the Mortgage Loan Seller or purchased by the
Servicer, separately setting forth the aggregate of the Principal
Balances of Mortgage Loans delinquent for three consecutive monthly
installments purchased by the Servicer at its option pursuant to the
Servicing Agreement;
(xi) the aggregate amount of the Monthly Servicing Fee paid
to or retained by the Servicer for the related Collection Period
(after giving effect to principal payments on such Payment Date); and
(xiii) the aggregate amount of Realized Losses incurred
during the related Collection Period and the cumulative amount of
Realized Losses since the Cut-off Date.
In the case of information furnished pursuant to subclauses (i) and
(ii) above, the amounts shall be expressed as a dollar amount per
Individual Bond.
"PERCENTAGE INTEREST": With respect to any Class of Bonds, the
undivided percentage interest (carried to eight places rounded down) in such
Class obtained by dividing the original Bond Balance of a Bond in such Class by
the original Bond Balance of such Class.
"PERMITTED ENCUMBRANCE": With respect to any Mortgage Loan, (i) the
lien created by a Mortgage, (ii) liens for taxes, assessments, levies, fees and
other governmental and similar charges either not yet due or being contested in
an appropriate Proceeding which shall suspend the collection thereof, shall not
expose any part of the Trust Estate to loss, sale forfeiture and shall not
affect the payments to the Indenture Trustee of any amounts payable under this
Indenture to the Indenture Trustee, and (iii) the exceptions to title set forth
in any Title Insurance Policy.
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"PERMITTED INVESTMENTS": One or more of the following obligations,
instruments and securities:
(a) direct general obligations of, or obligations fully
guaranteed by, the United States of America, the Federal Home Loan
Mortgage Corporation, Federal National Mortgage Corporation, the
Federal Home Loan Banks 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;
(b) (i) demand and time deposits in, certificates of deposit
of, banker's acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Indenture
Trustee or its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal
and/or state authorities, so long as, at the time of such investment
or contractual commitment providing for such investment, such
depository institution or trust company or its ultimate parent has a
short-term uninsured debt rating in one of the two highest available
rating categories of Standard & Poor's and of Fitch and provided that
each such investment has an original maturity of no more than 365 days
and (ii) any other demand or time deposit or deposit which is fully
insured by the FDIC;
(c) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (a) above and entered
into with a depository institution or trust company (acting as a
principal) rated "A" or higher by Standard & Poor's and by Fitch;
provided, however, that collateral transferred pursuant to such
repurchase obligation must be of the type described in clause (a)
above and must (i) be valued daily at current market price plus
accrued interest, (ii) pursuant to such valuation, be equal, at all
times, to 105% of the cash transferred by the Indenture Trustee in
exchange for such collateral and (iii) be delivered to the Indenture
Trustee or, if the Indenture Trustee is supplying the collateral, an
agent for the Indenture Trustee, in such a manner as to accomplish
perfection of a security interest in the collateral by possession of
certified securities;
(d) 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 has a long-term unsecured debt
rating in the highest available rating category of each of the Rating
Agencies at the time of such investment;
(e) commercial paper having an original maturity of less than
365 days and issued by an institution having a short-term unsecured
debt rating in the highest available rating category of each of the
Rating Agencies at the time of such investment;
(f) a guaranteed investment contract approved by each of the
Rating Agencies and issued by an insurance company or other
corporation having a long-term unsecured debt rating in the highest
available rating category of each of the Rating Agencies at the time
of such investment;
(g) money market funds having ratings in one of the two
highest available rating categories of Standard & Poor's and Fitch at
the time of such investment, which invest only in other Permitted
Investments (any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity
requirements for Permitted Investments set forth herein) including
money market funds of the Indenture Trustee and any such funds that
are managed by the Indenture Trustee or its affiliates or which
Indenture Trustee or any affiliate acts as advisor as long as such
money market funds satisfy the criteria of this subparagraph (g); and
(h) any other investment that will not result in a
downgrading or withdrawal of the rating by either Rating Agency on the
Bonds, as confirmed in writing by such Rating Agency.
The Indenture Trustee may purchase from or sell to itself or an
affiliate, as principal or agent, the Permitted Investments listed above. All
Permitted Investments in a trust account under the Indenture shall be made in
the name of the Indenture Trustee for the benefit of the Bondholders.
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<PAGE> 22
"PERSON": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PREDECESSOR BONDS": With respect to any particular Bond, every
previous Bond 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 2.07 in lieu of a lost, destroyed or
stolen Bond shall be deemed to evidence the same debt as the lost, destroyed or
stolen Bond.
"PREFERENCE AMOUNT": Any amount previously distributed to a Bondholder
that is recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the Bankruptcy Code in accordance with a
final nonappealable order of a court having competent jurisdiction.
"PRINCIPAL BALANCE": As to any Mortgage Loan and any Determination
Date, the actual outstanding principal amount thereof as of the close of
business on the Determination Date in the preceding month (or, in the case of
the first Payment Date, as of the Cut-off Date), less (i) all scheduled
payments of principal received or advanced (or to be advanced on the related
Deposit Date) with respect to the Mortgage Loan and due during the related Due
Period and all other amounts collected, received or otherwise recovered in
respect of principal on the Mortgage Loan (including Principal Prepayments, but
not including Payments Ahead that are not allocable to principal for the
related Due Period) during or in respect of the related Collection Period, Net
Liquidation Proceeds and Insurance Proceeds allocable to principal recovered or
collected in respect of such Mortgage Loan during the related Collection
Period, (ii) the portion of the Purchase Price allocable to principal to be
remitted by the Mortgage Loan Seller or the Servicer to the Indenture Trustee
on or prior to the related Deposit Date in connection with a repurchase of such
Mortgage Loan pursuant to the Mortgage Loan Sale Agreement, the Servicing
Agreement or Section 8.05 hereof, to the extent such amount is actually
remitted on or prior to such Deposit Date, and (iii) the amount to be remitted
by the Mortgage Loan Seller to the Indenture Trustee on the related Deposit
Date in connection with a substitution of a Qualified Replacement Mortgage Loan
for such Mortgage Loan pursuant to the Mortgage Loan Sales Agreement and
Section 8.05 hereof, to the extent such amount is actually remitted on or prior
to such Deposit Date; provided, however that Mortgage Loans that have become
Liquidated Mortgage Loans since the end of the preceding Determination Date
(or, in the case of the first Determination Date, since the Cut-off Date) will
be deemed to have a Principal Balance of zero on the current Determination
Date.
"PRINCIPAL PAYMENT AMOUNT": With respect to any Payment Date, the sum
of (i) the Principal Remittance Amount (minus, for Payment Dates occurring on
and after the Stepdown Date and for which a Trigger Event is not in effect, the
Overcollateralization Surplus, if any), and (ii) the Extra Principal Payment
Amount, if any.
"PRINCIPAL PREPAYMENT": As to any Mortgage Loan and Collection Period,
any payment by a Mortgagor or other recovery in respect of principal on a
Mortgage Loan (including Net Liquidation Proceeds and Trust Insurance Proceeds)
that, in the case of a payment by a Mortgagor, is received in advance of its
scheduled due date and is not a Payment Ahead.
"PRINCIPAL REMITTANCE AMOUNT": For any Payment Date, the amount equal
to the aggregate of (i) all scheduled payments of principal received (or
advanced or to be advanced on the related Deposit Date) with respect to the
Mortgage Loans and due during the related Due Period and all other amounts
collected, received or otherwise recovered in respect of principal on the
Mortgage Loans (including Principal Prepayments, but not including Payments
Ahead that are not allocable to principal for the related Due Period) during or
in respect of the related Collection Period (net amounts reimbursable therefrom
to the Servicer or the Indenture Trustee), and (ii) the aggregate of the
amounts allocable to principal deposited in the Bond Account on the related
Deposit Date by the Issuer, the Transferor or the Servicer in connection with a
repurchase, release, removal or substitution of any Mortgage Loans pursuant to
this Indenture.
"PROCEEDING": Any suit in equity, action at law or other judicial or
administrative proceeding.
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<PAGE> 23
"PURCHASE PRICE": With respect to any Defective Mortgage Loan, an
amount equal to (i) the sum of (A) the Principal Balance of such Defective
Mortgage Loan as of the beginning of the Due Period next preceding the Deposit
Date on which such repurchase or purchase is required to occur, (B) interest
computed at the applicable Mortgage Interest Rate on such Principal Balance
from the date to which interest was last paid by the Mortgagor to the last day
of the Due Period immediately preceding the Deposit Date on which such
repurchase occurs and (C) any previously unreimbursed Servicing Advances made
on or in respect of such Defective Mortgage Loan, less (ii) any payments of
principal and interest in respect of such Defective Mortgage Loan made by or on
behalf of the related Mortgagor during such Due Period. With respect to any
Qualified Replacement Mortgage Loan, the amount remitted by the Mortgage Loan
Seller to the Indenture Trustee on or prior to the Deposit Date relating to a
Payment Date in connection with a substitution of such Qualified Replacement
Mortgage Loan for a Mortgage Loan pursuant to the Mortgage Loan Sales Agreement
or Section 8.05 hereof.
"QUALIFIED REPLACEMENT MORTGAGE LOAN": A Mortgage Loan that is
substituted for a Deleted Mortgage Loan pursuant to Section 8.05 that must, at
the end of the Due Period preceding the date of such substitution, (i) have an
outstanding principal balance (when taken together with any other Qualified
Replacement Mortgage Loan being substituted for such Deleted Mortgage Loan), not
in excess of and not substantially less than the unpaid principal balance of the
Deleted Mortgage Loan at the end of the Due Period preceding the date of
substitution, (ii) have the Mortgage Interest Rate computed on substantially the
same basis as the Mortgage Interest Rate on the related Mortgage Loan, based on
six-month LIBOR and having a Gross Margin or Minimum Rate not less than (and not
more than one percentage point in excess of) the Gross Margin and Minimum Rate
applicable to the Deleted Mortgage Loan, (iii) have a remaining term to maturity
not greater than (and not more than one year less than) that of the Deleted
Mortgage Loan, (iv) have a Loan-to-Value Ratio equal to or lower than the
Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) have a first lien
priority, (vi) comply as of the date of substitution with each representation
and warranty set forth in Section 4(b) and Exhibit B of the Mortgage Loan Sale
Agreement, (vii) have the same or better property type as the Deleted Mortgage
Loan and (viii) have the same or better occupancy status. In the event that one
or more mortgage loans are proposed to be substituted for one or more Deleted
Mortgage Loans, the foregoing tests may be met on a weighted average basis or
other aggregate basis, except that the requirements of clauses (v), (vi), (vii)
and (viii) hereof must be satisfied as to each Qualified Replacement Mortgage
Loan.
"RATING AGENCIES": Standard & Poor's and Fitch (each, a "Rating
Agency"). If either such agency or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical credit rating
agency, or other comparable Person, designated by the Servicer, notice of which
designation shall be given to the Indenture Trustee.
"REALIZED LOSS": As defined in the Servicing Agreement.
"RECORD DATE": With respect to any Payment 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
Payment Date are determined; such date shall be the last Business Day preceding
such Payment Date or, with respect to Definitive Bonds, the last Business Day
of the month preceding the month of such Payment Date. With respect to a vote
of Bondholders required or allowed hereunder, the Record Date shall be the
later of (i) 30 days prior to the first solicitation of consents or (ii) the
date of the most recent list of Bondholders furnished to the Indenture Trustee
pursuant to Section 7.01(a) prior to such solicitation.
"REDEMPTION DATE": The Payment Date, if any, on which the Bonds are
redeemed pursuant to Article X hereof which date may occur on or after the
Clean-Up Call Date.
"REDEMPTION PRICE": With respect to any Bond to be redeemed, an amount
equal to 100% of the Current Bond Balance of the Bond to be so redeemed,
together with accrued and unpaid interest on such amount at the applicable Bond
Interest Rate, plus any unpaid Available Funds Cap Carry Forward Amount,
through the end of the Interest Period immediately preceding the Redemption
Date.
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<PAGE> 24
"REFERENCE BANKS": Bankers Trust Company, Barclay's Bank PLC and
National Westminster Bank PLC; provided that, if any of the foregoing banks are
deemed by the Servicer (as indicated in writing to the Indenture Trustee) not
suitable to serve as a Reference Bank, then any leading banks selected by the
Indenture Trustee and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) whose quotations appear on Telerate Page 3750 on the LIBOR
Determination Date in question, (iii) that have been designated as such by the
Indenture Trustee and (iv) not controlling, controlled by, or under common
control with, the Issuer, the Mortgage Loan Seller, the Transferor, the
Servicer or any originator.
"REMITTABLE FUNDS": As defined in the Servicing Agreement.
"REO PROPERTY": As defined in the Servicing Agreement.
"REQUIRED OVERCOLLATERALIZATION AMOUNT" As to any Payment Date, (x)
prior to the Stepdown Date, 3.0% of the Aggregate Principal Balance of the
Mortgage Loans as of the Cut-off Date, and (y) on and after the Stepdown Date
and if no Trigger Event is in effect, the greater of (i) 6.0% of the Aggregate
Principal Balance of the Mortgage Loans as of the last day of the related
Collection Period and (ii) $1,828,809; provided, however, if a Trigger Event is
in effect on and after the Stepdown Date, the Required Overcollateralization
Amount shall be equal to the Required Overcollateralization Amount for the
immediately preceding Payment Date.
"RESERVE INTEREST RATE": With respect to any LIBOR Determination Date,
the rate per annum that the Indenture Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
0.0625%) of the one-month U.S. dollar lending rates that New York City banks
selected by the Indenture Trustee are quoting on the relevant LIBOR
Determination Date to the principal London offices of leading banks in the
London interbank market, or (ii) in the event that the Indenture Trustee can
determine no such arithmetic mean, the lowest one-month U.S. dollar lending
rate that New York City banks selected by the Indenture Trustee are quoting on
such LIBOR Determination Date to leading European banks.
"RESIDUAL MAJORITY": The meaning specified in Section 10.01.
"RESPONSIBLE OFFICER": With respect to the Indenture Trustee, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
trust officer or assistant trust officer, the controller, any assistant
controller or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"SALE": The meaning specified in Section 5.17.
"SENIOR BOND": Any Class A Bond.
"SENIOR ENHANCEMENT PERCENTAGE": With respect to any Payment Date, the
percentage obtained by dividing (i) the sum of (x) the Class M-1 Bond Balance,
the Class M-2 Bond Balance and the Class M-3 Bond Balance and (y) the
Overcollateralization Amount, in each case after taking into account the
payment of the Principal Payment Amount on such Payment Date, by (ii) the
Aggregate Principal Balance of the Mortgage Loans as of the last day of the
related Due Period.
"SENIOR SPECIFIED ENHANCEMENT PERCENTAGE": With respect to any
Determination Date, 42.50%.
"SERVICER": With respect to any Mortgage Loan, National Mortgage
Corporation, a Colorado corporation, as Servicer under the Servicing Agreement,
and its permitted successors and assigns thereunder, including any successor
servicers appointed pursuant to Section 6.02 of the Servicing Agreement.
"SERVICER REMITTANCE REPORT": As defined in the Servicing Agreement.
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<PAGE> 25
"SERVICING ADVANCE": As defined in the Servicing Agreement.
"SERVICING AGREEMENT": The servicing agreement, dated as of June 1,
1998, among the Issuer, the Servicer and the Indenture Trustee, as indenture
trustee and backup servicer, providing, among other things, for the servicing
of the Mortgage Loans, as such agreement may be amended or supplemented from
time to time as permitted hereby and thereby. Such term shall also include any
servicing agreement entered into with a successor servicer. A copy of the
Servicing Agreement as in effect as of the date hereof is attached hereto as
Exhibit F.
"SERVICING FEE RATE": 0.50% per annum.
"60+ DAY DELINQUENT LOAN": Each Mortgagee Loan with respect to which
any portion of a scheduled monthly payment is, as of the last day of the prior
Collection Period, two months or more past due (without giving effect to any
grace period), each Mortgage Loan in foreclosure, all REO Property and each
Mortgage Loan for which the Mortgagor has filed for bankruptcy.
"STANDARD & POOR'S": Standard & Poor's Rating Services, a Division of
The McGraw-Hill Companies, Inc., and its successors in interest.
"STEPDOWN DATE": With respect to any Payment Date, the date that is
the later to occur of (i) the Payment Date in July 2001 and (ii) the first
Payment Date on which the Senior Enhancement Percentage (after taking into
account payments of principal on the Bonds on such Payment Date) is greater
than or equal to the Senior Specified Enhancement Percentage.
"TELERATE PAGE 3750": The display page so designated on the Dow Jones
Telerate Capital Markets Report (or such other page as may replace that page on
that servicer for the purpose of displaying London interbank offered rates of
major banks).
"TITLE INSURANCE POLICY": With respect to a Mortgage Loan, the policy
of mortgagee's title insurance issued in respect of the Mortgaged Property
securing such Mortgage Loan or a binder or commitment therefor, or in lieu of
such policy, and attorney's opinion of title.
"TRANSFEROR": Fund America Investors Corporation II, a Delaware
corporation.
"TRIGGER EVENT": With respect to any Payment Date, the condition in
effect if the three-month rolling average (as a percentage of the Aggregate
Principal Balance of the Mortgage Loan) of 60+ Day Delinquent Loans equals or
exceeds the lesser of one-half of the Senior Enhancement Percentage and 21.25%.
"TRUST AGREEMENT": That certain Deposit Trust Agreement, dated as of
June 1, 1998, among the Transferor, as "Depositor" (as such term is defined
therein), and the Owner Trustee.
"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 Indenture Trustee, including all proceeds
thereof).
"TRUST INDENTURE ACT" or "TIA": The Trust Indenture Act of 1939 as it
may be amended from time to time.
"TRUST INSURANCE PROCEEDS": As defined in the Servicing Agreement.
"TRUST PAYING AGENT": The entity appointed to act as paying agent
pursuant to the Trust Agreement with respect to amounts on deposit from time to
time in the Certificate Distribution Account and distributions thereof to
Certificateholders. The initial Trust Paying Agent is Norwest Bank Minnesota,
National Association.
"UNDERWRITER": Salomon Brothers Inc.
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"U.S. BANKRUPTCY CODE" shall mean the United States Bankruptcy Code,
11 U.S.C. Sections 101, et seq., as amended or supplemented from time to time.
"VICE PRESIDENT": Any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
ARTICLE II
THE BONDS
SECTION 2.01. FORMS GENERALLY.
The Class A Bonds shall be in substantially the form set forth on
Exhibit A-1 attached hereto, the Class M-1 Bonds shall be substantially in the
form set forth on Exhibit A-2 attached hereto, the Class M-2 Bonds shall be
substantially in the form set forth on Exhibit A-3 attached hereto, and the
Class M-3 Bonds shall be substantially in the form set forth on Exhibit A-4
attached hereto. Each Bond 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
Authorized Officers of the Owner Trustee executing such Bonds on behalf of the
Issuer, 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
Authorized Officers of the Owner Trustee executing such Bonds, as evidenced by
their execution thereof.
SECTION 2.02. FORMS OF CERTIFICATE OF AUTHENTICATION.
The form of the Authenticating Agent's certificate of authentication
is as follows:
This is one of the Bonds referred to in the within-mentioned
Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Authenticating Agent
By:
------------------------------------------
Authorized Signatory
SECTION 2.03. GENERAL PROVISIONS WITH RESPECT TO PRINCIPAL AND
INTEREST PAYMENTS.
The Bonds shall be designated generally as the "Collateralized
Mortgage Obligations, Series 1998-NMC1" of the Issuer.
The aggregate principal amount of Bonds that may be authenticated and
delivered under this Indenture is limited to the Original Bond Balance of
$236,526,000, except for the Bonds authenticated and delivered upon
registration of, transfer of or in exchange for, or in lieu of, other Bonds
pursuant to Sections 2.06, 2.07, or 9.06 of this Indenture. The Bonds shall be
divided among four Classes, having designations, original Bond Balances,
designations as Senior Bonds or Mezzanine Bonds, Bond Interest Rates for the
initial Interest Period and Final Maturity Dates as follows:
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<TABLE>
<CAPTION>
Bond Interest
Original Bond Senior/ Rate for the initial Final
Designation Balance Mezzanine Interest Period Maturity Date
----------- ------- --------- --------------- -------------
<S> <C> <C> <C> <C>
Class A Bonds $192,024,000 Senior 5.774% June 25, 2028
Class M-1 Bonds $ 19,264,000 Mezzanine 5.994% June 25, 2028
Class M-2 Bonds $ 10,851,000 Mezzanine 6.244% June 25, 2028
Class M-3 Bonds $ 14,387,000 Mezzanine 6.744% June 25, 2028
</TABLE>
The Bonds shall be issued in the forms specified in Section 2.01.
Subject to the provisions of Section 3.01, Section 5.07, Section 5.09
and Section 8.02(d), the principal of the Bonds shall be payable in
installments ending no later than the Final Maturity Date unless the unpaid
principal of such Bonds become due and payable at an earlier date by
declaration of acceleration or call for redemption or otherwise.
All payments made with respect to any Bond shall be applied first to
the interest then due and payable on such Bond and then to the principal
thereof. All computations of interest accrued on any Bond shall be made on the
basis of the actual number of days elapsed in the related Interest Period and a
year assumed to consist of 360 days.
Interest on the Bonds shall accrue at the applicable Bond Interest
Rate during each Interest Period on the Current Bond Balance of each
Outstanding Bond at the end of such Interest Period. Interest accrued during an
Interest Period shall be payable on the next following Payment Date.
All payments of principal of and interest on any Bond shall be made in
the manner specified in Section 2.08.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Bonds, if the Bonds have become or
been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on the Bonds shall be made
in accordance with Section 5.07.
SECTION 2.04. DENOMINATIONS.
The Bonds shall be issuable only as registered Bonds in the minimum
denomination of $10,000 and integral multiples of $1.00 in excess thereof, with
the exception of one Bond of each Class which may be issued in a lesser amount.
SECTION 2.05. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Bonds shall be executed on behalf of the Issuer by an Authorized
Officer of the Owner Trustee. The signature of such Authorized Officer of the
Owner Trustee on the Bonds may be manual or by facsimile.
Bonds bearing the manual or facsimile signature of an individual who
was at any time an Authorized Officer of the Owner Trustee shall bind the
Issuer, notwithstanding that such individual has ceased to be an Authorized
Officer of the Owner Trustee prior to the authentication and delivery of such
Bonds or was not an Authorized Officer of the Owner Trustee at the date of such
Bonds.
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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 Authenticating Agent for authentication; and the Authenticating Agent
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 that 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 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. 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 Indenture Trustee is hereby initially appointed "Bond Registrar"
for the purpose of registering Bonds and transfers of Bonds as herein provided.
The Indenture Trustee shall remain the Bond Registrar throughout the term
hereof. Upon any resignation of the Indenture Trustee, the Issuer shall
promptly appoint a successor or, in the absence of such appointment, shall
assume the duties of Bond Registrar.
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 Owner
Trustee on behalf of the Issuer, shall execute, and the Authenticating Agent
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Bonds of any authorized denominations of the same
Class and of a like aggregate principal amount.
At the option of the Holder, Bonds may be exchanged for other Bonds of
the same Class in any authorized denominations, and of a like aggregate initial
principal amount, upon surrender of the Bonds to be exchanged at such office or
agency. Whenever any Bonds are so surrendered for exchange, the Owner Trustee
shall execute, and the Authenticating Agent shall authenticate and deliver, the
Bonds that 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 Bond Registrar 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 and the Bond Registrar 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 2.07 not involving any transfer or any
exchange.
SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN BONDS.
If (1) any mutilated Bond is surrendered to the Bond Registrar or the
Bond Registrar receives evidence to its satisfaction of the destruction, loss
or theft of any Bond, and (2) there is delivered to the Bond Registrar such
security or indemnity as may be required by the Bond Registrar to save each of
the Issuer and the Bond Registrar harmless, then, in the absence of notice to
the Issuer or the Bond Registrar that such Bond has been acquired by a bona
fide purchaser, the Owner Trustee shall execute and upon its request the Bond
Registrar 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
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same Class, tenor and aggregate initial principal amount 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 Bond Registrar
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 Bond Registrar 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 or
the Bond Registrar 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 Indenture
Trustee or the Bond Registrar) 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 of the same Class 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 2.08. PAYMENTS OF PRINCIPAL AND INTEREST.
(a) Payments on Bonds issued as Book-Entry Bonds will be made
by or on behalf of the Indenture Trustee to the Clearing Agency or its
nominee. Any installment of interest or principal payable on any
Definitive Bonds that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in
whose name such Bond (or one or more Predecessor Bonds) is registered
at the close of business on the Record Date for such Payment Date by
either (i) check mailed to such Person's address as it appears in the
Bond Register on such Record Date, or (ii) by wire transfer of
immediately available funds to the account of a Bondholder, if such
Bondholder (A) is the registered holder of Definitive Bonds having an
initial principal amount of at least $1,000,000 and (B) has provided
the Indenture Trustee with wiring instructions in writing by five
Business Days prior to the related Record Date or has provided the
Indenture Trustee with such instructions for any previous Payment
Date, except for the final installment of principal payable with
respect to such Bond (or the Redemption Price for any Bond called for
redemption, if such redemption will result in payment of the then
entire unpaid principal amount of such Bond), which shall be payable
as provided in subsection (b) below of this Section 2.08. A fee may be
charged by the Indenture Trustee to a Bondholder of Definitive Bonds
for any payment made by wire transfer. Any installment of interest or
principal not punctually paid or duly provided for shall be payable as
soon as funds are available to the Indenture Trustee for payment
thereof, or if Section 5.07 applies, pursuant to Section 5.07.
(b) 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 Payment Date shall be binding upon all Holders
of such Bond and of any Bond issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, whether or not
such payment is noted on such Bond. The final installment of principal
of each Bond (including the Redemption Price of any Bond called for
optional redemption, if such optional redemption will result in
payment of the entire unpaid principal amount of such Bond) shall be
payable only upon presentation and surrender thereof on or after the
Payment Date therefor at the Indenture Trustee's presenting office
located within the United States of America pursuant to Section 3.02.
Whenever the Indenture Trustee expects that the entire
remaining unpaid principal amount of any Bond will become due and
payable on the next Payment Date other than pursuant to a redemption
pursuant
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to Article X, it shall, no later than two days prior to such
Payment Date, telecopy or hand deliver to each Person in whose name a
Bond to be so retired is registered at the close of business on such
otherwise applicable Record Date a notice to the effect that:
(i) the Indenture Trustee expects that funds sufficient to
pay such final installment will be available in the Bond Account on
such Payment Date; and
(ii) if such funds are available, (A) such final installment
will be payable on such Payment Date, but only upon presentation and
surrender of such Bond at the office or agency of the Bond Registrar
maintained for such purpose pursuant to Section 3.02 (the address of
which shall be set forth in such notice) and (B) no interest shall
accrue on such Bond after such Payment Date.
Notices in connection with redemptions of Bonds shall be
mailed to Bondholders in accordance with Section 10.02.
(c) Subject to the foregoing provisions of this Section, each
Bond delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Bond of the same Class
shall carry the rights to unpaid principal and interest that were
carried by such other Bond. Any checks mailed pursuant to subsection
(a) of this Section 2.08 and returned undelivered shall be held in
accordance with Section 3.03.
(d) Each Payment Date Statement, prepared by the Indenture
Trustee based on the Servicer Remittance Report delivered to the
Indenture Trustee pursuant to the Servicing Agreement, shall be
delivered by the Indenture Trustee to the Rating Agencies, the Owner
Trustee, the Underwriter, and each Bondholder as the statement
required pursuant to Section 8.06. Neither the Indenture Trustee (in
its capacity as Indenture Trustee) nor the Paying Agent shall have any
responsibility to recalculate, verify or recompute information
contained in any such tape or disk or any such Servicer Remittance
Report except to the extent necessary to satisfy all obligations under
this Section 2.08(d).
Within 90 days after the end of each calendar year, the Indenture
Trustee will be required to furnish to each Person who at any time
during the calendar year was a Bondholder, if requested in writing by
such Person, a statement containing the information set forth in
subclauses (i) and (ii) in the definition of "Payment Date Statement,"
aggregated for such calendar year or the applicable portion thereof
during which such Person was a Bondholder. Such obligation will be
deemed to have been satisfied to the extent that substantially
comparable information is provided pursuant to any requirements of the
Code as are from time to time in force.
SECTION 2.09. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any Bond, the
Issuer, the Indenture Trustee, any Paying Agent and any other agent of the
Issuer or the Indenture Trustee may 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, and neither the
Issuer, the Indenture Trustee, any Paying Agent nor any other agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.10. CANCELLATION.
All Bonds surrendered for payment, registration of transfer, exchange
or redemption shall, if surrendered to any Person other than the Bond
Registrar, be delivered to the Bond Registrar and, except for an optional
redemption pursuant to Section 10.04, shall be promptly canceled by it. The
Issuer may at any time deliver to the Bond Registrar for cancellation any Bond
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Bonds so delivered, except for an
optional redemption pursuant to Section 10.04, shall be promptly canceled by
the Bond Registrar. No Bonds shall be authenticated in lieu of or in
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exchange for any Bonds canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Bonds held by the Bond
Registrar shall be held by the Bond Registrar 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 2.11. AUTHENTICATION AND DELIVERY OF BONDS.
The Bonds may be executed by an Authorized Officer of the Owner
Trustee and delivered to the Authenticating Agent for authentication, and
thereupon the same shall be authenticated and delivered by the Authenticating
Agent, upon Issuer Request and upon receipt by the Authenticating Agent of all
of the following:
(a) An Issuer Order authorizing the execution, authentication
and delivery of the Bonds and specifying the Classes, the Final
Maturity Date, the principal amounts and the applicable Bond Interest
Rates (or the manner in which such Bond Interest Rates are to be
determined) 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
Authenticating Agent or upon which the Authenticating Agent is
expressly permitted to rely, complying with the requirements of
Section 11.01, reasonably satisfactory in form and substance to the
Authenticating Agent.
In rendering the opinions set forth above, such counsel may
rely upon officer's certificates of the Issuer, the Owner Trustee, the
Servicer and the Indenture Trustee, without independent confirmation
or verification with respect to factual matters relevant to such
opinions. In rendering the opinions set forth above, such counsel need
express no opinion as to (A) the existence of, or the priority of the
security interest created by the Indenture against, any liens or other
interests that arise by operation of law and that do not require any
filing or similar action in order to take priority over a perfected
security interest or (B) 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).
(d) An Officers' Certificate of the Issuer 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
Issuer's Certificate of Trust 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 Indenture
Trustee;
(iii) the information set forth in the Mortgage Loan Schedule
attached as Schedule I to this Indenture is correct;
(iv) the Issuer has Granted to the Indenture Trustee all of
its right, title and interest in each Mortgage Loan;
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(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; and
(vi) attached thereto are true and correct copies of letters
signed by (i) Standard & Poor's that the Class A Bonds be rated "AAA,"
the Class M-1 Bonds be rated at least "AA" and the Class M-2 Bonds be
rated at least "A," and (ii) Fitch that the Class A Bonds be rated
"AAA," the Class M-1 Bonds be rated at least "AA," the Class M-2 Bonds
be rated at least "A" and the Class M-3 Bonds be rated at least "BBB."
(e) An executed counterpart of the Servicing Agreement.
(f) An executed counterpart of the Mortgage Loan Sale
Agreement.
(g) An executed counterpart of the Mortgage Loan Contribution
Agreement.
SECTION 2.12. BOOK-ENTRY BONDS.
The Bonds will be issued initially as one or more certificates in the
name of the Cede & Co., as nominee for the Clearing Agency maintaining
book-entry records with respect to ownership and transfer of such Bonds, and
registration of the Bonds may not be transferred by the Bond Registrar except
upon Book-Entry Termination. Until Book-Entry Termination, the Bond Registrar
shall deal with the Clearing Agency as representatives of the Beneficial Owners
of such Bonds for purposes of exercising the rights of Bondholders hereunder.
Each payment of principal of and interest on a Book-Entry Bond shall be paid to
the Clearing Agency, which shall credit the amount of such payments to the
accounts of its Clearing Agency Participants in accordance with its normal
procedures. Each Clearing Agency Participant shall be responsible for
disbursing such payments to the Beneficial Owners of the Book-Entry Bonds that
it represents and to each indirect participating brokerage firm (a "brokerage
firm" or "indirect participating firm") for which it acts as agent. Each
brokerage firm shall be responsible for disbursing funds to the Beneficial
Owners of the Book-Entry Bonds that it represents. All such credits and
disbursements are to be made by the Clearing Agency and the Clearing Agency
Participants in accordance with the provisions of the Bonds. None of the
Indenture Trustee, the Bond Registrar, if any, the Issuer, or any Paying Agent
shall have any responsibility therefor except as otherwise provided by
applicable law. Requests and directions from, and votes of, such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners.
SECTION 2.13. TERMINATION OF BOOK ENTRY SYSTEM.
(a) The book-entry system through the Clearing Agency with
respect to the Book-Entry Bonds may be terminated upon the happening
of any of the following:
(i) The Clearing Agency advises the Indenture Trustee that
the Clearing Agency is no longer willing or able to discharge properly
its responsibilities as nominee and depositary with respect to the
Bonds or any Class of Bonds and the Indenture Trustee is unable to
locate a qualified successor clearing agency satisfactory to the
Issuer;
(ii) The Issuer, in its sole discretion, elects to terminate
the book-entry system by notice to the Clearing Agency and the
Indenture Trustee with respect to the Bonds or any Class of Bonds; or
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(iii) After the occurrence of an Event of Default (at which
time the Indenture Trustee shall use all reasonable efforts to
promptly notify each Beneficial Owner through the Clearing Agency of
such Event of Default), the Beneficial Owners of no less than 51% of
the applicable Bond Balance of any Class of the Book-Entry Bonds
advise the Indenture Trustee in writing, through the related Clearing
Agency Participants and the Clearing Agency, that the continuation of
a book-entry system through the Clearing Agency to the exclusion of
any Definitive Bonds being issued to any Person other than the
Clearing Agency or its nominee is no longer in the best interests of
the Beneficial Owners of such Class of Bonds.
(b) Upon the occurrence of any event described in subsection
(a) above, the Indenture Trustee shall use all reasonable efforts to
notify all Beneficial Owners of the relevant Class of Bonds, through
the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Bonds to Beneficial Owners requesting the
same, in an aggregate Current Bond Balance representing the interest
of each, making such adjustments and allowances as it may find
necessary or appropriate as to accrued interest and previous calls for
redemption. Definitive Bonds shall be issued only upon surrender to
the Indenture Trustee of the global Bond by the Clearing Agency,
accompanied by registration instructions for the Definitive Bonds.
Neither the Issuer nor the Indenture Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon issuance
of the Definitive Bonds, all references herein to obligations imposed
upon or to be performed by the Clearing Agency shall cease to be
applicable and the provisions relating to Definitive Bonds shall be
applicable.
SECTION 2.14. INTEREST PAYMENTS ON THE BONDS.
On each Payment Date, the Bond Interest will be applied from the
Interest Remittance Amount in the following order of priority:
(i) first, to pay the Bond Interest accrued on the Class A
Bonds and any Interest Carry Forward Amount with respect to the Class
A Bonds;
(ii) second, to pay the Bond Interest accrued on the Class
M-1 Bonds and any Interest Carry Forward Amount with respect to the
Class M-1 Bonds;
(iii) third, to pay the Bond Interest accrued on the Class
M-2 Bonds and any Interest Carry Forward Amount with respect to the
Class M-2 Bonds; and
(iv) fourth, to pay the Bond Interest accrued on the Class
M-3 Bonds and any Interest Carry Forward Amount with respect to the
Class M-3 Bonds.
SECTION 2.15. PRINCIPAL PAYMENTS ON THE BONDS.
(a) On each Payment Date (x) prior to the Stepdown Date or
(y) on which a Trigger Event is in effect, the Principal Payment
Amount shall be paid:
(i) first, to the Class A Bonds, until the Class A Bond
Balance thereof has been reduced to zero;
(ii) second, to the Class M-1 Bonds, until the Class M-1 Bond
Balance thereof has been reduced to zero;
(iii) third, to the Class M-2 Bonds, until the Class M-2 Bond
Balance thereof has been reduced to zero; and
(iv) fourth, to the Class M-3 Bonds, until the Class M-3 Bond
Balance thereof has been reduced to zero.
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(b) On each Payment Date (x) on or after the Stepdown Date
and (y) on which a Trigger Event is not in effect, the Holders of the
Senior Bonds and the Mezzanine Bonds shall be entitled to receive
payments in respect of principal to the extent of the Principal
Payment Amount in the following amounts and order of priority:
(i) first, the lesser of (a) the Principal Payment Amount and
(b) the Class A Principal Payment Amount, shall be paid to the Holders
of the Class A Bonds, until the Class A Bond Balance thereof has been
reduced to zero;
(ii) second, the lesser of (a) the excess of (X) the
Principal Payment Amount over (Y) the amount paid to the holders of
the Class A Bonds pursuant to clause (i) above, and (b) the Class M-1
Principal Payment Amount, shall be paid to the Holders of the Class
M-1 Bonds, until the Class M-1 Bond Balance thereof has been reduced
to zero;
(iii) third, the lesser of (a) the excess of (X) the
Principal Payment Amount over (Y) the sum of the amounts paid to the
Holders of the Class A Bonds pursuant to clause (i) above and to the
Holders of the Class M-1 Bonds pursuant to clause (ii) above, and (b)
the Class M-2 Principal Payment Amount, shall be paid to the holders
of the Class M-2 Bonds, until the Class M-2 Bond Balance thereof has
been reduced to zero; and
(iv) fourth, the lesser of (a) the excess of (X) the
Principal Payment Amount over (Y) the sum of the amounts paid to the
Holders of the Class A Bonds pursuant to clause (i) above, to the
Holders of the Class M-1 Bonds pursuant to clause (ii) above and to
the Holders of the Class M-2 Bonds pursuant to clause (iii) above, and
(b) the Class M-3 Principal Payment Amount, shall be paid to the
holders of the Class M-3 Bonds, until the Class M-3 Bond Balance
thereof has been reduced to zero.
(c) On the Final Maturity Date of each Class of Bonds,
principal will be payable on such Class of Bonds in an amount equal to
the Class A Bond Balance, the Class M-1 Bond Balance, the Class M-2
Bond Balance or the Class M-3 Bond Balance, as the case may be, on
such Payment Date.
SECTION 2.16. APPLICATION OF EXCESS CASHFLOW.
On each Payment Date, the Excess Cashflow will be applied to the
following types payments in the following order of priority:
(i) first, to pay any Interest Carry Forward Amount with
respect to the Class A Bonds for such Payment Date;
(ii) second, to fund any Extra Principal Payment Amount;
(iii) third, to pay any Interest Carry Forward Amount with
respect to the Class M-1 Bonds for such Payment Date;
(iv) fourth, to pay any Interest Carry Forward Amount with
respect to the Class M-2 Bonds for such Payment Date;
(v) fifth, to pay any Interest Carry Forward Amount with
respect to the Class M-3 Bonds for such Payment Date;
(vi) sixth, to pay the aggregate amount of Available Funds
Cap Carry Forward Amounts, if any, among all Classes of Bonds in
proportion to the respective Available Funds Cap Carry Forward Amounts
for each such Class in the same priority order as interest
distributions; and
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(vii) seventh, any remaining amount shall be released from
the lien of this Indenture and paid to the Certificateholder.
SECTION 2.17. PAYMENT OF PREPAYMENT PENALTIES TO THE
CERTIFICATEHOLDER.
The Indenture Trustee shall pay amounts received by the Servicer and
identified as prepayment penalties in the Servicer Remittance Report to the
holder of the Certificate. Such prepayment penalties are not subject to the
lien of the Indenture and shall not be available to make payments on the Bonds.
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 in accordance with the terms of the
Bonds and this Indenture. The Bonds shall be non-recourse obligations of the
Issuer and shall be limited in right of payment to amounts available from the
Trust Estate as provided in this Indenture and the Issuer shall not otherwise
be liable for payments on the Bonds. No person shall be personally liable for
any amounts payable under the Bonds. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this Section 3.01,
the provisions of this Section 3.01 shall control.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer will cause the Bond Registrar to maintain its corporate
trust office at a location where Bonds 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 may also from time to time at its own expense designate one
or more other offices or agencies within the United States of America 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, 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 Indenture 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 that
are to be made from amounts withdrawn from the Bond Account pursuant to Section
8.02(c) or Section 5.07 shall be made on behalf of the Issuer by the Paying
Agent, and no amounts so withdrawn from the Bond 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 5.07 or Section 8.02.
With respect to Definitive Bonds, if the Issuer shall have a Paying
Agent that is not also the Bond Registrar, such Bond Registrar shall furnish,
no later than the fifth calendar day after each Record Date, 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 held by each such
Holder.
Whenever the Issuer shall have a Paying Agent other than the Indenture
Trustee, it will, on or before the Business Day next preceding each Payment
Date direct the Indenture 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 Bond 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
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the Bonds with respect to which such deposit was made shall, upon Issuer Order,
be paid over by such Paying Agent to the Indenture Trustee for application in
accordance with Article VIII.
Any Paying Agent other than the Indenture Trustee shall be appointed
by Issuer Order and at the expense of the Issuer. The Issuer shall not appoint
any Paying Agent (other than the Indenture Trustee) that is not, at the time of
such appointment, a depository institution or trust company whose obligations
would be Permitted Investments pursuant to clause (c) of the definition of the
term Permitted Investments. The Issuer will cause each Paying Agent other than
the Indenture Trustee to execute and deliver to the Indenture Trustee an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section, that such Paying Agent will:
(1) allocate all sums received for payment to the Holders of
Bonds on each Payment Date among such Holders in the proportion
specified in the applicable Payment Date Statement, 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 Indenture Trustee,
immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of the
Bonds if at any time the Paying Agent 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 Indenture Trustee, give
the Indenture 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 Indenture Trustee, at any
time during the continuance of any such Default, upon the written
request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent; and
(6) comply with all requirements of the Code, and all
regulations thereunder, with respect to 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 of the Bonds, the Issuer has provided the
calculations pertaining thereto to the Indenture Trustee and the
Paying Agent.
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 Indenture Trustee, to pay to
the Indenture Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Indenture Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and upon such payment by any Paying Agent
to the Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money held by the Indenture Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Bond and remaining
unclaimed for two and one-half years after such amount has become due and
payable to the Holder of such Bond (or if earlier, three months before the date
on which such amount would escheat to a governmental entity under applicable
law) shall be discharged from such trust and 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 Indenture Trustee or such Paying Agent
with respect to such trust money shall thereupon cease. The Indenture Trustee
may adopt and employ, at the expense of the Issuer, any reasonable means of
notification of such repayment (including, but not
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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 Indenture Trustee or any Agent, at the last address of record
for each such Holder).
SECTION 3.04. EXISTENCE OF ISSUER.
(a) Subject to Sections 3.04(b) and (c), the Issuer will keep
in full effect its existence, rights and franchises as a business
trust under the laws of the State of Delaware or under the laws of any
other state or the United States of America, and will obtain and
preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Bonds, the
Servicing Agreement and the Mortgage Loan Contribution Agreement.
(b) Subject to Section 3.09(vii), any entity into which the
Issuer may be merged or with which it may be consolidated, or any
entity resulting from any merger or consolidation to which the Issuer
shall be a party, shall be the successor Issuer 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 in any
agreement relating to such merger or consolidation, by which any such
Issuer 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 (other than Section
3.09(vii)).
(c) Upon any consolidation or merger of or other succession
to the Issuer in accordance with this Section 3.04, the Person formed
by or surviving such consolidation or merger (if other than the
Issuer) may exercise every right and power of, and shall have all of
the obligations of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer 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 Loans, the Servicing
Agreement, the Mortgage Loan Sale Agreement or the Mortgage Loan
Contribution Agreement; or
(v) preserve and defend title to the Trust Estate and the
rights of the Indenture 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.
(b) The Indenture Trustee shall not remove any portion of the
Trust Estate that consists of money or is evidenced by an instrument,
certificate or other writing from the jurisdiction in which it was
held at the date of the most recent Opinion of Counsel delivered
pursuant to Section 3.06 (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
2.11(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
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Indenture Trustee shall have first received an Opinion of Counsel to
the effect that the lien and security interest created by this
Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
SECTION 3.06. OPINIONS AS TO TRUST ESTATE.
On or before April 30th in each calendar year, beginning with the
first calendar year commencing after the Closing Date, the Issuer shall furnish
to the Indenture Trustee an Opinion of Counsel reasonably satisfactory in form
and substance to the Indenture 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 action, 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 1st in the following
calendar year.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING AGREEMENT.
(a) The Issuer shall punctually perform and observe all of
its obligations under this Indenture and the Servicing Agreement.
(b) The Issuer shall not take any action and will use its
Best Efforts not to permit any action to be taken by others that would
release any Person from any of such Person's covenants or obligations
under any of the Mortgage Files 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 documents or instruments
contained in the Mortgage Files, except as expressly permitted in this
Indenture, the Servicing Agreement or such document included in the
Mortgage File or other instrument or unless such action will not
adversely affect the interests of the Holders of the Bonds.
(c) If the Issuer shall have knowledge of the occurrence of a
default under the Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Rating Agencies thereof, and
shall specify in such notice the action, if any, the Issuer is taking
with respect to such default.
(d) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, the Indenture Trustee shall
promptly notify the Rating Agencies. As soon as any successor Servicer
is appointed, the Indenture Trustee shall notify the Rating Agencies,
specifying in such notice the name and address of such successor
Servicer.
SECTION 3.08. INVESTMENT COMPANY ACT.
The Issuer shall at all times conduct its operations so as not to be
subject to, or shall comply with, the requirements of 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:
(i) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by this
Indenture or the Servicing Agreement;
(ii) 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;
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(iii) engage in any business or activity other than as
permitted by the Trust Agreement or other than in connection with, or
relating to, the issuance of the Bonds pursuant to this Indenture or
amend the Trust Agreement, as in effect on the Closing Date, other
than in accordance with Section 9.07;
(iv) incur, issue, assume or otherwise become liable for any
indebtedness other than the Bonds;
(v) incur, assume, guaranty or agree to indemnify any Person
with respect to 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;
(vi) dissolve or liquidate in whole or in part (until the
Bonds are paid in full);
(vii) (1) permit the validity or effectiveness of this
Indenture or any Grant to be impaired, or permit the lien of this
Indenture to be impaired, 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, (2) permit any lien, charge, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture or any Permitted Encumbrance) to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof, or (3) permit the
lien of this Indenture not to constitute a valid perfected first
priority security interest in the Trust Estate; or
(viii) take any other action that should reasonably be
expected to, or fail to take any action if such failure should
reasonably be expected to, cause the Issuer to be taxable as (a) an
association pursuant to Section 7701 of the Code or (b) a taxable
mortgage pool pursuant to Section 7701(i) of the Code.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.
On or before March 31, 1999, and each March 31st thereafter, the
Issuer shall deliver to the Indenture Trustee and the Underwriter a written
statement, signed by an Authorized Officer of the Owner Trustee, 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
Authorized Officer's supervision; and
(2) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a Default in the fulfillment of any such covenant or condition,
specifying each such Default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.11. RESTRICTED PAYMENTS.
The Issuer shall not, directly or indirectly, (i) pay any dividend or
make any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner Trustee or any
owner of a beneficial interest in the Issuer or otherwise with respect to any
ownership or equity interest or security in or of the Issuer or to the
Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made, distributions to the Servicer, the Indenture
Trustee, the Owner Trustee and the Certificateholders as contemplated by, and
to the extent funds are available for such purpose under, the Servicing
Agreement or the Trust Agreement and the Issuer will not, directly or
indirectly, make or cause to be made payments to or distributions from the Bond
Account except in accordance with this Indenture.
SECTION 3.12. TREATMENT OF BONDS AS DEBT FOR TAX PURPOSES.
The Issuer shall treat the Bonds as indebtedness for all federal and
state tax purposes.
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SECTION 3.13. NOTICE OF EVENTS OF DEFAULT.
The Issuer shall give the Indenture Trustee, the Rating Agencies and
the Underwriter prompt written notice of each Event of Default hereunder, each
default on the part of the Servicer of its obligations under the Servicing
Agreement and each default on the part of the Mortgage Loan Seller of its
obligations under the Mortgage Loan Sale Agreement.
SECTION 3.14. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Indenture Trustee, the Issuer will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this
Indenture.
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 that have been destroyed,
lost or stolen and that have been replaced or paid as
provided in Section 2.07, 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 Bond Registrar for cancellation; or
(B) all Bonds not theretofore delivered to the Bond
Registrar for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the
Final Maturity Date within one year, or
(iii) are to be called for redemption
within one year under irrevocable arrangements
satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in
the name, and at the expense, of the Issuer or the
Servicer,
and the Issuer or the Servicer, in the case of clauses
(B)(i), (B)(ii) or (B)(iii) above, has irrevocably deposited
or caused to be deposited with the Indenture Trustee, in
trust for such purpose, an amount sufficient to pay and
discharge the entire indebtedness on such Bonds not
theretofore delivered to the Indenture Trustee for
cancellation, for principal and interest to the Final
Maturity Date or to the applicable Redemption Date, as the
case may be, and in the case of Bonds that were not paid at
the Final Maturity Date of their entire unpaid principal
amount, for all overdue principal and all interest payable on
such Bonds to the next succeeding Payment Date therefor;
(2) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
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(3) the Issuer has delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel satisfactory in form
and substance to the Indenture 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 and thereby shall cease to be of further effect, and the
Indenture Trustee and each co-trustee and separate trustee, if any, then acting
as such hereunder shall, at the expense of the Issuer (or of the Servicer in
the case of a redemption by the Servicer), 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 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 Indenture Trustee and the Paying Agent to the Issuer and the
Holders of Bonds under Section 3.03, the obligations of the Indenture Trustee
to the Holders of Bonds under Section 4.02 and the provisions of Section 2.07
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 Indenture 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 Indenture Trustee may determine, to the
Persons entitled thereto, of the principal and interest for whose payment such
money has been deposited with the Indenture 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 (a) on any Payment Date, after taking into account all
payments made in respect of the Bonds on such Payment Date, (i) the
Bond Interest for the Most Senior Class remains unpaid, which default
shall continue for a period of five days or (ii) the Aggregate
Principal Balance of the Mortgage Loans is less than the Bond Balance
of the Most Senior Class, or (b) on the applicable Stated Maturity
Date, default in the payment in full of the Bond Balance of the Most
Senior Class;
(2) if the Issuer shall breach, or default in the due
observance of, any one or more of the covenants set forth in clauses
(i) through (viii) of Section 3.09;
(3) if the Issuer shall breach, or default 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
after there shall have been given, by registered or certified mail, to
the Issuer and the Indenture Trustee by the Holders of Bonds of the
Most Senior Class representing at least 25% of the Bond Balance of
such Class a written notice specifying such Default and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder;
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(4) if any representation or warranty of the Issuer made in
this Indenture or any certificate or other writing delivered by the
Issuer 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 after there shall have been given,
by registered or certified mail, written notice thereof to the Issuer
and the Indenture Trustee by the Holders of Bonds of the Most Senior
Class representing at least 25% of the Bond Balance of such Class, the
circumstance or condition in respect of which such representation or
warranty was incorrect shall not have been eliminated or otherwise
cured; provided, however, that in the event that there exists a remedy
with respect to any such breach that consists of a purchase
obligation, repurchase obligation or right to substitute under the
Basic Documents, then such purchase obligation, repurchase obligation
or right to substitute shall be the sole remedy with respect to such
breach and shall not constitute an Event of Default hereunder;
(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.
The failure to pay the Interest Carry Forward Amount (except with
respect to the Most Senior Class of Bonds Outstanding) or the Available Funds
Cap Carry Over Amount with respect to any Class of Bonds on any Payment Date
will only constitute an Event of Default to the extent funds are available to
make such payment pursuant to Sections 2.14 and 2.16.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every
such case, the Indenture Trustee may, and on request of the Holders of Bonds of
the Most Senior Class representing not less than 50% of the Bond Balance of the
such Class, shall, declare all the Bonds to be immediately due and payable by a
notice in writing to the Issuer (and to the Indenture Trustee if given by
Bondholders), and upon any such declaration such Bonds, in an amount equal to
the Bond Balance of such Bonds, together with accrued and unpaid interest
thereon (including the related Available Funds Cap Carry Forward Amount, if
any) to the date of such acceleration, shall become immediately due and
payable.
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 Indenture Trustee as hereinafter in this
Article provided the Holders of Bonds of the Most Senior Class representing
more than 50% of the Bond Balance of such Class, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(1) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of, and interest on,
all Bonds and all other amounts that would then be due
hereunder or upon such Bonds if the Event of Default giving
rise to such acceleration had not occurred; and
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(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its
agents and counsel; and
(2) all Events of Default, other than the nonpayment of the
principal of Bonds that have become due solely by such acceleration,
have been cured or waived as provided in Section 5.14.
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
INDENTURE TRUSTEE.
Subject to the provisions of Section 3.01 and the following sentence,
if an Event of Default occurs and is continuing, the Indenture Trustee may
proceed to protect and enforce its rights and the rights of the Bondholders by
any Proceedings the Indenture 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. Any Proceedings brought by the
Indenture Trustee on behalf of the Bondholders or any Bondholder against the
Issuer shall be limited to the preservation, enforcement and foreclosure of the
liens, assignments, rights and security interests under the Indenture and no
attachment, execution or other unit or process shall be sought, issued or
levied upon any assets, properties or funds of the Issuer, other than the Trust
Estate relative to the Bonds in respect of which such Event of Default has
occurred. If there is a foreclosure of any such liens, assignments, rights and
security interests under this Indenture, by private power of sale or otherwise,
no judgment for any deficiency upon the indebtedness represented by the Bonds
may be sought or obtained by the Indenture Trustee or any Bondholder against
the Issuer. The Indenture Trustee shall be entitled to recover the costs and
expenses expended by it pursuant to this Article V including reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee,
its agents and counsel.
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 Indenture Trustee
(subject to Section 5.17, to the extent applicable) may, for the benefit of the
Bondholders, 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, subject in all cases to the
provisions of Sections 3.01 and 5.03;
(b) in accordance with Section 5.17, 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;
(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 Indenture Trustee
or the Holders of the Bonds hereunder; and
(e) refrain from selling the Trust Estate and apply all
Remittable Funds pursuant to Section 5.07.
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SECTION 5.05. INDENTURE 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
Indenture 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 Indenture 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 as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Indenture 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 Indenture Trustee and, in the
event that the Indenture Trustee shall consent to the making of such
payments directly to the Bondholders, to pay to the Indenture Trustee
any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents and
counsel.
Nothing herein contained shall be deemed to authorize the Indenture
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 Indenture Trustee to vote in respect of the claim of any Bondholder in any
such Proceeding.
SECTION 5.06. INDENTURE 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 Indenture 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 Indenture 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 after payment of
amounts required to be paid pursuant to clause (i) of Section 5.07.
SECTION 5.07. 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 Indenture Trustee with respect to such
Bonds pursuant to this Article or otherwise and any other monies that may then
be held or thereafter received by the Indenture Trustee as security for such
Bonds shall be applied in the following order, at the date or dates fixed by
the Indenture Trustee and, in case of the payment of the entire amount due on
account of principal of, and interest on, such Bonds, upon presentation and
surrender thereof:
(i) first, to the Indenture Trustee, any unpaid Indenture
Trustee's Fees then due and any other amounts payable and due to the
Indenture Trustee under this Indenture, including any costs or
expenses incurred by it in connection with the enforcement of the
remedies provided for in this Article V;
(ii) second, to the Servicer, any amounts required to pay the
Servicer for any unpaid Monthly Servicing Fees then due and to
reimburse the Servicer for Monthly Advances previously made by, and
not previously reimbursed or retained by, the Services and, upon the
final liquidation of the related Mortgage Loan or the final
liquidation of the Trust Estate, Servicing Advances previously made
by, and not previously reimbursed or retained by, the Servicer;
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(iii) third, to the payment of the applicable Bond Interest
and Interest Carry Forward Amount, if any, then due and unpaid upon
the Outstanding Class A Bonds through the day preceding the date on
which such payment is made;
(iv) fourth, to the payment of the Bond Balance of the
Outstanding Class A Bonds, up to the amount of Current Bond Balances
of the Class A Bonds, ratably, without preference or priority of any
kind;
(v) fifth, to the payment of the applicable Bond Interest and
Interest Carry Forward Amount, if any, then due and unpaid upon the
Outstanding Class M-1 Bonds through the day preceding the date on
which such payment is made;
(vi) sixth, to the payment of the Bond Balance of the
Outstanding Class M-1 Bonds, up to the amount of the Current Bond
Balances of the Class M-1 Bonds, ratably, without preference or
priority of any kind;
(vii) seventh, to the payment of the applicable Bond Interest
and Interest Carry Forward Amount, if any, then due and unpaid upon
the Outstanding Class M-2 Bonds through the day preceding the date on
which such payment is made;
(viii) eighth, to the payment of the Bond Balance of the
Outstanding Class M-2 Bonds, up to the amount of the Current Bond
Balance of the Class M-2 Bonds, ratably, without preference or
priority of any kind;
(ix) ninth, to the payment of the applicable Bond Interest
and Interest Carry Forward Amounts, if any, then due and unpaid upon
the Outstanding Class M-3 Bonds through the day preceding the date on
which such payment is made;
(x) tenth, to the payment of the Bond Balance of the
Outstanding Class M-3 Bonds, up to the amount of the Current Bond
Balance of the Class M-3 Bonds, ratably, without preference or
priority of any kind;
(xi) eleventh, to the payment of the aggregate amount of
Available Funds Cap Carry Forward Amount, if any, among all Classes of
Bonds in proportion to the respective Available Funds Cap Carry
Forward Amounts for each such Class in the same priority as the
distribution of Bond Interest above; and
(xii) twelfth, to the payment of the remainder, if any, to
the Issuer or any other Person legally entitled thereto.
SECTION 5.08. 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
Indenture Trustee of a continuing Event of Default;
(2) the Holders of Bonds representing not less than 25% of
the Bond Balance of the Most Senior Class shall have made written
request to the Indenture Trustee to institute Proceedings in respect
of such Event of Default in its own name as Indenture Trustee
hereunder;
(3) such Holder or Holders have offered to the Indenture
Trustee indemnity in full against the costs, expenses and liabilities
to be incurred in compliance with such request;
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(4) the Indenture 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 Indenture Trustee during such 60-day period by the
Holders of Bonds representing more than 50% of the Bond Balance of the
Most Senior Class;
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 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 of the same Class.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Bonds
of the Most Senior Class, each representing less than 50% of the Bond Balances
of the Most Senior Class, the Indenture Trustee in its sole discretion may
determine what action, if any, shall be taken notwithstanding any other
provision herein to the contrary.
SECTION 5.09. UNCONDITIONAL RIGHTS OF BONDHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST.
Subject to the provisions in this Indenture (including Sections 3.01
and 5.03) limiting the right to recover amounts due on a Bond to recovery from
amounts in the Trust Estate, 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 Payment Date for 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 5.10. RESTORATION OF RIGHTS AND REMEDIES.
If the Indenture 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 Indenture Trustee or to such Bondholder, then and
in every such case the Issuer, the Indenture 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 Indenture Trustee and the Bondholders shall continue as though
no such Proceeding had been instituted.
SECTION 5.11. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Indenture
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 5.12. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Indenture 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 Indenture Trustee or to the Bondholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Bondholders, as the case may be.
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SECTION 5.13. CONTROL BY BONDHOLDERS.
The Holders of Bonds representing more than 50% of the Bond Balance of
the Most Senior Class on the applicable Record Date shall have the right to
direct the time, method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee or exercising any trust or power conferred
on the Indenture Trustee; provided that:
(1) such direction shall not be in conflict with any rule of
law or with this Indenture;
(2) any direction to the Indenture Trustee to undertake a
Sale of the Trust Estate shall be by the Holders of Bonds representing
the percentage of the Bond Balance of the Most Senior Class specified
in Section 5.17(b) (1), unless Section 5.17(b) (2) is applicable; and
(3) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction; provided, however, that, subject to Section 6.01, the
Indenture Trustee need not take any action that it determines might
involve it in liability or be unjustly prejudicial to the Bondholders
not consenting.
SECTION 5.14. WAIVER OF PAST DEFAULTS.
The Holders of Bonds representing more than 50% of the Bond Balance of
the Most Senior Class on the applicable Record Date may on behalf of the
Holders of all the Bonds, waive any past Default hereunder and its
consequences, except a Default:
(1) in the payment of principal or any installment of
interest on any Bond; or
(2) in respect of a covenant or provision hereof that 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 5.15. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Bond by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Indenture Trustee for any
action taken, suffered or omitted by it as Indenture Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section shall not apply to any suit
instituted by the Indenture Trustee, to any suit instituted by any Bondholder,
or group of Bondholders, holding in the aggregate Bonds representing more than
10% of the Bond Balance of the Most Senior Class, or to any suit instituted by
any Bondholder for the enforcement of the payment of any amount due on any Bond
on or after the related Payment Date or for the enforcement of the payment of
principal of any Bond on or after the Final Maturity Date (or, in the case of
any Bond called for redemption, on or after the applicable Redemption Date).
SECTION 5.16. 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, that 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
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of any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 5.17. 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
Indenture Trustee may from time to time postpone any public Sale by
public announcement made at the time and place of such Sale.
(b) To the extent permitted by law, the Indenture Trustee
shall not in any private Sale sell or otherwise dispose of the Trust
Estate, or any portion thereof, unless:
(1) the Holders of Bonds representing not less than
50% of the Bond Balance of the Most Senior Class consent to
or direct the Indenture Trustee to make such Sale; or
(2) the proceeds of such Sale would be not less than
the entire amount that would be payable to the Holders of the
Bonds, in full payment thereof in accordance with Section
5.07, on the Payment Date next succeeding the date of such
Sale.
The purchase by the Indenture Trustee of all or any portion
of the Trust Estate at a private Sale shall not be deemed a Sale or
disposition thereof for purposes of this Section 5.17(b).
(c) Unless the Holders of all Outstanding Bonds have
otherwise consented or directed the Indenture Trustee, at any public
Sale of all or any portion of the Trust Estate at which a minimum bid
equal to or greater than the amount described in paragraph (2) of
subsection (b) of this Section 5.17 has not been established by the
Indenture Trustee and no Person bids an amount equal to or greater
than such amount, the Indenture Trustee, acting in its capacity as
Indenture Trustee on behalf of the Bondholders, shall prevent such
sale and bid an amount (which shall include the Indenture Trustee's
right, in its capacity as Indenture Trustee, to credit bid) at least
$1.00 more than the highest other bid in order to preserve the Trust
Estate on behalf of the Bondholders.
(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
Outstanding Bonds or claims for interest thereon in lieu of
cash up to the amount that shall, upon distribution of the
net proceeds of such Sale, be payable thereon, and such
Bonds, in case the amounts so payable thereon shall be less
than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show such
partial payment;
(2) the Indenture Trustee may bid for and acquire
the property offered for Sale in connection with any 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 that would be payable
to the Holders of the Bonds as a result of such Sale in
accordance with Section 5.07 on the Payment Date next
succeeding the date of such Sale and (B) the expenses of the
Sale and of any Proceedings in connection therewith which are
reimbursable to it, without being required to produce the
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 Indenture Trustee shall be held
and dealt with by it in accordance with the provisions of
this Indenture;
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(3) the Indenture Trustee shall execute and deliver
an appropriate instrument of conveyance transferring its
interest in any portion of the Trust Estate in connection
with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Trust
Estate in connection with a Sale thereof, and to take all
action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall
be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or
see to the application of any moneys.
SECTION 5.18. ACTION ON BONDS.
The Indenture 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 Indenture Trustee or the Holders of
Bonds shall be impaired by the recovery of any judgment by the Indenture
Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Trust Estate.
SECTION 5.19. NO RECOURSE TO OTHER TRUST ESTATES OR OTHER ASSETS OF
THE ISSUER.
The Trust Estate Granted to the Indenture Trustee as security for the
Bonds serves as security only for the Bonds. Holders of the Bonds shall have no
recourse against the trust estate granted as security for any other series of
bonds issued by the Issuer, and no judgment against the Issuer for any amount
due with respect to the Bonds may be enforced against either the trust estate
securing any other series or any other assets of the Issuer, nor may any
prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Issuer.
SECTION 5.20. APPLICATION OF THE TRUST INDENTURE ACT.
Pursuant to Section 316(a) of the TIA, all provisions automatically
provided for in Section 316(a) are hereby expressly excluded.
SECTION 5.21. APPOINTMENT OF NEW TRUSTEE FOR THE MEZZANINE BONDS.
Upon the occurrence of an Event of Default with respect to any Class
of Bonds, the Indenture Trustee is required to resign as trustee for the
Mezzanine Bonds. The Issuer is required in such circumstances to appoint one or
more separate trustees for the Holders of the Mezzanine Bonds; provided,
however, that if the Issuer fails to appoint such separate trustees within 15
days thereafter, the Indenture Trustee shall immediately petition a court of
competent jurisdiction to appoint such separate trustees.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE.
(a) If an Event of Default has occurred and is continuing,
the Indenture Trustee shall exercise 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:
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(1) The Indenture 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 against the Indenture Trustee; and
(2) In the absence of bad faith on its part, the
Indenture Trustee may request and conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Indenture
Trustee and conforming to the requirements of this Indenture. The
Indenture Trustee shall, however, examine such certificates and
opinions to determine whether they conform on their face to the
requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:
(1) This paragraph does not limit the effect of
subsection (b) of this Section 6.01;
(2) The Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer,
unless it is proved that the Indenture Trustee was negligent in
ascertaining the pertinent facts; and
(3) The Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.13 or
5.17 or exercising any trust or power conferred upon the Indenture
Trustee under this Indenture.
(d) Except with respect to duties of the Indenture Trustee
prescribed by the TIA, as to which this Section 6.01(d) shall not
apply, for all purposes under this Indenture, the Indenture 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 of any event
described in Section 3.05 unless a Responsible Officer assigned to and
working in the Indenture Trustee's corporate trust department has
actual knowledge thereof or unless written notice of any event that is
in fact such an Event of Default or Default is received by the
Indenture 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
Indenture 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 under the Servicing Agreement or otherwise.
(f) Every provision of this Indenture that in any way relates
to the Indenture 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
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 Indenture Trustee or otherwise, the rights, powers
and duties of the Indenture 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.
(h) The Indenture Trustee or any Custodian appointed pursuant
to Section 8.13 shall at all times retain possession of the Mortgage
Files in the State of Minnesota, except for those Mortgage Files or
portions thereof released to the Servicer pursuant to this Indenture
or the Servicing Agreement.
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SECTION 6.02. NOTICE OF DEFAULT.
Within 90 days after the occurrence of any Default known to the
Indenture Trustee, the Indenture 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 in no event shall the Indenture Trustee
provide notice, or fail to provide notice of a Default known to the Indenture
Trustee in a manner contrary to the requirements of the Trust Indenture Act.
Concurrently with the mailing of any such notice to the Holders of the Bonds,
the Indenture Trustee shall transmit by mail a copy of such notice to the
Rating Agencies.
SECTION 6.03. RIGHTS OF INDENTURE TRUSTEE.
(a) Except as otherwise provided in Section 6.01, the
Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Indenture Trustee need not investigate any fact or matter stated in
any such document.
(b) Before the Indenture Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of
Counsel reasonably satisfactory in form and substance to the Indenture
Trustee. The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on any such Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes to be
authorized or within its rights or powers.
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 Indenture Trustee and the Authenticating Agent assume no
responsibility for their correctness. The Indenture 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 Indenture 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.
SECTION 6.05. MAY HOLD BONDS.
The Indenture 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 6.07 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
Indenture Trustee, Agent or such other agent.
SECTION 6.06. MONEY HELD IN TRUST.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required by this Indenture or
by law. The Indenture 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 that are
obligations of the Indenture Trustee, in its commercial capacity, and income or
other gain actually received by the Indenture Trustee on investments, which are
obligations of others.
SECTION 6.07. ELIGIBILITY; DISQUALIFICATION.
Irrespective of whether this Indenture is qualified under the TIA,
this Indenture shall always have a Indenture Trustee who satisfies the
requirements of TIA Sections 310(a)(1) and 310(a)(5). The Indenture Trustee
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shall always have a combined capital and surplus as stated in Section 6.08. The
Indenture Trustee shall be subject to TIA Section 310(b).
SECTION 6.08. INDENTURE TRUSTEE'S CAPITAL AND SURPLUS.
The Indenture Trustee shall at all times have a combined capital and
surplus of at least $100,000,000 or shall be a member of a bank holding company
system, the aggregate combined capital and surplus of which is at least
$100,000,000 and shall at all times be rated "BBB" or better by Standard &
Poor's and by Fitch; provided, however, that the Indenture Trustee's separate
capital and surplus shall at all times be at least the amount required by TIA
Section 310(a)(2). If the Indenture Trustee publishes annual reports of
condition of the type described in TIA Section 310(a)(1), its combined capital
and surplus for purposes of this Section 6.08 shall be as set forth in the
latest such report. If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.08 and TIA Section
310(a)(2), it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 6.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the
successor Indenture Trustee under Section 6.10.
(b) The Indenture Trustee may resign at any time by giving
written notice thereof to the Issuer and each Rating Agency. If an
instrument of acceptance by a successor Indenture Trustee shall not
have been delivered to the Indenture Trustee within 30 days after the
giving of such notice of resignation, the resigning Indenture Trustee
may petition any court of competent jurisdiction for the appointment
of a successor Indenture Trustee.
(c) The Indenture Trustee may be removed at any time by Act
of the Holders representing more than 50% of the Bond Balance of the
Most Senior Class, delivered to the Indenture Trustee and to the
Issuer.
(d) If at any time:
(1) the Indenture Trustee shall have a conflicting
interest prohibited by Section 6.07 and shall fail to resign
or eliminate such conflicting interest in accordance with
Section 6.07 after written request therefor by the Issuer or
by any Bondholder; or
(2) the Indenture Trustee shall cease to be eligible
under Section 6.08 or shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of
the Indenture Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the
Indenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, (i) the Issuer by an Issuer Order may remove
the Indenture Trustee, and the Issuer shall join with the Indenture
Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint a successor Indenture
Trustee and to vest in such successor Indenture Trustee any property,
title, right or power deemed necessary or desirable, subject to the
other provisions of this Indenture; provided, however, if the Issuer
does not join in such appointment within fifteen (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 Indenture Trustee may petition a
court of competent jurisdiction to make such appointment, or (ii)
subject to Section 5.15, and, in the case of a conflicting interest as
described in clause (1) above, unless the Indenture Trustee's duty to
resign has been stayed as provided in TIA Section 310(b), any
Bondholder who has been a bona fide Holder of a Bond for at least six
months may, on behalf of
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himself and all others similarly situated petition any court of
competent jurisdiction for the removal of the Indenture Trustee and
the appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office
of the Indenture Trustee for any cause, the Issuer, by an Issuer
Order, shall promptly appoint a successor Indenture Trustee. If within
one year after such resignation, removal or incapability or the
occurrence of such vacancy a successor Indenture Trustee shall be
appointed by Act of the Holders of Bonds representing more than 50% of
the Bond Balance of the Most Senior Class delivered to the Issuer and
the retiring Indenture Trustee, the successor Indenture Trustee so
appointed shall, forthwith upon its acceptance of such appointment,
become the successor Indenture Trustee and supersede the successor
Indenture Trustee appointed by the Issuer. If no successor Indenture
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 bonafide Holder of a Bond for at least
six months may, on behalf of himself and all others similarly situated
petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor
Indenture Trustee to the Holders of Bonds. Each notice shall include
the name of the successor Indenture Trustee and the address of its
Corporate Trust Office.
SECTION 6.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Indenture Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective and such successor
Indenture Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Indenture
Trustee. Notwithstanding the foregoing, on request of the Issuer or the
successor Indenture Trustee, such retiring Indenture Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Indenture Trustee all the rights, powers and trusts of the retiring
Indenture Trustee, and shall duly assign, transfer and deliver to such
successor Indenture Trustee all property and money held by such retiring
Indenture Trustee hereunder. Upon request of any such successor Indenture
Trustee, the Issuer shall execute and deliver any and all instruments for more
fully and certainly vesting in and confirming to such successor Indenture
Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article.
SECTION 6.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF INDENTURE TRUSTEE.
Any corporation into which the Indenture 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 Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor
of the Indenture Trustee hereunder, provided such corporation 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
Indenture Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Indenture Trustee may adopt such
authentication and deliver the Bonds so authenticated with the same effect as
if such successor Indenture Trustee had authenticated such Bonds.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.
The Indenture Trustee (and any co-trustee or separate trustee) shall
be subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b), and an Indenture Trustee (and any co-trustee or separate
trustee) who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated.
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SECTION 6.13. CO-INDENTURE TRUSTEES AND SEPARATE INDENTURE 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 Indenture Trustee shall have power to appoint,
and, upon the written request of the Indenture Trustee or of the Holders of
Bonds representing more than 50% of the Bond Balance of the Most Senior Class
with respect to which a co-trustee or separate trustee is being appointed, the
Issuer shall for such purpose join with the Indenture Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Indenture Trustee either to act
as co-trustee, jointly with the Indenture 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 Indenture Trustee alone
shall have power, or the obligation as provided in Section 5.21, to make such
appointment. All fees and expenses of any co-trustee or separate trustee shall
be payable by the Issuer.
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.
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 Indenture Trustee
hereunder, shall be exercised, solely by the Indenture Trustee.
(2) The rights, powers, duties and obligations hereby
conferred or imposed upon the Indenture Trustee in respect of any
property covered by such appointment shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee or by the
Indenture 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
Indenture 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 Indenture 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 an Event of Default has occurred and is continuing, the Indenture
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 Indenture Trustee, the Issuer
shall join with the Indenture 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 so resigned or removed may be appointed in the
manner provided in this Section.
(4) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Indenture
Trustee, or any other such trustee hereunder.
(5) Any Act of Bondholders delivered to the Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
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SECTION 6.14. AUTHENTICATING AGENTS.
The Issuer 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 Indenture 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 Section 2.06, as
fully to all intents and purposes as though the Authenticating Agent had been
expressly authorized by that Section 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 2.11 in connection with
their initial issuance), 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 Indenture Trustee." Such
Authenticating Agent shall at all times be a Person that both meets the
requirements of Section 6.07 for the Indenture Trustee hereunder and has an
office for presentation of Bonds in the United States of America. The Indenture
Trustee shall initially be the Authenticating Agent and shall be the Bond
Registrar as provided in Section 2.06. The office from which the Indenture
Trustee shall perform its duties as Bond Registrar and Authenticating Agent
shall be the Corporate Trust Office. Any Authenticating Agent appointed
pursuant to the terms of this Section 6.14 or pursuant to the terms of any
supplemental indenture shall deliver to the Indenture 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 Indenture Trustee for and
holding the Indenture 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 Issuer. The Issuer may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent. 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 Issuer shall promptly appoint a
successor Authenticating Agent, shall give written notice of such appointment
to the Indenture Trustee, and shall mail notice of such appointment to all
Holders of Bonds.
The Indenture 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 Indenture Trustee shall be entitled to be reimbursed for such
payments pursuant to Section 6.05 of the Servicing Agreement. The provisions of
Sections 2.09, 6.04 and 6.05 shall be applicable to any Authenticating Agent.
SECTION 6.15. REVIEW OF MORTGAGE FILES.
(a) Initial Certification. The Indenture Trustee shall, for
the benefit of the Bondholders, review each Mortgage File prior to the
Closing Date to ascertain that all documents required to be included
in the Mortgage File are included therein, and shall deliver to the
Mortgage Loan Seller and the Servicer on the Closing Date an Initial
Certification in the form attached hereto as Exhibit E-1 with respect
to each Mortgage Loan to the effect that, except as specifically noted
on a schedule of exceptions thereto, (A) all documents required to be
contained in the Mortgage File are in its possession, (B) such
documents have been reviewed by it and appear regular on their face
and relate to such Mortgage Loan, and (C) based on its
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examination and only as to the foregoing documents, the information
set forth on the related Mortgage Loan Schedule accurately reflects
information set forth in the Mortgage File.
It is understood that before making the Initial
Certification, the Indenture Trustee shall examine the related
Mortgage Loan Documents to confirm that:
(1) each Mortgage Note and Mortgage bears an
original signature or signatures purporting to be that of the
Person or Persons named as the maker and mortgagor/trustor
or, if photocopies are permitted, that such copies bear a
reproduction of such signature or signatures;
(2) except for the endorsement to the Indenture
Trustee, neither the Mortgage nor any Assignment, on the face
or the reverse side(s) thereof, contains evidence of any
unsatisfied claims, liens, security interests, encumbrances
or restrictions on transfer;
(3) the principal amount of the indebtedness secured
by the related Mortgage is identical to the original
principal amount of the related Mortgage Note;
(4) the Assignment of the related Mortgage from the
Mortgage Loan Seller to the Indenture Trustee is in the form
required pursuant to clause (e) of the definition of
"Mortgage Loan Documents" in the Mortgage Loan Sale
Agreement, and bears an original signature of the Mortgage
Loan Seller and any other necessary party (or signatures
purporting to be that of the Mortgage Loan Seller and any
such other party) or, if photocopies are permitted, that such
copies bear a reproduction of such signature or signatures;
(5) if intervening Assignments are included in the
Mortgage File, each such intervening Assignment bears an
original signature of the related mortgagee and/or the
assignee (and any other necessary party) (or signatures
purporting to be that of each such party) or, if photocopies
are permitted, that such copies bear a reproduction of such
signature or signatures;
(6) if either a title insurance policy, a
preliminary title report or a written commitment to issue a
title insurance policy is delivered, the address of the real
property set forth in such policy, report or written
commitment is identical to the real property address
contained in the related Mortgage; and
(7) if any of a title insurance policy, certificate
of title insurance or a written commitment to issue a title
insurance policy is delivered, such policy, certificate or
written commitment is for an amount not less than the
original principal amount of the related Mortgage Note and
such title insurance policy insures that the related Mortgage
creates a first lien, senior in priority to all other deeds
of trust, mortgages, deeds to secure debt, financing
statements and security agreements and to any mechanics'
liens, judgment liens or writs of attachment (or if the title
insurance policy or certificate of title insurance has not
been issued, the written commitment for such insurance
obligates the insurer to issue such policy for an amount not
less than the original principal amount of the related
Mortgage Note).
(b) Final Certification. On or before one year following the
Closing Date, the Indenture Trustee shall deliver to the Mortgage Loan
Seller and the Servicer a Final Certification in the form attached
hereto as Exhibit E-2 evidencing the completeness of the Mortgage File
for each Mortgage Loan, except as specifically noted on a schedule of
exceptions thereto.
(c) Certification Generally. In giving each of the Initial
Certification and the Final Certification, the Indenture Trustee shall
be under no duty or obligation (1) to inspect, review or examine any
such documents, instruments, securities or other papers to determine
that they or the signatures thereto are genuine, enforceable, or
appropriate for the represented purpose or that they have actually
been recorded or that they are other than what they purport to be on
their face or (2) to determine whether any
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Mortgage File should include a flood insurance policy, any rider,
addenda, surety or guaranty agreement, power of attorney, buy down
agreement, assumption agreement, modification agreement, written
assurance or substitution agreement.
(d) Recordation Report. No later than the fifth Business Day
of each third month, commencing in September 1998, the Indenture
Trustee shall deliver to the Servicer a recordation report dated as of
the first day of such month, identifying those Mortgage Loans for
which it has not yet received (1) an original recorded Mortgage or a
copy thereof certified to be true and correct by the public recording
office in possession of such Mortgage or (2) an original recorded
Assignment of the Mortgage to the Indenture Trustee and any required
intervening Assignments or a copy thereof certified to be a true and
correct copy by the public recording office in possession of such
Assignment.
SECTION 6.16. INDENTURE TRUSTEE FEES AND EXPENSES.
The Indenture Trustee shall be entitled to receive the Indenture
Trustee Fee on each Payment Date as provided herein. The Indenture Trustee also
shall be entitled, pursuant to the provisions of Section 6.05 of the Servicing
Agreement, to (i) payment of, or reimbursement for, expenses, disbursements and
advances incurred or made by the Indenture Trustee in accordance with any of
the provisions of this Indenture (including but not limited to the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) as provided in the Servicing Agreement,
and (ii) indemnification against losses, liability and expenses, including
reasonable attorney's fees, incurred, arising out of or in connection with this
Indenture and the Bonds as provided in the Servicing Agreement.
ARTICLE VII
BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES
OF BONDHOLDERS.
(a) The Issuer shall furnish or cause to be furnished to the
Indenture Trustee (i) semi-annually, not less than 45 days nor more
than 60 days after the Payment Date occurring closest to six months
after the Closing Date and each Payment Date occurring at six-month
intervals thereafter, all information in the possession or control of
the Issuer, in such form as the Indenture Trustee may reasonably
require, as to names and addresses of the Holders of Bonds, and (ii)
at such other times, as the Indenture Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list
of similar form and content as of a date not more than 10 days prior
to the time such list is furnished; provided, however, that so long as
the Indenture Trustee is the Bond Registrar, no such list shall be
required to be furnished.
(b) In addition to furnishing to the Indenture 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 Indenture 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 Indenture Trustee as provided in Section 7.01 and the names and
addresses of the Holders of Bonds received by the Indenture Trustee in
its capacity as Bond Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in Section 7.01 upon receipt of a new
list so furnished.
(b) Bondholders may communicate pursuant to TIA Section
312(b) with other Bondholders with respect to their rights under this
Indenture or under the Bonds.
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(c) The Issuer, the Indenture Trustee and the Bond Registrar
shall have the protection of TIA Section 312(c).
SECTION 7.03. REPORTS BY INDENTURE TRUSTEE.
(a) Within 60 days after December 31 of each year (the
"reporting date"), commencing with the year after the issuance of the
Bonds, (i) the Indenture Trustee shall, if required by TIA Section
313(a), mail to all Holders a brief report dated as of such reporting
date that complies with TIA Section 313(a); (ii) the Indenture Trustee
shall, to the extent not set forth in the Payment Date Statement
pursuant to Section 2.08(d), 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, the
Indenture 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)(2), 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 Bond Balance of the then
Outstanding Bonds covered by the report.
(b) 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 Indenture Trustee with the Commission and with each securities
exchange upon which the Bonds are listed. The Issuer will notify the
Indenture Trustee when the Bonds are listed on any securities
exchange.
SECTION 7.04. REPORTS BY ISSUER.
The Issuer (a) shall deliver to the Indenture Trustee within 15 days
after the Issuer is required to file the same with the Commission copies of the
annual reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) that the Issuer is required to file with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, and (b) shall also comply with the other provisions of TIA Section
314(a).
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
SECTION 8.01. COLLECTION OF MONEYS.
Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Indenture.
If the Indenture Trustee shall not have received the Remittable Funds
by close of business on any related Deposit Date, the Indenture Trustee shall,
unless the Issuer or the Servicer shall have made provisions satisfactory to
the Indenture Trustee for delivery to the Indenture Trustee of an amount equal
to such Remittable Funds, deliver a notice to the Issuer and the Servicer of
their failure to remit such Remittable Funds and that such failure, if not
remedied by the close of business on the Business Day after the date upon which
such notice is delivered to the Servicer, shall constitute an event of default
under the Servicing Agreement. If the Indenture Trustee shall subsequently
receive any such Remittable Funds by 2:00 p.m. Eastern Time on such Business
Day, such event of default shall not be deemed to have occurred.
Notwithstanding any other provision hereof, the Indenture Trustee shall deliver
to the Issuer or the Servicer, or their respective designee or assignee, any
Remittable Funds received with respect to a Mortgage Loan after the related
Deposit Date to the extent that the Issuer or the Servicer, respectively,
previously made payment or provision for payment with respect to such
Remittable Funds in accordance with this Section 8.01, and any such Remittable
Funds shall not be deemed part of the Trust Estate.
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Except as otherwise expressly provided in this Indenture and the
Servicing Agreement, if, following delivery by the Indenture Trustee of the
notice described above, the Servicer shall fail to remit the Remittable Funds
by 2:00 p.m. Eastern Time of the Business Day after which such notice is
delivered to the Servicer, the Indenture Trustee shall deliver a second notice
to the Servicer and the Issuer by 2:00 p.m. Eastern Time on the third Business
Day prior to the related Payment Date indicating that an event of default
occurred and is continuing under the Servicing Agreement. Thereupon, the
Indenture Trustee shall take such actions as are required of the Indenture
Trustee under Article VI of the Servicing Agreement. In addition, if a default
occurs in any other performance required under the Servicing Agreement, the
Indenture Trustee may, and upon the request of the Holders of Bonds
representing more than 50% of the Bond Balance of the Outstanding Bonds shall,
take such action as may be appropriate to enforce such payment or performance
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and to proceed thereafter as provided in Article
V.
SECTION 8.02. BOND ACCOUNT.
(a) The Issuer hereby directs the Indenture Trustee to
establish, at the Corporate Trust Office, one or more accounts that
shall collectively be the "Bond Account" on or before the Closing
Date. The Indenture Trustee shall promptly deposit in the Bond Account
(i) all Remittable Funds received by it from the Servicer pursuant to
the Servicing Agreement, (ii) any other funds from any deposits to be
made by the Servicer pursuant to the Servicing Agreement, (iii) any
amount required to be deposited in the Bond Account pursuant to
Section 8.01, and (iv) all other amounts received for deposit in the
Bond Account, including the payment of any Purchase Price received by
the Indenture Trustee. All amounts that are deposited from time to
time in the Bond Account are subject to withdrawal by the Indenture
Trustee for the purposes set forth in subsections (c) and (d) of this
Section 8.02. All funds withdrawn from the Bond Account pursuant to
subsection (c) of this Section 8.02 for the purpose of making payments
to the Holders of Bonds shall be applied in accordance with Section
2.14, Section 2.15, Section 2.16 and Section 3.03.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, amounts held in the Bond Account shall be
invested in Permitted Investments, which Permitted Investments shall
mature no later than the Business Day preceding the immediately
following Payment Date or, if such Permitted Investments are an
obligation of the Indenture Trustee or are money market funds for
which the Indenture Trustee or any affiliate is the manager or the
advisor, such Permitted Investments shall mature no later than the
following Payment Date.
All income or other gains, if any, from investment of moneys
deposited in the Bond Account shall be for the benefit of the
Indenture Trustee and on each Payment Date, any such amounts may be
released from the Bond Account and paid to the Indenture Trustee as
part of its compensation for acting as Indenture Trustee. Any loss
resulting from such investment of moneys deposited in the Bond Account
shall be reimbursed immediately as incurred to the Bond Account by the
Indenture Trustee. Subject to Section 6.01 and the preceding sentence,
the Indenture Trustee shall not in any way be held liable by reason of
any insufficiency in the Bond Account.
(c) On each Payment Date, the Indenture Trustee shall
withdraw amounts on deposit in the Bond Account and pay on a pari
passu basis the Indenture Trustee Fee, and, provided notice is given
to the Indenture Trustee no later than the 4th Business Day prior to
the Payment Date, amounts required to pay the Servicer any unpaid
Monthly Servicing Fees then due and to reimburse the Servicer for
Monthly Advances and Servicing Advances previously made by, and not
previously reimbursed to or retained by, the Servicer, which are so
reimbursable to the Servicer pursuant to the Servicing Agreement (as
reported in writing by the Servicer to the Indenture Trustee). After
payment of such amounts, unless the Bonds have been declared due and
payable pursuant to Section 5.02 and moneys collected by the Indenture
Trustee are being applied in accordance with Section 5.07, Available
Funds on deposit in the Bond Account on any Payment Date or Redemption
Date shall be withdrawn from the Bond Account, in the amounts
required, for application on such Payment Date as follows:
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(i) first, to the Bondholders, the Interest Remittance Amount
applied to Bond Interest for such Payment Date as specified in Section
2.14;
(ii) second, to the Bondholders, the Principal Payment Amount
for such Payment Date applied to reduce the Bond Balance of the Class
A, Class M-1, Class M-2, Class M-3 Bonds, as specified in Section
2.15; and
(iii) third, to the Bondholders and the Certificateholders,
the Excess Cashflow for such Payment Date applied as specified in
Section 2.16.
(d) On or after each Payment Date, so long as the Indenture
Trustee shall have prepared a Payment Date Statement in respect of
such Payment Date and (1) shall have made, or, in accordance with
Section 3.03, set aside from amounts in the Bond Account an amount
sufficient to make, the payments required to be made as set forth in
Section 8.02(c) as indicated in such Payment Date Statement, and (2)
shall have set aside any amounts that have been deposited in the Bond
Account prior to such time that represent amounts that are to be used
to make payments on the Bonds on the next succeeding Payment Date, the
cash balance, if any, then remaining in the Bond Account shall be
withdrawn from the Bond Account by the Indenture Trustee and, so long
as no Default or Event of Default shall have occurred and be
continuing, shall be released from the lien of this Indenture and paid
by the Indenture Trustee to the Certificateholders.
(e) Any payments made by the Indenture Trustee to the
Certificateholders pursuant to this Section 8.02 shall be remitted to
the Certificate Distribution Account established and maintained
pursuant to the Trust Agreement.
(f) In the event the Indenture Trustee is required to
establish a Collection Account pursuant to the Servicing Agreement,
the Indenture Trustee shall establish and maintain such account in the
manner required under the Servicing Agreement. The Indenture Trustee
shall reinvest amounts in the Collection Account at the direction of
the Servicer in Permitted Investments. All income or other gains, if
any, from investment of moneys deposited in the Collection Account
shall be for the benefit of the Servicer and the Indenture Trustees
shall release any such amounts from the Collection Account to the
Servicer on each Deposit Date.
SECTION 8.03. [INTENTIONALLY OMITTED.]
SECTION 8.04. GENERAL PROVISIONS REGARDING THE BOND ACCOUNT AND
MORTGAGE LOANS.
(a) The Bond Account shall relate solely to the Bonds and to
the Mortgage Loans, Permitted Investments and other property securing
the Bonds. Funds and other property in the Bond Account shall not be
commingled with any other moneys or property of the Issuer or any
Affiliate thereof. Notwithstanding the foregoing, the Indenture
Trustee may hold any funds or other property received or held by it as
part of the Bond 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 Indenture Trustee and the Indenture Trustee maintains adequate
records indicating the ownership of all such funds or property and the
portions thereof held for credit to the Bond Account.
(b) If any amounts are needed for payment from the Bond
Account and sufficient uninvested funds are not available therein to
make such payment, the Indenture Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in
the Bond Account.
(c) The Indenture 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 Indenture Trustee, all certificates or other
instruments, if any, evidencing any investment of
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funds in the Bond Account. The Indenture 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 the Bond Account, against delivery of the amount receivable in
connection with any sale.
(d) The Indenture Trustee shall not invest any part of the
Trust Estate in Permitted Investments that constitute uncertificated
securities (as defined in Section 8-102 of the Uniform Commercial
Code, as enacted in the relevant jurisdiction) or in any other
book-entry securities unless it has received an Opinion of Counsel
reasonably satisfactory in form and substance to the Indenture Trustee
setting forth, with respect to each type of security for which
authority to invest is being sought, the procedures that must be
followed to maintain the lien and security interest created by this
Indenture with respect to the Trust Estate.
SECTION 8.05. RELEASES OF DEFECTIVE MORTGAGE LOANS.
Upon notice or discovery that any of the representations or warranties
of the Mortgage Loan Seller set forth in Section 4(b) and Exhibit B of the
Mortgage Loan Sale Agreement was materially incorrect or otherwise misleading
with respect to any Mortgage Loan as of the time made, the Indenture Trustee
shall direct the Mortgage Loan Seller to either (i) within 60 days after the
Mortgage Loan Seller receives actual knowledge of such incorrectness, eliminate
or otherwise cure the circumstance or condition in respect of which such
representation or warranty was incorrect as of the time made, (ii) withdraw
such Defective Mortgage Loan from the lien of this Indenture following the
expiration of such 60-day period by depositing to the Bond Account an amount
equal to the Purchase Price for such Mortgage Loan or (iii) substitute a
Qualified Replacement Mortgage Loan for such Defective Mortgage Loan and
deposit any Purchase Price required to be paid in connection with such
substitution pursuant to Section 7 of the Mortgage Loan Sale Agreement, all as
provided in Section 7 of the Mortgage Loan Sale Agreement. Upon any purchase of
or substitution for a Defective Mortgage Loan by the Mortgage Loan Seller in
accordance with Section 7 of the Mortgage Sale Agreement, the Indenture Trustee
shall deliver the Mortgage File relating to such Defective Mortgage Loan to the
Mortgage Loan Seller, and the Issuer and the Indenture Trustee shall execute
such instruments of transfer as are necessary to convey title to such Defective
Mortgage Loan to the Mortgage Loan Seller from the lien of this Indenture.
SECTION 8.06. REPORTS BY INDENTURE TRUSTEE TO BONDHOLDERS; ACCESS TO
CERTAIN INFORMATION.
On each Payment Date, the Indenture Trustee shall deliver the written
report required by Section 2.08(d) to Bondholders of record as of the related
Record Date (including the Clearing Agency, if any).
The Indenture Trustee shall make available at its Corporate Trust
Office, during normal business hours, for review by any Bondholder or any
Person identified to the Indenture Trustee as a prospective Bondholder,
originals or copies of the following items: (a) the Indenture and any
amendments thereto, (b) all Payment Date Statements delivered to the Issuer
since the Closing Date, (c) any Officers' Certificates delivered to the
Indenture Trustee since the Closing Date as described in the Indenture and (d)
any Accountants' reports delivered to the Indenture Trustee since the Closing
Date as required under the Servicing Agreement. Copies of any and all of the
foregoing items will be available from the Indenture Trustee upon request;
however, the Indenture Trustee will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such copies
and shall not be required to provide such copies without reasonable assurances
that such sum will be paid.
SECTION 8.07. TRUST ESTATE MORTGAGE FILES.
(a) The Indenture Trustee shall release Mortgage Files or
portions thereof to the Servicer on the terms specified in the
Servicing Agreement.
(b) The Indenture 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 4.02).
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SECTION 8.08. AMENDMENT TO SERVICING AGREEMENT.
The Indenture Trustee may, without the consent of any Holder, enter
into or consent to any amendment or supplement to the Servicing Agreement for
the purpose of increasing the obligations or duties of any party other than the
Indenture Trustee or the Holders of the Bonds. The Indenture Trustee may, in
its discretion, decline to enter into or consent to any such supplement or
amendment: (i) unless the Indenture Trustee receives an Opinion of Counsel that
the position of the Holders would not be materially adversely affected or
written confirmation from the Rating Agencies that the then-current ratings on
the Bonds would not be adversely affected by such supplement or amendment or
(ii) if its own rights, duties or immunities would be adversely affected.
SECTION 8.09. DELIVERY OF THE MORTGAGE FILES PURSUANT TO SERVICING
AGREEMENT.
As is appropriate for the servicing or foreclosure of any Mortgage
Loan, the Indenture Trustee shall deliver to the Servicer of such Mortgage the
Mortgage Files for such Mortgage Loan upon receipt by the Indenture Trustee on
or prior to the date such release is to be made of:
(a) such Officers' Certificates, if any, as are required by
the Servicing Agreement; and
(b) a "Request for Release" in the form prescribed by the
Servicing Agreement, executed by the Servicer, providing that the
Servicer will hold or retain the Mortgage Files in trust for the
benefit of the Indenture Trustee and the Holders of Bonds.
SECTION 8.10. SERVICER AS AGENT.
In order to facilitate the servicing of the Mortgage Loans by the
Servicer of such Mortgage Loans, the Servicer of the Mortgage Loans has been
appointed by the Issuer to retain, in accordance with the provisions of the
Servicing Agreement and this Indenture, all Remittable Funds on such Mortgage
Loans prior to their deposit into the Bond Account on or prior to the related
Deposit Date.
SECTION 8.11. TERMINATION OF SERVICER.
In the event of an event of default specified in Section 6.01 of the
Servicing Agreement, the Indenture Trustee may (or as otherwise provided in the
Servicing Agreement) terminate the Servicer as provided in Section 6.01 and
Section 6.02 of the Servicing Agreement. If the Indenture Trustee terminates
the Servicer, the Indenture Trustee shall pursuant to Section 6.02 of the
Servicing Agreement assume the duties of the Servicer or appoint a successor
servicer acceptable to the Issuer and the Rating Agencies and meeting the
requirements set forth in the Servicing Agreement.
SECTION 8.12. OPINION OF COUNSEL.
The Indenture Trustee shall be entitled to receive at least five
Business Days' notice of any action to be taken pursuant to Section 8.07(a)
(other than in connection with releases of Mortgage Loans that were the subject
of a Full Prepayment of the type described in clause (i) of the definition of
the term "Full Prepayment") and 8.08, accompanied by copies of any instruments
involved, and the Indenture Trustee shall be entitled to receive an Opinion of
Counsel, in form and substance reasonably satisfactory to the Indenture
Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
SECTION 8.13. APPOINTMENT OF CUSTODIANS.
The Indenture Trustee may, at no additional cost to the Issuer, with
the consent of the Issuer, appoint one or more Custodians to hold all or a
portion of the Mortgage Files as agent for the Indenture Trustee. Each
Custodian
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shall (i) be a financial institution supervised and regulated by the
Comptroller of the Currency, the Board of Governors of the Federal Reserve
System, the Office of Thrift Supervision, or the Federal Deposit Insurance
Corporation; (ii) have combined capital and surplus of at least $10,000,000;
(iii) be equipped with secure, fireproof storage facilities, and have adequate
controls on access to assure the safety and security of the Mortgage Files;
(iv) utilize in its custodial function employees who are knowledgeable in the
handling of mortgage documents and of the functions of a mortgage document
custodian; and (v) satisfy any other reasonable requirements that the Issuer
may from time to time deem necessary to protect the interests of Bondholders in
the Mortgage Files. Each Custodian shall be subject to the same obligations and
standard of care as would be imposed on the Indenture Trustee hereunder
assuming the Indenture Trustee retained the Mortgage Files directly. The
appointment of one or more Custodians shall not relieve the Indenture Trustee
from any of its obligations hereunder, and the Indenture Trustee shall remain
responsible for all acts and omissions of any Custodian. If the Servicer is
appointed as a Custodian in accordance with this Section 8.13, it shall fulfill
its servicing and custodial duties and obligations through separate departments
and, if it maintains a trust department, shall fulfill its custodial duties and
obligations through such trust department.
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
Indenture Trustee, at any time and from time to time, may enter into one or
more indentures supplemental hereto, in form satisfactory to the Indenture
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 Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(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 to the extent permitted herein, 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 that may be defective or inconsistent with any other
provision herein, or to amend 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 in any material respect the
interests of the Holders of the Bonds; and provided, further, that the
amendment shall not be deemed to adversely affect in any material
respect the interests of the Holders of the Bonds if the Person
requesting the amendment obtains letters from the Rating Agencies that
the amendment would not result in the downgrading or withdrawal of the
then current ratings then assigned to 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.
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SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF BONDHOLDERS.
With the consent of Holders of Bonds representing not less than a
majority of the Bond Balance of all Outstanding Bonds or, if fewer than all
Classes would be affected, or each Class to be affected, by Act of said Holders
delivered to the Issuer and the Indenture Trustee, the Issuer and the Indenture
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, relating to such Class or Classes, or
of modifying in any manner the rights of the Holders of the Bonds, or of such
Class or Classes, 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 any Payment Date or the Final Maturity Date of
the Bonds 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 Final Maturity
Date thereof or for the enforcement of the payment of the entire
remaining unpaid principal amount of any Bond on or after the Final
Maturity Date (or, in the case of redemption, on or after the
applicable Redemption Date);
(2) reduce the percentage of the Bond Balance of the
Outstanding 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
5.13 or Section 5.17(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 other than 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;
(6) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the Required Payment Amount for
any Payment Date (including the calculation of any of the individual
components of such Required Payment Amount) or to affect rights of the
Holders of the Bonds to the benefits of any provisions for the
mandatory redemption of Bonds contained herein; or
(7) incur any indebtedness, other than the Bonds, that would
cause the Issuer or the Trust Estate to be treated as a "taxable
mortgage pool" within the meaning of Code Section 7701(i).
The Indenture Trustee may in its discretion determine whether or not
any Bonds of a particular Class would be 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. The
Indenture 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.
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Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section, the Indenture 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 Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or 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 Indenture 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
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties
or immunities under this Indenture or otherwise. The Issuer shall cause
executed copies of any supplemental indentures to be delivered 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 that 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
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Bonds so modified as to conform, in the opinion
of Indenture Trustee and the Issuer, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Bonds.
SECTION 9.07. AMENDMENTS TO GOVERNING DOCUMENTS.
The Indenture Trustee shall, upon Issuer Request, consent to any
proposed amendment to the Issuer's governing documents, or an amendment to or
waiver of any provision of any other document relating to the Issuer's
governing documents, such consent to be given without the necessity of
obtaining the consent of the Holders of any Bonds upon receipt by the Indenture
Trustee of:
(i) an Officers' Certificate, to which such proposed
amendment or waiver shall be attached, stating that such attached copy
is a 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; and
(ii) written confirmation from the Rating Agencies that the
implementation of the proposed amendment or waiver will not adversely
affect the then current ratings of the Bonds.
Notwithstanding the foregoing, the Indenture 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.
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Nothing in this Section 9.07 shall be construed to require that any
Person obtain the consent of the Indenture Trustee to any amendment or waiver
or any provision of any document where the making of such amendment or the
giving of such waiver without obtaining the consent of the Indenture Trustee is
not prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF BONDS
SECTION 10.01. REDEMPTION.
(a) The Bonds may be redeemed in whole, but not in part, on a
Payment Date that occurs on or after the Clean-Up Call Date at the
aggregate Redemption Price of all the Bonds at the option of the
holder(s) of a majority of the ownership interest in the Certificate
(the "Residual Majority"), or at the option of the Servicer if the
Residual Majority shall not have exercised its option to redeem the
Bonds on such date, provided, however, that funds in an amount equal
to the Redemption Price, plus any unreimbursed Nonrecoverable Advances
and any unreimbursed amounts due and owing to the Indenture Trustee
hereunder, must have been deposited with the Indenture Trustee prior
to the Indenture Trustee's giving notice of such redemption pursuant
to Section 10.02 or, the Issuer shall have complied with the
requirements for satisfaction and discharge of the Bonds specified in
Section 4.01. Notice of the election to redeem the Bonds shall be
furnished to the Indenture Trustee not later than thirty (30) days
prior to the Payment Date selected for such redemption, whereupon all
such Bonds shall be due and payable on such Payment Date upon the
furnishing of a notice pursuant to Section 10.02 to each Holder of
such Bonds. Any expenses associated with the compliance of the
provisions hereof in connection with a redemption of the Bonds shall
be paid by the Residual Majority or the Servicer, depending upon which
party is electing to redeem the Bonds.
(b) Upon receipt of the notice from Issuer of its election to
redeem the Bonds pursuant to Section 10.01(a), the Indenture Trustee
shall prepare and deliver to the Issuer, no later than the proposed
Redemption Date, a Payment Date Statement stating therein that it has
determined that the conditions to redemption at the option of the
Issuer have been satisfied and setting forth the amount, if any, to be
withdrawn from the Bond Account and paid to the Servicer as
reimbursement for Nonrecoverable Advances and such other information
as may be required to accomplish such redemption.
(c) Subject to Section 10.04, upon surrender of, and payment
for, the Bonds subject to redemption, such Bonds shall be retired and
cancelled by the Issuer.
(d) Upon redemption and retirement of all the Bonds, the
remaining Mortgage Loans securing the Bonds will be released from the
lien of this Indenture.
(e) There will be no prepayment premium in connection with
any redemption of a Class or Classes of the Bonds under this Article
X.
SECTION 10.02. FORM OF REDEMPTION NOTICE.
Notice of redemption shall be given by the Indenture Trustee in the
name of and at the expense of the Issuer by first class mail, postage prepaid,
mailed not less than ten days prior to the proposed Redemption Date to each
Holder of Bonds to be redeemed, such Holders being determined as of the Record
Date for such Payment Date.
All notices of redemption shall state:
(1) the proposed Redemption Date;
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(2) the Redemption Price at which the Bonds will be redeemed;
(3) the fact of payment in full on such Bonds, 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), and that no interest shall
accrue on such Bond for any period after the date fixed for
redemption.
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 OPTIONAL REDEMPTION.
Notice of redemption having been given as provided in Section 10.02,
each Bond to be redeemed shall, on the proposed Redemption Date, become due and
payable at the applicable Redemption Price and (unless the Issuer shall default
in the payment of the Redemption Price) no interest shall accrue on such
Redemption Price for any period after such Redemption Date; provided, however,
that if such Redemption Price is not paid on the proposed Redemption Date, the
Bond Balance shall, until paid, bear interest from the Redemption Date at the
Bond Interest Rate. The payment on the applicable Payment Date of the
Redemption Price shall be in lieu of the payment otherwise required to be made
on such Payment Date in respect of the Bonds.
SECTION 10.04. RESALE OF REDEEMED BONDS.
At the option of the Residual Majority (or if not exercised, the
Servicer), an optional redemption of the Bonds under this Article X may be
effected without retiring and canceling the Bonds so that the redeeming party
or a designee has the ability to own or resell such Class or Classes of the
Bonds.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or request by the Issuer to the
Indenture Trustee to take any action under any provision of this
Indenture, the Issuer shall furnish to the Indenture Trustee 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, if requested by the
Indenture Trustee, 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.
(b) 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
(other than certificates provided pursuant to TIA Section 314(a)(4))
shall include and shall be deemed to include (regardless of whether
specifically stated therein) the following:
(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;
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(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him 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 INDENTURE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
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 Indenture 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 Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of
the facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in 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 Indenture 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 Indenture 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 and evidenced 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 Indenture Trustee, and, where it is hereby expressly required, to
the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Bondholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any
such
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agent shall be sufficient for any purpose of this Indenture and
(subject to Section 6.01) conclusive in favor of the Indenture Trustee
and the Issuer, if made in the manner provided in this Section.
(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 of 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.
(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 Indenture Trustee
or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Bonds.
SECTION 11.04. NOTICES, ETC. TO INDENTURE 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 Indenture 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 Indenture
Trustee at its Corporate Trust Office; or
(2) the Issuer by the Indenture Trustee or by any Bondholder
shall be sufficient for every purpose hereunder (except as provided in
Section 5.01(3) and (4)) if in writing and mailed, first-class postage
prepaid, to the Issuer addressed to it at Fund America Investors Trust
1998-NMC1, in care of Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration, or at any other address previously
furnished in writing to the Indenture Trustee by the Issuer.
(3) the Transferor by the Indenture Trustee or by any
Bondholder shall be sufficient for every purpose hereunder if in
writing and mailed, first-class, postage paid, to Fund America
Investors Corporation II, Plaza Tower One, Suite 1200, 6400 South
Fiddler's Green Circle, Englewood, Colorado 80111, Attention: Howard
J. Glicksman or at any other address previously furnished in writing
to the Indenture Trustee by the Transferor; or
(4) the Mortgage Loan Seller or the Servicer by the Indenture
Trustee or by any Bondholder shall be sufficient for every purpose
hereunder if in writing and mailed, first-class, postage paid, to
National Mortgage Corporation, 7600 East Orchard Road, Suite 330S,
Englewood, Colorado 80111, Attention: President or at any other
address previously furnished in writing to the Indenture Trustee by
the Mortgage Loan Seller or the Servicer; or
(5) the Underwriter by any party or by any Bondholder shall
be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to Salomon Brothers Inc, Seven World
Trade Center, New York, New York 10048, Attention: Head: Mortgage
Finance.
Notices required to be given to the Rating Agencies by the
Issuer or the Indenture Trustee shall be in writing, personally
delivered or mailed first-class postage pre-paid, to (i) in the case
of Fitch, at the following address: Fitch IBCA, Inc., One State Street
Plaza, New York, New York 10004 and (ii) in the case of Standard &
Poor's, at the following address: Standard & Poor's Ratings Group, 26
Broadway
-63-
<PAGE> 70
(15th Floor), New York, New York, 10004, Attention: Asset Bankers
Surveillance Department; or as to each of the foregoing, at such other
address as shall be designed by written notice to the other parties.
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 that 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. Waivers of notice by Bondholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such 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 Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
SECTION 11.06. RULES BY INDENTURE TRUSTEE.
The Indenture Trustee may make reasonable rules for any meeting of
Bondholders.
SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of
the provisions of the 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.
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<PAGE> 71
SECTION 11.11. BENEFITS OF INDENTURE.
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 or
Section 5.21, 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 Payment 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 Payment Date, Redemption Date or other date for
the payment of principal of or interest on any Bond 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.
IN VIEW OF THE FACT THAT BONDHOLDERS ARE EXPECTED TO RESIDE IN MANY
STATES AND OUTSIDE THE UNITED STATES AND THE DESIRE TO ESTABLISH WITH CERTAINTY
THAT THIS INDENTURE WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF A STATE HAVING A WELL-DEVELOPED BODY OF COMMERCIAL
AND FINANCIAL LAW RELEVANT TO TRANSACTIONS OF THE TYPE CONTEMPLATED HEREIN,
THIS INDENTURE AND EACH BOND 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.
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, but 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 offices, such recording to be effected by the Issuer and at its
expense in compliance with any Opinion of Counsel delivered pursuant to Section
2.11(c) or 3.06.
SECTION 11.16. ISSUER OBLIGATION.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Bonds or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director, employee or agent of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of the Trust Agreement.
-65-
<PAGE> 72
SECTION 11.17 NO PETITION.
The Indenture Trustee, by entering into this Indenture, and each
Bondholder and Beneficial Owner, by accepting a Bond, hereby covenant and agree
that they will not at any time institute against the Transferor or the Issuer,
or join in any institution against the Transferor 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 Basic Documents. In addition, the Indenture Trustee
will on behalf of the holders of the Bonds, (a) file a written objection to any
motion or other proceeding seeking the substantive consolidation of the
Mortgage Loan Seller with National Mortgage Finance Corporation, the Transferor
or the Issuer, (b) file an appropriate memorandum of points and authorities or
other brief in support of such objection, or (c) endeavor to establish at the
hearing on such objection that the substantive consolidation of such entity
would be materially prejudicial to the Bondholders.
This Section 11.17 will survive for one year AND ONE DAY following the
termination of this Indenture.
SECTION 11.18. INSPECTION.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all of 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 Indenture Trustee, 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 expense incident to the exercise by the Indenture Trustee of any
right under this Section 11.18 shall be borne by the Issuer.
SECTION 11.19. USURY.
The amount of interest payable or paid on any Bond under the terms of
this Indenture shall be limited to an amount that 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),
that 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 Indenture
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 Indenture Trustee, refund
the amount of such excess or, at the option of the Indenture Trustee, apply the
excess to the payment of principal of such Bond, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Indenture Trustee for the
benefit of Holders of Bonds for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Bonds.
-66-
<PAGE> 73
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
FUND AMERICA INVESTORS TRUST 1998-NMC1
By: Wilmington Trust Company,
as Owner Trustee
By:
------------------------------
Authorized Signatory
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee
By:
------------------------------------
Name:
Title:
-67-
<PAGE> 74
State of New York )
)ss.:
County of New York )
On the _________ day of June, 1998 before me, a notary public in and
for said State, personally appeared ______________________________, known to me
to be ______________________ of Wilmington Trust Company, a corporation that
executed the within instrument acting as trustee of Fund America Investors
Trust 1998-NMC1, and also known to me to be the person 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.
-----------------------------------------
Notary Public
[Notarial Seal]
State of New York )
)ss.:
County of New York )
On the _________ day of June, 1998 before me, a notary public in and
for said State, personally appeared ______________________________, known to me
to be ______________________ of Norwest Bank Minnesota, National Association, a
national banking association that executed the within instrument, and also
known to me to be the person who executed it on behalf of said association, and
acknowledged to me that such association 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.
-----------------------------------------
Notary Public
[Notarial Seal]
-68-
<PAGE> 1
Exhibit 5.1
FILE NO.: 50039.000005
DIRECT DIAL: (704) 378-4703
June 25, 1998
Fund America Investors Corporation II
Plaza Tower One, Suite 1200B
6400 South Fiddler's Green Circle
Englewood, Colorado 80111
Registration Statement No. 333-33823
Dear Ladies and Gentlemen:
We have acted as counsel to Fund America Investors Corporation II, a
Delaware corporation (the "Company"), in connection with its proposed offering
and sale from time to time of Collateralized Mortgage Obligations (the "Bonds")
pursuant to its Registration Statement on Form S-3 (No. 333-33823). In this
capacity, we have examined the Registration Statement, the Company's Articles of
Incorporation and Bylaws, the form of Deposit Trust Agreement between the
Company, as depositor, and Wilmington Trust Company, as owner trustee, pursuant
to which Fund America Investors Trust 1998-NMC1 (the "Issuer") will be formed,
the form of Indenture between the Issuer, as issuer of the Collateral Mortgage
Obligations, Series 1998-NMC1, and Norwest Bank Minnesota, National Association,
as indenture trustee (the "Indenture"), and such other materials as we have
deemed necessary to the issuance of this opinion.
On the basis of the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. At the
time of any issuance of Bonds, the Issuer of such Bonds will exist as a trust
under the laws of the State of Delaware.
2. When the Indenture has been duly authorized by all necessary action
and has been duly executed and delivered by the parties thereto, it will
constitute a valid, legal and binding agreement of the Issuer, enforceable
against the Issuer in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and to general principles of equity,
regardless of whether enforcement is sought in a proceeding in equity or at law.
<PAGE> 2
Fund America Investors Corporation II
June 25, 1998
Page 2
3. When the Bonds have been duly authorized for sale by all necessary
action, and when the Bonds have been duly issued, executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by
the purchasers thereof, the Bonds will be legally and validly issued, and the
holders of the Bonds will be entitled to the benefits provided by the Indenture.
We hereby consent to the filing of this opinion as an exhibit to the
Company's Current Report on Form 8-K filed in connection with its offering of
its Series 1998-NMC1 Bonds. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by Section 7 of the
Securities Act of 1933 or the rules and regulations promulgated thereunder by
the Securities and Exchange Commission.
Very truly yours,
/s/ Hunton & Williams
02151/05993/08025
<PAGE> 1
Exhibit 8.1
June 25, 1998
Fund America Investors Corporation II
Plaza Tower One, Suite 1200B
6400 South Fiddler's Green Circle
Englewood, Colorado 80111
Ladies and Gentlemen:
We have acted as counsel to Fund America Investors Corporation II, a
Delaware corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-3 (No. 333-33823) (the "Registration
Statement"), which has been filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"), for the registration
under the Act of Collateralized Mortgage Obligations and Pass-Through
Certificates (the "Securities") in one or more series ("Series"). As set forth
in the Registration Statement, each Series of Securities will be issued under
and pursuant to the conditions of a separate pooling agreement, pooling and
administration agreement or indenture (each, an "Agreement") among the Company
or an owner trust established by the Company (the "Issuer"), a trustee (the
"Trustee") and, where appropriate, an administrator (the "Administrator"), each
to be identified in the prospectus supplement for such Series of Securities.
We have examined the prospectus and form of prospectus supplement
related thereto contained in the Registration Statement (each, a "Prospectus")
and such other documents, records and instruments as we have deemed necessary
for the purposes of this opinion.
In arriving at the opinion expressed below, we have assumed that each
Agreement will be duly authorized by all necessary corporate action on the part
of the Issuer, the Trustee, the Administrator (where applicable) and any other
party thereto for such Series of Securities and will be duly executed and
delivered by the Issuer, the Trustee, the Administrator and any other party
thereto substantially in the applicable form filed or incorporated by reference
as an exhibit to the Registration Statement, that each Series of Securities will
be duly executed and delivered in substantially the forms set forth in the
related Agreement filed or incorporated by reference as an exhibit to the
Registration Statement, and that Securities will be sold as described in the
Registration Statement.
Based on the foregoing, we are of the opinion that the legal
conclusions contained in each Prospectus forming a part of the Registration
Statement under the caption "Certain Federal Income Tax Consequences" are
correct in all material respects, and the discussion thereunder does not omit
any material provision with respect to the matters covered. You should be aware
that this opinion represents our conclusions as to the application of existing
law to a transaction as described above. There can be no assurance that contrary
positions will
<PAGE> 2
Fund America Investors Corporation II
June 25, 1998
Page 2
not be taken by the Internal Revenue Service or that the law will not change.
This opinion is based on the facts and circumstances set forth in the
Registration Statement and in the other documents reviewed by us. Our opinion as
to the matters set forth herein could change with respect to a particular Series
of Securities as a result of changes in facts or circumstances, changes in the
terms of the documents reviewed by us, or changes in the law subsequent to the
date hereof. Because the Prospectuses contemplate Series of Securities with
numerous different characteristics, you should be aware that the particular
characteristics of each Series of Securities must be considered in determining
the applicability of this opinion to a particular Series of Securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the references to Hunton & Williams
under the caption "Certain Federal Income Tax Consequences" in the Prospectus.
In giving this consent, we do not admit that we are in the category of persons
whose consent is required by Section 7 of the Act or the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.
No opinion has been sought and none has been given concerning the tax
treatment of the issuance and sale of the Securities under the laws of any
state.
Very truly yours,
/s/ Hunton & Williams
03352/07767
<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-----------------------------
[ ] CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. National Banking Association 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Agent for Service)
-----------------------------
FUND AMERICA INVESTORS TRUST 1998-NMC1
(Exact name of obligor as specified in its charter)
Delaware Not Yet Received
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c\o Wilmington Trust
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
(Address of principal executive offices) (Zip code)
-----------------------------
Fund America Investors Trust 1998-NMC1
Collateralized Mortgage Obligations, Series 1998-NMC1
(Title of the indenture securities)
================================================================================
<PAGE> 2
Item 1. General Information. Furnish the following information as to
the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of
the trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor is
not in default as provided under Item 13.
Item 15. Foreign Trustee. Not applicable.
Item 16. List of Exhibits. List below all exhibits filed as a part of
this Statement of Eligibility. Trustee
incorporates by reference into this Form T-1
the exhibits attached hereto.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of
the trustee to commence business issued June
28, 1872, by the Comptroller of the Currency
to The Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the Comptroller
of the Currency dated January 2, 1934,
approving the consolidation of The
Northwestern National Bank of Minneapolis
and The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being
titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January
12, 1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank
of Minneapolis.*
<PAGE> 3
d. A copy of the letter dated May 12, 1983 from
the Regional Counsel, Comptroller of the
Currency, acknowledging receipt of notice of
name change effective May 1, 1983 from
Northwestern National Bank of Minneapolis to
Norwest Bank Minneapolis, National
Association.*
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks for
the Comptroller of the Currency certifying
approval of consolidation and merger
effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with
various other banks under the title of
"Norwest Bank Minnesota, National
Association."*
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued January 2,
1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. A copy of the latest report of condition of the
trustee published pursuant to law or the requirements
of its supervising or examining authority.**
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to Exhibit 25 filed with
registration statement (number 33-66026) of trustee's parent,
Norwest Corporation.
** Incorporated by reference to Exhibit 25.1 to Form 8-K, filed
June 8 , 1998, in connection with registration statement
(number 333-52577) of Southern Pacific Secured Assets Corp..
2
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 18th day of June 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Peter J. Masterman
--------------------------
Name: Peter J. Masterman
--------------------------
Title: Vice President
--------------------------
<PAGE> 5
EXHIBIT 6
June 18, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Peter J. Masterman
--------------------------
Name: Peter J. Masterman
--------------------------
Title: Vice President
--------------------------
4
