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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) January 20, 2000
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Fund America Investors Corporation II
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(Exact name of registrant as specified in charter)
Delaware 33-73748 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 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
FAIC II Issuer Trust 2000-1 (the "Issuer") was formed pursuant to an
Agreement of Trust, dated as of January 19, 2000, among the Registrant,
Christiana Bank & Trust Company, as Issuer Trustee (the "Issuer Trustee"), and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Seller ("Merrill Lynch").
The Issuer is governed pursuant to an Amended and Restated Agreement of Trust,
dated as of January 20, 2000 (the "Issuer Trust Agreement"), among the
Registrant, Issuer Trustee and State Street Bank and Trust Company, as Issuer
Certificate Agent (the "Issuer Certificate Agent").
On January 20, 2000, the Issuer issued (i) U.S. $1,986,400 original
aggregate principal amount of its variable rate FAIC II Issuer Trust 2000-1,
Class F Notes (the "Class F Notes"), (ii) U.S. $764,000 original aggregate
principal amount of its variable rate FAIC II Issuer Trust 2000-1, Class S Notes
(the "Class S Notes", and, together with the Class F Notes, the "Notes")
pursuant to a Terms Indenture, dated as of January 20, 2000 (together with the
Standard Indenture provisions incorporated therein by reference, the "Terms
Indenture"), by and between the Issuer and State Street Bank and Trust Company,
as Note Trustee (the "Note Trustee"), and (iii) U.S. $465,600 original aggregate
principal amount of its FAIC II Issuer Trust 2000-1, Class R Certificates (the
"Class R Certificates"), pursuant to the Issuer Trust Agreement.
The Registrant purchased seven agency securities being guaranteed by
either Freddie Mac or Fannie Mae (the "Agency Securities") from Merrill Lynch,
pursuant to a Purchase Agreement, dated as of January 20, 2000 (the "Purchase
Agreement"), between the Registrant and Merrill Lynch. In turn, the Issuer
received from the Registrant the Agency Securities and the Registrant received
the net proceeds from the sale of the Notes and the Class R Certificates,
pursuant to a Deposit and Sale Agreement, dated as of January 20, 2000 (the
"Deposit Agreement"), by and between the Registrant and the Issuer.
As security for the Notes, the Issuer pledged to the Note Trustee
primarily all of the Agency Securities pursuant to the Indenture.
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The Notes have been sold by the Issuer to Merrill Lynch, as underwriter
(the "Underwriter") pursuant to an Underwriting Agreement, dated as of January
19, 2000, among the Underwriter, the Issuer and the Registrant.
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Indenture.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Not Applicable.
Exhibits
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1.1 Copy of the Underwriting Agreement, dated as of January 19,
2000, among Merrill Lynch, Pierce, Fenner & Smith
Incorporated, FAIC II Issuer Trust 2000-1 and the Registrant.
4.1 Copy of the Terms Indenture, dated as of January 20, 2000, by
and between FAIC II Issuer Trust 2000-1 and State Street Bank
and Trust Company, as Note Trustee.
4.2 Copy of the Standard Indenture Provisions, dated as of January
20, 2000.
8.1 Copy of the opinion of Hunton & Williams, dated January 20,
2000, regarding tax matters.
10.1 Copy of the Amended and Restated Agreement of Trust, dated as
of January 20, 2000, among the Registrant, Christiana Bank &
Trust Company, as Issuer Trustee, and State Street Bank and
Trust Company, as Issuer Certificate Agent.
10.2 Copy of the Deposit and Sale Agreement dated as of January 20,
2000 by and between the Registrant and FAIC II Issuer Trust
2000-1.
10.3 Copy of the Purchase Agreement dated January 20, 2000 between
the Registrant and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
23.1 Consent of Hunton & Williams (included in Exhibit 8.1)
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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.
January 20, 2000 FUND AMERICA INVESTORS CORPORATION II
By: /s/ Helen M. Dickens
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Name: Helen M. Dickens
Title: Vice President
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
1.1 Copy of the Underwriting Agreement, dated as of January 19,
2000, among Merrill Lynch, Pierce, Fenner and Smith
Incorporated, FAIC II Issuer Trust 2000-1 and the Registrant
4.1 Copy of the Terms Indenture, dated as of January 20, 2000, by
and between FAIC II Issuer Trust 2000-1 and State Street Bank
and Trust Company, as Note Trustee
4.2 Copy of the Standard Indenture Provisions, dated as of January
20, 2000
8.1 Copy of the opinion of Hunton & Williams, dated January 20,
2000, regarding tax matters
10.1 Copy of the Amended and Restated Agreement of Trust, dated as
of January 20, 2000, among the Registrant, Christiana Bank &
Trust Company, as Issuer Trustee, and State Street Bank and
Trust Company, as Issuer Certificate Agent
10.2 Copy of the Deposit and Sale Agreement dated as of January 20,
2000 by and between the Registrant and FAIC II Issuer Trust
2000-1
10.3 Copy of the Purchase Agreement dated January 20, 2000 between
the Registrant and Merrill Lynch, Pierce, Fenner and Smith
Incorporated
23.1 Consent of Hunton & Williams (included in Exhibit 8.1)
</TABLE>
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EXHIBIT 1.1
EXECUTION COPY
$2,750,400
FAIC II ISSUER TRUST 2000-1
$1,986,400 VARIABLE RATE CLASS F, ASSET BACKED NOTES, SERIES 2000-1
$764,000 VARIABLE RATE CLASS S, ASSET BACKED NOTES, SERIES 2000-1
FUND AMERICA INVESTORS CORPORATION II
UNDERWRITING AGREEMENT
January 19, 2000
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Dear Sirs:
1. Introductory. Fund America Investors Corporation II, a Delaware
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to cause FAIC II Issuer Trust 2000-1 (the "Trust") to issue and
sell $1,986,400 aggregate principal amount of variable rate Class F, Asset
Backed Notes, Series 2000-1 (the "Class F Notes") and $764,000 aggregate
principal amount of variable rate Class S, Asset Backed Notes, Series 2000-1
(the "Class S Notes," and together with the Class F Notes, the "Notes"). The
Notes will be issued pursuant to the Terms Indenture dated as of January 20,
2000 (together with the Standard Indenture Provisions incorporated by reference
therein, the "Indenture") between the Trust and State Street Bank and Trust
Company (the "Note Trustee").
Concurrently with the issuance and sale of the Notes as contemplated herein,
the Trust will issue $465,600 of certificates of beneficial interest (the
"Certificates"), each representing an interest in the Issuer Assets. The
Certificates will be issued pursuant to an Amended and Restated Agreement of
Trust dated as of January 20, 2000 (the "Issuer Trust Agreement"), between the
Company, Christiana Bank & Trust Company, as Issuer Trustee, and State Street
Bank and Trust Company, as Issuer Certificate Agent. The Certificates are
effectively subordinated to the Notes, except with respect to the principal
collections on the Series 2203, Class PG, mortgage pass-
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through certificate issued by Freddie Mac, which security is pledged to secure
the Notes under the Indenture.
The assets of the Trust will include, among other things, (i) seven REMIC
securities guaranteed by either Fannie Mae or Freddie Mac to be conveyed to the
Trust on the Closing Date (the "Agency Securities"), (ii) amounts in the Note
Collection Account, the Interest Reserve Account, the Expense Account and the
Trust Agreement Collection Account, (iii) the rights of the Trust under the
Deposit Agreement and the Issuer Trust Agreement and (iv) all proceeds of the
foregoing. The Agency Securities will be contributed to the Trust by the
Company. Capitalized terms used but not defined herein have the meanings
ascribed thereto in the Indenture or, if not defined therein, in the Issuer
Trust Agreement.
The Company and the Trust hereby agree with you (the "Underwriter") as
follows:
2. Representations and Warranties of the Company and the Trust. Each of the
Company and the Trust hereby represents and warrants, as to itself, to, and
agrees with, the Underwriter that:
(a) A registration statement on Form S-3 (No. 333-33823), as heretofore
amended, relating to the Notes, including a form of prospectus, has been filed
with the Securities and Exchange Commission (the "Commission") and has been
declared effective under the Securities Act of 1933, as amended (the "1933
Act"), and is not proposed to be amended. The registration statement (including
the prospectus constituting a part thereof) in the form in which it became
effective under the 1933 Act, including the exhibits thereto, is hereinafter
referred to as the "Registration Statement" and the prospectus dated January 19,
2000 in the form in which it was most recently filed with the Commission, and
the prospectus supplement dated January 19, 2000 are together hereinafter
referred to as the "Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the 1933 Act.
(b) On the date the Registration Statement became effective (the "Effective
Date") and on the date hereof, the Registration Statement and the Prospectus
comply in all respects with the requirements of the 1933 Act and the rules and
regulations of the Commission thereunder (the "Rules and Regulations") and
neither of such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required to be
stated therein or necessary, to make the statements therein not misleading;
provided, that no representation is made as to any numerical and statistical
information therein relating to the Notes, the Certificates or the Agency
Securities, all of which was supplied by the Underwriter.
(c) The Company has been duly incorporated and is an existing corporation in
good standing under the laws of the State of Delaware, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified to do business as
a foreign corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification.
(d) The Trust has been duly formed and is validly existing in good standing
under the laws of the State of Delaware, with power and authority to own its
properties and conduct its business as
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described in the Prospectus; and the Trust is duly qualified to do business in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification.
(e) No consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required to be obtained or made by
it for the consummation of the transactions contemplated by this Agreement and
the Transaction Documents in connection with the issuance and sale of the Notes
and the Certificates, except such as have been obtained and made under the 1933
Act, such as may be required under state securities laws and the filing of any
financing statements required to perfect the Note Trustee's interest in the
Issuer Assets, which financing statements will be filed in the appropriate
offices within ten (10) days of the Closing Date.
(f) It is not in violation of its organizational or formation documents or
in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any agreement or instrument to which it is a
party or by which it or its properties are bound which could have a material
adverse effect on the transactions contemplated herein or in the Transaction
Documents. The execution, delivery and performance of this Agreement and the
Transaction Documents, and the issuance and sale of the Notes and the
Certificates and compliance with the terms and provisions hereof and thereof
will not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over it or any of its properties, or any agreement or instrument to
which it is a party or by which it is bound or to which any of its properties is
subject, or its organizational or formation documents; it has full power and
authority to enter into this Agreement and the Transaction Documents to which it
is a party and to consummate the transactions contemplated hereby and thereby;
the Trust has full power and authority to authorize, issue and sell the Notes
and the Certificates as contemplated by this Agreement, the Indenture and the
Issuer Trust Agreement.
(g) On the Closing Date, the Company will have directed (i) the Issuer
Trustee to execute, and the Authenticating Agent to authenticate, the Notes and,
when delivered and paid for pursuant to the Indenture, the Notes will have been
duly executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Trust, entitled to the benefits of the
Indenture and enforceable in accordance with their terms and (ii) the Issuer
Trustee to execute, and the Issuer Certificate Agent to authenticate, the
Certificates and, when delivered and paid for pursuant to the Issuer Trust
Agreement, the Certificates will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of the
Trust, entitled to the benefits provided in the Issuer Trust Agreement and
enforceable in accordance with their terms.
(h) It possesses adequate certificates, authorities and permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by it and has not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or permit
that, if determined adversely to it, would individually or in the aggregate have
a material adverse effect on it.
(i) Except as disclosed in the Prospectus, there are no pending actions,
suits or proceedings against or affecting it or any of its properties that, if
determined adversely to it, would individually
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or in the aggregate have a material adverse effect on the condition (financial
or other), business or results of operations of it, or would materially and
adversely affect its ability to perform its obligations under this Agreement or
the Transaction Documents to which it is a party, or which are otherwise
material in the context of the issuance and sale of the Notes or the
Certificates; and no such actions, suits or proceedings are threatened or, to
its knowledge, contemplated.
(j) As of the Closing Date, the representations and warranties made by it in
the Transaction Documents to which it is a party will be true and correct.
(k) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
(i) there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business and (ii)
there have been no transactions entered into by the Company, other than those in
the ordinary course of business, which are material with respect to the Company.
(l) Each of the Transaction Documents to which it is a party will be duly
authorized by it and, when duly executed and delivered by it and the other
parties thereto, will constitute its valid and binding agreement enforceable
against it in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(m) This Agreement has been duly authorized, executed and delivered by it.
(n) The Company has authorized the conveyance of the Agency Securities to
the Trust and, as of the Closing Date, the Company has directed the Trust to
execute, issue and sell the Notes and the Certificates.
(o) The Company's assignment and delivery of the Agency Securities to the
Trust will vest in the Trust all of the Company's right, title and interest
therein, subject to no prior lien, mortgage, security interest, pledge, adverse
claim, charge or other encumbrance.
(p) The Trust's assignment of the Pledged Assets to the Note Trustee
pursuant to the Indenture will vest in the Note Trustee, for the benefit of the
Noteholders, a security interest therein, which will be perfected upon the Note
Trustee's taking possession of the certificated Agency Securities endorsed by
the registered holder(s) thereof in blank or to the Note Trustee and upon the
Note Trustee's being reflected by book-entry in the Federal Reserve Bank's
records as the holder of the Series 2203 Freddie Mac Security, subject to no
prior lien, mortgage, security interest, pledge, adverse claim, charge or other
encumbrance except for any tax lien, mechanics' lien or other lien or
encumbrance that attaches by operation of law so long as the Note Trustee
maintains physical possession of the certificated Agency Securities in the form
described above, in the Commonwealth of Massachusetts, and so long as the Note
Trustee continues to be a "securities intermediary" of the
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Federal Reserve Bank and continues to be reflected in the records of the Federal
Reserve Bank as the holder of the Series 2203 Freddie Mac Security as described
in Section 3.03 of the Indenture.
(q) Any taxes, fees and other governmental charges in connection with the
execution, delivery and performance of this Agreement, the Transaction
Documents, the Notes and the Certificates and any other agreements contemplated
herein or therein shall have been paid or will be paid by the Company at or
prior to the Closing Date to the extent then due.
(r) Neither the Company nor the Trust is, and after giving effect to the
offering and sale of the Notes and the Certificates and the application of the
proceeds thereof as described in the Prospectus, will not be required to be,
registered as an "investment company" as defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act").
3. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Trust agrees to sell to the
Underwriter, and the Underwriter agrees to purchase from the Trust, at a
purchase price of, in the case of (i) the Class F Notes, 100% of the principal
amount thereof and (ii) the Class S Notes, 68% of the principal amount thereof.
The Trust will deliver against payment of the purchase price, the Notes of
each Class in the form of one or more definitive notes, in authorized
denominations and registered in such names as the Underwriter shall specify to
the Trust and such Notes will be made available for checking at the office of
Hunton & Williams, Richmond, Virginia, at least 24 hours prior to the Closing
Date. Payment for the Notes shall be made by the Underwriter by wire transfer to
the Note Proceeds Account established under the Indenture, at 10:00 a.m., New
York time, on January 20, 2000, or at such other time not later than seven full
business days thereafter as Merrill Lynch and the Company determine, such time
being herein referred to as the "Closing Date", against delivery to the
Underwriter of the Notes.
The Trust will deliver the Certificates in definitive form, in authorized
denominations and registered in the such names as the Underwriter shall specify
to the Trust and will be made available for checking at the above office of
Hunton & Williams at least 24 hours prior to the Closing Date.
Pursuant to Rule 15c6-1(d) under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the parties hereto have agreed that the Closing Date
will be not later than January 20, 2000, unless otherwise agreed to as described
above.
4. Offering by Underwriter. It is understood that the Underwriter proposes
to offer the Notes for sale to the public (which may include selected dealers)
as set forth in the Prospectus.
5. Certain Agreements of the Company and the Trust. Each of the Company and
the Trust hereby agrees, as to itself, with the Underwriter:
(a) Immediately following the execution of this Agreement, the Company will
prepare the Prospectus setting forth the principal amount of the offered Notes,
the price at which the offered
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Notes are to be purchased by you and such other information as you and the
Company deem appropriate in connection with the offering of the Notes. The
Company will, to the extent required by the Regulations, promptly transmit
copies of the Prospectus to the Commission for filing pursuant to Rule 424 under
the 1933 Act and will furnish to you as many copies of the Prospectus as you
shall reasonably request.
(b) The Company will advise you promptly of any proposal to amend or
supplement the Registration Statement as filed or the related Prospectus and
will not effect such amendment or supplementation without your prior review and
consent.
(c) If, at any time when a Prospectus relating to the Notes is required to
be delivered under the 1933 Act in connection with sales by the Underwriter or
any dealer, any event occurs as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any such time to amend the Prospectus to comply with the 1933
Act, the Company will promptly notify you of such event and will promptly
prepare and file with the Commission (subject to your prior review pursuant to
Section 5(b)), at its own expense, an amendment or supplement which will correct
such statement or omission, or an amendment which will effect such compliance.
The Underwriter's consent to any such amendment or supplement shall not
constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date (as
defined below), the Trust to make generally available to the Noteholders an
earnings statement of the Trust covering a period of at least 12 months
beginning after the Effective Date which will satisfy the provisions of Section
11(a) of the 1933 Act, if required under Section 11(a) of the 1933 Act. For the
purpose of the preceding sentence, "Availability Date" means the 90th day after
the end of the Trust's fourth fiscal quarter following the fiscal quarter that
includes such Effective Date.
(e) The Company will furnish to you copies of the Registration Statement
(including all exhibits thereto), and, so long as delivery of a prospectus
relating to the Notes is required to be delivered under the 1933 Act in
connection with sales by the Underwriter or any dealer, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as you may reasonably request. The Prospectus shall be so
furnished on or prior to 3:00 p.m., New York time, on the business day following
the execution and delivery of this Agreement. All other such documents shall be
so furnished as soon as available. The Company will pay the expenses of printing
and distributing to the Underwriter all such documents.
(f) The Company will use its best efforts to qualify the Notes for offering
and sale and the determination of their eligibility for investment under the
laws of such states as the Underwriter designates and will continue such
qualifications in effect so long as required for the distribution of the Notes.
(g) For a period from the date of this Agreement until the retirement of the
Notes (i) the Trust will furnish to the Underwriter copies of each certificate
and the annual statements of
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compliance delivered to the Note Trustee pursuant to the Indenture, by
first-class mail as soon as practicable after such statements are furnished to
the Note Trustee, and (ii) such other forms of periodic certificates or reports
as may be delivered to the Note Trustee, the Issuer Trustee, the Noteholders or
the Certificateholders under the Indenture, the Issuer Trust Agreement or the
other Transaction Documents.
(h) So long as any Note is outstanding, the Trust will furnish to the
Underwriter by first-class mail as soon as practicable, (i) all documents
distributed, or caused to be distributed, by the Trust to Noteholders, (ii) all
documents filed, or caused to be filed, by the Trust with the Commission
pursuant to the 1934 Act or any order of the Commission thereunder and (iii)
such other information concerning the Trust as the Underwriter from time to time
may reasonably request.
(i) Except as otherwise agreed, the Company will pay all expenses incident
to the performance of its obligations under this Agreement and will reimburse
the Underwriter (if and to the extent incurred by it) for any filing fees and
other expenses (including fees and disbursements of counsel) in connection with
the qualification of the Notes for sale and determination of their eligibility
for investment under the laws of such jurisdictions as the Underwriter
designates and the printing of memoranda relating thereto, for any fees charged
by investment rating agencies for the rating of the Notes and for expenses
incurred in distributing the Prospectus (including any amendments and
supplements thereto).
(j) To the extent, if any, that the rating provided with respect to the
Notes by Moody's Investors Service, Inc. ("Moody's") is conditional upon the
furnishing of documents or the taking of any other action by the Company or the
Trust, the Company or the Trust, as applicable, shall furnish such documents and
take any such other action.
(k) From and after the Closing Date, the Company shall not take any action
inconsistent with the Trust's ownership of the Issuer Assets.
6. Conditions of the Obligation of the Underwriter. The obligation of the
Underwriter to purchase and pay for the Notes on the Closing Date will be
subject to the accuracy of the representations and warranties on the part of the
Company and the Trust herein, to the accuracy of the statements of officers of
the Company and the Trust made pursuant to the provisions hereof, to the
performance by the Company and the Trust of their respective obligations
hereunder and to the following additional conditions precedent:
(a) The Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a). Prior to the Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company or the Underwriter, shall be contemplated by the
Commission.
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(b) The Underwriter shall have received an opinion of Hunton & Williams,
counsel to the Company and the Trust, dated the Closing Date, with respect to
certain corporate and bankruptcy matters and in the form attached as Exhibit A-1
hereto.
(c) The Underwriter shall have received an opinion of Hunton & Williams,
special tax counsel for the Company and the Trust, dated the Closing Date, with
respect to certain tax matters and in the form attached as Exhibit A-2 hereto.
(d) The Underwriter shall have received an opinion of Hunton & Williams,
counsel to the Company and the Trust, dated the Closing Date, with respect to
certain security interest (creation and perfection) matters and in the form
attached as Exhibit A-3 hereto.
(e) The Underwriter shall have received from Milbank, Tweed, Hadley & McCloy
LLP, counsel for the Underwriter, such opinion or opinions, dated the Closing
Date, with respect to such matters as the Underwriter may require, and the
Company and the Trust shall have furnished to such counsel such documents as it
may request for the purpose of enabling it to pass upon such matters.
(f) The Underwriter shall have received a certificate, dated the Closing
Date, of (I) the Chairman of the Board, the President or any Vice-President and
a principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable investigation, shall
state that: the representations and warranties of the Company in this Agreement
are true and correct; the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date; the representations and warranties of the Company in the
Transaction Documents are true and correct as of the dates specified in such
agreements; the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such agreements at or
prior to the Closing Date; no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; and, subsequent to the
date of the Prospectus, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary course
of business and (II) an Authorized Officer of the Trust in which such officer,
to the best of their knowledge after reasonable investigation, shall state that:
the representations and warranties of the Trust in this Agreement are true and
correct; the Trust has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to the Closing
Date; the representations and warranties of the Trust in the Transaction
Documents are true and correct as of the dates specified in such agreements; the
Trust has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied under such agreements at or prior to the Closing
Date; and, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission.
(g) The Underwriter shall have received an opinion of Peabody & Arnold,
counsel to the Note Trustee and the Issuer Certificate Agent, dated the Closing
Date and in the form attached as Exhibit B hereto.
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(h) The Underwriter shall have received an opinion of Stradley Ronan Stevens
& Young LLP, counsel to the Issuer Trustee, dated the Closing Date and in the
form attached as Exhibit C hereto.
(i) The Underwriter shall have received evidence satisfactory to it and its
counsel that, within ten (10) days of the Closing Date, UCC-1 financing
statements have been or are being filed in the office of the Secretary of State
of the state of (i) Delaware reflecting the transfer of the interest of the
Seller in the Agency Securities and the proceeds thereof to the Company and the
transfer of the interest of the Company in the Agency Securities and the
proceeds thereof to the Trust and (ii) Delaware reflecting the grant of the
security interest by the Trust in the Agency Securities and the proceeds thereof
to the Note Trustee.
(j) Moody's shall have rated each class of the Notes "Aaa".
(k) The Underwriter shall have received executed copies of each of the
Transaction Documents and any other documents executed on or prior to the
Closing Date in connection therewith.
The Company and the Trust will furnish the Underwriter with such conformed
copies of such opinions, certificates, letters and documents as the Underwriter
reasonably requests.
7. Indemnification and Contribution.
(a) The Company and the Trust hereby agree, jointly and severally, to
indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
<PAGE> 10
10
(iii) against any and all expense whatsoever, as incurred (including the
reasonable fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under clause (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the Trust
by the Underwriter expressly for use in the Prospectus (or any amendment or
supplement thereto), including, without limitation, any numerical and
statistical information in the Prospectus relating to the Notes, the
Certificates or the Agency Securities, all of which was supplied by the
Underwriter.
(b) The Underwriter agrees to indemnify and hold harmless each of the
Company and the Trust, their respective trustee, officers and directors and each
person, if any, who controls the Company or the Trust, as applicable, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Prospectus (or any amendment or supplement thereto) in reliance upon
and in conformity with written information furnished to the Trust by the
Underwriter expressly for use in the Prospectus (or any amendment or supplement
thereto), including, without limitation, any numerical and statistical
information in the Prospectus relating to the Notes, the Certificates or the
Agency Securities, all of which was supplied by the Underwriter.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 7(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 7(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be
<PAGE> 11
11
sought under this Section 7 (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) If the indemnification provided for in this Section 7 is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to herein, then
each indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Trust on the one hand and the
Underwriter on the other hand from the offering of the Notes pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Trust on the one hand and of the Underwriter on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Trust on the one hand
and the Underwriter on the other hand in connection with the offering of the
Notes pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Notes pursuant to
this Agreement (before deducting expenses) received by the Trust and the total
underwriting discount received by the Underwriter, bear to the aggregate initial
public offering price of the Notes.
The relative fault of the Company and the Trust on the one hand and the
Underwriter on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Trust or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Trust and the Underwriter
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 7 shall be deemed to
<PAGE> 12
12
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriter shall not
be required to contribute any amount in excess of the total underwriting
discount received by the Underwriter.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter, and
each person, if any, who controls the Company or the Trust, as applicable,
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company or the Trust, as
applicable.
8. Termination of Agreement. The Underwriter may terminate this Agreement,
by notice to the Company and the Trust, at any time at or prior to the Closing
Date (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company, whether or not
arising in the ordinary course of business which, in the judgment of the
Underwriter, materially impairs the investment quality of each Class of the
Notes or makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for each Class of the Notes; (ii) if
there has occurred any downgrading in the rating of the debt securities of the
Company by any "nationally recognized statistical rating organization" (as such
term is defined for purposes of Rule 436(g) under the 1933 Act), or any public
announcement that such organization has under surveillance or review its rating
of any debt securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Underwriter,
impracticable to market the Notes or to enforce contracts for the sale of the
Notes; (iv) if trading in any securities of the Company has been suspended or
materially limited by the Commission; (v) if trading generally on either the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority; or (vi) if a
banking moratorium has been declared by federal or New York authorities.
<PAGE> 13
13
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, the Trust or their respective officers and of the Underwriter set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Underwriter, the Company, the Trust or any of their
respective representatives, officers or directors or any controlling person, and
will survive delivery of and payment for the Notes. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the Notes
by the Underwriter is not consummated, the Company shall remain responsible for
the expenses to be paid or reimbursed by it pursuant to Section 5 and the
respective obligations of the Company, the Trust and the Underwriter pursuant to
Section 7 shall remain in effect, and if any Notes have been purchased hereunder
the representations and warranties in Section 2 and all obligations under
Section 5 shall also remain in effect. If the purchase of the Notes by the
Underwriter is not consummated for any reason other than solely because of the
occurrence of any event specified in clause, (iii), (v) or (vi) of Section 8,
the Company will reimburse the Underwriter for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Notes.
10. Notices. All communications hereunder will be in writing and, if sent to
the Underwriter, will be mailed, delivered or sent by facsimile and confirmed to
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, North
Tower, World Financial Center, New York, New York, 10281-1201, Attention: John
Winchester (facsimile number (212) 449-5868), if sent to the Company, will be
mailed, delivered or sent by facsimile and confirmed to it at Fund America
Investors Corporation II, Plaza Tower One, Suite 1200B, 6400 South Fiddler's
Green Circle, Englewood, Colorado 80111, Attention: Howard J. Glickman (fax
(303) 741-2630), or if sent to the Trust, will be mailed, delivered or sent by
facsimile and confirmed to it at FAIC II Issuer Trust 2000-1, c/o Christiana
Bank & Trust Company, Greenville Center, 3801 Kennet Pike, Greenville, Delaware
19807, Attention: Corporate Trust Administration.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the trustee,
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligation hereunder.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
(b) Each of the Company and the Trust hereby submits to the nonexclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
<PAGE> 14
14
14. The Issuer Trustee. The representations, warranties, covenants and other
agreements of the Issuer in this Agreement are made solely by the Issuer and not
by Christiana Bank & Trust Company in its individual capacity. In no event shall
Christiana Bank & Trust Company be liable for any debt, claim, demand, judgment
or obligation of any kind of, against or with respect to the Issuer by reason of
its being the Issuer Trustee of the Issuer.
<PAGE> 15
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company one of the counterparts hereof, whereupon
it will become a binding agreement between the Company, the Trust and the
Underwriter in accordance with its terms.
Very truly yours,
FUND AMERICA INVESTORS CORPORATION II
By: /s/ Helen M. Dickens
------------------------------
Name: Helen M. Dickens
Title: Vice President
FAIC II ISUER TRUST 2000-1
By: Christiana Bank & Trust Company,
not in its individual capacity
but solely as Issuer Trustee of
the Issuer
By: /s/ Louis W. Geibel, Jr.
------------------------------
Name: Louis W. Geibel, Jr.
Title: Vice President
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Brodie Johnson
-----------------------------
Name: Brodie Johnson
Title: Director
<PAGE> 1
EXHIBIT 4.1
TERMS INDENTURE
dated as of January 20, 2000
between
FAIC II ISSUER TRUST 2000-1,
Issuer
and
STATE STREET BANK AND TRUST COMPANY
Note Trustee
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I DEFINITIONS.............................................................................................3
Section 1.01 Definitions................................................................................3
Section 1.02 Rules of Construction.....................................................................15
Section 1.03 Legal Holidays............................................................................15
ARTICLE II ISSUE, EXECUTION, FORM AND REGISTRATION OF NOTE.......................................................15
Section 2.01 Authentication and Delivery of Notes......................................................15
Section 2.02 Execution of Notes........................................................................16
Section 2.03 Certificate of Authentication.............................................................16
Section 2.04 Form, Denomination and Date of Notes......................................................16
Section 2.05 Payment of Notes..........................................................................17
Section 2.06 Registration, Transfer or Exchange of Notes...............................................17
Section 2.07 Taxes....................................................................................19
Section 2.08 Note Payments; Repayment of Principal of the Notes........................................19
ARTICLE III NOTE PROCEEDS ACCOUNT; CUSTODY OF AGENCY SECURITIES..................................................20
Section 3.01 Note Proceeds Account.....................................................................20
Section 3.02 Withdrawals from Note Proceeds Account....................................................20
Section 3.03 Custody of Agency Securities..............................................................21
ARTICLE IV THE NOTE COLLECTION ACCOUNT...........................................................................22
Section 4.01 Note Collection Account...................................................................22
Section 4.02 Payments..................................................................................23
ARTICLE V THE INTEREST RESERVE ACCOUNT...........................................................................24
Section 5.01 Interest Reserve Account..................................................................24
Section 5.02 Payments..................................................................................25
ARTICLE VI THE EXPENSE RESERVE ACCOUNT...........................................................................25
Section 6.01 Expense Reserve Account...................................................................25
Section 6.02 Payments.................................................................................26
ARTICLE VII COVENANTS OF THE ISSUER..............................................................................27
Section 7.01 Covenants of the Issuer...................................................................27
ARTICLE VIII LIMITATION ON LIABILITY OF THE ISSUER...............................................................30
Section 8.01 Liabilities of the Issuer.................................................................30
ARTICLE IX EVENTS OF DEFAULT.....................................................................................31
Section 9.01 Events of Default.........................................................................31
Section 9.02 Application of Proceeds...................................................................33
Section 9.03 Other Enforcement Provisions..............................................................34
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE X CONCERNING THE NOTE TRUSTEE............................................................................34
Section 10.01 Duties of the Note Trustee; Certain Rights of the Note Trustee...........................34
Section 10.02 Performance of Note Trustee's Duties.....................................................36
Section 10.03 Resignation and Removal; Appointment of Successor Note Trustee...........................37
Section 10.04 Acceptance of Appointment by Successor Note Trustee......................................38
Section 10.05 Merger or Consolidation of Note Trustee..................................................38
Section 10.06 Certain Procedural Matters...............................................................39
Section 10.07 Note Trustee Fees and Indemnification....................................................39
Section 10.08 Information..............................................................................40
Section 10.09 Eligibility Requirements for Note Trustee................................................40
Section 10.10 Note Trustee Not Liable for Notes........................................................40
Section 10.11 Note Trustee May Own Notes...............................................................41
Section 10.12 Maintenance of Office or Agency..........................................................41
Section 10.13 Appointment of Co-Note Trustee...........................................................41
Section 10.14 Application of the Trust Indenture Act...................................................41
Section 10.15 Conflict With Trust Indenture Act........................................................41
ARTICLE XI CONCERNING THE NOTEHOLDERS............................................................................42
Section 11.01 Control by Majority Noteholders..........................................................42
Section 11.02 Right of Revocation of Action Taken......................................................42
ARTICLE XII OPTIONAL NOTE REDEMPTION.............................................................................42
Section 12.01 Optional Note Redemption.................................................................42
Section 12.02 Notice of Optional Note Redemption.......................................................43
Section 12.03 Payment of Notes Called for Redemption...................................................44
Section 12.04 Termination..............................................................................44
ARTICLE XIII MISCELLANEOUS.......................................................................................44
Section 13.01 Notices..................................................................................44
Section 13.02 Effect of Headings.......................................................................45
Section 13.03 Counterparts.............................................................................45
Section 13.04 Further Assurance........................................................................45
Section 13.05 Governing Law; Submission to Jurisdiction................................................45
Section 13.06 Waiver of Jury Trial.....................................................................46
Section 13.07 Limitation on Rights of Noteholders......................................................46
Section 13.08 Notes Nonassessable and Fully Paid.......................................................46
Section 13.09 Incorporation of Standard Indenture Provisions...........................................47
Section 13.10 No REMIC Election........................................................................47
</TABLE>
ii
<PAGE> 4
Schedule I: Agency Securities
Exhibit A-1 Form of Class F Note
Exhibit A-2 Form of Class S Note
Exhibit B Form of Account Certification
Exhibit C Form of Transferee Certificate
Annex A Standard Indenture Provisions
iii
<PAGE> 5
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.
<TABLE>
<CAPTION>
Standard
Trust Indenture Act of 1939 Terms Indenture Indenture Provisions
- --------------------------- --------------- --------------------
<S> <C> <C> <C>
Section 310
(a)(1)............................................. 10.09
(a)(2)............................................. 10.09
(a)(3)............................................. 10.13
(a)(4)............................................. Not Applicable
(a)(5)............................................. 10.09
(b)................................................ 10.09, 10.03
(c)................................................ Not Applicable
Section 311
(a)................................................ 9.01
(b)................................................ 9.01
(c)................................................ Not Applicable
Section 312
(a)................................................ 7.01, 7.02(a)
(b)................................................ 7.02(b)
(c)................................................ 7.02(c)
Section 313
(a)................................................ 7.03(a)
(b)................................................ 7.03(a)
(c)................................................ 7.03(a)
(d)................................................ 7.03(b)
Section 314
(a)................................................ 7.04, 11.05
(b)(1)............................................. 2.03
(b)(2)............................................. 3.06
(c)(1)............................................. 2.03, 9.01 4.01(c)
(c)(2)............................................. 2.03, 9.01 4.01(c)
(c)(3)............................................. Not Applicable
(d)(1)............................................. 7.01(h) 11.01(b)
(d)(2)............................................. 7.01(h) 11.01(c)
(d)(3)............................................. 7.01(h) 11.01(d)
(e)................................................ 11.01(f)
Section 315
(a)................................................ 10.01(c),(d)
(b)................................................ 6.02 7.03
(c)................................................ 9.01
(d)(1)............................................. 10.01
(d)(2)............................................. 10.01
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
(d)(3)............................................. 10.01
(e)................................................ 5.16
Section 316
(a)................................................ 10.14 5.02, 5.14, 5.15
(b)................................................ 2.05(b) 5.10
(c)................................................ 10.14
Section 317
(a)(1)............................................. 9.01 5.03
(a)(2)............................................. 9.01 5.06
(b)................................................ 3.03
Section 318
(a)................................................ 10.15 11.07
</TABLE>
v
<PAGE> 7
This TERMS INDENTURE, dated as of January 20, 2000, between
FAIC II ISSUER TRUST 2000-1, a newly formed Delaware statutory business trust
(together with its successors, the "Issuer") and STATE STREET BANK AND TRUST
COMPANY, a trust company incorporated in the Commonwealth of Massachusetts (in
its individual capacity, "State Street") (acting hereunder not in its individual
capacity (except as expressly set forth herein) but solely in its capacity as
trustee hereunder, together with its successors in such capacity, the "Note
Trustee"),
W I T N E S S E T H :
WHEREAS, pursuant to a Purchase Agreement dated the date
hereof (the "Purchase Agreement") between Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation (the "Seller") and Fund America Investors
Corporation II, a corporation existing under the laws of the State of Delaware
(the "Depositor"), (i) the Depositor shall purchase from the Seller, and the
Seller shall sell to the Depositor, certain securities guaranteed by either
Fannie Mae or Freddie Mac, which securities are identified on Schedule I
attached hereto (the "Agency Securities") and (ii) the Seller shall receive from
the Depositor amounts received by the Depositor from the Issuer pursuant to the
Deposit Agreement (as defined herein);
WHEREAS, pursuant to a Deposit and Sale Agreement dated as of
January 20, 2000 (the "Deposit Agreement") between the Depositor and the Issuer,
(i) the Issuer shall receive from the Depositor (a) the seven Agency Securities
and (b) the rights of the Depositor under the Purchase Agreement (collectively,
the "Contributed Assets") and (ii) the Depositor shall receive from the Issuer
the net proceeds from the sale of the Notes and the Class R Certificates (each
as defined herein);
WHEREAS, the Issuer has authorized the issue of (i) U.S.
$1,986,400 original aggregate principal amount of its variable rate FAIC II
Issuer Trust 2000-1, Class F Notes (the "Class F Notes"), and (ii) U.S. $764,000
original aggregate principal amount of its variable rate FAIC II Issuer Trust
2000-1, Class S Notes (the "Class S Notes", and, together with the Class F
Notes, the "Notes"), the payments of which will be secured by the Pledged Assets
(as defined herein);
WHEREAS, this Terms Indenture incorporates by reference
certain Standard Indenture Provisions (as defined herein);
WHEREAS, the execution and delivery of this Terms Indenture,
together with the Standard Indenture Provisions incorporated herein by reference
(this Terms Indenture, together with such Standard Indenture Provisions so
incorporated by reference, the "Indenture") has been duly authorized by the
Issuer;
WHEREAS, the Note Trustee has accepted the trusts created by
this Indenture and in evidence thereof has joined in the execution hereof; and
WHEREAS, all things necessary to make the Notes, when issued
and authenticated by the Note Trustee as in this Indenture provided, the legal,
valid and binding
Indenture
<PAGE> 8
2
obligations of the Issuer and to provide a security interest in the Trust Estate
(as defined herein) have been done and performed.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in
consideration of the above premises, of the acceptance by the Note Trustee of
the trusts hereby created, and of the purchase and acceptance of the Notes by
the owners thereof, and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, and for the purpose of fixing
and declaring the terms and conditions upon which the Notes are to be issued,
authenticated, delivered, secured and accepted by all Persons (as defined below)
who shall from time to time be or become owners thereof, and in order to secure
the payment of principal of all the Notes at any time issued and outstanding and
the interest, if any, thereon according to their tenor, purport and effect, and
in order to secure the performance and observance of all the covenants,
agreements and conditions contained therein and herein, the Issuer has executed
and delivered this Indenture and has Granted (as defined below) and does hereby
Grant to the Note Trustee on and subject to the terms set forth in this
Indenture:
GRANTING CLAUSES:
All right, title and interest of the Issuer, whether now owned
or hereafter acquired, in, to and under a segregated pool of assets consisting
of (i) the seven Agency Securities (sometimes referred to as the "Contributed
Securities") and all payments thereon payable on or after the Cut-off Date (as
defined below) (excluding all payments of principal collected on the Series 2203
Freddie Mac Security, Class PG until such time as the outstanding certificate
balance of the Class R Certificates is reduced to zero) (as defined herein),
(ii) the Accounts (as defined below) and all amounts deposited therein
(excluding payments of principal collected on the Series 2203 Freddie Mac
Security, Class PG, until such time as the outstanding certificate balance of
the Class R Certificates is reduced to zero) pursuant to the applicable
provisions of this Indenture and all investments of such amounts pursuant to the
applicable provisions of this Indenture, (iii) the rights of the Issuer under
the Deposit Agreement and the Issuer Trust Agreement and (iv) all proceeds of
the conversion, voluntary or involuntary, of any of the foregoing into cash,
instruments, securities or other property, including without limitation all
amounts from time to time held in or credited to the Accounts, whether in the
form of cash or invested in instruments, securities or other property
(collectively, the "Pledged Assets").
TO HAVE AND TO HOLD all the same absolutely with all
privileges and appurtenances hereby conveyed, transferred and assigned, or
agreed or intended so to be, to the Note Trustee and its successors in the trust
for the benefit of the Noteholders (as defined herein) and their assigns forever
(collectively, the "Trust Estate");
IN TRUST NEVERTHELESS, upon the terms and trusts herein set
forth for the equal and proportionate benefit, security and protection of all
holders of the Notes issued under and secured by this Indenture, without
privilege, priority or distinction as to lien or otherwise of any of the Notes
over any of the other Notes, except as otherwise expressly provided in this
Indenture, and for the benefit, security and protection of the Noteholders, and
the Note Trustee with respect to the payment of all amounts payable to the
holders of the Notes or the Note
Indenture
<PAGE> 9
3
Trustee out of the Accounts to the extent herein provided; provided, however,
that if the Issuer, its successors or assigns, shall well and truly pay, or
cause to be paid, the principal of and any premium, if any, on the Notes and the
interest due or to become due thereon, at the times and in the manner provided
in the Notes according to the true intent and meaning thereof and there shall be
made all the payments into the Accounts as required under this Indenture and the
Issuer, its successors or assigns, shall well and truly keep, perform and
observe all the covenants and conditions pursuant to the terms of this Indenture
to be kept, performed and observed by the Issuer, and shall pay to the Note
Trustee all sums of money due or to become due to the Note Trustee in accordance
with the terms and provisions hereof, and if all amounts payable to the holders
of the Notes and the Note Trustee from amounts on deposit in the Accounts to the
extent herein provided, shall have been paid in full, then upon such final
payments this Indenture and the rights hereby granted shall cease and be void;
otherwise, this Indenture shall be and remain in full force and effect.
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
References to "Sections" and "Articles" herein refer to
Sections and Articles of this Indenture unless otherwise stated. All terms used
in this Indenture but not defined herein which are defined in the Standard
Indenture Provisions, either directly or by reference therein, have the meanings
assigned to them therein, except to the extent the context clearly requires
otherwise. Otherwise, any terms defined in the Standard Indenture Provisions
which are also defined herein, are replaced by the terms defined herein.
"1999-19 Supplement" means the Prospectus Supplement, dated
March 13, 1999 to the Fannie Mae Residual Security Prospectus.
"1999-39 Supplement" means the Prospectus Supplement, dated
June 22, 1999, to the Fannie Mae Residual Security Prospectus.
"1999-51 Supplement" means the Prospectus Supplement, dated
August 11, 1999, to the Fannie Mae Residual Security Prospectus.
"2114 Supplement" means the Supplement dated December 10, 1998
to the Base Book.
"2137 Supplement" means the Supplement dated February 11, 1999
to the Base Book.
"2149 Supplement" means the Supplement dated March 31, 1999 to
the Base Book.
Indenture
<PAGE> 10
4
"2203 Supplement" means the Supplement dated November 8, 1999
to the Base Book.
"Account Bank" means State Street Bank and Trust Company.
"Account Statement" has the meaning assigned to such term in
Section 7.01(i) of this Terms Indenture.
"Accounts" means the Note Proceeds Account, the Note
Collection Account and the Interest Reserve Account established hereunder.
"Administrative Expenses" means the sum of all out-of-pocket
fees and expenses payable by the Issuer from time to time to any Person pursuant
to this Indenture or the Issuer Trust Agreement of the Issuer in connection with
the transactions contemplated by the Transaction Documents (including, without
limitation, amounts owing by the Issuer under applicable law, amounts necessary
to maintain the existence of the Issuer, the fees and expenses of the Issuer and
the Note Trustee, and fees payable in connection with the formation of the
Issuer and establishment, maintenance and operation of the trusts created under
this Indenture).
"Agency Security" means each of the securities identified in
Schedule I hereto.
"Authorized Officer" means (i) in the case of the Issuer, the
Persons specified by the Issuer Trustee and the Issuer Certificate Agent as such
in an Officers' Certificate of the Issuer Trustee or the Issuer Certificate
Agent delivered from time to time to the Note Trustee, (ii) in the case of the
Note Trustee, a Responsible Officer or such other Persons as may from time to
time be designated as such by the Note Trustee in writing to the Issuer.
"Available Amount" means, on any Monthly Payment Date, the
Available Reserve Amount together with all amounts held in the Note Collection
Account, representing amounts collected on the Pledged Assets after the Cut-off
Date during the Interest Accrual Period for such Monthly Payment Date and any
earnings on amounts in the Note Collection Account, but not including any of the
principal collections on the Series 2203 Freddie Mac Security until after the
Monthly Payment Date on which the outstanding certificate balance of the Class R
Certificates is reduced to zero.
"Available Reserve Amount" means, on any date, the amounts on
deposit in the Interest Reserve Account.
"Base Book" means the Offering Circular, dated April 1, 1998,
relating to the offering of Multiclass REMIC Certificates issued by Freddie Mac.
"Certificateholders" mean the registered holders from time to
time of any of the Class R Certificates issued pursuant to the Issuer Trust
Agreement.
"Christiana Bank" means Christiana Bank & Trust Company, a
banking corporation incorporated in the State of Delaware.
Indenture
<PAGE> 11
5
"Class" means a class of Notes, that is, either the Class F
Notes or the Class S Notes.
"Class R Certificates" means those certificates issued
pursuant to the Issuer Trust Agreement and further defined therein.
"Closing Date" means the date of the initial issuance of the
Notes under this Indenture, which shall be January 20, 2000.
"Contributed Assets" has the meaning assigned to such term in
the second WHEREAS clause hereto.
"Contributed Securities" has the meaning assigned to such term
in the Granting Clauses.
"Corporate Trust Office" means the principal corporate trust
office of the Note Trustee, with a current address: (a) if by courier, at State
Street Bank and Trust Company, Global Investor Services Group - Corporate Trust,
2 Avenue de Lafayette - 6th Floor, Boston, Massachusetts 02111 and (b) if by
U.S. mail, at State Street Bank and Trust Company, Global Investor Services
Group - Corporate Trust, P. O. Box 778, Boston, Massachusetts, 02102-0778, or
such other address within the United States as the Note Trustee may designate
from time to time by notice to the Issuer or the principal corporate trust
office of any successor Note Trustee.
"Cut-off Date" means January 26, 2000.
"Default Notice" has the meaning assigned to such term in
Section 9.01.
"Deposit Agreement" means the Deposit and Sale Agreement dated
as of January 20, 2000 between the Depositor and the Issuer.
"Depositor" has the meaning assigned to such term in the first
WHEREAS clause of this Terms Indenture.
"Dollars" and the sign "$" mean the lawful currency of the
United States of America.
"Eligible Investments" means any direct general obligations
of, or obligations fully and unconditionally guaranteed as to the timely payment
of principal and interest by, the United States or any agency or instrumentality
thereof; provided that such obligations are backed by the full faith and credit
of the United States, Federal Housing Administration debentures, Freddie Mac
senior debt obligations, and Fannie Mae senior debt obligations, but excluding
any of such securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption; and provided, further, that no
instrument described above shall evidence either the right to receive (1) only
interest with respect to the obligations underlying such instrument or (2) both
principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provided a yield to maturity at par
Indenture
<PAGE> 12
6
greater than 120% of the yield to maturity at par of the underlying obligations
and that no instrument described hereunder may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity; provided that each Eligible Investment
(x) shall be (I) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Note Trustee or its nominee which
(together with any appropriate instruments of transfer) are delivered to, and
held by, the Note Trustee or an agent thereof (which shall not be the Issuer or
any of its Affiliates) in the State of New York; or (II) in book-entry form; and
(y) shall mature not later than the Business Day immediately preceding the next
succeeding Monthly Payment Date, except that obligations of State Street may
mature on such Monthly Payment Date.
"ERISA" has the meaning assigned to such term in Section
2.06(c) of this Terms Indenture.
"Event of Default" has the meaning assigned to such term in
Section 9.01 of this Terms Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expense Reserve Account" has the meaning assigned to such
term in Section 6.01 of this Terms Indenture.
"Fannie Mae" means Fannie Mae, a corporation organized and
existing under the laws of the United States.
"Fannie Mae 1999-19 R Security" means Certificate No. 1
evidencing U.S. $500,000 principal amount of 6.5% Series 1999-19 Guaranteed
REMIC Pass-Through Certificates, Class R (a) issued and guaranteed by Fannie
Mae, pursuant to the terms of a Trust Agreement dated as of April 1, 1999 by
Fannie Mae as issuer and Trustee thereunder for Guaranteed REMIC Pass-Through
Certificates relating to Fannie Mae REMIC Trust 1999-19 and (b) offered to the
public pursuant to the Fannie Mae Residual Security Prospectus and 1999-9
Supplement.
"Fannie Mae 1999-39 R Security" means Certificate No. 1
evidencing U.S. $500,000 principal amount of 6.5% Series 1999-39 Guaranteed
REMIC Pass-Through Certificates, Class R (a) issued and guaranteed by Fannie
Mae, pursuant to the terms of a Trust Agreement dated as of July 1, 1999 by
Fannie Mae as issuer and Trustee thereunder for Guaranteed REMIC Pass-Through
Certificates relating to Fannie Mae REMIC Trust 1999-39 and (b) offered to the
public pursuant to the Fannie Mae Residual Security Prospectus and 1999-39
Supplement.
"Fannie Mae 1999-51 R Security" means Certificate No. 1
evidencing U.S. $500,000 principal amount of 6.0% Series 1999-51 Guaranteed
REMIC Pass-Through Certificates, Class R (a) issued and guaranteed by Fannie
Mae, pursuant to the terms of a Trust Agreement dated as of September 1, 1999 by
Fannie Mae as issuer and Trustee thereunder for Guaranteed REMIC Pass-Through
Certificates relating to Fannie Mae REMIC Trust 1999-51 and (b) offered to the
public pursuant to the Fannie Mae Residual Security Prospectus and 1999-51
Supplement.
Indenture
<PAGE> 13
7
"Fannie Mae Residual Security Prospectus" means the Prospectus
dated as of September 18, 1998 relating to Guaranteed REMIC Pass-Through
Certificates.
"Final Scheduled Monthly Payment Date" means December 1, 2029.
"Freddie Mac" means the Federal Home Loan Mortgage
Corporation, a shareholder-owned, government-sponsored enterprise.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a meaning correlative to the
foregoing.
"Indebtedness" of any Person means all items classified as
liabilities for money borrowed in accordance with generally accepted accounting
principles, and shall include capitalized leases and Guarantees of Indebtedness
of others.
"Independent Counsel" means Hunton & Williams; or any other
law firm reasonably acceptable to the Majority Noteholders which is recognized
nationally as specializing in the substantive area of law to be opined to in the
opinion in question.
"Initial Certificate Balance" means, with respect to the Class
R Certificates, U.S. $465,600.
"Initial Principal Amount" means, with respect to the Class F
Notes, U.S. $1,986,400, and with respect to the Class S Notes, U.S. $764,000.
"Insolvency Appointee" has the meaning set forth in Section
7.01(a).
"Interest Accrual Period" means, with respect to any Monthly
Payment Date, the period beginning on the previous Monthly Payment Date to, but
excluding, the current Monthly Payment Date, provided, that with respect to the
initial Monthly Payment Date, the Interest Accrual Period shall mean the period
from and including the Closing Date to and excluding March 1, 2000.
Indenture
<PAGE> 14
8
"Interest Proceeds" means, with respect to any Monthly Payment
Date, the sum (without duplication) of (i) all payments of interest received by
the Issuer during the related Interest Accrual Period on the Issuer Assets and
Eligible Investments, including any payments of accrued interest whether
received in connection with a sale of Eligible Investments or otherwise, and
(ii) all income on (or proceeds from) Eligible Investments purchased with the
amounts in clause (i) above, including all payments of principal (including
prepayments) on Eligible Investments purchased with such amounts in clause (i).
"Interest Reserve Account" means a segregated account in the
name of the Note Trustee for the benefit of the Noteholders into which U.S.
$5,462.60, an amount equal to or greater than the amount of interest that will
accrue on the Notes from the Closing Date through January 31, 2000, shall be
deposited by the Issuer on the Closing Date and which will be available to make
interest payments on the Notes as described herein.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, time deposit or otherwise.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Issuance Costs" means all fees and expenses in connection
with the issuance of the Notes and the transactions contemplated by the
Transaction Documents, including all legal and other third party fees and
expenses.
"Issuer" has the meaning assigned to such term in the first
paragraph of this Terms Indenture.
"Issuer Assets" means (i) the Agency Securities; (ii) the
amounts in the Note Collection Account, the Interest Reserve Account and the
Trust Agreement Collection Account, including any Eligible Investments purchased
with funds held in the Note Collection Account and the Interest Reserve Account;
(iii) the rights of the Issuer under the Deposit Agreement and the Issuer Trust
Agreement; and (iv) all proceeds of the foregoing.
"Issuer Certificate Agent" means State Street in its capacity
as the Issuer Certificate Agent under the Issuer Trust Agreement.
"Issuer Order" and "Issuer Request". A written order or
request signed by an Authorized Officer of the Issuer Certificate Agent on
behalf of the Issuer and delivered to the Note Trustee.
"Issuer Trust Agreement" means the Amended and Restated
Agreement of Trust dated as of January 20, 2000 among the Depositor, the Issuer
Trustee and the Issuer Certificate Agent.
"Issuer Trustee" means Christiana Bank, as the trustee of the
Issuer pursuant to the Issuer Trust Agreement.
Indenture
<PAGE> 15
9
"LIBOR" means the London Interbank Offered Rate for one-month
U.S. dollar deposits, reported as the "Interest Settlement Rate" of the British
Bankers' Association (currently found on Telerate page 3750) as of 11:00 a.m.
(London time) on the related LIBOR Determination Date; provided, that if the
Note Trustee is unable to calculate LIBOR on any required date, "LIBOR" shall be
the LIBOR calculated by the Note Trustee for the prior interest accrual period
until a new LIBOR can be calculated.
"LIBOR Determination Date" has the meaning assigned to such
term in Section 2.05(c).
"Lien" means, as applied to property or assets, real or
personal, tangible or intangible, any claim, pledge, mortgage, lien, charge,
security interest or encumbrance of any kind thereon (including, without
limitation, any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof or the interest
of the lessor under any capitalized lease and the filing of or agreement to give
any financing statement or similar document to perfect any security interest
under the Uniform Commercial Code of any jurisdiction or any other similar
filing to perfect any security interest).
"Majority Noteholders" means at any time Noteholders holding,
collectively, Outstanding Notes evidencing at least a majority in the
Outstanding Principal Amount of the Notes.
"Merrill Lynch" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation.
"Monthly Payment Date" means the first Business Day of each
month, commencing March 1, 2000.
"Moody's" means Moody's Investors Service, Inc. and any
successor or successors thereto.
"New York UCC" means the Uniform Commercial Code as in effect
from time to time in the State of New York.
"Note Collection Account" has the meaning assigned to such
term in Section 4.01.
"Note Interest Amount" means for each Class of Notes, and on
any Monthly Payment Date, interest in an amount equal to interest accrued on the
Outstanding Principal Amount of that Class of Notes at the applicable Note
Interest Rate during the related Interest Accrual Period plus all other accrued
and unpaid interest on the Notes.
"Note Interest Rate" means, with respect to each class of
Notes, the rate of interest calculated as set forth in Section 2.05(c) hereof.
"Note Proceeds Account" has the meaning assigned to such term
in Section 3.01.
Indenture
<PAGE> 16
10
"Note Register" has the meaning set forth in Section 2.06(a).
"Note Registrar" means State Street in its capacity as the
registrar with respect to the Notes, in which capacity it will provide for the
registration of Notes and the registration of transfers or exchanges of Notes in
the register maintained by it.
"Note Trustee" means State Street, not in its individual
capacity, but solely in its capacity as Note Trustee under this Indenture, and
its successors in such capacity.
"Noteholders" means the registered holders from time to time
of any of the Notes.
"Notes" has the meaning assigned to such term in the third
WHEREAS clause hereof.
"Officers' Certificate" means a certificate signed by (a) in
the case of the Issuer, any Authorized Officer of the Issuer Trustee or the
Issuer Certificate Agent or (b) in the case of the Note Trustee, any Responsible
Officer of the Note Trustee, and in each case delivered to the Issuer or the
Note Trustee, as required by this Indenture.
"Optional Note Redemption" means a redemption of the Notes in
accordance with Section 12.01 of this Terms Indenture.
"Optional Note Redemption Amount" has the meaning assigned to
such term in Section 12.01 of this Terms Indenture.
"Optional Note Redemption Date" means the Monthly Payment Date
on which an Optional Note Redemption is to occur as evidenced in an Optional
Note Redemption Notice.
"Optional Note Redemption Notice" has the meaning assigned to
such term in Section 12.02 of this Terms Indenture.
"Outstanding", used with reference to the Notes, means at any
time, all Notes authenticated and delivered by the Note Trustee under this
Indenture, except
(a) Notes theretofore canceled by the Note Trustee or
delivered to the Note Trustee for cancellation;
(b) Notes, or portions thereof, for the payment of which
moneys in the necessary amount shall have been deposited in trust with the Note
Trustee; provided that if such Notes or portions thereof are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been given
as herein provided, or provision satisfactory to the Note Trustee shall have
been made for the giving of such notice; and
(c) Notes in substitution or exchange for which other Notes
shall have been authenticated and delivered;
Indenture
<PAGE> 17
11
provided, however, that in determining whether the holders of Notes representing
the requisite aggregate Outstanding Principal Amount or of the requisite number
of Outstanding Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Notes owned by the Issuer or any other
obligor upon the Notes or any Affiliate of the Issuer or such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Note Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
which the Note Trustee knows to be so owned shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Note Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer or any other obligor upon the Notes or any Affiliate of the Issuer or
such other obligor; provided, however, that in the case of clause (b) above, if
the Note Trustee is unable to redeem the Notes, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such payment, then a
Note shall not be deemed to cease to be Outstanding pursuant to clause (b) above
prior to the date on which the money is payable to holders of the Notes.
"Outstanding Certificate Balance" means, with respect to the
Class R Certificates, on any date, an amount equal to (i) the Initial
Certificate Balance thereof minus (ii) the aggregate amount of all distributions
of principal made to the Certificateholders thereof. The Outstanding Certificate
Balance shall be calculated as of the close of business, in the case of any
Monthly Payment Date other than the initial Monthly Payment Date, on the
preceding Monthly Payment Date after giving effect to all distributions of
principal to the applicable Certificateholders on each preceding Monthly Payment
Date (including such preceding Monthly Payment Date); provided that on the
Closing Date the Outstanding Certificate Balance thereof shall be equal to the
Initial Certificate Balance thereof.
"Outstanding Principal Amount" means, with respect to the
Notes, on any date, an amount equal to (i) the Initial Principal Amount thereof
minus (ii) the aggregate amount of all principal payments paid to the
Noteholders on or prior to such date. The Outstanding Principal Amount shall be
calculated as of the close of business, in the case of any Monthly Payment Date
other than the initial Monthly Payment Date, on the preceding Monthly Payment
Date after giving effect to all repayments of principal made to the applicable
Noteholders on each preceding Monthly Payment Date (including such preceding
Monthly Payment Date); provided that on the Closing Date the Outstanding
Principal Amount thereof shall be equal to the Initial Principal Amount thereof.
"Permitted Note Redemption Date" has the meaning assigned to
such term in Section 12.01 of this Terms Indenture.
"Permitted Indebtedness" means the Notes.
"Permitted Liens" means Liens arising under the Transaction
Documents.
Indenture
<PAGE> 18
12
"Plan" has the meaning assigned to such term in Section
2.06(c) of this Terms Indenture.
"Pledged Assets" has the meaning assigned to such term in the
Granting Clauses.
"Purchase Agreement" means the Purchase Agreement dated as of
January 20, 2000 between Merrill Lynch and the Depositor.
"Record Date" means, with respect to any Monthly Payment Date,
the close of business on the last Business Day of the calendar month immediately
preceding such Monthly Payment Date.
"Redemption Price" has the meaning assigned to such term in
Section 12.02 of this Terms Indenture.
"Regulated Plan" has the meaning assigned to such term in
Section 2.06(c) of this Terms Indenture.
"REMIC Provisions" means the provisions of the Federal income
tax law relating to real estate mortgage investment conduits, which provisions
appear at Sections 860A through 860G of the Code and related provisions, and any
applicable proposed, temporary or final regulations and published rulings and
notices promulgated thereunder, as the foregoing may be in effect from time to
time.
"Required Holders" has the meaning assigned to such term in
Section 9.01 of this Terms Indenture.
"Responsible Officer" means, with respect to the Note Trustee,
any officer in its Corporate Trust Department or similar group administering the
trust established hereby or any other officer of the Note Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restrictive Rules" has the meaning assigned to such term in
Section 2.06(c) of this Terms Indenture.
"Secured Obligations" means the Notes, and all other amounts
payable by the Issuer hereunder and under the Notes.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means Merrill Lynch, in its capacity as Seller under
the Purchase Agreement.
"Series 2114 Freddie Mac Security" means Certificate No. 1
evidencing U.S. $400,000 principal amount of 6.0% Series 2114 Multiclass REMIC
Certificates, Class R
Indenture
<PAGE> 19
13
(a) issued and guaranteed by Freddie Mac, pursuant to the terms of (x) the
Underlying Freddie Mac Agreement and (y) the Terms Supplement dated as of
January 29, 1999 to the Underlying Freddie Mac Agreement relating to the Series
2114 Multiclass REMIC Certificates and (b) offered to the public pursuant to (x)
the Base Book and (y) the 2061 Supplement to the Base Book.
"Series 2137 Freddie Mac Security" means Certificate No. 1
evidencing U.S. $500,000 principal amount of 6.5% Series 2137 Multiclass REMIC
Certificates, Class R (a) issued and guaranteed by Freddie Mac pursuant to (x)
the Underlying Freddie Mac Agreement and (y) the Terms Supplement dated as of
March 30, 1999 to the Underlying Freddie Mac Agreement relating to the Series
2137 Multiclass REMIC Certificates and (b) offered to the public pursuant to (x)
the Base Book and (y) the 2137 Supplement to the Base Book.
"Series 2149 Freddie Mac Security" means Certificate No. 1
evidencing U.S. $500,000 principal amount of 6.5% Series 2149 Multiclass REMIC
Certificates, Class R (a) issued and guaranteed by Freddie Mac pursuant to (x)
the Underlying Freddie Mac Agreement and (y) the Terms Supplement dated as of
May 28, 1999 to the Underlying Freddie Mac Agreement relating to the Series 2149
Multiclass REMIC Certificates and (b) offered to the public pursuant to (x) the
Base Book and (y) the 2149 Supplement to the Base Book.
"Series 2203 Freddie Mac Security" means U.S. $316,000
principal amount, 6.0% Series 2203 Multiclass REMIC Certificates, Class PG,
issued in uncertificated form, (a) issued and guaranteed by Freddie Mac pursuant
to (x) the Underlying Freddie Mac Agreement and (y) the Terms Supplement dated
as of November 30, 1999 to the Underlying Freddie Mac Agreement relating to the
Series 2203 Multiclass REMIC Certificates and (b) offered to the public pursuant
to (x) the Base Book and (y) the 2203 Supplement to the Base Book.
"Series Supplement" means each of the Series 2114 Freddie Mac
Security, the Series 2137 Freddie Mac Security, the Series 2149 Freddie Mac
Security and the Series 2203 Freddie Mac Security.
"Standard and Poor's" means Standard & Poor's Ratings Service,
a division of The McGraw-Hill, Companies, and any successor or successors
thereto.
"Standard Indenture Provisions" means the Standard Indenture
Provisions incorporated by reference herein and attached hereto as Annex A.
"State Street" means State Street Bank and Trust Company, a
trust company incorporated in the Commonwealth of Massachusetts.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other individuals performing similar functions, are at the time directly or
indirectly owned by such Person.
Indenture
<PAGE> 20
14
"Transaction Documents" means this Indenture, the Notes, the
Issuer Trust Agreement, the Class R Certificates, the Deposit Agreement and the
Purchase Agreement.
"Trust Agreement Collection Account" has the meaning assigned
to such term in the Issuer Trust Agreement.
"Trust Estate" has the meaning assigned to such term in the
Granting Clauses following the preamble to this Terms Indenture.
"Underlying Documents" means the Underlying Issuing Documents
and the Underlying Offering Documents.
"Underlying Freddie Mac Agreement" means the Multiclass REMIC
Certificate Agreement dated as of April 1, 1998 among Freddie Mac and the
Noteholders of the REMIC Certificates, MACR Certificates (each as defined
therein) and such other securities as may be issued from time to time pursuant
to the Underlying Freddie Mac Agreement.
"Underlying Issuing Documents" means the Issuing Documents and
supplements identified on Schedule I hereto and any and all amendments and
supplements thereto.
"Underlying Offering Documents" means the Offering Documents
and supplements identified on Schedule I hereto and any and all amendments and
supplements thereto.
"Underlying Trustees" means the trustees under the Underlying
Issuing Documents in respect to the Agency Securities and any successors and
assigns thereunder.
"United States" shall mean the States, District of Columbia,
territories, possessions and territorial waters of the United States of America.
"U.S. GAAP" or "GAAP" means generally accepted accounting
principles in the United States.
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (ii) obligations of a person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as
custodian with respect to any such U.S. Government Obligation or a specific
payment of principal and interest on any such U.S. Government Obligation held by
such custodian for the account of such holder of such depository receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or of interest on the
U.S. Government Obligation evidenced by such depository receipt.
Indenture
<PAGE> 21
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Section 1.02 Rules of Construction.
Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders. Unless the context
shall otherwise indicate, the words "Note", "owner", "holder", "Noteholder" and
"Person" shall include the plural as well as the singular number and, the word
"holder" or "owner" when used herein with respect to Notes issued hereunder
shall mean a Noteholder.
References herein to specific Persons include their legal
successors (or their successors fulfilling the function specified herein) and
permitted assigns, where applicable, agreements and contracts include references
to such agreements and contracts as amended or supplemented from time to time,
to the extent herein and therein permitted.
Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Note Trustee hereunder shall be prepared, in accordance with generally accepted
accounting principles applied on a basis consistent with U.S. GAAP. All
calculations made for the purposes of determining compliance with this Indenture
shall (except as otherwise expressly provided herein) be made by application of
generally accepted accounting principles applied on a basis consistent with U.S.
GAAP.
Section 1.03 Legal Holidays.
In any case where any Monthly Payment Date or any date for the
making of a deposit or payment hereunder shall fall on a day which is not a
Business Day, such payment, deposit or payment need not be made on such date,
but may be made on the next succeeding day that is a Business Day with the same
force and effect as if made on such Monthly Payment Date; provided that no
interest shall accrue on the amount so payable for such period.
ARTICLE II
ISSUE, EXECUTION, FORM AND REGISTRATION OF NOTE
With the exception of Sections 2.06, 2.08, 2.10 and 2.11 of
the Standard Indenture Provisions, which are incorporated herein by reference,
the provisions of Article II of the Standard Indenture Provisions are replaced
by the following Sections of this Terms Indenture:
Section 2.01 Authentication and Delivery of Notes.
Upon the execution and delivery of this Indenture, Class F
Notes in an aggregate principal amount not in excess of U.S. $1,986,400 at one
time Outstanding and Class S Notes in an aggregate principal amount not in
excess of U.S. $764,000 at one time Outstanding may be executed and delivered by
the Issuer to the Note Trustee for authentication, accompanied by a
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certificate of an Authorized Officer of the Issuer directing such
authentication, and the Note Trustee shall thereupon authenticate and deliver
such Notes to the respective registered holders thereof upon the written order
of the Issuer signed by an Authorized Officer of the Issuer, without any further
action by the Issuer. For purposes of, and as defined in, the Standard Indenture
Provisions, the Notes will be Pro Rata Bonds.
Section 2.02 Execution of Notes.
The Notes shall be executed on behalf of the Issuer by an
Authorized Officer of the Issuer. Such signature may be the manual or facsimile
signature of any present or any future such Authorized Officer. With the
delivery of this Indenture, the Issuer is furnishing, and from time to time
thereafter may furnish, an Officers' Certificate identifying and certifying the
incumbency and specimen signature(s) of its Authorized Officers. Until the Note
Trustee receives a subsequent Officers' Certificate, the Note Trustee shall be
entitled to rely on the last such Officers' Certificate delivered to it for
purposes of determining the Authorized Officers. The Issuer is also furnishing
an Officer's Certificate that all conditions to issuance of the Notes have been
satisfied. Typographical and other minor errors or defects in any signature
shall not affect the validity or enforceability of any Note which has been duly
authenticated and delivered by the Note Trustee.
In case any Authorized Officer who shall have signed any of
the Notes shall cease to be such Authorized Officer before the Note so signed
shall be authenticated and delivered by the Note Trustee or disposed of by or on
behalf of the Issuer, such Note nevertheless may be authenticated and delivered
or disposed of as though the Person who signed such Note had not ceased to be
such Authorized Officer; and any Note may be signed on behalf of the Issuer by
such persons as, at the actual date of the execution of such Note, shall be an
Authorized Officer, shall be a valid and binding obligation of the Issuer
notwithstanding that at the date of the execution and delivery of such Note any
such Person was not an Authorized Officer.
Section 2.03 Certificate of Authentication.
Only such Notes as shall bear thereon a certification of
authentication substantially as set forth in the form of the Notes annexed as
Exhibits A-1 and A-2 hereto, executed by the Note Trustee by manual signature of
one of its Authorized Officers, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certification by the
Note Trustee upon any Note executed by or on behalf of the Issuer shall be
conclusive evidence that the Note so authenticated has been duly authenticated
and delivered hereunder and that the registered holder is entitled to the
benefits of this Indenture. The Issuer shall deliver to the Note Trustee an
Opinion of Counsel satisfying the requirement of TIA Section 3.14(a), which also
states that all conditions to the issuance of the Notes under the Indenture have
been satisfied.
Section 2.04 Form, Denomination and Date of Notes.
(a) The Notes will be issued only in definitive, fully
registered certificated form without interest coupons substantially in the form
of Exhibits A-1 and A-2 hereto, as applicable. The Notes shall be numbered,
lettered, or otherwise distinguished in such manner as the Authorized Officer of
the Issuer executing the same may determine with the approval of the Note
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Trustee prior to the issuance of the Notes. Any of the Notes may be issued with
appropriate insertions, omissions, substitutions and variations, and may have
imprinted or otherwise reproduced thereon such legend or legends, not
inconsistent with the provisions of this Indenture, as may be required to comply
with any law or with any rules or regulations pursuant thereto, or to conform to
general usage.
(b) The Notes shall mature on December 1, 2029 and shall bear
interest at the rates calculated as specified in Section 2.05(c).
(c) Each Note shall be dated the date of its authentication.
(d) Unless otherwise agreed in writing by the Issuer, the
Notes shall be issued in minimum denominations of U.S. $10,000. After issuance,
any Note may fail to be in such required minimum denominations due to repayment
of principal thereof.
Section 2.05 Payment of Notes.
(a) The principal of and interest on the Notes shall be
payable by the Note Trustee from its Corporate Trust Office in Dollars in
accordance with Sections 2.08 and 4.02, from funds immediately available
therefor at such office against surrender of such Notes in the case of payment
in full, except as provided in Section 2.05(b).
(b) Notwithstanding any provision of this Indenture or the
Notes to the contrary, payments of all amounts which become due and payable in
respect of any Note other than payment in full shall be made by the Note Trustee
directly to the registered holder of such Note, without surrender or
presentation thereof to the Note Trustee. Except as limited by the terms of this
Indenture, the rights of any Noteholders to institute suit for the enforcement
of any such payment shall not be impaired without the consent of such
Noteholder.
(c) Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months. The Class F Notes shall bear interest at
an annual rate equal to LIBOR + 1.10%, subject to a maximum rate of interest
equal to 9.00%. The Class S Notes shall bear interest at an annual rate equal to
20.54% - (2.6 x LIBOR). The Note Trustee shall calculate the Note Interest Rate
for each Class of Notes for each Interest Accrual Period two Business Days prior
to the Monthly Payment Date on which such Interest Accrual Period begins (the
"LIBOR Determination Date"). The Note Trustee shall have no obligation to
publish such Note Interest Rates in any newspaper or by any other public means
or to provide such information to any party except as expressly provided herein.
Section 2.06 Registration, Transfer or Exchange of Notes.
(a) Notwithstanding any provisions of the Standard Indenture
Provisions to the contrary, the provisions of this Section 2.06 shall apply to
the registration, transfer and exchange of the Notes. The Note Trustee shall
keep or cause to be kept at the Corporate Trust Office one or more books (herein
called the "Note Register") for the registration and registration of transfer
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or exchange of any of the Notes. The Issuer hereby appoints the Note Trustee its
registrar (herein called the "Note Registrar") to keep the Note Register.
(b) Any Note may be surrendered for transfer or exchange at
the Corporate Trust Office, accompanied in the case of a transfer by a written
instrument of transfer in form reasonably acceptable to the Note Trustee, duly
executed by the holder of such Note, and thereupon, at the direction of the Note
Trustee, the Issuer shall execute, in the case of a transfer, in the name of the
transferee or transferees, and the Note Trustee shall authenticate and deliver,
a new Note or Notes for the same aggregate unpaid principal amount.
(c) No transfer of a Note shall be made unless and until the
prospective transferee provides the Note Trustee with an affidavit, in the form
provided as paragraph 7 to Exhibit C hereto, to the effect that such transferee
is (i) not an employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or any plan or arrangement subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), nor
a Person acting, directly or indirectly, on behalf of any such employee benefit
plan, plan or arrangement (including an insurance company using funds in its
general or separate account that may constitute "plan assets") (each a "Plan")
and is not a governmental plan or a church plan subject to any laws or
regulations (the "Restrictive Rules") that are substantially similar to either
Section 406 of ERISA or Section 4975 of the Code (a "Regulated Plan"), (ii) if
it is a Plan, the acquisition and holding of the Notes by the Transferee will
not result in a non-exempt prohibited transaction under Section 406 of ERISA
and/or Section 4975 of the Code, or (iii) if it is not a Plan, but is a
Regulated Plan, the acquisition and holding of the Notes by the Transferee will
not result in a violation of any such Restrictive Rules.
(d) The ownership of any Note shall be proved by the Note
Register. The Note Trustee may deem and treat the registered holder of any Note
as the absolute owner of such Note for all purposes and, prior to due
presentment for registration of transfer, shall not be affected by any notice to
the contrary.
(e) No fee shall be charged to any holder for any registration
of transfer or exchange, but the Note Trustee shall require payment by the
holder requesting such registration of a sum sufficient to reimburse it for any
governmental, regulatory, administrative, or other similar charge or other
expense to which the Note Trustee is subject in connection therewith.
(f) All Notes authenticated and delivered by the Note Trustee
upon any transfer or exchange pursuant to this Indenture shall be entitled to
the same benefits under this Indenture as the Note or Notes surrendered upon
such transfer or exchange.
(g) The Issuer and the Note Trustee shall not be required (i)
to issue, register the transfer of or exchange any Notes during any period
beginning at the opening of business 15 days after the day of the mailing of a
notice of redemption of such Notes and ending at the close of business on the
day of such redemption or (ii) to register the transfer of or exchange any Notes
so selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
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Section 2.07 Taxes.
The Notes have been issued with the intention that such Notes
will qualify under applicable United States federal, state and local income tax
law as indebtedness secured by the Trust Estate. The Issuer and each Noteholder,
by its acceptance of a Note, agree to treat the Notes as indebtedness for the
purposes of United States federal, state and local income, or franchise taxes,
or for any other tax imposed on or measured by income. The Issuer covenants and
agrees to at all times exercise such rights, powers, and obligations it may have
through an office located in Delaware.
Section 2.08 Note Payments; Repayment of Principal of the
Notes.
The Issuer hereby covenants with the Note Trustee to pay to
the Note Trustee all amounts from time to time due and payable by it hereunder
and under the Notes to any Noteholder as herein and therein provided. Without
limiting the generality of the foregoing, the Issuer shall allocate all
collections received on the Agency Securities during any Interest Accrual Period
and after the Cut-off Date, and shall allocate the Available Amount and the
Available Reserve Amount on each Monthly Payment Date, as follows, in the
following order of priority:
First, the principal collected on the Series 2203 Freddie Mac
Security will be remitted to the Trust Agreement Collection Account as received.
These collections will be applied by the Issuer Certificate Agent on the related
Monthly Payment Date to reduce the Outstanding Certificate Balance of the Class
R Certificates, until the Outstanding Certificate Balance thereof has been
reduced to zero, and will not be included in the Available Amount paid to the
Noteholders.
Second, principal and interest collected on the Series 2114
Freddie Mac Security, Series 2137 Freddie Mac Security, Series 2149 Freddie Mac
Security, Fannie Mae 1999-51 R Security, Fannie Mae 1999-19 R Security, and
Fannie Mae 1999-39 R Security, and any interest collected on the Series 2203
Freddie Mac Security and any principal collected on the Series 2203 Freddie Mac
Security after the Outstanding Certificate Balance of the Class R Certificates
has been reduced to zero, in each case collected during any Interest Accrual
Period and held in the Note Collection Account on the related Monthly Payment
Date, will be applied as follows on the related Monthly Payment Date, in the
following order of priority:
(i) to pay the Note Interest Amount for such Monthly
Payment Date as interest on the Class F and Class S Notes, with such
collections allocated pro rata between such Classes based on their
respective Note Interest Amounts until the Note Interest Amount for
each Class of Notes on that Monthly Payment Date has been paid in full;
(ii) to pay the principal of the Class F and Class S
Notes with such remaining collections, allocated pro rata between such
Classes based on their respective outstanding principal balances, until
the principal balances thereof have been reduced to zero; and
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(iii) to remit any remaining collections to the Trust
Agreement Collection Account, where it will be applied (subject to any
prior payments under Section 5.03(a) of the Issuer Trust Agreement) (A)
first, to reduce the Outstanding Certificate Balance of the Class R
Certificates, until the Outstanding Certificate Balance thereof has
been reduced to zero and (B) second, as additional investment yield on
the Class R Certificates.
ARTICLE III
NOTE PROCEEDS ACCOUNT; CUSTODY OF AGENCY SECURITIES
The provisions of Article VIII of the Standard Indenture
Provisions are replaced by Article III, Article IV, Article V and Article VI
hereof.
Section 3.01 Note Proceeds Account.
The Note Trustee will establish and maintain a special
purpose, non-interest bearing trust account at the Account Bank in the name of
the Note Trustee on behalf of the Noteholders, (the "Note Proceeds Account").
The Note Proceeds Account shall be under the sole dominion and control of the
Note Trustee. In addition, the Account Bank hereby agrees with the Note Trustee
that to the extent contemplated under the New York UCC (i) the Proceeds Account
shall be a "securities account" (within the definition of Section 8-501 of the
New York UCC), (ii) the "securities intermediary's jurisdiction" (within the
meaning of Article 8 of the New York UCC) of the Account Bank will be the State
of New York, (iii) all cash and other property in such securities account will
be treated by the Account Bank as a "financial asset" (as defined in Section
8-102(a)(9) of the New York UCC) for the purposes of Article 8 of the New York
UCC and (iv) that the "entitlement holder" (as defined in Section 8-102(a)(17)
of the New York UCC) for the purposes of Article 8 of the New York UCC shall be
the Note Trustee for the benefit of the Noteholders. The Note Trustee shall
deposit into the Note Proceeds Account the proceeds of the issuance of the Notes
and shall distribute such proceeds in accordance with Section 3.02. All right,
title and interest in and to the cash amounts on deposit in the Note Proceeds
Account shall constitute part of the Trust Estate and shall be held for the
benefit of the Noteholders, the Note Trustee and the Issuer as their interests
shall appear hereunder and shall not constitute payment of the Secured
Obligations (or any other obligations to which such funds are provided hereunder
to be applied) until applied thereto as hereinafter provided.
Section 3.02 Withdrawals from Note Proceeds Account.
On the Closing Date, the Note Trustee shall make the following
transfers from the Note Proceeds Account:
(a) U.S. $120,000.00 to pay the Persons entitled thereto all
Issuance Costs as set forth in a written statement provided by the Issuer to the
Note Trustee on the Closing Date;
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(b) U.S. $5,462.60 to the Interest Reserve Account;
(c) U.S. $45,000 to the Expense Reserve Account; and
(d) U.S. $2,351,457.40, being the balance to the Depositor as
payment on behalf of the Issuer in respect of the sale of Contributed Assets
pursuant to the terms of the Deposit Agreement.
Section 3.03 Custody of Agency Securities.
The Note Trustee shall maintain possession of the certificates
evidencing the Agency Securities (other than the Series 2203 Freddie Mac
Security) in the Commonwealth of Massachusetts throughout the term of this
Indenture and shall maintain its beneficial ownership of the Series 2203 Freddie
Mac Security throughout the term of this Indenture.
The Note Trustee acknowledges receipt of a certificate
evidencing each of the Agency Securities other than the Series 2203 Freddie Mac
Security (such securities the "Certificated Securities"), together with
endorsements or "bond powers" in blank, and transferee affidavits signed by the
Issuer's Class R Certificateholders, in the forms attached to the Issuer Trust
Agreement. The Note Trustee has received confirmation that the Series 2203
Freddie Mac Security has been credited to its account and that (A) the Federal
Reserve Bank of Boston has made an appropriate entry on its books and records of
the transfer of the Series 2203 Freddie Mac Security to a "participant
securities account," as defined in 24 CFR Part 81, of State Street Bank and
Trust Company acting in its capacity, as a "participant" for purposes of 31 CFR
Part 357 (the "Participant"), and (B) the Participant has, by book-entry on its
books and records, identified that the Series 2203 Freddie Mac Security has been
credited to a "securities account" as defined in Section 8-501(a) of the
Massachusetts UCC maintained by a "securities intermediary" as defined in
Section 8-102(a)(14) of the Massachusetts UCC and in 24 CFR Part 81 of the Note
Trustee maintained with such Participant (such that the Note Trustee is
identified in the records of such Participant as the entitlement holder with
respect thereto), and (C) the Note Trustee has identified on its books and
records that such Series 2203 Freddie Mac Security is held by it as Note Trustee
under this Indenture.
The Note Trustee shall promptly submit the Certificated
Securities together with the transfer documentation furnished to it (including
transferee affidavits the Note Trustee has executed) to the related transfer
agents in order that the Note Trustee can become the registered holder of the
Certificated Securities. In connection with the delivery and registration of the
Agency Securities into the name of the Note Trustee, as such, the Note Trustee
shall execute and deliver such transfer agreements and affidavits as may be
required and in the forms furnished to it by the Issuer, and the Note Trustee
shall be indemnified by the Issuer and held harmless in so doing.
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ARTICLE IV
THE NOTE COLLECTION ACCOUNT
Section 4.01 Note Collection Account.
(a) The Note Trustee shall establish and maintain a special
purpose, non-interest bearing trust account at the Account Bank in the name of
the Note Trustee on behalf of the Noteholders, which will be a "securities
account" (within the meaning of Section 8-501 of the New York UCC) (the "Note
Collection Account"). The Note Collection Account shall be under the sole
dominion and control of the Note Trustee. In addition, the Account Bank hereby
agrees with the Note Trustee that (i) the Note Collection Account shall be a
"securities account" (within the meaning of Section 8-501 of the New York UCC),
(ii) the "securities intermediary jurisdiction" (within the meaning of Article 8
of the New York UCC) of the Account Bank will be the State of New York, (iii)
all cash and other property in such securities account will be treated by the
Account Bank as a "financial asset" (as defined in Section 8-102(a)(9) of the
New York UCC) for the purposes of Article 8 of the New York UCC and (iv) the
"entitlement holder" (as such term is defined in Section 8-102(a)(17) of the New
York UCC) for the purposes of Article 8 of the New York UCC shall be the Note
Trustee for the benefit of the Noteholders.
(b) The Note Trustee shall deposit all distributions received
on the Issuer Assets and all payments from or on behalf of the Issuer for
deposit therein pursuant to the Transaction Documents no later than the next
Business Day following receipt of funds from the Issuer or any Underlying
Trustee or other obligor with respect to the Contributed Assets. The Note
Trustee will give notice to the Issuer and the Noteholders of the location of
the Note Collection Account and of any change thereof (provided that no such
change shall be made without the prior approval of all of the Noteholders),
prior to the use thereof, in substantially the form of Exhibit B hereto. Funds
held in the Note Collection Account and delivered to the Note Trustee earlier
than one Business Day prior to the next Monthly Payment Date shall be invested
in Eligible Investments selected by the Note Trustee in its reasonable
discretion and shall mature not later than the Business Day immediately
preceding such Monthly Payment Date, except that obligations of State Street may
mature on the Monthly Payment Date. Any income received by the Note Trustee with
respect to the balance from time to time on deposit in the Note Collection
Account, including any interest or capital gains on Eligible Investments made
with amounts on deposit in the Note Collection Account, shall remain, or be
deposited, in the Note Collection Account. All right, title and interest in and
to the cash amounts on deposit from time to time in the Note Collection Account
together with any Eligible Investments from time to time made pursuant to this
Section 4.01 shall constitute part of the Trust Estate and shall be held for the
benefit of the Noteholders, the Note Trustee and the Issuer as their interests
shall appear hereunder and shall not constitute payment of the Secured
Obligations (or any other obligations to which such funds are provided hereunder
to be applied) until applied thereto as hereinafter provided.
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(c) The Note Trustee shall make, to the extent required or
authorized hereunder, withdrawals from the Note Collection Account for the
following purposes:
(i) to withdraw any amount deposited in the Note
Collection Account and not required to be deposited therein;
(ii) to make required payments to the Noteholders, to the
Trust Agreement Collection Account and to the Issuer pursuant to
Section 2.08, Section 4.02, Section 9.02 and Section 12.03; and
(iii) to clear and terminate the Note Collection Account
upon satisfaction and discharge of this Indenture pursuant to
Article IV of the Standard Indenture Provisions.
(d) The Note Trustee shall not be accountable for the use or
application by the Issuer or the Issuer Trustee of any funds paid to the Issuer
or the Issuer Trustee in respect of the Contributed Securities, but the Note
Trustee shall be responsible for and shall pay any such funds once deposited
into the Note Collection Account in accordance with the provisions of this
Section 4.01 and Section 4.02. The Issuer shall be accountable for any funds
paid to the Issuer in respect of the Contributed Securities, in accordance with
the terms hereof.
Section 4.02 Payments.
(a) On each Monthly Payment Date, the Note Trustee shall
withdraw the Available Amount from the Note Collection Account and any Available
Reserve Amount from the Interest Reserve Account and pay such amounts to the
Noteholders as described in Section 2.08.
(b) All payments made to Noteholders on each Monthly Payment
Date will be made to the Noteholders of record on the immediately preceding
Record Date.
(c) The Noteholders shall be entitled to receive payments
hereunder on a Monthly Payment Date by wire transfer to the account specified in
writing by the applicable Noteholder to the Note Trustee. In each case, the
account must be specified in writing at least five Business Days prior to the
Record Date for the Monthly Payment Date on which wire transfers will commence.
(d) If the Note Trustee shall not have received a distribution
or payment with respect to a Pledged Asset by the Business Day after the date on
which such distribution was due and payable, the Note Trustee shall promptly and
in no event later than two Business Days thereafter demand such payment from the
applicable payor of such distribution or payment, and promptly and in no event
later than two Business Days give written notice thereof to the Noteholders.
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ARTICLE V
THE INTEREST RESERVE ACCOUNT
Section 5.01 Interest Reserve Account.
(a)(i) The Note Trustee shall establish and maintain
a special purpose, non-interest bearing trust account at the Account
Bank in the name of the Note Trustee on behalf of the Noteholders, (the
"Interest Reserve Account"). The Interest Reserve Account shall be
under the sole dominion and control of the Note Trustee. In addition,
the Account Bank hereby agrees with the Note Trustee that (a) the
Interest Reserve Account shall be a "securities account" (within the
meaning of Section 8-501 of the New York UCC), (b) the "securities
intermediary jurisdiction" (within the meaning of Article 8 of the New
York UCC) of the Account Bank will be the State of New York, (c) all
cash and other property in such securities account will be treated by
the Account Bank as a "financial asset" (as defined in Section
8-102(a)(9) of the New York UCC) for the purposes of Article 8 of the
New York UCC and (d) the "entitlement holder" (as such term is defined
in Section 8-102(a)(17) of the New York UCC) for the purposes of
Article 8 of the New York UCC shall be the Note Trustee for the benefit
of the Noteholders. The Note Trustee will give notice to the Issuer and
the Noteholders of the location of the Interest Reserve Account and of
any changes thereof (which may only be made with the prior written
consent of all of the Noteholders), prior to the use thereof, in
substantially the form of Exhibit B hereto.
(ii) Funds held in the Interest Reserve Account
shall be invested in Eligible Investments by the Note Trustee in its
reasonable discretion that mature not later than the Business Day
immediately preceding the next Monthly Payment Date, except that
obligations of State Street may mature on the Monthly Payment Date. On
any Monthly Payment Date, any funds remaining in the Interest Reserve
Account after all required payments have been made on such date shall
be reinvested by the Note Trustee in Eligible Investments that mature
not later than the Business Day immediately preceding the next Monthly
Payment Date, except that obligations of State Street may mature on
such next succeeding Monthly Payment Date; provided that any funds
remaining in the Interest Reserve Account after the principal balance
of the Notes has been reduced to zero and all accrued interest on the
Notes has been paid shall be withdrawn from the Interest Reserve
Account by the Note Trustee and deposited into the Trust Agreement
Collection Account for distribution by the Issuer Certificate Agent to
the Certificateholders on such date as distributions of additional
investment yield on the Class R Certificates.
(b) The Note Trustee shall make, to the extent required or
authorized hereunder, withdrawals from the Interest Reserve Account for the
following purposes:
(i) to withdraw any amount deposited in the Interest
Reserve Account and not required to be deposited therein;
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(ii) to make required payments to the Noteholders and the
Issuer pursuant to Section 2.08, Section 5.02, Section 9.02 and
Section 12.03; and
(iii) to clear and terminate the Interest Reserve Account
upon satisfaction and discharge of this Indenture pursuant to
Article IV of the Standard Indenture Provisions.
(c) The Note Trustee shall be responsible for and shall pay
any such funds once deposited into the Interest Reserve Account in accordance
with the provisions of this Section 5.01 and Section 5.02.
Section 5.02 Payments.
On each Monthly Payment Date, to the extent that the Available
Amount is insufficient to pay the Note Interest Amount payable on the Notes on
such Monthly Payment Date, amounts, if any, on deposit in the Interest Reserve
Amount shall be applied toward the payment of any remaining accrued and unpaid
interest on the Notes.
ARTICLE VI
THE EXPENSE RESERVE ACCOUNT
Section 6.01 Expense Reserve Account.
(a)(i) The Note Trustee shall establish and
maintain a special purpose, non-interest bearing trust account at the
Account Bank in the name of the Note Trustee on behalf of the Issuer
Trustee, the Note Trustee and the Issuer Certificate Agent (the
"Expense Reserve Account"). The Expense Reserve Account shall be under
the sole dominion and control of the Note Trustee. In addition, the
Account Bank hereby agrees with the Note Trustee that to the extent
contemplated under the New York UCC (a) the Expense Reserve Account
shall be a "securities account" (within the meaning of Section 8-501 of
the New York UCC), (b) the "securities intermediary jurisdiction"
(within the meaning of Article 8 of the New York UCC) of the Account
Bank will be the State of New York, (c) all cash and other property in
such securities account will be treated by the Account Bank as a
"financial asset" (as defined in Section 8-102(a)(9) of the New York
UCC) for the purposes of Article 8 of the New York UCC and (d) the
"entitlement holder" (as such term is defined in Section 8-102(a)(17)
of the New York UCC) for the purposes of Article 8 of the New York UCC
shall be the Note Trustee for the benefit of the Note Trustee, the
Issuer Trustee and the Issuer Certificate Agent. The Note Trustee will
give notice to the Issuer, the Issuer Trustee, the Issuer Certificate
Agent and the Noteholders of the location of the Expense Reserve
Account and of any change thereof, prior to the use thereof, in
substantially the form of Exhibit B hereto.
Indenture
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(ii) Funds held in the Expense Reserve Account
shall be invested by the Note Trustee in Eligible Investments that
mature not later than the Business Day immediately preceding the next
Monthly Payment Date, except that obligations of State Street may
mature on the Monthly Payment Date. On any Monthly Payment Date, any
funds remaining in the Expense Reserve Account after all required
payments have been made on such date shall be reinvested by the Note
Trustee in Eligible Investments that mature not later than the Business
Day immediately preceding the next Monthly Payment Date, except that
obligations of State Street may mature on such next succeeding Monthly
Payment Date; provided that any funds remaining in the Expense Reserve
Account on the Final Scheduled Monthly Payment Date after all required
payments on the Notes have been made on such date shall be withdrawn
from the Expense Reserve Account by the Note Trustee and allocated
among the Issuer Trustee, the Note Trustee and the Issuer Certificate
Agent in accordance with the proportions specified in Section 6.02 and
such respective portions shall be distributed to the Issuer Trustee,
the Note Trustee and the Issuer Certificate Agent on such date.
(b) The Note Trustee shall make, to the extent required or
authorized hereunder, withdrawals from the Expense Reserve Account for the
following purposes:
(i) to withdraw any amount deposited in the Expense
Reserve Account and not required to be deposited therein;
(ii) to make required payments to the Issuer Trustee, the
Note Trustee and the Issuer Certificate Agent of the fees
specified in Section 6.02; and
(iii) to clear and terminate the Expense Reserve Account
upon satisfaction and discharge of this Indenture pursuant to
Article IV of the Standard Indenture provisions.
(c) The Note Trustee shall be responsible for and shall pay
any such funds once deposited into the Expense Reserve Account in accordance
with the provisions of this Section 6.01 and Section 6.02.
Section 6.02 Payments.
(a) On each Monthly Payment Date for so long as funds are
available in the Expense Reserve Account to make such payments, the Issuer
Trustee shall be entitled to receive $166.67, the Note Trustee shall be entitled
to receive $291.66 and the Issuer Certificate Agent shall be entitled to receive
$291.66. On each such Monthly Payment Date, the Note Trustee shall withdraw from
the Expense Reserve Account and distribute such amounts to the Issuer Trustee,
the Note Trustee and the Issuer Certificate Agent; provided that if the amount
in the Expense Reserve Account shall be insufficient to pay each of the Issuer
Trustee, the Note Trustee and the Issuer Certificate Agent the amounts
specified, then the Issuer Trustee, the Note Trustee and the Issuer Certificate
Agent shall be allocated 22.22%, 38.89% and 38.89%, respectively, of such amount
available in the Expense Reserve Account and such respective portions shall be
distributed to the Issuer Trustee, the Note Trustee and the Issuer Certificate
Agent. In the event
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that any of the Issuer Trustee, the Note Trustee and the Issuer Certificate
Agent shall resign from their respective capacities in accordance with the terms
of the agreements to which it is a party, any amounts required to be provided by
it in respect of the fees of its successor in such capacity or capacities shall
be deposited into the Expense Reserve Account. Unless otherwise specified herein
or in the Issuer Trust Agreement, the Issuer Trustee, the Note Trustee and the
Issuer Certificate Agent, or their respective successors in such capacities,
shall be entitled to receive fees solely from amounts on deposit in the Expense
Reserve Account.
(b) On the Final Scheduled Monthly Payment Date, prior to
making any distributions pursuant to Section 4.02(b) hereof, the Note Trustee
shall, upon receipt of written consent of the Issuer to be provided by the
Issuer Trustee upon the Issuer Trustee's receipt of an Officer's Certificate
from the Issuer Certificate Agent certifying that all required payments on the
Notes and the Class R Certificates have been paid in full, withdraw any amounts
on deposit in the Expense Reserve Account and allocate them among the Issuer
Trustee, Note Trustee and Issuer Certificate Agent in accordance with the
percentages set forth in Section 6.02(a).
ARTICLE VII
COVENANTS OF THE ISSUER
Section 7.01 Covenants of the Issuer.
In addition to the covenants contained in Article III of the
Standard Indenture Provisions, the Issuer agrees that so long as any amount
payable hereunder or under any Note remains unpaid:
(a) Notices. If at any time any creditor of the Issuer seeks
to enforce any judgment or order of any competent court or other competent
tribunal in the State of Delaware or the State of New York against any of the
Trust Estate, the Issuer shall (i) promptly give written notice to such creditor
and to such court or tribunal of the Note Trustee's interests therein; (ii) if
at any time an examiner, administrator, administrative receiver, receiver,
trustee, custodian, sequestrator, conservator or other similar appointee (an
"Insolvency Appointee") is appointed in respect of any secured creditor or any
of their assets, promptly give notice to such appointee of the Note Trustee's
interests therein; and (iii) notify the Note Trustee in writing thereof in
either case. The Issuer will not voluntarily appoint or cause to be appointed or
commence any proceeding to appoint any Insolvency Appointee over all or any of
its property.
(b) Performance of Obligations. The Issuer will perform in
full its obligations under the Transaction Documents. The Issuer will pay and
discharge in full, at or before maturity, solely from funds other than the Trust
Estate of the Issuer, all of its other material obligations and liabilities
including, without limitation, tax liabilities (and use its best efforts to
comply with all statutes, regulations and orders of governmental bodies relating
to taxes), except where the same
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may be contested in good faith by appropriate proceedings and for which adequate
reserves have been established to the extent required by generally accepted
accounting principles.
(c) Compliance with Laws. The Issuer will comply in all
material respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities in the jurisdiction of its formation
and the rules and regulations thereunder except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings.
(d) Investments; No Subsidiaries. Other than as contemplated
by the Transaction Documents, the Issuer will not make or acquire any Investment
in any Person other than Eligible Investments. Without limitation of the
foregoing, the Issuer shall have no Subsidiaries.
(e) Consolidation or Merger. The Issuer will keep in full
effect its existence, rights and franchises as a statutory business trust under
the laws of the State of Delaware and will obtain and preserve its qualification
to do business as a foreign business trust in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, or any of the Trust Estate and to perform its
respective duties under this Indenture.
Any Person into which the Issuer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Issuer shall be a party, or any Person succeeding to the business of the
Issuer, shall be the successor of the Issuer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
(f) Use of Proceeds. The proceeds of the Notes will be used by
the Issuer in accordance with Section 3.02 to pay the Issuance Costs and to
purchase the Contributed Securities pursuant to the terms of the Deposit
Agreement.
(g) Amendment of Transaction Documents. Except where otherwise
provided in the Standard Indenture Provisions, the Issuer will not agree or
consent to any amendment, modification or waiver of any provision of any
Transaction Document without the written consent of the Note Trustee at the
written direction of the Majority Noteholders. In addition, the Issuer will not
agree to the amendment of any Transaction Document unless the Note Trustee has
confirmed to the Issuer in writing that it has received from legal counsel
acceptable to the Note Trustee an opinion to the effect that such amendment will
not result in any adverse effect on the security interests created hereby or on
the rights of the Noteholders hereunder.
(h) Opinions as to Fair Value. As necessary, the Issuer shall
cause to be delivered to the Note Trustee an opinion as to fair value as
specified in TIA Section 314(d).
(i) Reports to Noteholders. The Issuer will provide the
following reports:
(i) Within five Business Days following each Monthly
Payment Date, the Note Trustee shall furnish or make available to the
Issuer Trustee and each Noteholder and the Issuer Certificate Agent a
statement (an "Account Statement") setting forth the status of the Note
Collection Account, the Interest Reserve Account, the Expense Reserve
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Account and the Trust Agreement Collection Account showing, for the
related Interest Accrual Period, deposits in or withdrawals from the
Note Collection Account, the Interest Reserve Account, the Expense
Reserve Account and the Trust Agreement Collection Account and proceeds
of investments of funds in the Note Collection Account, the Interest
Reserve Account and the Expense Reserve Account. The Account Statement
shall also set forth the following information:
(A) the Outstanding Principal Amounts of
each Class of the Notes and the Outstanding Certificate
Balance of the Class R Certificates, respectively, as of the
end of the immediately preceding Interest Accrual Period;
(B) the amounts in the Note Collection
Account, the Interest Reserve Account, the Expense Reserve
Account and the Trust Agreement Collection Account as of the
end of the immediately preceding Interest Accrual Period;
(C) the amounts of such funds in the Note
Collection Account (and, if any, the Interest Reserve Account)
applied toward the payment of any Note Interest Amount on any
Class of the Notes on the preceding Monthly Payment Date;
(D) the amount, if any, of such amounts in
the Note Collection Account applied toward the reduction of
the Outstanding Principal Amount of each Class of the Notes on
the preceding Monthly Payment Date;
(E) the amounts, if any, of such amounts in
the Trust Agreement Collection Account applied toward the
reduction of the Outstanding Certificate Balance of the Class
R Certificates and to pay investment yield on the Class R
Certificates, respectively, on the preceding Monthly Payment
Date; and
(F) the Outstanding Principal Amounts of
each Class of the Notes and the Outstanding Certificate
Balance of the Class R Certificates, respectively, at the
close of business on the immediately preceding Monthly Payment
Date, after application of payments to the Notes and the Class
R Certificates on such Monthly Payment Date.
(ii) The Note Trustee shall (A) furnish to the
Noteholders and any taxing authority, within the time periods required
by applicable law, such forms of information as is required by
applicable Federal or state tax law, including, but not limited to
appropriate Forms 1099 and (B) shall also provide such other
information in its possession as may be reasonably requested by any
Noteholder, at such Noteholder's expense, to enable the Noteholder to
prepare its tax returns.
(iii) The Note Trustee shall also supply the Issuer
Certificate Agent all information in its possession the Issuer
Certificate Agent needs to prepare and furnish the
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reports it is required to prepare and furnish pursuant to Section 5.05
of the Issuer Trust Agreement.
(j) The reference to an "Officer's Certificate of the Owner
Trustee" in Section 3.10 of the Standard Indenture Provisions is hereby changed
to be a reference to an "Officer's Certificate of the Issuer."
ARTICLE VIII
LIMITATION ON LIABILITY OF THE ISSUER
Section 8.01 Liabilities of the Issuer.
(a) The Issuer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by it
herein. The Issuer Certificate Agent on behalf of the Issuer shall immediately
deposit with the Note Trustee for credit to the Note Collection Account any
funds the Issuer may receive in respect of payments on any Contributed Security
due after the Cut-off Date.
(b) It is expressly understood and agreed by the parties that
each of the representations, undertakings, covenants and agreements made on the
part of the Issuer herein is made and intended not as a personal representation,
undertaking, covenant or agreement by the Issuer Trustee or any of its
affiliates, but is made and intended for the purpose of binding the Issuer and
the Noteholders shall look solely to the Pledged Assets for payment under the
Notes. Neither the Issuer Trustee nor any of its affiliates shall be under any
liability to the Note Trustee, the Noteholders, the Depositor or any other
Person for any amounts due under a Note or this Indenture or for any action
taken or for refraining from the taking of any action in its capacity as Issuer
Trustee pursuant to this Indenture; provided, however, that this provision shall
not protect the Issuer Trustee against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder. The Issuer Trustee may rely in good faith on any document
of any kind prima facie properly executed and submitted by any other Person
respecting any matters arising hereunder.
(c) The Issuer Trustee shall have the duties, obligations and
responsibilities explicitly set forth in the Transaction Documents only. Any
other reference to the Issuer shall be construed to confer upon State Street, as
Issuer Certificate Agent, the authority to take such action or exercise such
power on behalf of the Issuer in its capacity as Issuer Certificate Agent and
that such action or exercise of power on behalf of the Issuer shall be the sole
responsibility of State Street. This provision supersedes any provision to the
contrary in the Standard Indenture Provisions.
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ARTICLE IX
EVENTS OF DEFAULT
Section 9.01 Events of Default.
Notwithstanding the provisions of Section 5.01 of the Standard
Indenture Provisions, "Events of Default" shall mean only the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) failure by the Issuer to make (or cause to be made on its
behalf) payment of the Outstanding Principal Amount of the Notes when due at
maturity;
(b) failure by the Issuer to make (or cause to be made on its
behalf) on any Monthly Payment Date a payment of the Note Interest Amount to the
extent of the Available Amount;
(c) failure by the Issuer duly to observe or to perform any
other covenant or agreement of the Issuer under the Indenture, the Notes or any
other Transaction Document (as defined in the Indenture), as the case may be,
which failure (i) materially adversely affects the rights of the Noteholders and
(ii) continues unremedied for a period of 30 days (or, with respect to any
covenant or agreement relating to the remittance of distributions and other
amounts by the Issuer, a period of 5 days) after the earlier of (x) a
responsible officer of the Issuer becoming aware of such default and (y) the
giving of written notice of such failure by the Note Trustee or by any
Noteholder;
(d) termination or impairment of the Note Trustee's security
interest in the Trust Estate;
(e) any representation, warranty, certification or statement
made by the Issuer in the Indenture or in any Transaction Document or in any
Agency Security, financial statement or other document delivered pursuant to any
Transaction Document shall prove to have been incorrect in any adverse material
respect when made (or deemed made);
(f)(i) the Issuer shall become insolvent or bankrupt; or shall
admit in writing its inability to pay its debts or honor its obligations, or
shall apply to any tribunal for the appointment of a receiver, liquidator or
trustee of or for itself or for all or any substantial part of its property or
assets; (ii) a receiver, liquidator or trustee of or for the Issuer (or for all
or any substantial part of its property or assets) is appointed and not
discharged within 60 days; or (iii) any bankruptcy, insolvency, reorganization,
arrangement or liquidation proceedings (or similar proceedings analogous in
purpose and effect) shall be instituted by or against the Issuer, or any
supervisory
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authority having jurisdiction in the premises shall have taken possession of the
business or property of the Issuer with a view to the liquidation of its affairs
or the conservation of its assets, and in either case, are consented to by the
Issuer, or are not dismissed within 60 days;
(g) the rendering of any final judgment, enforceable in any
competent court, against the Issuer, for the payment of money equal to or in
excess of U.S. $10,000, and such judgment shall not be discharged or dismissed
or execution thereon stayed pending appeal within 60 days after entry; or
(h) the Certificate of Trust or other related formation
documents of the Issuer shall be amended without the written consent of the
Majority Noteholders.
The Events of Default contained in this Section 9.01 shall be
the only Events of Default applicable to the Notes.
Notwithstanding the provisions of Section 5.02 of the Standard
Indenture Provisions, if an Event of Default with respect to the Notes occurs
and is continuing, then, and in each and every such case: (i) the Note Trustee,
at the direction of the registered holders of at least 25% of the aggregate
Outstanding Principal Amount of the Notes (the "Required Holders"), in their
sole and absolute discretion, shall deliver a written notice (a "Default
Notice") to the Issuer, which shall specifically state that it is a Default
Notice, and (ii) the Note Trustee at the direction of the Required Holders, by
notice in writing to the Issuer, shall declare the principal of all the Notes
and the unpaid interest accrued thereon to be due and payable immediately, and
upon any such declaration the same shall become immediately due and payable,
without presentment, demand, protest or other requirements of any kind, all of
which are hereby expressly waived by the Issuer; provided that in the case of an
Event of Default of the type described in subsection (f) with respect to the
Issuer, the Notes and all interest accrued thereon, shall become automatically
due and payable, without presentment, demand, protest or other requirements of
any kind, all of which are hereby expressly waived by the Issuer. At any time
after such a declaration of acceleration of maturity has been made and before a
judgment or decree for payment of the money due has been obtained by the Note
Trustee, the Majority Noteholders, by written notice to the Issuer and the Note
Trustee, may rescind and annul such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Note Trustee a
sum sufficient to pay:
(i) all payments of principal and interest on all
Notes (including overdue installments of principal and
interest, if any, together with the interest on such overdue
installments to the extent such interest is lawful) and all
other amounts which would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration
had not occurred; and
(ii) all sums paid or advanced by the Note Trustee
hereunder and any other amounts due the Note Trustee
hereunder, including, without limitation, the reasonable
compensation, expenses, disbursements and advances of the Note
Trustee, its agents and counsel; and
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(b) all Events of Default hereunder other than the nonpayment
of the principal of Notes which have become due solely such
acceleration, have been cured, waived or otherwise remedied as provided
herein.
The Note Trustee (and any co-trustee or separate trustee) will
be subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b), and a Note 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. The Note Trustee shall be entitled to take all actions as
specified in TIA Section 317(a).
If the Notes have been declared due and payable following an
Event of Default, the Note Trustee may liquidate all or any portion of the Trust
Estate (including, without limitation, the Agency Securities including the
Series 2203 Freddie Mac Security), or elect to maintain possession of the Trust
Estate and continue to apply all collections from the Trust Estate as if there
had been no declaration of acceleration, all as directed by the Majority
Noteholders. The Note Trustee will be prohibited from selling the Trust Estate
following an Event of Default, unless (i) all of the Noteholders consent to such
sale; or (ii) the proceeds of such sale are sufficient to pay in full the
principal of the outstanding Certificates and the principal of and accrued
interest on the Notes at the time of such sale; or (iii) the Note Trustee
determines that the collections on the Trust Estate will not be sufficient on an
ongoing basis to make all payments of interest on the Notes as such payments
become due and to pay the outstanding principal amount of the Notes at maturity,
and the Note Trustee obtains the consent of the Noteholders holding 66-2/3% of
the aggregate outstanding amount of the Notes.
The provisions of Section 5.18 of the Standard Indenture
Provisions shall not apply to the Notes.
Section 9.02 Application of Proceeds.
Notwithstanding Section 5.08 of the Standard Indenture
Provisions, and in replacement thereof, any moneys collected by the Note Trustee
pursuant to this Article (including by means of a payment or deposit by the
Issuer under Section 9.01), together with all moneys at the time on deposit in
the Note Collection Account (other than amounts representing principal of the
Series 2203 Freddie Mac Security which will be deposited by the Note Trustee in
the Trust Agreement Collection Account for distribution to the
Certificateholders) shall (i) at the direction of the Majority Noteholders, upon
the occurrence and during the continuance of a Event of Default or (ii) if a
Default Notice is in effect, be applied in the following order at the date or
dates fixed by the Note Trustee and, in case of the payment of such moneys on
account of principal, premium, if any, or interest:
first, to the payment of all amounts due to the
Note Trustee under Section 10.07; and
second, to make payments on the Notes and the Class R
Certificates in accordance with the payment provisions set
forth in Section 2.08.
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Any collections on liquidation of any Agency Security in
excess of amounts applied pursuant to clause "first" above shall be treated
first as a recovery of interest accrued thereto through the date of liquidation
and thereafter as a recovery of principal thereon. Payments to Class R
Certificateholders shall be subject to Section 6.02 of the Issuer Trust
Agreement.
Section 9.03 Other Enforcement Provisions.
Except as explicitly superseded by the forgoing Sections 9.01
and 9.02, the provisions of Article V of the Standard Indenture Provisions are
incorporated herein by reference and shall govern enforcement actions in respect
of the Notes.
ARTICLE X
CONCERNING THE NOTE TRUSTEE
Except to the extent otherwise required by the TIA, the
provisions of this Article X shall supersede the provisions of Article VI of the
Standard Indenture Provisions.
Section 10.01 Duties of the Note Trustee; Certain Rights of
the Note Trustee.
(a) State Street Bank and Trust Company agrees to act, and is
hereby appointed by the Issuer, to act as the Note Trustee under this Indenture.
The Note Trustee shall, on behalf of the Issuer and the Noteholders, collect
payments due under the Contributed Securities in accordance with applicable law.
Without limiting the generality of the foregoing, the Note Trustee is hereby
authorized and empowered after the failure to pay any amount on or in connection
with (i) any Contributed Security when such amount is due and payable under the
applicable Underlying Issuing Document and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Contributed Security.
(b) The Note Trustee may, as it deems necessary in its sole
discretion, monitor any Underlying Trustee's performance of its duties under the
Underlying Issuing Document and exercise any right of a holder of a Contributed
Security to direct the applicable trustee, servicer or collateral agent in the
performance of its duties, but the Note Trustee shall have no obligation,
express or implied, to do so.
(c) Upon receiving notice as the registered holder of the
Contributed Securities of (A) the resignation or removal of the Underlying
Trustee under any Underlying Issuing Document or (B) the occurrence of an event
of default under any Underlying Issuing Document (or similar event), the Note
Trustee shall promptly notify the Noteholders of such resignation, removal or
event of default (or similar event).
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(d) The Note Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and the other
Transaction Documents to which it is a party and no implied duties shall be read
into this Indenture or the other Transactions Documents. Neither the Note
Trustee, its agents nor Affiliates shall be liable for any act or omission made
in connection with this Indenture or the other Transaction Documents except in
the case of its gross negligence or willful misconduct. In furtherance, and not
in limitation, of the Note Trustee's rights, duties and protections hereunder,
and unless otherwise specifically provided in this Indenture, the Note Trustee
shall (subject to the terms hereof and of the other Transaction Documents) grant
such consents, make such requests and determinations and take or refrain from
taking such actions (including, without limitation, actions with respect to an
Event of Default, of which the Note Trustee has notice) as are permitted (but
not expressly required) to be granted, made or taken by the Note Trustee under
the Transaction Documents, as the Majority Noteholders shall direct in writing.
No provision of this Indenture shall be construed to relieve the Note Trustee
from liability for its own grossly negligent action, its own grossly negligent
failure to act or its own misconduct, its grossly negligent failure to perform
its obligations in compliance with this Indenture, or any liability which would
be imposed by reason of its willful misfeasance or bad faith; provided, however,
that:
(i) the duties and obligations of the Note Trustee
shall be determined solely by the express provisions of this Indenture,
the Note Trustee shall not be personally liable except for the
performance of such duties and obligations as are specifically set
forth in this Indenture, no implied covenants, duties or obligations
shall be read into this Indenture against the Note Trustee and the Note
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Note Trustee and conforming
to the requirements of this Indenture which it reasonably believes in
good faith to be genuine and to have been duly executed by the proper
authorities respecting any matters arising hereunder;
(ii) the Note Trustee shall not be personally liable
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Note Trustee, unless the Note Trustee was
grossly negligent or acted in bad faith or with willful misfeasance;
(iii) the Note Trustee shall not be personally liable
with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of the Majority
Noteholder or the Issuer, relating to the time, method and place of
conducting any proceeding for any remedy available to the Note Trustee,
or exercising any trust or power conferred upon the Note Trustee, under
this Indenture; and
(iv) no provision of this Indenture or the other
Transaction Documents shall require the Note 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.
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(v) The Note Trustee shall have the benefits
afforded by TIA Section 315(d).
(e) Certain Rights of Note Trustee.
(i) The Note Trustee may request and rely upon, and
shall be protected in acting or refraining from acting upon, and shall
not be bound to make any investigation into the facts or matters stated
in, any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, note, guaranty or other paper,
document or electronic communication believed by it to be genuine and
to have been signed or presented by the proper party or parties, but
the Note Trustee in its sole discretion may make such further inquiry
or investigation into such facts or matters as it may see fit;
(ii) the Note Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture or
any of the other Transaction Documents at the request, order or
direction of any of the Noteholders, including the Majority
Noteholders, pursuant to the provisions of this Indenture or any of the
other Transaction Documents, unless such Noteholders or other entities
shall have furnished to the Note Trustee reasonable security or
indemnity (including reasonable advancements) against the costs,
expenses and liabilities (including, without limitation, attorneys'
fees and expenses) which might be incurred therein or thereby;
(iii) none of the provisions contained in this
Indenture shall require the Note Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers;
(iv) as a condition to the taking or omitting of any
action by it hereunder, the Note Trustee may consult with counsel,
accountants or other experts and the advice of such counsel,
accountants or other experts or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action
taken or omitted by it hereunder in good faith and in reliance thereon;
and
(v) for all purposes under this Indenture, the Note
Trustee shall not be deemed to have notice or knowledge of any Default
or Event of Default (other than the Events of Default specified in
Section 9.01(a) or (b)) unless a Responsible Officer assigned to and
working in the Corporate Trust Office has actual knowledge thereof or
unless written notice of such a Default or Event of Default is received
by the Note Trustee at the Corporate Trust Office and such notice
references the Notes generally, the Issuer, the Trust Estate or this
Indenture.
Section 10.02 Performance of Note Trustee's Duties.
(a) Neither the Note Trustee nor its agents shall be liable to
any Person for any delay in or failure of the payment under the Contributed
Securities or for any nonperformance or default on the part of any party (other
than the Note Trustee) under the Transaction Documents.
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(b) Subject to the provisions of Article IX, the Note Trustee
may, in the execution and exercise of all or any of the trusts, powers,
authorities and discretions vested in it by the Transaction Documents, act by
Responsible Officers or a Responsible Officer of the Note Trustee or its
Affiliates, and the Note Trustee may also whenever it deems it expedient in the
interests of the Noteholders, whether by power of attorney or otherwise,
delegate to any Person or fluctuating body of Persons all or any of the trusts,
powers, authorities and discretions vested in it by the Transaction Documents
and any such delegation may be made upon such terms and conditions and subject
to such regulations (including power to subdelegate) as the Note Trustee may
deem fit and it shall not be bound to supervise the proceedings and shall not in
any way or to any extent be responsible for any loss incurred by any misconduct
or default on the part of such delegate or subdelegate; provided that the Note
Trustee shall have exercised reasonable care in the selection of such delegate.
The Note Trustee shall give prompt notice to the Issuer of the appointment (and
termination thereof) of any delegate as aforesaid and shall procure that any
delegate shall also give prompt notice to the Issuer of any subdelegate.
(c) Neither the Note Trustee nor any director or officer of
the Note Trustee shall be precluded from underwriting, guaranteeing the
subscription of or subscribing for some or all of the Notes with or without a
commission or other remuneration or from purchasing or otherwise acquiring,
holding, dealing in or disposing of the Notes or any of them or any notes,
bonds, debentures, debenture stock, shares or securities whatsoever of, or from
acting as banker (including, without limitation, engaging in normal banking,
trust and investment banking business), paying agent or process agent for or
with, the Issuer and any Affiliate thereof or from otherwise at any time
contracting or entering into any financial or other transactions with the Issuer
or any Affiliate thereof or from accepting and holding the office of trustee for
the holders of any securities of the Issuer or any Affiliate thereof.
(d) The Note Trustee is hereby authorized, in making or
disposing of any investment permitted by this Indenture, to deal with itself (in
its individual capacity) or with any one or more of its affiliates, whether it
or such affiliate is acting as an agent of the Note Trustee or for any third
person or dealing as principal for its own account.
Section 10.03 Resignation and Removal; Appointment of
Successor Note Trustee.
(a) The Note Trustee may not resign and be discharged of the
trust created by this Indenture unless (i) the Note Trustee shall provide 30
days' written notice to the Issuer Trustee and the Noteholders, (ii) the Note
Trustee shall locate a successor Note Trustee satisfying the eligibility
requirements for such successor Note Trustee set forth in subsection (c) of this
Section 10.03 and Section 10.09 and (iii) the Note Trustee shall have agreed
with such prospective successor Note Trustee as to fees and expenses to be paid
such successor Note Trustee for serving as Note Trustee with respect to the
Notes so long as the Notes are Outstanding and, if such agreed upon fees and
expenses to be paid the successor Note Trustee exceed the amounts remaining in
the Expense Reserve Account allocated to the Note Trustee, the Note Trustee
shall make provisions for such shortfall in a manner satisfactory to such
successor Note Trustee and (iv) such successor Note Trustee shall agree to be
assigned all of the rights and powers, and to assume all of the duties and
obligations, of the Note Trustee set forth in this
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Indenture and the other Transaction Documents, and such resignation shall take
effect upon receipt by the Note Trustee of an instrument of acceptance of
appointment executed by a successor trustee as herein provided in Sections 10.04
and 10.05.
(b) The Note Trustee may be removed upon 30 days' prior
written notice by the Majority Noteholders delivered to the Note Trustee and to
the Issuer Trustee.
(c) If at any time the Note Trustee shall be removed or
otherwise become incapable of acting, or if at any time a vacancy shall occur in
the office of the Note Trustee for any other cause, the Issuer shall use its
best efforts to locate and recommend a qualified successor trustee or trustees
and a successor trustee or trustees may be appointed by the Majority Noteholders
(whether or not such successor or successors shall have been located or
recommended by the Issuer) upon written notice to the Issuer and the Note
Trustee. In the event that no such successor trustee (or trustees) is appointed
by the Majority Noteholders, the Note Trustee may request a court to make such
appointment. Every successor trustee appointed pursuant to this Section 10.03
shall be a licensed bank or trust company organized under the law of the United
States or any State thereof having a corporate trust department and a combined
capital and surplus of at least U.S. $100,000,000 and otherwise satisfying the
criteria set forth in Section 10.09, if there be such an institution willing and
able to accept the trust upon reasonable or customary terms.
Section 10.04 Acceptance of Appointment by Successor Note
Trustee.
Any successor Note Trustee selected by the predecessor Note
Trustee pursuant to Section 10.03(a) or appointed as provided in Section
10.03(b) shall execute, acknowledge and deliver to the Issuer and to its
predecessor trustee an instrument accepting such selection or appointment
hereunder, and, subject to the provisions of Section 10.03, as applicable,
thereupon the resignation or removal of the predecessor Note Trustee shall
become effective and such successor Note Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Note Trustee herein; but, nevertheless, at the written direction of the
Majority Noteholders or written request of the successor Note Trustee, the Note
Trustee ceasing to act shall execute and deliver an instrument transferring to
such successor Note Trustee all the rights and powers of the Note Trustee so
ceasing to act. Upon written request of any such successor Note Trustee, the
Noteholders shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor Note Trustee all such
rights and powers. Any predecessor Note Trustee shall nevertheless retain a Lien
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of this Indenture.
Section 10.05 Merger or Consolidation of Note Trustee.
Any corporation into which the Note 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 Note Trustee shall be a
party and any entity which shall acquire
Indenture
<PAGE> 45
39
substantially all of the corporate trust business of the Note Trustee shall be
the successor of the Note Trustee hereunder; provided that such corporation
shall be qualified under the provisions of Section 10.03(c), without the
execution or filing of any paper or any further act on the part of any of the
parties hereto or the holders, notwithstanding anything contained herein to the
contrary.
Section 10.06 Certain Procedural Matters.
The Note Trustee, in its own name and as trustee of an express
trust, at the written direction of the Majority Noteholders, shall be entitled
and empowered to institute any action or proceeding at law or in equity for the
collection of any amounts due and unpaid or the enforcement of any other rights
of the holders, prosecute any such action or proceeding to judgment or final
decree.
Section 10.07 Note Trustee Fees and Indemnification.
(a) On each Monthly Payment Date, the Note Trustee shall be
entitled to the amount specified in Section 6.02 in respect of its fees (which
fee amount includes all expenses incurred by the Note Trustee in the day-to-day
performance of its obligations hereunder). The Issuer covenants and agrees to
pay or reimburse the Note Trustee upon its request for all extraordinary
reasonable expenses, disbursements and advances incurred or made by the Note
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ, whether or not such expenses are
incurred in connection with any Opinion of Counsel required or permitted to be
obtained by the Note Trustee), except that the Issuer shall not pay or reimburse
the Note Trustee for any expense, disbursement or advance as may arise from the
Note Trustee's gross negligence, willful misfeasance or bad faith. The Note
Trustee agrees that such amounts are for the account of the Issuer and it shall,
other than as provided in Section 5.03(a) of the Issuer Trust Agreement, have no
lien or claim on the Issuer Assets in respect thereof. The Note Trustee and any
director, officer, employee or agent of the Note Trustee shall be indemnified by
the Issuer and held harmless against any loss, liability, claim or expense
incurred in connection with any legal action or claim, including any pending or
threatened legal action or claim, relating to this Indenture or the Notes, or
the performance of any of the Note Trustee's duties hereunder, other than any
loss, liability, claim or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder; provided that (i) with
respect to any such legal action the Note Trustee shall have given the Issuer
notice thereof promptly after the Note Trustee shall have knowledge thereof and
(ii) the Issuer shall defend such legal action and the Note Trustee shall
cooperate and consult fully with the Issuer in preparing such defense. Such
indemnity shall survive the termination or discharge of this Indenture and the
resignation or removal of the Note Trustee. Any payment in respect of the
amounts specified in the foregoing indemnity made by the Issuer to the Note
Trustee shall be from the Issuer's own funds, without reimbursement, other than
as provided in Section 5.03(a) of the Issuer Trust Agreement, from the Issuer
Assets therefor.
Indenture
<PAGE> 46
40
(b) The Note Trustee shall be required to pay all expenses,
except as expressly provided herein, incurred by it or its agents in connection
with its activities hereunder and shall be entitled to reimbursement therefor as
provided in this Section 10.07. The Note Trustee shall in no event acquire any
claim against the Noteholders or the Issuer by reason of non-receipt of any fees
and expenses and the Note Trustee shall, unless and until the effective date of
any resignation of the Note Trustee under Section 10.03, continue to perform its
obligations hereunder notwithstanding such non-receipt.
Section 10.08 Information.
The Note Trustee will promptly deliver to the Noteholders any
notices, financial statements, officer's certificates or other forms of
communication that it receives pursuant to the terms of this Indenture.
Section 10.09 Eligibility Requirements for Note Trustee.
The Note Trustee hereunder shall at all times be a corporation
or association having its principal office in the State of Delaware or New York
or the Commonwealth of Massachusetts and organized and doing business under the
laws of such state or the United States of America, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least U.S. $100,000,000, shall be subject to supervision or examination by
federal or state authority and, if the Note Trustee is not State Street Bank and
Trust Company, shall have a short term debt rating in one of the two highest
categories of Standard & Poor's and Moody's. If such corporation or association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 10.09 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. At all
times, the Note Trustee shall satisfy the requirements of TIA Sections
310(a)(1), 310(a)(2) and 310(a)(5) and shall be subject to TIA Section 310(b).
In case at any time the Note Trustee shall cease to be eligible in accordance
with the provisions of this Section 10.09, the Note Trustee shall resign
immediately in the manner and with the effect specified in Section 10.03.
Section 10.10 Note Trustee Not Liable for Notes.
The recitals contained herein and in the Notes shall be taken
as the statements of the Issuer, and the Issuer Trustee and the Note Trustee
assume no responsibility for their correctness. Except for the certificate of
authentication on the Notes, the Note Trustee makes no representations as to the
validity or sufficiency of the Notes or any related Transaction Documents.
Except for its signature on the Notes, the Issuer Trustee makes no
representations as to the validity or sufficiency of the Notes or any related
Transaction Documents. Neither the Note Trustee nor the Issuer Trustee shall be
accountable for the use or application by the Issuer of any funds paid to the
Issuer in respect of the Notes, but the Note Trustee shall be responsible for
any such funds that may be deposited with it pursuant to Sections 3.01, 4.01,
5.01 and 6.01.
Indenture
<PAGE> 47
41
Section 10.11 Note Trustee May Own Notes.
State Street Bank and Trust Company, in its capacity as the
Note Trustee, in its individual or any other capacity, and any of its affiliates
may become the owner or pledgee of Notes with the same rights as it would have
if it were not the Note Trustee.
Section 10.12 Maintenance of Office or Agency.
The Note Trustee will maintain or cause to be maintained at
its expense an office or offices or agency or agencies where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Note Trustee in respect of the Notes and this Indenture
may be served, which initially shall be its Corporate Trust Office. The Note
Trustee will give prompt written notice to the Noteholders of any change in the
location of the Note Register or any such office or agency.
Section 10.13 Appointment of Co-Note Trustee.
The Note Trustee, with the consent of the Issuer and only for
the purpose of meeting the legal requirements, if any, of certain jurisdictions,
shall have the power to appoint co-trustees (the fees and expenses of which
shall be paid by the Note Trustee out of its fees). In the event of such
appointment, all rights, powers and duties and obligations conferred or imposed
upon the Note Trustee by this Indenture will be conferred or imposed upon the
Note Trustee and such co-trustee jointly, or in any jurisdiction where the Note
Trustee is incompetent or unqualified to perform certain acts, singly upon such
co-trustee who shall exercise and perform such rights, powers, duties and
obligations solely at the discretion of Note Trustee.
Section 10.14 Application of the Trust Indenture Act.
Pursuant to Sections 316(a) and (c) of the TIA, all provisions
automatically provided for in Section 316(a) and (c) are hereby expressly
excluded.
Section 10.15 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.
Indenture
<PAGE> 48
42
ARTICLE XI
CONCERNING THE NOTEHOLDERS
Section 11.01 Control by Majority Noteholders.
Except as provided below, the Majority Noteholders, by a
written direction to the Note Trustee, shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Note Trustee or exercising any trust or power conferred on the Note Trustee;
provided, however, that the Note Trustee shall have the right to decline to
follow any such direction (i) if the Note Trustee shall be advised by counsel
that the action so directed may not lawfully be taken or (ii) if the Note
Trustee shall be advised by counsel that the action so directed may involve it
in personal liability unless it shall have been furnished a satisfactory
indemnity or security therefor.
Section 11.02 Right of Revocation of Action Taken.
At any time prior to (but not later than) the evidencing to
the Note Trustee, as provided in the Standard Indenture Provisions, of the
taking of any action by the holders, any holder of a Note the serial number of
which is shown by the evidence to be included in those Notes the holders of
which have consented to such action may, by filing written notice with the Note
Trustee at the Corporate Trust Office and upon proof of holding as provided in
Section 2.06, revoke such action insofar as it concerns such Note. Unless
revoked pursuant to the foregoing provisions, any such action taken by a holder
shall be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Note issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon such
Note. Except as otherwise provided herein, any action taken by the Majority
Noteholders shall be conclusive and binding upon the Issuer, the Note Trustee
and the holders of all Notes.
ARTICLE XII
OPTIONAL NOTE REDEMPTION
The provisions of this Article XII shall be the sole
provisions applicable to the redemption of the Notes hereunder and replace the
provisions of Article X of the Standard Indenture Provisions.
Section 12.01 Optional Note Redemption.
Holders of 100% of the Outstanding Certificate Balance of the
Class R Certificates may cause the Issuer to redeem all but not less than all of
the Notes at a price equal to 100% of
Indenture
<PAGE> 49
43
the Outstanding Principal Amount of the Notes (the "Optional Note Redemption
Amount") on any Monthly Payment Date on or after the earlier of (A) June 1, 2005
and (B) the first Monthly Payment Date on which the remaining balance of the
Agency Securities shall be equal to or less than 20% of the principal amount of
the Agency Securities (at original issuance), after giving effect to any
principal payments on such Monthly Payment Date (the "Permitted Note Redemption
Date"); provided that if the Depositor or the Seller, as its assignee, has
redeemed the Class R Certificates or has delivered a written demand to the
Issuer Certificate Agent for the optional redemption of the Class R Certificates
to occur on the upcoming Monthly Payment Date, the Depositor or its assignee,
and not the holders of the Class R Certificates, shall have the right to cause
the Notes to be redeemed. In order for a redemption of the Notes to occur on a
particular Monthly Payment Date, (i) the Issuer Certificate Agent or the Issuer
Trustee shall have delivered to the Note Trustee a written demand for such
redemption at least 10 days but not greater than 25 days prior to the Monthly
Payment Date selected for such redemption, which demand specifies such selected
Monthly Payment Date, and (ii) the Optional Note Redemption Amount shall be
caused to be deposited into the Note Collection Account by such Noteholders no
later than the 9th calendar day prior to such Monthly Payment Date.
Section 12.02 Notice of Optional Note Redemption.
Notice of an Optional Note Redemption Event (the "Optional
Note Redemption Notice") shall be given by the Issuer or, at the Issuer's
request, by the Note Trustee, as the case may be, to each Noteholder by first
class mail or airmail, postage prepaid, at their last addresses as they shall
appear upon the registry books. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives the notice. Failure to give notice by mail, or any defect in
the notice to any Noteholder shall not affect the validity of the proceedings
for the Optional Note Redemption with respect to the Notes held by other
Noteholders.
The Optional Note Redemption Notice to each such Noteholder
shall specify the principal amount of each Note held by such Noteholder to be
redeemed, the Optional Note Redemption Date, the Optional Note Redemption
Amount, the place or places of payment, that interest accrued but unpaid to the
Optional Note Redemption Date will be paid as specified in the Optional Note
Redemption Notice and that on and after date interest thereon or on the portions
thereof to be redeemed will cease to accrue.
The Optional Note Redemption Notice shall be given in the name
and at the expense of the Issuer. At least one Business Day prior to the
Optional Note Redemption Date specified in the Optional Note Redemption Notice,
the Issuer will deposit or cause to be deposited the Optional Note Redemption
Amount in the Note Collection Account.
With respect to each Note, redemption will be made pro rata
based on the Optional Note Redemption Amount with respect to all the Outstanding
Notes (each pro rata portion of the Optional Note Redemption Amount, the
"Redemption Price"). For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Indenture
<PAGE> 50
44
Notes shall relate, in the case of any Note redeemed, to the portion of the
principal amount of such Note which has been or is to be redeemed pursuant to
Section 12.01.
Section 12.03 Payment of Notes Called for Redemption.
If an Optional Note Redemption Notice has been given as
provided in Section 12.02, the Notes shall become due and payable on the date
and at the place stated in such Optional Note Redemption Notice at the
Redemption Price payable pursuant to Section 12.01 and Section 12.02, and on and
after said date (unless the Issuer shall default in the payment of such Notes at
the Redemption Price, together with interest accrued but unpaid to said date and
any other amounts payable pursuant to Section 12.01) interest on the Notes shall
cease to accrue and, except as provided in Article IV of the Standard Indenture
Provisions, such Notes shall cease from and after the Optional Note Redemption
Date to be entitled to any benefit or security under this Indenture, and the
Noteholders shall have no right in respect of such Notes except the right to
receive the Redemption Price with respect to each Note held, accrued but unpaid
interest to the date fixed for redemption and any other amounts payable pursuant
to Section 12.01. The Notes shall be paid and redeemed by the Issuer at the
applicable Redemption Price, together with interest accrued but unpaid thereon
to the Optional Note Redemption Date and any amounts payable pursuant to Section
12.01; provided that any payment of interest becoming due on the Optional Note
Redemption Date shall be payable to the registered holders of such Notes subject
to the terms and provisions of Section 2.06.
If any Note called for redemption pursuant to Section 12.01
shall not be so paid upon surrender thereof for redemption, the principal,
premium, if any, and interest shall, until paid or duly provided for, bear
interest from the Optional Note Redemption Date at the Note Interest Rate.
Section 12.04 Termination.
The obligations and responsibilities of the Issuer and the
Note Trustee created hereby with respect to the trust created hereby shall
terminate upon the payment to Noteholders of all amounts required to be paid to
them pursuant to this Indenture and payment of all fees and expenses due the
Note Trustee.
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or successfully transmitted in full by facsimile or other immediate electronic
transmission device, to (a) in the case of the Issuer, FAIC
Indenture
<PAGE> 51
45
II Issuer Trust 2000-1, c/o Christiana Bank & Trust Company, Greenville Center,
3801 Kennett Pike, Greenville, Delaware, 19807, Attention: Corporate Trust
Administration, tel: 302-421-5800 and fax: 302-421-5815, and (b) in the case of
the Note Trustee or the Note Registrar, State Street Bank and Trust Company at
the Corporate Trust Office, telephone number (617) 662-1311, fax: (617)
662-1435, or such other address as may hereafter be furnished to the other
parties in writing by a party. Any notice electronically transmitted as provided
above shall also be dispatched by mail, first class postage prepaid, no later
than the next Business Day after such transmission.
Section 13.02 Effect of Headings.
The Table of Contents hereto and the Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
Section 13.03 Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
Section 13.04 Further Assurance.
The Issuer shall, from time to time on being required to do so
by the Note Trustee, now or at any time in the future, do or procure the doing
of all such acts and/or execute or procure the execution of all such documents
in a form satisfactory to the Note Trustee as the Note Trustee may reasonably
consider necessary for giving full effect to this Indenture and securing to the
Note Trustee the full benefit of the rights, powers and remedies conferred upon
the Note Trustee in this Indenture.
Section 13.05 Governing Law; Submission to Jurisdiction.
This Indenture shall be construed in accordance with and
governed by the substantive laws of the State of New York applicable to
agreements made and to be performed in the State of New York and the
obligations, rights and remedies of the parties hereto and the Noteholders shall
be determined in accordance with such laws and without regard to the conflict of
laws principles therein. The parties hereto hereby submit to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York and of the Supreme Court of the State of New York sitting in New York
County (including its Appellate Division), and of any other appellate court in
the State of New York, for the purposes of all legal proceedings arising out of
or relating to this Indenture or the transactions contemplated hereby. The
parties hereto hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection that they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
Indenture
<PAGE> 52
46
Section 13.06 Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 13.07 Limitation on Rights of Noteholders.
No Noteholder shall have any right to vote (except as provided
in this Indenture) or in any manner otherwise control the operation and
management of the Trust Estate (except as provided in this Indenture), or the
obligations of the parties hereto (except as provided in this Indenture), nor
shall anything herein set forth or contained in the terms of the Notes be
construed so as to constitute the Noteholders from time to time as partners or
members of an association; nor shall any Noteholder be under any liability to
any third party by reason of any action taken by the parties to this Indenture
pursuant to any provision hereof, except as expressly provided for herein.
No Noteholder shall have any right by virtue or by availing
itself of any provisions of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture,
unless such Holder previously shall have given to the Note Trustee a written
notice of a Note Trustee default or default under this Indenture and of the
continuance thereof, as hereinbefore provided, and unless the Majority
Noteholders shall also have made written request upon the Note Trustee to
institute such action, suit or proceeding in its own name as Note Trustee
hereunder and shall have offered to the Note Trustee such reasonable indemnity
as it may require against the costs, expenses, and liabilities to be incurred
therein or thereby, and the Note Trustee, for 10 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Noteholder with the other Noteholder and
the Note Trustee, that no one or more Noteholders of Notes shall have any right
in any manner whatever by virtue or by availing itself or themselves of any
provisions of this Indenture to affect, disturb or prejudice the rights of the
Noteholders of any other of the Notes, or to obtain or seek to obtain priority
over or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the common benefit of
all Noteholders. For the protection and enforcement of the provisions of this
Section 13.07, each and every Noteholder and the Note Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 13.08 Notes Nonassessable and Fully Paid.
It is the intention of the Issuer that the Noteholders shall
not be personally liable for obligations of the Issuer, that the interests in
the Trust Estate represented by the Notes shall be nonassessable for any reason
whatsoever, and that the Notes, upon due authentication thereof by the Note
Trustee pursuant to this Indenture, are and shall be deemed fully paid.
Indenture
<PAGE> 53
47
Section 13.09 Incorporation of Standard Indenture Provisions.
Except as otherwise provided herein, the Standard Indenture
Provisions are incorporated by reference into this Indenture. Except as
explicitly stated herein, in the event of any inconsistency between the Standard
Indenture Provisions and the provisions of this Indenture, the provisions of the
Standard Indenture Provisions shall control the interpretation of the rights,
remedies and obligations of the parties hereto.
Except as the context may otherwise require, when used in the
Standard Indenture Provisions, the following words shall have meanings
correlative to the defined terms used herein:
"Bond" or "Bonds" has a meaning correlative to the Notes.
"Bond Registrar" has a meaning correlative to the Note Registrar.
"Owner Trustee" has a meaning correlative to the Issuer Trustee.
"Trustee" has a meaning correlative to the Note Trustee.
Notwithstanding the foregoing, the provisions of Section 8.11
of the Standard Indenture Provisions shall not apply to the Trust Estate, and
neither the Issuer nor any other Person shall have any right to substitute or
replace any of the Issuer Assets, except as expressly contemplated herein.
Section 13.10 No REMIC Election.
No election will be made to treat the Issuer as a REMIC.
Indenture
<PAGE> 54
48
IN WITNESS WHEREOF, the undersigned have caused this Indenture
to be duly executed as a deed as of this 20th day of January, 2000 by their
respective officers hereunto duly authorized.
FAIC II ISSUER TRUST 2000-1,
as Issuer
By: Christiana Bank and Trust Company, not in its
individual capacity but solely as Issuer Trustee
By: /Louis W. Geibel, Jr.
---------------------------------
Name: Louis W. Geibel, Jr.
Title: Vice President
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
(except as expressly set forth
herein) but solely in its capacity
as the Note Trustee
By: /Craig D. Lange
----------------------------
Name: Craig D. Lange
Title: Assistant Vice President
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
(except as expressly set forth
herein) but solely in its capacity
as the Account Bank with respect
to Sections 4.01, 5.01, 6.01, 7.01
By: /Craig D. Lange
----------------------------
Name: Craig D. Lange
Title: Assistant Vice President
[Signature Page to Indenture]
Indenture
<PAGE> 55
SCHEDULE I
TRUST ESTATE
AGENCY SECURITIES
[Copy from Prospectus Supplement when final]
<PAGE> 56
EXHIBIT A-1
[Form of Class F Note]
No transfer of a Note shall be made unless and until the prospective transferee
provides the Note Trustee with an affidavit, in the form provided as paragraph 7
to Exhibit C hereto, to the effect that such transferee is (i) not an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or any plan or arrangement subject to Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), nor a Person acting,
directly or indirectly, on behalf of any such employee benefit plan, plan or
arrangement (including an insurance company using funds in its general or
separate account that may constitute "plan assets") (each a "Plan") and is not a
governmental plan or a church plan subject to any laws or regulation (the
"Restrictive Rules") that are substantially similar to either Section 406 of
ERISA or Section 4975 of the Code (a "Regulated Plan"), (ii) if it is a Plan,
the acquisition and holding of the Notes by the Transferee will not result in a
non-exempt prohibited transaction under Section 406 of ERISA and/or Section 4975
of the Code, or (iii) if it is not a Plan, but is a Regulated Plan, the
acquisition and holding of the Notes by the Transferee will not result in a
violation of any such Restrictive Rules.
FAIC II ISSUER TRUST 2000-1
CLASS F NOTES, DUE DECEMBER 1, 2029
No. __
Cusip No. U.S. $[ ]
------------------------ ----------
FAIC II ISSUER TRUST 2000-1, a statutory business trust under
the laws of the State of Delaware (the "Issuer"), for value received, hereby
promises to pay to ____________________________________________, or registered
assigns, upon presentation and surrender of this Note (except as otherwise
permitted by the Indenture referred to below), the principal sum of
____________________________________________________________ United States
Dollars (U.S. $____________) on December 1, 2029 (the "Final Scheduled Monthly
Payment Date"), all as provided below and in the Indenture referred to herein.
The obligations of the Issuer under this Note and the
Indenture are obligations of the Issuer, secured by a pledge of the Trust
Estate. Except as otherwise provided in the Indenture, the principal of this
Note shall be payable no later than the Final Scheduled Monthly Payment Date
unless the unpaid principal of this Note becomes due and payable at an earlier
date by declaration of acceleration, call for redemption or otherwise.
Payments on the Notes will be payable on the first Business
Day of each month commencing on March 1, 2000 (each, a "Monthly Payment Date")
to Noteholders of record of the Notes as of the close of business on the last
Business Day of the calendar month immediately preceding to such Monthly Payment
Date (the "Record Date").
Indenture
<PAGE> 57
2
Payments on the Notes on any Monthly Payment Date will be made
only from amounts on deposit in the Note Collection Account (and, to the extent
that funds thereon are insufficient for payments of interest on the Notes, in
the Interest Reserve Account) on such Payment Date (the "Available Amount") in
accordance with the payment provisions described in the Indenture.
Interest calculated at an annual rate of LIBOR + 1.10%,
subject to a maximum rate of 9.00% (the "Class F Note Interest Rate") and
applied to the Outstanding Principal Amount of the Class F Notes (the "Class F
Note Interest Amount") shall be payable on each Monthly Payment Date at
one-twelfth of the annual rate (calculated on the basis of a 360-day year of
30-day months); provided that, for the initial Monthly Payment Date, "Class F
Note Interest Amount" shall be equal to the product of (X) the actual number of
days from and including the Closing Date to and excluding March 1, 2000, divided
by 360 days and (Y) the Class F Note Interest Rate and (Z) the Initial Principal
Amount (as defined herein) of the Class F Notes. On each Monthly Payment Date,
the Note Trustee will pay the Class F Note Interest Amount, pro rata, to the
holders of the Class F Notes. Interest on the Notes in respect of a Monthly
Payment Date will accrue from and including the first day of the Interest
Accrual Period relating to such Monthly Payment Date to and including the last
day of such Interest Accrual Period.
The Note Trustee will send each payment on a Monthly Payment
Date to each Noteholder, together with a statement setting forth, among other
things, (i) the amount of such payment allocable to interest and (ii) the amount
of such payment allocable to principal. Such amounts will be expressed as a
dollar amount per U.S. $1,000 of the original principal amount of the Notes.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Indenture.
Unless the certificate of authentication hereon has been
executed by the Note Trustee by the manual signature of one of its Authorized
Officers, this Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
Holders of 100% of the Outstanding Certificate Balance of the
Class R Certificates may cause the Issuer to redeem all but not less than all of
the Notes at a price equal to 100% of the Outstanding Principal Amount of the
Notes (the "Optional Note Redemption Amount") on any Monthly Payment Date on or
after the earlier of (A) June 1, 2005 and (B) the first Monthly Payment Date on
which the remaining balance of the Agency Securities shall be equal to or less
than 20% of the principal amount of the Agency Securities (at original
issuance), after giving effect to any principal payments on such Monthly Payment
Date (the "Permitted Note Redemption Date"); provided that if the Depositor or
the Seller, as its assignee, has redeemed the Class R Certificates or has
delivered a written demand to the Issuer Certificate Agent for the optional
redemption of the Class R Certificates to occur on the upcoming Monthly Payment
Date, the Depositor or its assignee, and not the holders of the Class R
Certificates, shall have the right to cause the Notes to be redeemed. In order
for a redemption of the Notes to occur on a particular Monthly Payment Date, (i)
the Issuer Trustee shall have delivered to the Note Trustee a
Indenture
<PAGE> 58
3
written demand for such redemption at least 10 days but not greater than 25 days
prior to the Monthly Payment Date selected for such redemption, which demand
specifies such selected Monthly Payment Date, and (ii) the Optional Note
Redemption Amount shall be caused to be deposited into the Note Collection
Account by such Noteholders no later than the 9th calendar day prior to such
Monthly Payment Date.
If an Event of Default shall occur and be continuing, the
Notes may become or be declared due and payable in the manner and with the
effect provided in the Indenture.
Title to this Note shall pass by registration in the Note
Register kept at the Corporate Trust Office by the Note Trustee, as registrar.
No service charge shall be made for exchange or registration
of transfer of this Note, but the Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
It is understood and agreed by the holder of this Note that
(a) this Note is being executed by the Issuer Trustee and authenticated and
delivered by the Note Trustee in the exercise of the respective powers and
authority conferred and vested in each such entity, (b) nothing herein contained
shall be construed as creating any liability on Christiana Bank & Trust Company
or State Street Bank and Trust Company, in each case, individually or
personally, to perform any covenant either expressed or implied contained herein
or in the Indenture, all such liability, if any, being expressly waived by the
holder hereof and by any person claiming by, through or under the holder hereof,
and (c) under no circumstances shall Christiana Bank & Trust Company or State
Street Bank and Trust Company be personally liable for the payment of any
indebtedness or expense of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Issuer under this Note or the Indenture.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED
BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS OR CHOICE OF LAW
PRINCIPLES THEREOF.
Indenture
<PAGE> 59
4
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated , .
----------- -- ----
FAIC II ISSUER TRUST 2000-1
By: CHRISTIANA BANK & TRUST COMPANY,
as trustee of the Issuer
By:
-------------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Note Trustee
By:
------------------------------------
Name:
Title: Authorized Signatory
Indenture
<PAGE> 60
5
ASSIGNMENT FORM
For value received
---------------------------------------
hereby sell, assign and transfer unto
-----------------------------------------
-----------------------------------------
Please insert social security or
other identifying number of assignee
Please print or type name and address,
including zip code, of assignee:
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
the within Note and does hereby irrevocably constitute and appoint ___________
Attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Date: Your Signature:
---------------------- ---------------------------
(Sign exactly as your name
appears on this Note)
Indenture
<PAGE> 61
EXHIBIT A-2
[Form of Class S Note]
No transfer of a Note shall be made unless and until the prospective transferee
provides the Note Trustee with an affidavit, in the form provided as paragraph 7
to Exhibit C hereto, to the effect that such transferee is (i) not an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or any plan or arrangement subject to Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), nor a Person acting,
directly or indirectly, on behalf of any such employee benefit plan, plan or
arrangement (including an insurance company using funds in its general or
separate account that may constitute "plan assets") (each a "Plan") and is not a
governmental plan or a church plan subject to any laws or regulation (the
"Restrictive Rules") that are substantially similar to either Section 406 of
ERISA or Section 4975 of the Code (a "Regulated Plan"), (ii) if it is a Plan,
the acquisition and holding of the Notes by the Transferee will not result in a
non-exempt prohibited transaction under Section 406 of ERISA and/or Section 4975
of the Code, or (iii) if it is not a Plan, but is a Regulated Plan, the
acquisition and holding of the Notes by the Transferee will not result in a
violation of any such Restrictive Rules.
FAIC II ISSUER TRUST 2000-1
CLASS S NOTES, DUE DECEMBER 1, 2029
No.
Cusip No. -- U.S. $[ ]
--------------------- ----------
FAIC II ISSUER TRUST 2000-1, a statutory business trust under
the laws of the State of Delaware (the "Issuer"), for value received, hereby
promises to pay to ____________________________________________, or registered
assigns, upon presentation and surrender of this Note (except as otherwise
permitted by the Indenture referred to below), the principal sum of
____________________________________________________________ United States
Dollars (U.S. $____________) on December 1, 2029 (the "Final Scheduled Monthly
Payment Date"), all as provided below and in the Indenture referred to herein.
The obligations of the Issuer under this Note and the
Indenture are obligations of the Issuer, secured by a pledge of the Trust
Estate. Except as otherwise provided in the Indenture, the principal of this
Note shall be payable no later than the Final Scheduled Monthly Payment Date
unless the unpaid principal of this Note becomes due and payable at an earlier
date by declaration of acceleration, call for redemption or otherwise.
Payments on the Notes will be payable on the first Business
Day of each month commencing on March 1, 2000 (each, a "Monthly Payment Date")
to Noteholders of record of the Notes as of the close of business on the last
Business Day of the calendar month immediately preceding to such Monthly Payment
Date (the "Record Date").
Indenture
<PAGE> 62
2
Payments on the Notes on any Monthly Payment Date will be made
only from amounts on deposit in the Note Collection Account (and, to the extent
that funds thereon are insufficient for payments of interest on the Notes, in
the Interest Reserve Account) on such Payment Date (the "Available Amount") in
accordance with the payment provisions described in the Indenture.
Interest calculated at an annual rate of 20.54% - [(2.6 x
LIBOR)] (the "Class S Note Interest Rate") and applied to the Outstanding
Principal Amount of the Class S Notes (the "Class S Note Interest Amount") shall
be payable on each Monthly Payment Date at one-twelfth of the annual rate
(calculated on the basis of a 360-day year of 30-day months); provided that, for
the initial Monthly Payment Date, "Class S Note Interest Amount" shall be equal
to the product of (X) the actual number of days from and including the Closing
Date to and excluding March 1, 2000, divided by 360 days and (Y) the Note
Interest Rate and (Z) the Initial Principal Amount (as defined herein) of the
Class S Notes. On each Monthly Payment Date, the Note Trustee will pay the Class
S Note Interest Amount, pro rata, to the holders of the Class S Notes. Interest
on the Class S Notes in respect of a Monthly Payment Date will accrue from and
including the first day of the Interest Accrual Period relating to such Monthly
Payment Date to and including the last day of such Interest Accrual Period.
The Note Trustee will send each payment on a Monthly Payment
Date to each Noteholder, together with a statement setting forth, among other
things, (i) the amount of such payment allocable to interest and (ii) the amount
of such payment allocable to principal. Such amounts will be expressed as a
dollar amount per U.S. $1,000 of the original principal amount of the Notes.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Indenture.
Unless the certificate of authentication hereon has been
executed by the Note Trustee by the manual signature of one of its Authorized
Officers, this Note shall not be entitled to any benefit under the Indenture or
be valid or obligatory for any purpose.
Holders of 100% of the Outstanding Certificate Balance of the Class R
Certificates may cause the Issuer to redeem all but not less than all of the
Notes at a price equal to 100% of the Outstanding Principal Amount of the Notes
(the "Optional Note Redemption Amount") on any Monthly Payment Date on or after
the earlier of (A) June 1, 2005 and (B) the first Monthly Payment Date on which
the remaining balance of the Agency Securities shall be equal to or less than
20% of the principal amount of the Agency Securities (at original issuance),
after giving effect to any principal payments on such Monthly Payment Date (the
"Permitted Note Redemption Date"); provided that if the Depositor or the Seller,
as its assignee, has redeemed the Class R Certificates or has delivered a
written demand to the Issuer Certificate Agent for the optional redemption of
the Class R Certificates to occur on the upcoming Monthly Payment Date, the
Depositor or its assignee, and not the holders of the Class R Certificates,
shall have the right to cause the Notes to be redeemed. In order for a
redemption of the Notes to occur on a particular Monthly Payment Date, (i) the
Issuer Trustee shall have delivered to the Note Trustee a
Indenture
<PAGE> 63
3
written demand for such redemption at least 10 days but not greater than 25 days
prior to the Monthly Payment Date selected for such redemption, which demand
specifies such selected Monthly Payment Date, and (ii) the Optional Note
Redemption Amount shall be caused to be deposited into the Note Collection
Account by such Noteholders no later than the 9th calendar day prior to such
Monthly Payment Date.
If an Event of Default shall occur and be continuing, the
Notes may become or be declared due and payable in the manner and with the
effect provided in the Indenture.
Title to this Note shall pass by registration in the Note
Register kept at the Corporate Trust Office by the Note Trustee, as registrar.
No service charge shall be made for exchange or registration
of transfer of this Note, but the Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
It is understood and agreed by the holder of this Note that
(a) this Note is being executed by the Issuer Trustee and authenticated and
delivered by the Note Trustee in the exercise of the respective powers and
authority conferred and vested in each such entity, (b) nothing herein contained
shall be construed as creating any liability on Christiana Bank & Trust Company
or State Street Bank and Trust Company, in each case, individually or
personally, to perform any covenant either expressed or implied contained herein
or in the Indenture, all such liability, if any, being expressly waived by the
holder hereof and by any person claiming by, through or under the holder hereof,
and (c) under no circumstances shall Christiana Bank & Trust Company or State
Street Bank and Trust Company be personally liable for the payment of any
indebtedness or expense of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Issuer under this Note or the Indenture.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED
BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS OR CHOICE OF LAW
PRINCIPLES THEREOF.
Indenture
<PAGE> 64
4
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated , .
----------- -- ----
FAIC II ISSUER TRUST 2000-1
By: CHRISTIANA BANK & TRUST COMPANY,
as trustee of the Issuer
By:
------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Note Trustee
By:
------------------------------
Name:
Title: Authorized Signatory
Indenture
<PAGE> 65
5
ASSIGNMENT FORM
For value received
-----------------------------------------
hereby sell, assign and transfer unto
--------------------------------------
--------------------------------------
Please insert social security or
other identifying number of assignee
Please print or type name and address,
including zip code, of assignee:
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
the within Note and does hereby irrevocably constitute and appoint ___________
Attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Date: Your Signature:
---------------------- -----------------------------
(Sign exactly as your name
appears on this Note)
Indenture
<PAGE> 66
EXHIBIT B
Form
of
ACCOUNT CERTIFICATION
January __, 2000
State Street Bank and Trust Company, in its individual
capacity, hereby certifies that it has established the accounts described below
pursuant to Section 4.01, Section 5.01, Section 6.01 and Section 7.01 of the
Indenture dated as of January 20, 2000 between FAIC II Issuer Trust 2000-1, as
Issuer, and the Note Trustee, relating to FAIC II Issuer Trust 2000-1 Notes, Due
December 1, 2029.
Title of Account: Note Proceeds Account
Account Number:
------------------------------
------------------------------
Title of Account: Note Collection Account
Account Number:
------------------------------
Title of Account: Interest Reserve Account
Account Number:
------------------------------
Address of office or
branch at which the
above-referenced
Accounts are maintained: State Street Bank and Trust Company
Indenture
<PAGE> 67
2
Title of Account: Expense Reserve Account
Account Number:
------------------------------
Address of office or
branch at which the
above-referenced
Accounts are maintained: State Street Bank and Trust Company
By:
-----------------------------------------------
Name:
Title:
Path: DOCSOPEN\RICHMOND\07724\50039\000008\@7ty03!.DOC
Doc #: 476710; V. 3
Doc Name: Terms Indenture
Author: Hiner, Thomas, 07724
Last Edit: 1/20/00 1:20 PM
Indenture
<PAGE> 1
EXHIBIT 4.2
================================================================================
STANDARD INDENTURE PROVISIONS
Dated as of January 20, 2000
Relating to
COLLATERALIZED MORTGAGE OBLIGATIONS
(Issuable in series by Fund America Investors Corporation II
and one or more trusts all or substantially all of the beneficial ownership in
which is or will be owned by Fund America Investors Corporation II)
================================================================================
<PAGE> 2
Cross-reference sheet showing the location in the Standard Indenture Provisions
of the provisions inserted pursuant to Sections 310 through 318(a) inclusive of
the Trust Indenture Act of 1939.
<TABLE>
<CAPTION>
Standard Indenture
Provisions Section
(or Article if
numbered with a
TIA Roman numeral)
- --- --------------
<S> <C>
Section 310(a)(1) ........................................................... 6.09
(a)(2) ........................................................... 6.09
(a)(3) ........................................................... 6.14
(a)(4) ........................................................... Not Applicable
(b) ........................................................... 6.08
........................................................... 6.10
........................................................... 11.05
(c) ........................................................... Not Applicable
Section 3.11(a) ........................................................... 6.13(a)
(b) ........................................................... 6.13(b)
(c) ........................................................... Not Applicable
Section 3.12(a) ........................................................... 7.01
........................................................... 7.02(a)
(b) ........................................................... 7.02(b)
(c) ........................................................... 7.02(c)
Section 31 3(a) ........................................................... 7.03(a)
(b) ........................................................... 7.03(a)
(c) ........................................................... 7.03(b)
(d) ........................................................... 7.03(b)
Section 314 (a) ........................................................... 7.04
........................................................... 11.05
(b)(1) ........................................................... 2.12(c)(vii)
(b)(2) ........................................................... 3.06
(c)(1) ........................................................... 2.12(d)
........................................................... 4.01(c)
........................................................... 8.02(d)
........................................................... 8.11(a)
........................................................... 11.01(a)
(c)(2) ........................................................... 2.12(c)
........................................................... 4.01(c)
........................................................... 8.02(d)
........................................................... 8.11(a)
(c)(3) ........................................................... 2.12(e)
........................................................... 8.02(d)
........................................................... 8.11(a)
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Standard Indenture
Provisions Section
(or Article if
numbered with a
TIA Roman numeral)
- --- --------------
<S> <C>
Section 314(d)(1) ........................................................... 8.02(d)
........................................................... 11.01(b)
........................................................... 8.11(a)
(d)(2) ........................................................... 11.01(c)
........................................................... 2.12(e)
........................................................... 8.11(a)
(d)(3) ........................................................... 11.01(d)
........................................................... 2.12(q)
(e) ........................................................... 11.01(f)
Section 315(a) ........................................................... 6.01(a)
........................................................... 6.01(c)(1)
(b) ........................................................... 6.02
........................................................... 7.03
(c) ........................................................... 6.01(b)
(d) ........................................................... 6.01(c)
(d)(1) ........................................................... 6.01(c)(1)
(d)(2) ........................................................... 6.01(c)(2)
(d)(3) ........................................................... 6.01(c)(3)
(e) ........................................................... 5.16
Section 316(a)(1)(A) ........................................................... 5.02
........................................................... 5.14
........................................................... 8.01
(a)(1)(B) ........................................................... 5.15
(a)(2) ........................................................... Not Applicable
(b) ........................................................... 5.10
Section 317(a)(1) ........................................................... 5.03
(a)(2) ........................................................... 5.06
(b) ........................................................... 3.03
Section 318(a) ........................................................... 11.07
</TABLE>
Note: This cross-reference sheet does not constitute part of the Standard
Indenture Provisions.
-ii-
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS...........................................................................................2
1.01 General Definitions............................................................................2
"Accountant"...................................................................................2
"Accounting Party".............................................................................2
"Accrual Date".................................................................................2
"Act"..........................................................................................2
"Advice".......................................................................................2
"Affiliate"....................................................................................2
"Agent"........................................................................................2
"Aggregate Certificate Balance"................................................................3
"Aggregate Current Principal Amount"...........................................................3
"Aggregate Principal Payment"..................................................................3
"Assumed Date of Receipt"......................................................................3
"Assumed Principal Balance"....................................................................3
"Assumed Reinvestment Rate"....................................................................3
"Authenticating Agent".........................................................................3
"Authorized Officer"...........................................................................3
"Available Reinvestment Income"................................................................3
"Bank".........................................................................................3
"Beneficial Owner".............................................................................3
"Board of Directors"...........................................................................4
"Board Resolution".............................................................................4
"Bond Interest Rate"...........................................................................4
"Bond Redemption Amount".......................................................................4
"Bond Redemption Date".........................................................................4
"Bond Register" and "Bond Registrar"...........................................................4
"Bond Value"...................................................................................4
"Bond Value Related Shortfall".................................................................4
"Bondholder" or "Holder".......................................................................4
"Bondholder Redemption"........................................................................4
"Bondholder Redemption Amount".................................................................4
"Bondholder Redemption Price"..................................................................5
"Bonds"........................................................................................5
"Book Entry Bonds".............................................................................5
"Business Day".................................................................................5
"Certificate"..................................................................................5
"Certificate Group"............................................................................5
"Certificate Group Principal Balance"..........................................................5
"Certificate Principal Balance"................................................................5
"Certificate Rate".............................................................................5
"Certificate Trustee"..........................................................................6
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
"Class"........................................................................................6
"Clearing Agency"..............................................................................6
"Clearing Agency Participant"..................................................................6
"Closing Date".................................................................................6
"Code".........................................................................................6
"Collection Account"...........................................................................6
"Commission"...................................................................................6
"Compound Interest Bond".......................................................................6
"Conventional Certificate".....................................................................6
"Conventional Certificate Servicer"............................................................6
"Corporate Trust Office".......................................................................7
"Current Principal Amount".....................................................................7
"Debt Service Requirement".....................................................................7
"Debt Service Requirement Determination Date"..................................................7
"Debt Service Reserve Fund"....................................................................7
"Deceased Holder Bonds"........................................................................7
"Deceased Holder Preference"...................................................................7
"Default"......................................................................................7
"Definitive Bonds".............................................................................8
"Deposit Trust Agreement"......................................................................8
"Deposited Securities".........................................................................8
"Designated Interest Accrual Date".............................................................8
"Distribution".................................................................................8
"Due Date" or "Distribution Due Date"..........................................................8
"Due Period"...................................................................................8
"Eligible Investments".........................................................................8
"Eligible Substitute Certificate".............................................................10
"Event of Default"............................................................................11
"Expense Fund"................................................................................11
"FAIC II".....................................................................................11
"FHLMC".......................................................................................11
"FHLMC Certificate"...........................................................................11
"FMLMC Reserve Amount"........................................................................11
"FNMA"........................................................................................11
"FNMA Certificate"............................................................................11
"First SAB Paydown Date"......................................................................11
"Floating Interest Rate Bond Redemption Date".................................................11
"Floating Interest Rate Bond Redemption Price"................................................11
"Floating Interest Rate Bonds"................................................................11
"Future value"................................................................................12
"GNMA"........................................................................................12
"GNMA Certificate"............................................................................12
"Governing Documents".........................................................................12
"GPM Loan"....................................................................................12
"GPM Mortgage Certificate"....................................................................12
"Grant".......................................................................................12
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C>
"Guarantor"...................................................................................12
"Guaranty Agreement"..........................................................................12
"Highest Bond Interest Rate"..................................................................13
"Holder"......................................................................................13
"Indenture"...................................................................................13
"Independent".................................................................................13
"Individual Bond".............................................................................13
"Initial Interest Payment Date"...............................................................13
"Interest Accrual Period".....................................................................13
"Interest Delay Period".......................................................................14
"Interest Determination Date".................................................................14
"Interest Payment Date".......................................................................14
"Investment Statement"........................................................................14
"Issuer"......................................................................................14
"Issuer Expenses".............................................................................14
"Issuer Order" and "Issuer Request"...........................................................14
"Letter Agreement"............................................................................14
"LIBOR".......................................................................................14
"Manager".....................................................................................14
"Maturity"....................................................................................14
"Maximum Bond Interest Rate Assumption".......................................................15
"Maximum Floating Interest Rate"..............................................................15
"Month of Closing"............................................................................15
"Monthly Payment Deficit".....................................................................15
"Mortgage Loan Attributable Bond Value".......................................................15
"New York Agent"..............................................................................15
"New York Office".............................................................................15
"Non-Agency Certificate"......................................................................15
"Non-Disqualification Opinion"................................................................16
"Non-Scheduled Principal Amount"..............................................................16
"Officers' Certificate".......................................................................16
"Opinion of Counsel"..........................................................................16
"Optional Floating Rate Bond Redemption"......................................................16
"Outstanding".................................................................................16
"Overdue Bond"................................................................................17
"Overdue Bond Interest Rate"..................................................................17
"Owner Trustee"...............................................................................17
"Paying Agent"................................................................................17
"Payment Date"................................................................................17
"Payment Date Statement"......................................................................17
"Permitted Encumbrance".......................................................................17
"Permitted Transferee"........................................................................17
"Person"......................................................................................18
"Pooling and Servicing Agreement".............................................................18
"Predecessor Bonds"...........................................................................18
"Principal Distribution Amount"...............................................................18
</TABLE>
-v-
<PAGE> 7
<TABLE>
<S> <C>
"Principal Payment Date"......................................................................18
"Principal Priority Bonds"....................................................................18
"Principal Reduction Date"....................................................................18
"Proceeding"..................................................................................18
"Pro Rata Bonds"..............................................................................18
"Prospectus"..................................................................................18
"Qualified GIC"...............................................................................18
"Qualified Letter of Credit"..................................................................19
"Qualified Trustee Nominee"...................................................................19
"Rating Agency"...............................................................................20
"Record Date".................................................................................20
"Redemption"..................................................................................20
"Redemption Date".............................................................................20
"Redemption Price"............................................................................20
"Reference Bank"..............................................................................21
"Regular Holder Preference"...................................................................21
"Reinvestment Bonds"..........................................................................21
"Reinvestment Income".........................................................................21
"Released Property"...........................................................................21
"REMIC".......................................................................................21
"Report Recipient"............................................................................21
"Required Rating Category"....................................................................21
"Requisite Amount of the Reserve Fund"........................................................21
"Reserve Fund"................................................................................21
"Reserve Interest Rate".......................................................................21
"Residual Interest"...........................................................................21
"Residual Interest Holder"....................................................................22
"Residual Payee"..............................................................................22
"Responsible Officer".........................................................................22
"SAB Amount"..................................................................................22
"SAB Bond"....................................................................................22
"SAB Payment Date"............................................................................22
"SAB Principal Payment".......................................................................22
"Sale"........................................................................................22
"Schedule of Certificates"....................................................................22
"Scheduled Principal Amount"..................................................................22
"Series"......................................................................................22
"Shortfall Period"............................................................................23
"Special Payment Date"........................................................................23
"Special Payment Date Statement"..............................................................23
"Special Record Date".........................................................................23
"Special Redemption"..........................................................................23
"Special Redemption Date".....................................................................23
"Special Redemption Date Statement"...........................................................23
"Special Redemption Determination Date".......................................................23
"Special Redemption Price"....................................................................23
</TABLE>
-vi-
<PAGE> 8
<TABLE>
<S> <C>
"Special Reserve Fund"........................................................................23
"Spread"......................................................................................23
"Spread Distribution Amount"..................................................................25
"Spread Percentage"...........................................................................25
"Standard Indenture Provisions" or "these Standard Indenture Provisions"......................25
"Stated Maturity".............................................................................25
"Straight Pass-Through Conventional Certificate"..............................................25
"Tender Date".................................................................................25
"Tender Documents"............................................................................25
"Terms Indenture".............................................................................25
"Trust Account"...............................................................................26
"Trust Estate"................................................................................26
"Trust Indenture Act" or "TIA"................................................................26
"Trustee".....................................................................................26
"Uncertificated Certificate"..................................................................26
"Vice President"..............................................................................26
1.02 Calculations Respecting Mortgage Loans Underlying Certificates................................26
ARTICLE II THE BONDS...........................................................................................28
2.01 Forms Generally...............................................................................28
2.02 Forms of Bonds and Certificate of Authentication..............................................29
2.03 General Provisions with Respect to issuance of Bonds, Bonds Issuable in Series and
Classes; Certain Related Provisions...........................................................44
2.04 Denominations.................................................................................50
2.05 Execution, Authentication, Delivery and Dating................................................50
2.06 Temporary Bonds...............................................................................50
2.07 Registration, Registration of Transfer and Exchange...........................................51
2.08 Mutilate, Destroyed, Lost or Stolen Bonds.....................................................52
2.09 Payment of Principal and Interest.............................................................53
2.10 Persons Deemed Owners.........................................................................62
2.11 Cancellation..................................................................................62
2.12 Authentication and Delivery of Bonds..........................................................62
2.13 Book Entry Bonds..............................................................................73
2.14 Termination of Book Entry System..............................................................73
ARTICLE III COVENANTS..........................................................................................74
3.01 Payment of Bonds..............................................................................74
3.02 Maintenance of Office or Agency...............................................................74
3.03 Money for Bond Payments to be Held in Trust...................................................75
3.04 Existence.....................................................................................77
3.05 Protection of Trust Estate....................................................................77
3.06 Opinions as to Trust Estate...................................................................78
3.07 Performance of Obligations....................................................................79
3.08 Negative Covenants............................................................................79
3.09 Successor Substituted.........................................................................81
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3.10 Annual Statement as to Compliance.............................................................81
3.11 Amendments....................................................................................81
3.12 Covenants of the Issuer.......................................................................81
3.13 Contribution of Assets........................................................................82
3.14 Notice of Event of Default....................................................................82
3.15 Further Assurances and OID Certificates.......................................................82
ARTICLE IV SATISFACTION AND DISCHARGE..........................................................................82
4.01 Satisfaction and Discharge of Indenture.......................................................82
4.02 Application of Trust Money....................................................................84
4.03 REMIC Termination.............................................................................84
4.04 Reinstatement.................................................................................85
ARTICLE V DEFAULTS AND REMEDIES................................................................................85
5.01 Event of Default..............................................................................85
5.02 Acceleration of Maturity; Rescission and Annulment............................................86
5.03 Collection of Indebtedness and Suits for Enforcement by Trustee...............................87
5.04 Remedies......................................................................................88
5.05 Optional Preservation of Trust Estate.........................................................88
5.06 Trustee May File Proofs of Claim..............................................................90
5.07 Trustee May Enforce Claim C without Possession of Bonds.......................................91
5.08 Application of Money Collected................................................................91
5.09 Limitation of Suits...........................................................................92
5.10 Unconditional Rights of Bondholders to Receive Principal and Any Premium and Interest.........93
5.11 Restoration of Rights and Remedies............................................................93
5.12 Rights and Remedies Cumulative................................................................93
5.13 Delay or Omission Not Waiver..................................................................93
5.14 Control by Bondholders........................................................................94
5.15 Waiver of Past Defaults.......................................................................94
5.16 Undertaking for Costs.........................................................................94
5.17 Waiver of Stay or Extension Laws..............................................................95
5.18 Sale of Trust Estate..........................................................................95
5.19 Action on Bonds...............................................................................97
ARTICLE VI THE TRUSTEE.........................................................................................98
6.01 Certain Duties and Responsibilities...........................................................98
6.02 Notice of Default.............................................................................99
6.03 Certain Rights of Trustee.....................................................................99
6.04 Not Responsible for Recitals or Issuance of Bonds............................................100
6.05 May Hold Bonds...............................................................................100
6.06 Money Held in Trust..........................................................................101
6.07 Compensation and Reimbursement...............................................................101
6.08 Disqualification; Conflicting Interests......................................................102
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6.09 Corporate Trustee Required; Eligibility......................................................103
6.10 Resignation and Removal; Appointment of Successor............................................103
6.11 Acceptance of Appointment by Successor.......................................................104
6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee.......................105
6.13 Preferential Collection of Claims Against Issuer.............................................105
6.14 Co-trustees and Separate Trustees............................................................105
6.15 Authenticating Agent.........................................................................107
6.16 Actions Necessary to Preserve Trust Estate...................................................107
ARTICLE VII BONDHOLDERS' LISTS AND REPORTS....................................................................108
7.01 Issuer to Furnish Trustee Names and Addresses of Bondholders.................................108
7.02 Preservation of Information; Communications to Bondholders...................................108
7.03 Reports by Trustee...........................................................................108
7.04 Reports by Issuer............................................................................109
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES.............................................................110
8.01 Collection of Moneys.........................................................................110
8.02 Collection Accounts..........................................................................111
8.03 Debt Service Reserve Funds...................................................................114
8.04 Reserve Funds................................................................................116
8.05 Special Reserve Funds........................................................................119
8.06 General Provisions Regarding Trust Accounts..................................................120
8.07 Reports by Trustee to Bondholders............................................................122
8.08 Reports by Trustee...........................................................................122
8.09 Reports by Independent Accountants...........................................................123
8.10 Expense Fund.................................................................................124
8.11 Substitution of Certificates with Eligible Substitute Certificates...........................125
ARTICLE IX SUPPLEMENTAL INDENTURES............................................................................126
9.01 Supplemental Indentures without Consent of Bondholders.......................................126
9.02 Supplemental Indentures with Consent of Bondholders..........................................128
9.03 Execution of Supplemental Indentures.........................................................129
9.04 Effect of Supplemental Indentures............................................................129
9.05 Conformity with Trust Indenture Act..........................................................130
9.06 Reference in Bonds to Supplemental Indentures................................................130
9.07 Amendments to Governing Documents............................................................130
ARTICLE X REDEMPTION OF BONDS.................................................................................131
10.01 Special Redemption...........................................................................131
10.02 Bondholder Redemption........................................................................135
10.03 Withdrawal of Requests.......................................................................138
10.04 Redemption Register..........................................................................138
10.05 Redemption at the Option of the Issuer; Election to Redeem...................................139
10.06 Optional Floating Interest Rate Bond Redemption..............................................139
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10.07 Redemption Notice............................................................................139
10.08 Bonds Payable on Special Redemption Date, Redemption Date or Floating Interest Rate
Bond Redemption Date.........................................................................141
ARTICLE XI MISCELLANEOUS......................................................................................141
11.01 TIA Certificates and Opinions................................................................141
11.02 Form of Documents Delivered to Trustee.......................................................143
11.03 Acts of Bondholders..........................................................................144
11.04 Notices, etc. to Trustee and Issuer..........................................................144
11.05 Notices to Bondholders; Waiver of Notices....................................................145
11.06 Rules by Trustee and Agents..................................................................145
11.07 Conflict with Trust Indenture Act............................................................145
11.08 Effect of Headings and Table of Contents.....................................................145
11.09 Successors and Assigns.......................................................................145
11.10 Severability.................................................................................146
11.11 Benefits of Standard Indenture Provisions....................................................146
11.12 Legal Holidays...............................................................................146
11.13 GOVERNING LAW................................................................................146
11.14 Counterparts.................................................................................146
11.15 Recording of Indenture.......................................................................146
11.16 Inspection...................................................................................147
11.17 Issuer Obligation............................................................................147
11.18 Limitation on Interest.......................................................................147
11.19 REMIC Status.................................................................................148
11.20 Designations of Regular and Residual Interests in a REMIC....................................148
11.21 Prohibited Transactions Tax..................................................................148
11.22 Appointment of Tax Matters Partner...........................................................148
11.23 Filing of REMIC Tax Returns..................................................................148
11.24 Reductions of Reserve Funds..................................................................149
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Preliminary Statement
From time to time, Fund America Investors Corporation II and certain
trusts, all or substantially all of the beneficial ownership of which is or will
be owned by Fund America Investors Corporation II (Fund America Investors
Corporation II and such trusts or permitted successors or assigns of any such
entity hereinafter collectively referred to as the "Issuer"), may issue one or
more series (a "Series") of Collateralized Mortgage Obligations ("Bonds"). The
issuance of each Series of such Bonds will occur only under a separate
supplemental indenture or terms indenture which incorporates by reference these
Standard Indenture Provisions (each, a "Terms Indenture") and which will be duly
executed and delivered by the entity issuing such Bonds (acting through an owner
trustee if the Issuer is a trust) and by the Trustee under the Terms Indenture
and will be limited to the amount of such issuance, as stated in such Terms
Indenture. These Standard Indenture Provisions may be incorporated into any
number of Terms Indentures, each such Terms Indenture to constitute an
instrument wholly separate from any other.
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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
the Indenture, and the definitions of such terms are applicable to the singular
as well as to the plural forms of such terms and to the masculine as well as to
the feminine and neuter genders of such terms. Reference is made to Section
10.01(a) for the definition of certain terms used in Section 10.01. All other
terms used herein which are defined in the Trust Indenture Act (as hereinafter
defined), either directly or by reference therein, have the meanings assigned to
them therein. Whenever any reference is made to an amount the determination or
calculation of which is governed by Section 1.02, the provisions of Section 1.02
shall be applicable to such determination or calculation, whether or not
reference is specifically made to Section 1.02, unless some other method of
calculation or determination is expressly specified in the particular provision.
"Accountant": A Person engaged in the practice of accounting who may be
employed by or affiliated with the Issuer or an Affiliate of the Issuer (except
when the Indenture provides that an Accountant must be Independent).
"Accounting Party": The Issuer, unless otherwise specified in the Terms
Indenture for the applicable Series.
"Accrual Date": With respect to the Bonds of a particular Series, the date
upon which interest begins accruing on the Bonds of such Series, as provided in
such Bonds and the related Terms Indenture.
"Act": With respect to any Bondholder, the meaning specified in Section
11.03.
"Advice": With respect to an Uncertificated Certificate, any instrument or
instruments evidencing and acknowledging the transfer or pledge of such
Uncertificated Certificate to the Trustee, issued by one or more entities
maintaining books on which transfers and pledges of such Uncertificated
Certificate are recorded in accordance with applicable governmental statutes and
regulations and applicable regulations of GNMA, FNMA or FHLMC, as the case may
be.
"Affiliate": With respect to any specified Person, any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this definition, "control", when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent": Any Bond Registrar, Paying Agent or Authenticating Agent.
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"Aggregate Certificate Balance": As of any date, with respect to the
Certificates securing a Series, the aggregate of the Certificate Principal
Balances for all such Certificates as of such date.
"Aggregate Current Principal Amount": With respect to any Series or any
Class within such Series, as the case may be, the aggregate of the Current
Principal Amounts of all Bonds of such Series or Class Outstanding, if any, at
the time of determination.
"Aggregate Principal Payment": As defined in Section 2.02(a).
"Assumed Date of Receipt": With respect to any Series, the date or dates
specified in the related Terms Indenture as of which Distributions due on each
Distribution Due Date are assumed to be deposited in the respective Collection
Account.
"Assumed Principal Balance": As to a GPM Loan at the time of determination,
the principal amount thereof at the Closing Date for the related Series
(including any accrued but unpaid interest added to the principal of such GPM
Loan in accordance with its terms as of the first day of the month in which the
Closing Date occurs) less the aggregate of any and all payments of principal on
such GPM Loan which have been reported and passed-through to the holders of the
related GPM Mortgage Certificate as distributions of principal thereof since the
first day of the month of Closing.
"Assumed Reinvestment Rate": With respect to any Series, the highest
reinvestment rate permitted by each Rating Agency rating such Series of Bonds,
as specified in the related Terms Indenture.
"Authenticating Agent": With respect to any particular Series, the Person,
if any, named as Authenticating Agent for such Series in the applicable Terms
Indenture or appointed by the Trustee at the request of the Issuer pursuant to
Section 6.25, until any successor Authenticating Agent for such Series is named,
and thereafter "Authenticating Agent" shall mean such successor.
"Authorized Officer": With respect to any corporation, the Chairman of the
Board of Directors, the President, any Vice President, the Secretary or the
Treasurer of such corporation who is authorized to act for such corporation in
matters relating to, and binding upon, such corporation; with respect to any
partnership, any general partner thereof; with respect to any bank or trust
company acting as trustee of an express trust or as custodian, any officer
thereof who is authorized to act for such bank or trust company in matters
relating to, and binding upon, such bank or trust company.
"Available Reinvestment Income": With respect to a Series of Bonds, that
portion, if any, of Reinvestment Income that may be retained by the Trustee as
part of the Trust Estate of such Series.
"Bank": The Owner Trustee in its individual capacity.
"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 Class or
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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).
"Board of Directors": In the event FAIC II is the Issuer, either the board
of directors of the Issuer or the executive committee, if any, of that board of
directors that is authorized to take the relevant action.
"Board Resolution": In the event FAIC II is the Issuer, a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Issuer to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification and delivered to the Trustee indicating
action by the Issuer.
"Bond Interest Rate": With respect to any Series or Class, the annual rate
at which interest accrues on the Bonds of such Series or Class, as specified in
the related Terms Indenture.
"Bond Redemption Amount": With respect to any Class of any Series of Bonds
which is subject to redemption at the option of the Issuer, the amount, if any,
specified in the related Terms Indenture.
"Bond Redemption Date": With respect to any Class of any Series of Bonds
which is subject to redemption at the option of the Issuer, the date, if any,
specified in the related Terms Indenture, which date shall be a Payment Date for
such Series.
"Bond Register" and "Bond Registrar": The respective meanings specified in
Section 2.07.
"Bond Value": With respect to any Certificate Group securing a particular
Series at the time of any determination, the principal amount of Bonds that, in
accordance with calculations performed as specified in the related Terms
Indenture, can be supported by the Distributions on the Certificates within such
Certificate Group, the other funds from the Trust Estate allocable to such
Certificate Group, and Available Reinvestment Income thereon at the Assumed
Reinvestment Rate.
"Bond Value Related Shortfall": With respect to the Bonds of any Series on
any Principal Payment Date or Special Redemption Date, the amount necessary,
after application of all other amounts then available to make payments of
principal of and interest on such Bonds, to make the payment of principal and
interest then due on such Bonds; the method of determining the maximum possible
Bond Value Related Shortfall, if any, for any future date to be as specified in
the related Terms Indenture.
"Bondholder" or "Holder": The Person in whose name a Bond is registered in
the Bond Register.
"Bondholder Redemption": A redemption of Bonds at the request of
Bondholders pursuant to Section 10.02 (excluding subsection (e) thereof).
"Bondholder Redemption Amount": As defined in Section 10.02(a).
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"Bondholder Redemption Price": As defined in Section 2.02(c).
"Bonds": Any bonds authorized by, and authenticated and delivered under the
Indenture.
"Book Entry Bonds": Bonds of a Class for which the Terms Indenture provides
that ownership and transfers of Bonds shall be made through book entries by a
Clearing Agency as described in Section 2.13; provided, that after the
occurrence of a condition whereupon book entry transfers are no longer permitted
and Definitive Bonds are to be issued to the Beneficial Owners of Bonds of such
Class, all as specified in the related Terms Indenture, Bonds of such Class
shall no longer be "Book Entry Bonds".
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in New York, New York or in the city in
which the Corporate Trust Office is located are authorized or obligated by law
or executive order to be closed or as otherwise set forth in the Terms
Indenture.
"Certificate": A GNMA Certificate, FNMA Certificate, FHLMC Certificate,
Non-Agency Certificate or a Conventional Certificate, as the case may be, which
is Granted to the Trustee under the Indenture and the related Terms Indenture as
security for a particular Series. The term "Certificates" means all of the GNMA
Certificates (if any), FNMA Certificates (if any), FHLMC Certificates (if any),
Non-Agency Certificates (if any) and Conventional Certificates (if any) Granted
to the Trustee under the Indenture and the related Terms Indenture as security
for a particular Series. The term "outstanding Certificates" as of any date
means all of the Certificates other than any Certificates which have been fully
paid as of such date.
"Certificate Group": With respect to any Series, a group of one or more
outstanding Certificates, and/or other assets which may be included in the Trust
Estate securing such Series which have the characteristics described in the
related Terms Indenture.
"Certificate Group Principal Balance": With respect to any Certificate
Group at any time, the aggregate of the then current Certificate Principal
Balances of all Certificates in such Certificate Group.
"Certificate Principal Balance": As of the date of any determination with
respect to any Certificate, the then aggregate outstanding principal balance of
such Certificate. The outstanding principal balance of any GPM Mortgage
Certificate at the date of any determination shall be calculated by including
therein all accrued interest which has not been paid but has been added to the
principal of the underlying GPM Loans in accordance with their terms.
"Certificate Rate": With respect to any Certificate, the pass-through or
interest rate payable to the holder thereof as indicated thereon. In the event
that any Certificate provides for a pass-through rate of interest which is
calculated on a mortgage loan by mortgage loan basis (equal as to each such
mortgage loan to the interest rate borne thereby less the fixed servicing fee
specified for such Certificate) the Certificate Rate for such Certificate at the
time of any determination shall be the weighted average of such individual
mortgage loan pass-through rates less such fixed servicing fee.
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"Certificate Trustee": As defined in the related Terms Indenture, if
applicable to a Series.
"Class": With respect to any Series, all Bonds of such Series having the
same Stated Maturity of principal and further designated as a Class in the
applicable Terms Indenture or Supplement thereto.
"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.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities held by the Clearing Agency.
"Closing Date": With respect to any Series, the date on which Bonds of such
Series are first executed, authenticated and delivered.
"Code": The Internal Revenue Code of 1986, including any successor or
amendatory statutes.
"Collection Account": With respect to any Series, the trust collection
account or accounts created and maintained pursuant to Section 8.02.
"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.
"Compound Interest Bond": A Bond on which interest accrues and is
compounded and added to the principal of such Bond periodically but with respect
to which neither interest nor principal is payable until the entire unpaid
principal amount of each Outstanding Bond of the same Series having an earlier
Stated Maturity of principal has been paid unless the related Terms Indenture
provides otherwise, in which event interest payments will commence at the time
specified in such Terms Indenture.
"Conventional Certificate": A conventional mortgage pass-through
certificate serviced or administered by the Conventional Certificate Servicer
for a particular Series (or one of the Conventional Certificate Servicers if
there is more than one for a particular Series) and representing a fractional
undivided interest in a pool of conventional mortgage loans secured by one- to
four-family residences, which certificate is Granted to the Trustee under the
Indenture and the related Terms Indenture as security for such Series. The term
"outstanding Conventional Certificates" as of any date means the Conventional
Certificates other than the Conventional Certificates which have been fully paid
as of such date.
"Conventional Certificate Servicer": With respect to any Series for which
all or any portion of the related Trust Estate includes Conventional
Certificates, the Person that is
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acting as administrator or master servicer of the mortgage loans underlying the
Conventional Certificates securing such Series that were serviced or
administered by it (such Person or Persons may include the Issuer and any
Affiliate of the Issuer and shall be specified in the related Terms Indenture),
or any successor administrator or master servicer appointed pursuant to the
Pooling and Servicing Agreement under which the Conventional Certificates issued
by any such Persons were issued.
"Corporate Trust Office": The principal corporate trust office of the
Trustee as indicated in the related Terms Indenture, or at such other address as
the Trustee may designate from time to time by notice to the Bondholders and the
Issuer, or the principal corporate trust office of any successor Trustee.
"Current Principal Amount": With respect to any Bond of any Series as of
any date of determination, the sum of:
(a) the original principal amount of such Bond, and
(b) if such Bond is a Compound Interest Bond, the aggregate amount of
interest, if any, accrued on such Bond and added to the principal thereof
on each Interest Payment Date for such Series through the Interest Payment
Date immediately preceding such date of determination;
reduced by all prior payments, if any, made with respect to principal (including
payments with respect to amounts previously added to principal as described in
clause (b) above) of such Bond.
"Debt Service Requirement": With respect to a particular Payment Date of
any Bonds of a Series, an amount determined as provided in the related Terms
Indenture.
"Debt Service Requirement Determination Date": With respect to a Series,
the date prior to a Payment Date (such date and the month in which the first
such date occurs being as specified in the related Terms Indenture) as of which
the Debt Service Requirement applicable to such Payment Date is required to be
computed.
"Debt Service Reserve Fund": With respect to any Series, the trust account,
if any, required to be created and maintained with the Trustee pursuant to
Section 8.03.
"Deceased Holder Bonds": Bonds as to which Bondholder Redemption is
requested by the personal representative (or by the personal representative
whether or not joined by any surviving tenants in common), surviving joint
tenant or surviving tenant by the entirety of a deceased Holder or a deceased
Beneficial Owner.
"Deceased Holder Preference": With respect to a Class of Principal Priority
Bonds, the amount, if any, equal to the number of Individual Bonds of such Class
for which a Holder of Deceased Holder Bonds may obtain priority with respect to
the Bondholder Redemption, as specified in the related Terms Indenture.
"Default": Any occurrence which is, or with notice or the lapse of time or
both would become, an Event of Default.
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"Definitive Bonds": Bonds other than Book Entry Bonds.
"Deposit Trust Agreement": In the event the Issuer is a trust, the deposit
trust agreement identified in the Terms Indenture establishing the trust which
is the Issuer of the Bonds, as such agreement may be amended from time to time.
"Deposited Securities": As defined in Section 11.01(c).
"Designated Interest Accrual Date": With respect to (i) any payment of
amounts on Overdue Bonds, the day immediately preceding the date of payment,
(ii) the Trustee's demand for payment pursuant to Section 5.03, the day
immediately preceding the date of payment pursuant to such demand, and (iii) any
Principal Reduction Date or Redemption Date, the date that precedes the day
immediately preceding such Principal Reduction Date or Redemption Date by a
period of time equal to the Interest Delay Period, if any; except as otherwise
provided in the related Terms Indenture with respect to any one or more of the
foregoing clauses (i), (ii) or (iii).
"Distribution": With respect to any Certificate, the amount of monthly
remittance payable to the holder of such Certificate in accordance with its
terms.
"Due Date" or "Distribution Due Date": The date on which a particular
Distribution is payable to the holder of the related Certificate in accordance
with its terms.
"Due Period": With respect to any Payment Date for a Series, the period
specified as a "Due Period" in the related Terms Indenture.
"Eligible Investments": Except to the extent expanded or restricted by the
Terms Indenture for the Series of which such obligations or securities form part
of the Trust Estate, any one or more of the following obligations or securities:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, or any agency or instrumentality of the United
States of America the obligations of which are backed by the full faith and
credit of the United States of America, senior debt obligations and
participation certificates of FHLMC or senior debt obligations of, and
guaranteed mortgage pass-through certificates fully guaranteed by, FNMA;
(ii) demand and time deposits in, certificates of deposits of, or
bankers acceptances issued by, any depository institution or trust company
(including the Trustee or any Affiliate or agent of the Trustee, 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 banking authorities, so long as at
the time of such investment or contractual commitment providing for such
investment (A) (1) the commercial paper or other short-term debt
obligations of such depository institution or trust company (or, in the
case of a depository institution which is the principal subsidiary of a
holding company, the commercial paper or other short-term debt obligations
of such holding company) have the highest credit ratings available from
each Rating Agency that has rated the Bonds of such Series, and (2) if any
such Rating Agency is Moody's Investors Service, Inc., such depository
institution, trust company or
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parent holding company also has outstanding long-term debt rated at least
Aa3 by Moody's Investors Service, Inc., or (B) in the case of deposits,
such deposits are fully insured by the Federal Deposit Insurance
Corporation;
(iii) repurchase obligations with respect to (A) any security described
in clause (i) above or (B) any other security issued or guaranteed by an
agency or instrumentality of the United States of America, which is backed
by the full faith and credit of the United States of America (collectively,
"Eligible Collateral"), in either case entered into with (a) a depository
institution or trust company (acting as principal) described in clause (ii)
above or (b) with a broker dealer supervised by the Securities Investor
Protection Corporation so long as the Bonds of such Series are not subject
to Special Redemption at the time such repurchase obligation is entered
into, such repurchase obligation is by its terms to be performed by the
repurchase obligor (x) if the Bonds of such Series are then subject to
Special Redemption, no later than thirty days prior to the first Principal
Reduction Date after such repurchase agreement is entered into (or the
second Principal Reduction Date after such repurchase agreement is entered
into if it has already been determined that the Bonds of such Series are
not redeemable on the first Principal Reduction Date after such repurchase
agreement is entered into) and (y) if the Bonds of such Series are not
subject to Special Redemption at the time such repurchase obligation is
entered into, then no later than thirty days prior to the first Principal
Payment Date after such repurchase agreement is entered into, and such
Eligible Collateral (1) has an aggregate market value as determined by the
Trustee on a weekly basis of not less than 105% of the repurchase liability
under such agreement, including accrued interest; (2) is deposited with the
Trustee or with a Federal Reserve Bank for the account of the Trustee, or
with a bank or trust company which is acting solely as agent for the
Trustee and, in the case of any such depositary other than the Trustee, has
a combined net capital and surplus of at least $50,000,000; (3) is subject
to a perfected first security interest in favor of the Trustee; and (4) is
free and clear of claims of third parties; provided, however, in the event
that on any weekly determination date the aggregate market value of the
Eligible Collateral as determined by the Trustee pursuant to clause (1) is
less than 105% of the repurchase liability under such repurchase agreement,
including accrued interest (such shortfall being hereinafter referred to as
the "Repo Collateral Shortfall"), the Trustee shall so notify the
repurchase obligor, and in the event that, after the expiration of two
Business Days following such notification, such repurchase obligor has not
deposited with the Trustee additional Eligible Collateral having an
aggregate market value on the date of deposit at least equal to the Repo
Collateral Shortfall, the Trustee shall promptly sell the Eligible
Collateral relating to such repurchase agreement and invest the proceeds of
such sale that are in excess of the amounts required to be remitted to the
repurchase obligor in Eligible Investments specified by the Issuer pursuant
to Article VIII;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof rated no lower than the Required Rating Category by each
Rating Agency that has rated the Bonds of such Series at the time of such
investment or contractual commitment providing for such investment;
provided, however, that securities issued by any particular corporation
will not be Eligible Investments to the extent that investment therein will
cause the then outstanding principal amount of securities issued by such
corporation and held as part of
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the Trust Estate for a Series to exceed 10% of the sum of the Aggregate
Certificate Balance and the aggregate principal amount of all Eligible
Investments held as part of the Trust Estate for such Series;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof)
having the highest credit rating available from each Rating Agency that has
rated the Bonds of such Series at the time of such investment; provided,
however, that if any such Rating Agency is Moody's Investors Service, then
at such time the issuer of such obligations shall also have outstanding
long-term debt obligations rated at least Aa3 by Moody's Investors Service;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership interests
in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations
are backed by the full faith and credit of the United States of America)
held by a custodian on behalf of the holders of such receipts;
(viii) any other demand, money market or time deposit, obligation,
security or investment as to which the Trustee has received notice from the
Issuer that such investment is acceptable to each Rating Agency that rated
the Bonds as collateral for securities having ratings equivalent to their
respective ratings of the Bonds that were in effect at the Closing Date;
and
(ix) pooled or common trust funds of the Trustee or an Affiliate of the
Trustee acting as trustee and custodian and representing ownership solely
of the investments listed in clauses (i), (ii), (iii), or (iv) above, any
such pooled or common trust funds which provide for demand withdrawals
being conclusively deemed to satisfy any maturity requirements for Eligible
Investments set forth in these Standard Indenture Provisions.
"Eligible Substitute Certificate": A Certificate Granted pursuant to
Section 8.11 for one or more Certificates previously Granted to the Trustee as
collateral for a Series of Bonds, which substituted Certificate, unless
otherwise specified in the related Terms Indenture:
(a) (i) is a Certificate issued by the same agency (i.e., GNMA, FNMA or
FHLMC) which issued the Certificate for which it is substituted; (ii) has
an annual interest rate which is not more than 1% greater or not more than
1% less than the interest rate of the Certificate for which it is
substituted; (iii) has scheduled Distributions for each Due Period
subsequent to the Due Period in which such substitution occurs which will
not cause any Class of Bonds of such Series to be paid in full later than
the Stated Maturity of such Class of Bonds; (iv) has a Bond Value at least
equal to the Bond Value of the Certificate for which it is substituted; and
(v) has a maturity date not earlier than one year prior to, and in no event
later than, the maturity date of the Certificate for which it is
substituted; and
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(b) if a FHLMC Certificate, is entitled to the same guaranty of payment
of principal as the Certificate for which it is substituted or is
guaranteed as to timely payment of interest and principal by FHLMC.
"Event of Default": As defined in Section 5.01.
"Expense Fund": With respect to any Series, the account, if any, required
to be created and maintained with the Trustee pursuant to Section 8.10.
"FAIC II": Fund America Investors Corporation II, a Delaware corporation.
"FHLMC": The Federal Home Loan Mortgage Corporation successor thereof.
"FHLMC Certificate": A participation certificate under which the full and
timely payment of interest and the ultimate collection (and, if specified in the
related Terms Indenture, timely payment) of principal is guaranteed by FHLMC and
which represents an undivided interest in a group of fully-amortizing loans (or
participation interests therein) secured by one- to four-family residences and
which is Granted to the Trustee under the Indenture as security for a particular
Series. The term "outstanding FMLMC Certificates" as of any date means the FHLMC
Certificates other than the FHLMC Certificates which have been fully paid as of
such date.
"FMLMC Reserve Amount": With respect to any Series secured by FMLMC
Certificates for which an agreement of the type described in Section 2.12(k) is
not delivered, an amount set forth or determined pursuant to the related Terms
Indenture.
"FNMA": The Federal National Mortgage Association or any successor thereof.
"FNMA Certificate": A guaranteed pass-through certificate issued by FNMA,
the full and timely payment of principal and interest of which is guaranteed by
FNMA and which represents a proportional undivided ownership interest in a pool
of fully-amortizing mortgage loans secured by one- to four-family residences and
which is Granted to the Trustee under the Indenture as security for a particular
Series. The term "outstanding FNMA Certificates" as of any date means the FNMA
Certificates other than the FNMA Certificates which have been fully paid as of
such date.
"First SAB Paydown Date": The date which is the earlier of (i) the date on
which all Bonds other than the SAB Bonds have been paid in full or (ii) the date
specified in the related Terms Indenture.
"Floating Interest Rate Bond Redemption Date": As defined in Section 10.06.
"Floating Interest Rate Bond Redemption Price": An amount to be paid to
redeem Bonds of a Series pursuant to Section 10.06, as specified in the related
Terms Indenture.
"Floating Interest Rate Bonds": A Bond on which interest accrues at a Bond
Interest Rate that is adjusted, based upon a predetermined index, at fixed
periodic intervals, all as set forth in the related Terms Indenture.
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"Future value": With respect to any cash or Eligible Investment held or to
be deposited in a Trust Account for a Series, as of any particular date
subsequent to the date of determination, the sum of such cash or amount of
Eligible Investment and the investment income which can be earned thereon to
such subsequent date, determined in accordance with such assumptions or
requirements as may be specified in the related Terms Indenture.
"GNMA": The Government National Mortgage Association or any successor
thereof.
"GNMA Certificate": A fully modified pass-through mortgage-backed
certificate the full and timely payment of which is guaranteed by GNMA and which
is proportionately based upon and backed by a pool of fully amortizing mortgage
loans secured by one- to four-family residences and which is Granted to the
Trustee under the Indenture as security for a particular Series. The term
"outstanding GNMA Certificates" as of any date means the GNMA Certificates other
than the GNMA Certificates which have been fully paid as of such date. The terms
of "GNMA I Certificate" and "GNMA II Certificates" refer to the portion of the
GNMA Certificates that were issued under the GNMA I program or the GNMA II
program, as the case may be. The GNMA I program and GNMA II program are the
programs under which fully-modified pass-through mortgage-backed certificates
guaranteed by GNMA may be issued, as set forth in the applicable regulations and
guidelines of GNMA.
"Governing Documents": (a) with respect to FAIC, the Certificate of
Incorporation and Bylaws of FAIC, as amended from time to time and (b) with
respect to an Issuer that is a trust, the respective Deposit Trust Agreement.
"GPM Loan": A mortgage loan underlying a Certificate which provides that
monthly installments of principal and interest increase periodically during such
initial portion of the term of such mortgage loan as is specified therein and
for which the scheduled payments during such portion of the term are not
sufficient to pay the full amount of interest accruing on such mortgage loan.
"GPM Mortgage Certificate": A Certificate backed by a pool of GPM Loans.
"Grant": To grant, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm. A Grant of a
Certificate or of 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 in
respect of such Certificate and all other moneys payable thereunder, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise, and generally to do and receive anything which the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Guarantor": The party to a Guaranty Agreement with the Issuer and the
Trustee.
"Guaranty Agreement": As to any Series which is directly insured,
guaranteed or otherwise backed, the insurance policy, surety bond, letter of
credit or similar agreement
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<PAGE> 24
pursuant to which such insurance, guaranty or other backing is furnished as
specified in the related Terms Indenture.
"Highest Bond Interest Rate": With respect to any Series at the time of
determination, a per annum rate of interest equal to the highest Bond Interest
Rate applicable to any then outstanding Bond of such Series.
"Holder": A Bondholder.
"Indenture": With respect to each Issuer and each Trustee, all Terms
Indentures entered into between such Issuer and such Trustee, that incorporate
the Standard Indenture Provisions by reference, collectively, and, with respect
to each Series, the Terms Indenture authorizing such Series, incorporating the
Standard Indenture Provisions by reference.
"Independent": When used with respect to any specified Person means such a
Person who (a) is in fact independent of the Issuer and any other obligor upon
the Bonds and of any Affiliate of the Issuer or of such other obligor, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer or in any such other obligor or in any Affiliate of the
Issuer or of such other obligor and (c) is not connected with the Issuer or any
such other obligor or any Affiliate of the Issuer or of such other obligor as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such Person shall be appointed by an Issuer Order and approved by the Trustee in
the exercise of reasonable care and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning thereof.
"Individual Bond": A Bond of an original principal amount equal to the
lesser of (1) the minimum denomination for Bonds of that Series and Class as
specified in the related Terms Indenture and (2) if the Bonds of such Series and
Class are issuable in whole multiples of an amount smaller than such minimum
denomination in excess thereof, such smaller amount. A Bond of an original
principal amount in excess of such minimum denomination shall be deemed to be a
number of Individual Bonds equal to the quotient obtained by dividing such
original principal amount by such minimum denomination.
"Initial Interest Payment Date": With respect to any Class of Compound
Interest Bonds of any Series, the Principal Payment Date on which the
outstanding principal of the Class of Bonds of such Series, whose final
installment of principal has the latest Stated Maturity of principal prior to
the Stated Maturity of the final installment of principal of such Class of
Compound Interest Bonds, is paid in full, or such other date as may be specified
in the related Terms Indenture.
"Interest Accrual Period": With respect to any Interest Payment Date for a
Series and Class of Bonds, the period specified in the related Terms Indenture
for which interest accrued on the Outstanding Bonds of such Series and Class
during such period is to be paid or, if applicable, deferred and added to
principal.
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"Interest Delay Period": With respect to any Class of Bonds of a Series,
the length of time, if any, between the end of each Interest Accrual Period and
the day immediately preceding the corresponding Interest Payment Date.
"Interest Determination Date": With respect to any Class of Floating
Interest Rate Bonds, the date specified in the related Terms Indenture on which
the Bond Interest Rate at which interest shall accrue on such Class of Floating
Interest Rate Bonds during the next succeeding Floating Interest Rate Period is
determined.
"Interest Payment Date": With respect to any Series or Class, any date
specified in the related Terms Indenture as a fixed date on which an installment
of interest on the Bonds of such Series or Class is due and payable.
"Investment Statement": A written statement prepared by the Accounting
Party and setting forth its calculations made in connection with a determination
pursuant to Section 8.02(b) or Section 8.04(b) with respect to a proposed
investment of funds in a Collection Account or Reserve Fund.
"Issuer": As provided in the related Terms Indenture, (a) FAIC II, or (b) a
trust acting through the Owner Trustee under the Deposit Trust Agreement, until
a successor Person shall become the Issuer pursuant to the applicable provisions
of the Indenture, and thereafter Issuer shall mean such successor Person, and
also shall include any other obligor on the Bonds. All actions by, and rights
and obligations of, the Owner Trustee, if any, under the Indenture and the Bonds
are actions by and rights and obligations of the Issuer.
"Issuer Expenses": Except as otherwise provided in the related Terms
Indenture, the aggregate annual expenses of the Issuer incurred in connection
with or relating to the administration of the Bonds of a Series other than
interest expense on the Bonds of such Series.
"Issuer Order" and "Issuer Request": In the event the Issuer is (a) a
corporation, a written order or request signed in the name of the Issuer by its
Chairman, President, Controller or a Vice President, or (b) a trust, a written
order or request signed in the name of the Issuer by an Authorized Officer of
the Owner Trustee on behalf of the Issuer and, in any such case, delivered to
the Trustee.
"Letter Agreement": With respect to a Class of Book Entry Bonds, the letter
agreement among the Issuer, the Trustee and the Clearing Agency governing book
entry transfers of such Book Entry Bonds and attached as an exhibit to the
related Terms Indenture.
"LIBOR": With respect to a Series that includes one or more Classes of
Floating Interest Rate Bonds, the rate specified in the related Terms Indenture.
"Manager": As provided in the related Terms Indenture.
"Maturity": With respect to any Bond, the date on which the entire unpaid
principal amount of such Bond becomes due and payable as therein provided or as
provided in the related Terms Indenture, whether at its Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
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<PAGE> 26
"Maximum Bond Interest Rate Assumption": With respect to the Class or
Classes of Floating Interest Rate Bonds, if any, for any Interest Accrual Period
for which the applicable interest rate on such Floating Interest Rate Bonds has
not yet been determined an assumed interest rate on such Bonds as specified in
the related Terms Indenture.
"Maximum Floating Interest Rate": The Bond Interest Rate specified as such
in the related Terms Indenture.
"Month of Closing": With respect to any Series, the month in which the
Closing Date occurs.
"Monthly Payment Deficit": As to any GPM Loan for any date under which a
scheduled monthly payment is due, the amount, if any, by which the amount of
such payment so due (net of any portion thereof which represents servicing and
guaranty fees and which is not to be distributed in respect of the related GPM
Mortgage Certificate) is less than one month's interest as the highest Bond
Interest Rate for such Series or the corresponding Mortgage Loan Attributable
Bond Value for such date.
"Mortgage Loan Attributable Bond Value": As to any GPM Loan underlying a
GPM Mortgage Certificate at any date, the product of
(a) as specified in the applicable Terms Indenture, either
(i) the Assumed Principal Balance of such GPM Loan, or
(ii) the actual outstanding principal balance of such GPM Loan as
of such date (including all accrued but unpaid interest previously
added to the principal balance thereof), and
(b) a fraction having a numerator equal to the Bond Value as of such
date of the Certificate Group in which the related GPM Mortgage Certificate
is included and a denominator equal to the Certificate Group Principal
Balance of such Certificate Group as of such date.
"New York Agent": With respect to each Series, the agent initially
appointed by the Issuer for purposes of presentation and surrender of Bonds for
registration of transfer and exchange and for notices and demands) or upon the
Issuer pursuant to Section 3.02, as specified in the related Terms Indenture.
"New York Office": With respect to each Series, the office initially
appointed by the Issuer for purposes of presentation and surrender of Bonds for
registration of transfer and exchange for notices and demands to or upon the
Issuer pursuant to Section 3.02, as specified in the related Terms Indenture.
"Non-Agency Certificate": As defined in the related Terms Indenture, if
applicable to a Series.
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"Non-Disqualification Opinion": Except as otherwise provided in the related
Terms Indenture, with respect to any action proposed to be taken under the
Indenture, an Opinion of Counsel, to the effect that the taking of such action
will not cause (i) the Trust Estate securing the series to fail to qualify as a
REMIC at any time while any Bonds of such Series are Outstanding where an
election to treat the Trust Estate securing such Series as a REMIC has been made
or will be made or (ii) the Issuer to fail to qualify as a REMIC at any time
while any Bonds are Outstanding where an election to treat the Issuer as a REMIC
has been made or will be made, as the case may be, or (iii) any prohibited
transaction that will result in the imposition of a tax pursuant to Section
860F(a) of the Code or cause any other tax to be imposed on the REMIC.
"Non-Scheduled Principal Amount": As defined in Section 2.02(a).
"Officers' Certificate": In the event the Issuer is (a) a corporation, a
certificate signed by the Chairman, the President or Vice President, and by the
Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the
Secretary or an Assistant Secretary of such corporation, or (b) a trust, a
certificate signed by two Authorized Officers of the Owner Trustee, and in any
such case delivered to the Trustee. Unless otherwise specified, any reference in
the Indenture to an Officers' Certificate shall be to an Officers' Certificate
of the Issuer (in the event the Issuer is a corporation) or the Owner Trustee of
the Issuer (in the event the Issuer is a trust), on behalf of the Issuer.
"Opinion of Counsel": A written opinion of counsel who may, except as
otherwise expressly provided in the Indenture, be counsel for the Issuer
(including in-house counsel employed full-time by the Issuer or any Affiliate)
and who shall be satisfactory to the Trustee.
"Optional Floating Rate Bond Redemption": As defined in Section 10.06.
"Outstanding": With respect to Bonds of a Class or Series, as of the date
of determination, all Bonds of such Class or Series theretofore authenticated
and delivered under the Indenture except:
(a) Definitive Bonds theretofore cancelled by the Bond Registrar or
delivered to the Bond Registrar for cancellation;
(b) Bonds or portions thereof which have been paid in full or, in the
case of Definitive Bonds, for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Bonds; provided that, if such
Bonds or portions thereof are to be redeemed, notice of such redemption has
been duly given pursuant to the Indenture or provision therefor
satisfactory to the Trustee has been made; and
(c) Predecessor Bonds unless proof satisfactory to the Trustee is
presented that any such Definitive Bonds are held by a holder in due
course;
provided, however, that in determining whether the Holders of Bonds representing
the requisite Aggregate Current Principal Amount or of the requisite number of
Outstanding Bonds of any Class or Series have given any request, demand,
authorization, direction, notice, consent or
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<PAGE> 28
waiver hereunder, Bonds owned by the Issuer or any other obligor upon such Bonds
or any Affiliate of the Issuer or such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Bonds which the Trustee knows to be
so owned shall be so disregarded. Bonds so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Bonds and that the pledgee is not the Issuer or any other obligor upon the Bonds
or any Affiliate of the Issuer or such other obligor. Provided, however, in the
case of clause (b) above, (A) if an election has been made or will be made to
treat the Trust Estate securing the Series or the Issuer as a REMIC, solely for
purposes of a Non-Disqualification Opinion and for purposes of determining
whether a Non-Disqualification Opinion must be delivered pursuant to any
requirement of the Indenture, or (B) if the Trustee is unable to redeem such
Bonds, by reason of any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such payment, then a Bond shall not be deemed to cease to be
Outstanding pursuant to clause (b) above prior to the date on which the money is
payable to Holders of the Bonds.
"Overdue Bond": As defined in Section 2.09(d).
"Overdue Bond Interest Rate": With respect to any Series or Class the per
annum rate at which interest accrues on the Overdue Bonds of such Series or
Class, as specified in the related Terms Indenture.
"Owner Trustee": In the event that the Issuer is a trust, the owner trustee
of such trust identified in the Terms Indenture acting not in its individual
capacity but solely as owner trustee with respect to such trust, or such
successor Person as shall become owner trustee pursuant to the applicable
provisions of the Indenture and the Deposit Trust Agreement.
"Paying Agent": The Trustee or any other Person that meets the eligibility
standards for the Trustee specified in Section 6.09 and is authorized by the
Issuer to pay the principal of or any interest which may become payable on any
Bonds on behalf of the Issuer.
"Payment Date": As to any Series or Class, any day which is specified as an
Interest Payment Date or Principal Payment Date for the Bonds of that Series or
Class.
"Payment Date Statement": As defined in Section 2.09(e).
"Permitted Encumbrance": Any lien, charge, security interest, mortgage or
other encumbrance granted by the Issuer in any portion of the Trust Estate,
provided that: (i) such lien, charge, security interest or encumbrance extends
only to a portion of such Trust Estate which is limited to amounts payable to
the Issuer which have been released from the lien of the Indenture and (ii) such
lien, charge, security interest or encumbrance secures a guaranty or
indebtedness permitted by Section 3.08(e).
"Permitted Transferee": Except as otherwise provided in the related Terms
Indenture, any Person who is a proposed transferee or assignee of any Residual
Interest provided that: (i) the Trustee has received evidence satisfactory to it
that the ownership of such Residual
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Interest by such Person shall not cause the Trust Estate to be subject to any
federal income taxation, and (ii) such Person has entered into an express
written agreement with the Issuer not to transfer the Residual Interest
transferred or assigned to it to any other Person unless such Person is a
Permitted Transferee, which agreement shall be enforceable by the Trustee as
third party beneficiary.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Pooling and Servicing Agreement": As to any Conventional Certificate, the
agreement pursuant to which such Conventional Certificate was issued.
"Predecessor Bonds": With respect to any particular Bond of a Series and
Class, every previous Bond of that Series and Class evidencing all or a Portion
of the same debt as that evidenced by such particular Bond; and, for the purpose
of this definition, any Bond authenticated and delivered under Section 2.08 in
lieu of a lost, destroyed or stolen Bond shall be deemed to evidence the same
debt as the lost, destroyed or stolen Bond.
"Principal Distribution Amount": With respect to any Payment Date for a
Series, an amount determined as provided in the related Terms Indenture.
"Principal Payment Date": With respect to any Series or Class any date
specified in the related Terms Indenture as a fixed date on which an installment
of principal is due and payable or, in the case of a Class of Principal Priority
Bonds, the date on which such Bonds may be redeemed by Bondholder Redemption or
mandatory redemption pursuant to Section 10.01.
"Principal Priority Bonds": Bonds, if any, which are subject to Bondholder
Redemption.
"Principal Reduction Date": With respect to a particular Series or Class,
any Principal Payment Date or Special Redemption Date.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Pro Rata Bonds": Bonds that are not Principal Priority Bonds.
"Prospectus": With respect to each Series of Bonds, the initial prospectus
and the related prospectus supplement, which together comprise part of the
Registration Statement on Form S-11 to be filed with the Commission to register
the Bonds pursuant to the Securities Act of 1933, as amended, which will be used
to offer and sell the Bonds.
"Qualified GIC": A guaranteed investment contract Granted or to be Granted
to the Trustee to provide for the investment of funds in a Trust Account for a
particular Series, which contract shall
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(a) be an obligation of an insurance company or other corporation or
entity whose credit standing is acceptable to each Rating Agency rating the
Bonds of such Series;
(b) provide that the Trustee may exercise all of the rights of the
Issuer under such contract without the necessity of the taking of any
action by the Issuer;
(c) provide that if at any time the then current credit standing of the
obligor under such contract is such that continued investment pursuant to
such contract of funds included in the Trust Estate for such Series would
result in a downgrading of any rating of the Bonds of such Series, the
Trustee may terminate such contract and be entitled to the immediate return
of all funds previously invested thereunder, together with accrued interest
thereon at the interest rate provided under such contract through the date
of delivery of such funds to the Trustee; and
(d) meet such other standards as may be specified in the related Terms
Indenture for such Series.
"Qualified Letter of Credit": With respect to any Series for which a
Reserve Fund or Debt Service Reserve Fund is required to be maintained, a letter
of credit delivered or to be delivered to the Trustee in lieu of a deposit of
cash or Eligible Investments in the Reserve Fund or Debt Service Reserve Fund
for such Series, which letter of credit shall
(a) be irrevocable and name the Trustee, in its capacity as such, as
the sole beneficiary thereof;
(b) be issued by a bank or other institution whose credit standing is
acceptable to each Rating Agency which is rating or has rated the Bonds of
such Series;
(c) provide that upon delivery of a certificate by the Trustee stating
(i) that the Trustee has been notified by the Issuer that continued
reliance on such letter of credit for the purpose or purposes for which it
was originally delivered to the Trustee would result in a downgrading of a
rating of the Bonds of such Series, and (ii) that the Issuer has not
replaced such letter of credit with a Qualified Letter of Credit within
seven days after the giving of the notice referred to in clause (i) of this
paragraph (c) the Trustee shall terminate such letter of credit so long as
the conditions for termination set forth in the related Terms Indenture for
such Series are satisfied or, if such conditions are not satisfied, the
Trustee may immediately draw down the unutilized balance of such letter of
credit;
(d) be transferable to any successor trustee hereunder with respect to
such Series; and
(e) meet such other standards as may be specified in the related Terms
Indenture for such Series.
"Qualified Trustee Nominee": A Person in whose name Certificates or
Eligible Investments Granted to the Trustee may be registered as nominee of the
Trustee in lieu of
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registration in the name of the Trustee, provided that the following conditions
shall be satisfied in connection with such registration:
(a) the instruments governing the creation and operation of the nominee
provide that neither the nominee nor any owner of an interest in the
nominee (other than the Trustee) shall have any interest, beneficial or
otherwise, in any Certificates or Eligible Investments at any time held in
the name of the nominee, except for the purpose of transferring and holding
legal title thereto;
(b) the nominee and the Trustee have entered into a binding agreement:
(i) establishing that any Certificates or Eligible Investments held
in the name of the nominee are to be held in the name of the nominee as
agent (other than commission agent or broker) or nominee for the
account of the Trustee, and
(ii) appointing the Trustee as the agent and attorney of the
nominee with full power and authority irrevocably to sell, assign,
endorse, transfer and deliver any Certificates or Eligible Investments
standing in the name of the nominee, and to execute and deliver all
such instruments as may be necessary and proper for such purpose; and
(c) in connection with the registration of any Certificate or Eligible
Investment in the name of the nominee all requirements under applicable
governmental regulations necessary to effect a valid registration of
transfer of such Certificate or Eligible Investment are complied with.
"Rating Agency": With respect to each Series, a nationally recognized
statistical rating organization (as that term is used in Rule
15c3-1(c)(2)(vi)(f) under the Securities Exchange Act of 1934, as amended, or
any successor provision thereto) that issued a rating letter of which a copy was
delivered by the Issuer pursuant to Section 2.12(d). Unless otherwise specified
in the related Terms Indenture, each Rating Agency that has rated any Series of
Bonds of an Issuer shall be a Rating Agency for all Series subsequently issued
by such Issuer. "Record Date": With respect to any Series or Class, a date
specified in the related Terms Indenture as a date on which the Holders of Bonds
of such Series or Class entitled to receive a payment of principal or interest
on the succeeding Payment Date are determined.
"Redemption": A redemption of Bonds pursuant to Article X other than a
Special Redemption or a Bondholder Redemption.
"Redemption Date": With respect to any Bond of any Series or Class to be
redeemed pursuant to Section 10.05, any date fixed for such redemption by or
pursuant to the Indenture, which date shall, unless otherwise provided in the
related Terms Indenture, be a Payment Date.
"Redemption Price": An amount to be paid to redeem Bonds of a Series
pursuant to Section 10.05, as specified in the related Terms Indenture.
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"Reference Bank": A bank providing quotations for use in determining LIBOR,
as specified in the related Terms Indenture.
"Regular Holder Preference": With respect to a Class of Principal Priority
Bonds, the amount, if any, equal to the number of Individual Bonds of such Class
for which a Holder of Bonds other than Deceased Holder Bonds may obtain priority
with respect to Bondholder Redemption, as specified in the related Terms
Indenture.
"Reinvestment Bonds": The Bonds of a Series for which a related Terms
Indenture provides that all or a portion of Reinvestment Income shall be
Available Reinvestment Income.
"Reinvestment Income": Income on, and gain from the sale or liquidation of,
Eligible Investments held by the Trustee as part of the Trust Estate securing a
Series.
"Released Property": As defined in Section 11.01(b).
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"Report Recipient": The Trustee, unless, with respect to a Series, the
Accounting Party is the Trustee, in which case the Report Recipient for such
Series shall be the Issuer.
"Required Rating Category": With respect to each Rating Agency rating a
Series of Bonds issued by an Issuer:
(a) if such Series is the first Series issued by such Issuer, the
rating assigned to such Series by such Rating Agency in the letter
delivered by the Issuer pursuant to Section 2.12(d), or
(b) if such Series is not the first Series issued by such Issuer,
unless otherwise specified in the related Terms Indenture, the lowest
rating assigned to any Series of Outstanding Bonds of such Issuer.
"Requisite Amount of the Reserve Fund": With respect to any Series, the
amount specified as such, if any, in the related Terms Indenture.
"Reserve Fund": The fund or funds, if any, required to be established as
specified in the related Terms Indenture and maintained pursuant to Section
8.04.
"Reserve Interest Rate": The interest rate defined as such in the related
Terms Indenture.
"Residual Interest": Except as otherwise provided in the related Terms
Indenture, with respect to any Series for which an election has been made or
will be made to treat the Issuer or Trust Estate securing the Series as a REMIC,
any rights to receive payments under the Indenture which rights are designated
as a residual interest in a REMIC within the meaning of Section 860G(a)(2) of
the Code.
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"Residual Interest Holder": Except as otherwise provided in the related
Terms Indenture, with respect to any Series for which an election has been made
or will be made to treat the Issuer or Trust Estate securing the Series as a
REMIC, the owner or assignee of a Residual Interest or an undivided interest in
the Residual Interest, provided however, that with respect to any Series for
which an election has been made or will be made to treat the Issuer or Trust
Estate securing the Series as a REMIC, a Residual Interest Holder must be a
Permitted Transferee.
"Residual Payee": As provided in the related Terms Indenture.
"Responsible Officer": With respect to the 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 Cashier, any Assistant
Cashier, the Controller, any Assistant Controller, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant
Treasurer, any Trust Officer or Assistant Trust Officer, any authorized
signatory (a person specifically authorized by a resolution of the Board of
Directors of the Trustee, or a designated committee thereof to assign on behalf
of the Trustee in connection with the Trustee's duties or part thereof under the
Indenture) or any other officer of the 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.
"SAB Amount": The amount set forth in the related Terms Indenture with
respect to the SAB Bonds for the indicated SAB Payment Date.
"SAB Bond": A Scheduled Amortization Bond as designated in the related
Terms Indenture, with respect to which principal is distributable only in the
amount of the SAB Principal Payment indicated for any SAB Payment Date.
"SAB Payment Date": Any Payment Date on which a payment of principal on the
SAB Bonds is required to be made as designated in the related Terms Indenture,
the first of such dates being the First SAB Paydown Date.
"SAB Principal Payment": The principal payment required to be made on SAB
Bonds on any SAB Payment Date, as specified in the related Terms Indenture.
"Sale": As defined in Section 5.18.
"Schedule of Certificates": Schedule A to a Terms Indenture listing by
type, pool number, pass-through rate, original and outstanding principal
balance, issue date, and latest loan maturity date, the Certificates being
Granted to the Trustee on the Closing Date for the related Series, and in the
event Conventional Certificates are being granted to the Trustee on the Closing
Date for such Series, such additional information relating to the Conventional
Certificates as may be specified in such Terms Indenture.
"Scheduled Principal Amount": As defined in Section 2.02(a).
"Series": A separate series of Bonds issued pursuant to a Terms Indenture.
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"Shortfall Period": With respect to any Series secured by any GPM Mortgage
Certificates, the period from the Closing Date for such Series through the end
of the last Due Period during which any GPM Loan underlying any of such GPM
Mortgage Certificates has a Monthly Payment Deficit.
"Special Payment Date": With respect to any Overdue Bond of any Series or
Class, the first day of each month following the month in which an amount due
was not paid.
"Special Payment Date Statement": As defined in Section 2.09(f).
"Special Record Date": With respect to any Special Payment Date or Special
Redemption Date on which payments are to be made on a Class of Bonds of a
Series, the date as of which the Bondholders of the related Series or such Class
entitled to receive a payment of principal or interest on such Special Payment
Date or Special Redemption Date are to be determined if the payment of principal
to be made on such date does not completely retire such Class, which date shall
be as specified in the related Terms Indenture.
"Special Redemption": A redemption of Bonds pursuant to Section 10.01.
"Special Redemption Date": With respect to the Bonds of a particular Series
which is subject to Special Redemption, the date each month, other than any
month in which a Principal Payment Date occurs, on which Bonds of that Series
may be redeemed by Special Redemption; such date shall be the same day of each
such month as the day of the month on which Principal Payment Dates for the
Bonds of that Series occur.
"Special Redemption Date Statement": As defined in Section 10.01(c).
"Special Redemption Determination Date": With respect to a Series which is
subject to Special Redemption, the date in each month (other than a month in
which a Debt Service Requirement Determination Date occurs) on which the
Accounting Party is required to make the determinations set forth in Section
10.01, which date shall be as specified in the related Terms Indenture.
"Special Redemption Price": An amount to be paid to redeem Bonds pursuant
to Section 10.01, equal to 100% of the principal amount of the Bonds to be
redeemed, plus accrued and unpaid interest thereon through the Designated
Interest Accrual Date for the Special Redemption Date.
"Special Reserve Fund": With respect to any Series, the trust account, if
any, created and maintained with the Trustee pursuant to Section 8.05.
"Spread": As to any Due Period for a Series, the difference (if positive,
else zero) equal to:
(a) the sum of:
(i) the total amount of Distributions on the Certificates securing
such Series received during such Due Period (and, in the case of the
first Due Period
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for a Series, the amount, if any, deposited in the related Collection
Account on the Closing Date for such Series pursuant to Section
2.12(g));
(ii) if and to the extent so specified in the related Terms
Indenture, any amounts withdrawn from the Debt Service Reserve Fund for
such Series during such Due Period, or to be withdrawn after the end of
such Due Period but prior to the related Payment Date, and deposited in
the related Collection Account pursuant to Section 8.03(c);
(iii) the aggregate Available Reinvestment Income, if any, on the
amount described in clauses (i) and (ii) above
(A) received through the close of business on the last
Business Day in such Due Period, and
(B) receivable thereafter but before the following Payment
Date (or on the following Payment Date in the case of any
investment which may mature on such Payment Date pursuant to
Section 8.04(b)) in the case of any such amount invested in
investments scheduled to mature after the last Business Day in such
Due Period; and
(iv) the aggregate Available Reinvestment Income, if any, which can
be earned from reinvestment of each of the amounts described in the
foregoing clauses (i) through (iii), at the Assumed Reinvestment Rate
applicable to such Series, from
(A) the first Business Day following such Due Period, in the
case of any cash in such Collection Account at the close of
business on the last Business Day in such Due Period,
(B) the date funds are required to be deposited in the
Collection Account, if such deposit date is after the last Business
Day in such Due Period, or
(C) the scheduled maturity date of any investment scheduled
to mature after the last Business Day in such Due Period,
in either case to the last Business Day prior to the related Payment Date, minus
(b) the sum of
(i) the Debt Service Requirement for such Payment Date, exclusive
of any Spread Distribution Amount included therein;
(ii) the Special Redemption Price paid on any Bonds of such Series
redeemed on a Special Redemption Date during such Due Period; and
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(iii) the amount if any, with respect to the fees of the Trustee
and Accountants, and other administrative fees as specified in the
related Terms Indenture;
provided that, in the case of any calculation of Spread made on a Debt Service
Requirement Determination Date, Distributions due during the related Due Period
but not received on or prior to such Debt Service Requirement Determination Date
shall be assumed to be received on the Assumed Dates of Receipt; and provided,
further, that any such calculation of Spread shall be subject to adjustment
pursuant to Section 2.09(e) under the circumstances and in the manner set forth
therein.
"Spread Distribution Amount": With respect to any Payment Date for a
Series, the Spread Percentage of the Spread for the related Due Period.
"Spread Percentage": With respect to any Payment Date for a Series, the
percentage specified or determined pursuant to the related Terms Indenture,
provided that, if such Terms Indenture fails to specify such a percentage, the
Spread Percentage with respect to any Payment Date for such Series shall be
deemed to be zero.
"Standard Indenture Provisions" or "these Standard Indenture Provisions":
This document in the form in which it is incorporated by reference into a Terms
Indenture.
"Stated Maturity": With respect to any payment or installment of principal
of any Bond or any installment of interest thereon, the date specified in such
Bond and in the related Terms Indenture as the fixed date on which such payment
or installment of principal or installment of interest is due and payable.
"Straight Pass-Through Conventional Certificate": A Conventional
Certificate under the terms of which no interest is distributable to the holder
thereof with respect to prepaid principal of any underlying mortgage loan for
any period after the date of any such prepayment, with the result that the
amount of interest distributable to the holder of such Conventional Certificate
on the Distribution Due Date on which such prepaid principal is distributed
might be less than one month's interest at the applicable Certificate Rate on
the Certificate Principal Balance of such Certificate, determined before giving
effect to the Distribution due on such Distribution Due Date.
"Tender Date": With respect to a Series, a day specified in the related
Terms Indenture for each Payment Date on or before which date a Bondholder must
submit notice to the Trustee requesting redemption of his or its Bonds or submit
notice requesting withdrawal of such a request for redemption.
"Tender Documents": As defined in Section 10.02.
"Terms Indenture": An instrument between the Issuer and the Trustee either
in the form of a terms indenture or a series supplement providing for the
issuance of the Bonds and into which these Standard Indenture Provisions are
incorporated by reference. Each Terms Indenture between the same Issuer and
Trustee shall be a series supplement, supplemental to the first Terms Indenture
between such parties.
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"Trust Account": Any Collection Account, Debt Service Reserve Fund, Reserve
Fund, Special Reserve Fund, or other account that may be defined in the Terms
Indenture or a Supplement thereto.
"Trust Estate": With respect to any Series, all money, instruments and
other property subject or intended to be subject to the lien of the Indenture
for the benefit of such Series as of any particular time (including, without
limitation, all property and interests Granted to the Trustee in the related
Terms Indenture), including all proceeds thereof.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939 as in force
at the Closing Date, unless otherwise specifically provided.
"Trustee": The Person identified in the Terms Indenture acting as trustee
for the benefit of the Bondholders, until a successor Person shall have become
the Trustee pursuant to the applicable provisions of the Indenture, and
thereafter, "Trustee" shall mean such successor Person.
"Uncertificated Certificate": A Certificate issued in book entry form and
not represented by an instrument.
"Vice President": With respect to the Trustee or the Issuer (in the event
FAIC II is the Issuer), any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
SECTION 1.02 Calculations Respecting Mortgage Loans Underlying
Certificates.
(a) In connection with all calculations required to be made pursuant to
the Indenture with respect to Distributions on any Certificate or any
payments on the underlying mortgage loans or with respect to the income
which can be earned from the reinvestment of Distributions and of any other
amounts receivable for deposit in a Trust Account, the rules set forth in
this Section 1.02 shall be applied except to the extent supplemented or
modified herein or in the related Terms Indenture.
(b) If the Terms Indenture provides that calculations with respect to
Distributions are required to be made entirely or partially on a mortgage
loan-by-mortgage loan basis, then such calculations shall be based upon
current information as to the terms of such mortgage loans and reports of
payments received on such mortgage loans supplied to the Accounting Party
by the Person responsible for the servicing thereof and satisfying such
requirements, if any, as may be set forth in such Terms Indenture.
To the extent they are not patently incorrect on their face, such
information or accountings may be conclusively relied upon in making such
calculations.
(c) For any Certificate with respect to which calculations required to
be made pursuant to the Indenture are not made on a mortgage
loan-by-mortgage loan basis, such calculations shall be made on the basis
of information or accountings as to Distributions on such Certificate
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(i) furnished by the issuer thereof or published by a third party
that bases the information published by it on information furnished by
or on behalf of GNMA, in the case of a GNMA I Certificate,
(ii) furnished by the paying agent therefor or published by a third
party that bases the information published by it on information
furnished by or on behalf of GNMA, in the case of a GNMA II
Certificate,
(iii) furnished by FNMA or FHLMC or published by a third party that
bases the information published by it on information furnished by FNMA
or FHLMC, in the case of a FNMA Certificate or FHLMC Certificate, or
(iv) furnished by the related Conventional Certificate Servicer and
satisfying such requirements, if any, with respect thereto as may be
set forth in the Terms Indenture for the Series secured thereby, in the
case of a Conventional Certificate.
To the extent they are not patently incorrect on their face, such
information or accountings may be conclusively relied upon in taking such
calculations.
(d) Unless the Terms Indenture provides otherwise, all calculations
with respect to future distributions on the Certificates pledged as
security for the related Series or future payments on the underlying
mortgage loans shall be made on the assumption that each of the mortgage
loans underlying the Certificates in a particular Certificate Group is a
single fully-amortizing fixed-rate mortgage loan
(i) bearing interest at a fixed rate equal to the highest rate
which might be borne by any of the mortgage loans underlying any of the
Certificates in such Certificate Group such highest rate being the sum
of (A) the Certificate Rate for the Certificates in such Certificate
Group and (B) either (1) the highest servicing fee and guaranty fee, if
any, applicable to any of the underlying mortgage loans or (2) if the
exact servicing fee and guaranty fee, if any, applicable to such
underlying mortgage loans is not known, the highest possible servicing
fees and guaranty fee, if any, which might be applicable thereto (as
provided in applicable guidelines for the program pursuant to which
such Certificates were issued) and subject to a servicing fee equal to
the amount described above in clause (B)(1) or (B)(2), which ever is
applicable;
(ii) having an outstanding principal balance equal to the aggregate
of the then current Certificate Principal Balances of all the
Certificates included in such Certificate Group;
(iii) maturing in the month of the scheduled maturity date of the
latest maturing Certificate in such Certificate Group; and
(iv) which either provides for fixed level monthly payments or, in
the case of a Certificate Group comprised of GPM Mortgage Certificates,
provides for scheduled payment increases equal to the largest
percentage increase possible
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for any of the GPM Loans underlying the GPM Mortgage Certificates in
such Certificate Group, which payment increases would become effective
for the underlying GPM Loan maturing in the month of the scheduled
maturity date of the latest maturing GPM Mortgage Certificate in such
Certificate Group.
(e) All calculations with respect to future Distributions on a
Certificate shall be made on the assumption that none of the underlying
mortgage loans is prepaid and that all such mortgage loans are paid in
accordance with their actual payment schedule, or the assumed payment
schedule calculated pursuant to subsection (d), whichever is applicable,
except as may be provided otherwise in the related Certificate Principal
Balances, shall give effect to the period of time which elapses between
scheduled due dates on which payments on underlying mortgage loans are due
and the dates on which such payments are required to be distributed to the
holder of a related Certificate in accordance with the guidelines for the
program pursuant to which such Certificate was issued.
(f) If any Certificate securing a Series has a Certificate Rate in
excess of the Highest Bond Interest Rate for such Series, then, except as
otherwise provided in the related Terms Indenture, for purposes of
calculating the amount of Spread resulting from any future Distribution on
such Certificate it shall be assumed that in addition to the servicing fee
and guaranty fee, if any, actually payable with respect to the underlying
mortgage loans, or assumed to be payable with respect thereto as provided
in subsection (d), such underlying mortgage loans are subject to an
additional servicing fee equal, on an annual basis, to the difference
between
(i) the Certificate Rate for such Certificate, and
(ii) the Overdue Bond Interest Rate for the Series secured by such
Certificate.
ARTICLE II
THE BONDS
SECTION 2.01 Forms Generally.
The Bonds and the Trustee's or Authenticating Agent's certificates of the
authentication shall be in substantially the forms set forth in this Article,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by the Indenture or as may in the Issuer's judgment
be necessary, appropriate or convenient to permit the Bonds of a Series to be
issued and sold to or held in bearer form by non-United States Persons, to
establish entitlement to an exemption from United States withholding tax or
reporting requirements with respect to payments on the Bonds of a Series, or to
comply, or facilitate compliance, with other applicable laws and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange on which the Bonds of the respective Series may be listed,
or as may, consistently herewith, be determined by the officers executing such
Bonds, as evidenced by their execution thereof. While Bonds of a Series may
contain the above-referenced provisions with
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respect to Bonds issued in bearer form, no Bonds may actually be issued in
bearer form until the Issuer and the Trustee shall have entered into an
appropriate supplemental indenture pursuant to Section 9.01(8) providing for
such issuance. 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 to the
portion of the text appearing on the reverse of the Bond.
Definitive Bonds shall be printed, lithographed or engraved or produced by
any combination of these methods on steel engraved borders or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Bonds may be listed, all as determined by the officers executing such Bonds, as
evidenced by their execution thereof.
Each Class of Book Entry Bonds shall be evidenced by one or more
certificates physically held by one or more Clearing Agencies or custodian
banks, referred to in Section 2.13, which certificates may be typewritten,
printed, lithographed, mimeographed or otherwise produced.
SECTION 2.02 Forms of Bonds and Certificate of Authentication.
(a) Except as otherwise provided in the related Terms Indenture, the
form of a Bond of any Class which is not a Compound Interest Bond or
Principal Priority Bond is as follows:
THE PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS BOND AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
[OID Legend]
[Legend stating that the Bond is an interest in REMIC]
[Legend regarding ERISA transfer restrictions]
---------------------------
(a ________________________)
COLLATERALIZED MORTGAGE OBLIGATION
SERIES _____
CLASS _____
DUE __________, ____
ACCRUAL DATE: __________, ____
$_______________ No. ____
___________________________________, a ___________________________ duly
organized and existing under the laws of the State of ________________ (the
"Issuer"), for value received, hereby promises to pay to ___________________, or
registered assigns,
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_____________________ Dollars in [insert Principal Payment frequency]
installments on [insert Principal Payment Dates] (the "Principal Payment Dates")
in each year, ending on or before [insert Stated Maturity of Principal] (the
"Stated Maturity" of such final installment of principal), and on certain other
dates, in the event of one or more special redemptions as described below, and
to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the unpaid principal amount of this Bond outstanding from time to
time from [insert Accrual Date] (the "Accrual Date"), or such later date with
respect to which interest has been paid [until] [through the _____ day of the
________ month preceding the date on which] the principal amount of this Bond is
paid in full, at the [Applicable Floating Interest Rate (as defined below)]
[rate of __________ percent (___%) per annum], such interest being payable
[insert Interest Payment frequency] on [insert Interest Payment Dates] in each
year, commencing on __________, ____(the "Interest Payment Dates"). Installments
of principal due and payable on this Bond are payable in the amounts and on the
dates described below or on the reverse hereof which shall have the same effect
as though fully set forth at this place.
[Reference Point A]
[Interest payable on this Bond on an Interest Payment Date will be equal to
the amount of interest that has accrued from the ___ day of the _________ month
preceding the preceding Interest Payment Date (or from the Accrual Date in the
case of the first Interest Payment Date) through the ____ day of the _________
month preceding the Interest Payment Date on which such interest is payable (the
"Interest Accrual Period"). Interest accrued on this Bond during any Interest
Accrual Period will be calculated on the assumption that any principal payment
made on this Bond during such Interest Accrual Period was instead made
[month(s)] prior to the date of such principal payment.]
[The Applicable Floating Interest Rate for each Interest Accrual Period
shall be determined on the second Business Day (determined in accordance with
the Indenture referred to on the reverse hereof) next preceding the commencement
of such Interest Accrual Period and shall equal __________ percent (___%) per
annum during the first Interest Accrual Period and, for each Interest Accrual
Period thereafter, the lesser of (i) ___________ percent (___%) per annum above
[insert description of LIBOR], determined in accordance with the Indenture, and
(ii) ___ percent (___%) per annum.]
[Reference Point B]
The principal of and interest on this Bond are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Bond shall be applied first to interest due and payable on
this Bond as provided above and then to the unpaid principal of this Bond. Any
installment of principal or interest which is not paid when and as due shall
bear interest at the rate of interest borne by the principal of this Bond from
the date due to the date of payment thereof, but only to the extent payment of
such interest shall be lawful and enforceable [, except that under certain
circumstances following a declaration of acceleration of the Series ___ Bonds,
as described on the reverse hereof [below], interest shall be payable on the
unpaid principal hereof and on any overdue installment of interest hereon at the
rate of [insert
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Overdue Bond Interest Rate]% per annum, but only to the extent that the payment
of such interest shall be lawful and enforceable].
This Bond is one of a duly authorized issue of Bonds of the Issuer,
designated as its Collateralized Mortgage Obligations, Series ___ (the "Series
___ Bonds" or the "Bonds"), issued in classes (each a "Class") consisting of
"[insert Class designation of each Class] Bonds," all issued and to be issued
under a Terms Indenture dated as of _____________ (the "Indenture"), by and
between the Issuer and _____________________, a __________ (the "Trustee", which
term includes any Successor Trustee under the Indenture), to which Indenture and
all Indentures supplemental thereto reference is hereby made for a statement of
the respective rights thereunder of the Issuer, the Trustee and the Holders of
the Bonds of each Class which are, and are to be, authenticated and delivered.
All terms used in this Bond which are defined in the Indenture shall have the
meanings assigned to them in the Indenture unless otherwise defined herein.
The aggregate amount of each installment of principal payable on the Series
___ Bonds on each Principal Payment Date (the "Aggregate Principal Payment") is
equal to [the sum of ]:
[(1)] [all interest, if any, which has accrued but is not then payable on
any Class [insert Class designation or designations of the Compound Interest
Bonds of such Series] Bonds then Outstanding for the period from the immediately
preceding Principal Payment Date (or from the Accrual Date in the case of the
first Principal Payment Date) to such Principal Payment Date;] [the ___ day of
the ___ month preceding the preceding Principal Payment Date (or from the
Accrual Date in the case of the first Principal Payment Date) through the ___
day of the ___________ month preceding such Principal Payment Date;] [and]
[(2)] the Principal Distribution Amount for such Principal Payment Date [;
and]
[(3) the Spread Distribution Amount for such Principal Payment Date;]
reduced by the [excess, if any, of (a) the] aggregate of the Monthly Payment
Deficits for all GPM Mortgage Certificates securing the Series ___ Bonds, for
the period from the preceding Principal Payment Date (or from the Accrual Date,
in the case of the first Principal Payment Date) to such Principal Payment Date
over (b) the aggregate amount of Spread for such period].
[Principal installments will be paid on the Class ______Bonds on the
following Principal Payment Dates and in the following amounts, to the extent of
the Aggregate Principal Payment, with any unpaid amount being added to the
respective amount for the next succeeding Principal Payment Date (such amount
payable on the Class ___ Bonds on a Principal Payment Date being the "Scheduled
Principal Amount" for such Principal Payment Date).]
The aggregate installments of principal due and payable on the Series ___
Bonds on each Principal Payment Date [in excess of the Scheduled Principal
Amount (the "Non-Scheduled Principal Amount"), if any] are payable first to the
Holders of the Class [insert Class designation of Bonds of the Series having the
earliest Stated Maturity] Bonds of such Series pro rata among the Class [insert
Class designation of Bonds of the Series having the earliest Stated Maturity]
Bonds of such Series, until the entire principal amount of such Class [insert
Class designation of Bonds of the Series having the earliest Stated Maturity]
Bonds has been paid. On the Principal Payment Date on which the entire principal
amount of such Class [insert Class designation of
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Bonds of the Series having the earliest Stated Maturity] Bonds has been paid,
any remaining amounts required to be applied on such Principal Payment Date to
the payment of [the principal of the Series ___ Bonds] [the Non-Scheduled
Principal Amount] shall be paid to the Holders of the Class [insert Class
designation of Bonds of the Series having the second earliest Stated Maturity]
Bonds of such Series pro rata among the Class [insert Class designation of Bonds
of the Series having the second earliest Stated Maturity] Bonds of such Series
until the entire principal amount of such Class [insert Class designation of
Bonds of the Series having the second earliest Stated Maturity] Bonds has been
paid. Payments of principal of the remaining Classes of such Series ___ Bonds
other than Class ___ Bonds shall be made in a similar manner, with the
[Non-Scheduled Principal Amount] [Aggregate Principal Payment] on each Principal
Payment Date always being applied first to the payment of principal of the then
Outstanding Class of the Series ___ Bonds (other than Class ___ Bonds) having
the earliest Stated Maturity of principal of all Series ___ Bonds then
Outstanding.
Notwithstanding the foregoing, the entire unpaid principal amount of each
Class of the Series ___ Bonds shall be due and payable, if not then previously
paid, on the respective Stated Maturity of principal of such Class.
Payment of the then remaining unpaid principal amount of this Bond on its
Stated Maturity or on such earlier date as the Issuer shall be required to apply
payments received with respect to the Certificates securing the Series ___ Bonds
to payment of the then remaining unpaid principal amount of this Bond or payment
of the Redemption Price, Special Redemption Price or Bondholder Redemption Price
payable on any date as of which this Bond has been called for redemption in
full, shall be made upon presentation and surrender of this Bond to the Trustee
or the office or agency of the Issuer maintained for such purpose. Payments of
interest on this Bond due and payable on each Interest Payment Date, together
with the installment of principal of this Bond due and payable on each Interest
Payment Date which is also a Principal Payment Date for this Bond or on any
Special Redemption Date to the extent not in full payment of this Bond, shall be
made by check mailed to the Person whose name appears as the registered Holder
of this Bond (or one or more Predecessor Bonds) on the Bond Register as of
[insert description of Record Date] immediately preceding such Interest Payment
Date (the "Record Date") or as of the [insert description of Special Record Date
for special redemptions] immediately preceding such Special Redemption Date.
[Reference Point C]
Checks for amounts which include installments of principal due on this Bond
shall be mailed to the Person entitled thereto at the address of such Person as
it appears on the Bond Register as of the applicable Record Date or Special
Record Date without requiring that this Bond be submitted for notation of
payment and checks returned undelivered will be held for payment to the Person
entitled thereto, subject to the terms of the Indenture, at the office or agency
in the United States of America designated by the Issuer for such purpose
pursuant to the Indenture. Any reduction in the principal amount of this Bond
(or any one or more Predecessor Bonds) effected by any payments made on any
Principal Payment Date, Special Payment Date or Special Redemption Date shall be
binding upon all future Holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not noted hereon.
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<PAGE> 44
If funds will be available, as provided in the Indenture, for payment in
full of the then remaining outstanding principal amount of this Bond on a
Principal Payment Date or Special Redemption Date which is prior to its Stated
Maturity, then the Issuer will notify the Person who was the registered Holder
hereof (a) in the case of a Principal Payment Date, on the [insert applicable
day] day of the month [prior to the month] in which such Principal Payment Date
occurs by notice mailed no later than the ___ Business Day after the [insert day
before Debt Service Requirement Determination Date] day of the month [prior to
the month] in which such Principal Payment Date occurs or (b) in the case of a
Special Redemption Date, on the [insert applicable day] day of the month [prior
to the month] in which such Special Redemption Date occurs by notice mailed no
later than ___ Business Days after the [insert applicable day] day of the month
[prior to the month] in which such Special Redemption Date occurs and, in either
case, the amount then due and payable shall be payable only upon presentation of
this Bond at the Corporate Trust Office of the Trustee or the office or agency
of the Issuer maintained for such purpose.
[Reference Point D]
Any portion of any payment of principal or interest which was due but was
not paid or duly provided for on a Payment Date shall forthwith cease to be
payable to the Person who was the registered Holder of this Bond on the
applicable Record Date, and shall be paid, to the extent funds are available for
such payment, on each Special Payment Date thereafter until all such overdue
amounts are paid or duly provided for, if in part, to the Person in whose name
this Bond (or one or more Predecessor Bonds) is registered on the Special Record
Date applicable to each such Special Payment Date or, if in whole, upon
presentation of this Bond at the Corporate Trust Office of the Trustee or the
office or agency of the Issuer maintained for such purpose or, in either case,
at any other time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Bonds may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture.
If an Event of Default as defined in the Indenture shall occur and be
continuing with respect to the Series ___ Bonds, the Series ___ Bonds may become
or be declared due and payable in the manner and with the effect provided in the
Indenture. If any such declaration of acceleration occurs prior to the Stated
Maturity of the principal of this Bond, the amount payable to the Holder of this
Bond will be equal to the then aggregate unpaid principal amount of this Bond,
together with accrued and unpaid interest thereon [through the day preceding the
day of the month that is a full ___ preceding] [to] the date of payment thereof.
The Indenture provides that, notwithstanding the acceleration of the maturity of
the Series ___ Bonds, under certain circumstances specified therein allotments
collected as proceeds of the collateral securing the Series ___ Bonds or
otherwise shall continue to be applied to payments of principal of and interest
on the Series ___ Bonds as if they had not been declared due and payable. In all
other circumstances, following the acceleration of the maturity of the Series
___ Bonds, all amounts collected as proceeds of the collateral securing the
Series ___ Bonds or otherwise shall be applied, pro rata among all Series ___
Bonds, without preference or priority, first to the payment of interest and then
to the payment of amounts due with respect to principal. [In such event,
interest on the then unpaid principal amount of all Series ___ Bonds and on any
overdue installments of interest on the Series ___ Bonds shall be payable at the
rate of [insert Overdue
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<PAGE> 45
Bond Interest Rate]% per annum, but only to the extent that payment of such
interest and payment thereof at such rate is lawful and enforceable.]
An Event of Default with respect to the Bonds of any other Series issued
under the Indenture, including any failure to make any payment with respect
thereto when and as due, will not be an Event of Default with respect to Series
___ Bonds.
As provided in the Indenture and only under the special circumstances
specified therein, the Series ______ Bonds are subject to Special Redemption in
whole or in part at a price equal to 100% of the principal amount of the Bonds
to be redeemed (including interest accrued but not paid on the Class [insert
Class designation or designations of the Compound Interest Bonds of the Series]
and added to the principal amount thereof) together with accrued and unpaid
interest thereon (through the ___ day of the ___ month preceding] [to] the
Special Redemption Date. Any such Special Redemption of Series ___ Bonds will be
made on the Special Redemption Date in the manner hereinabove set forth. As
provided in the Indenture, all payments of principal on any Special Redemption
will be applied among the Classes of the Series ___ Bonds and among Series ___
Bonds within each Class in the same priority and manner as would be applicable
on the next succeeding Principal Payment Date. The Indenture provides that the
Class ___ Bonds may be called for redemption in whole [or] [, but not] in
part[,] at ___% of the Aggregate Current Principal Amount thereof plus accrued
interest [through the day preceding the day of the month that is a full ____
preceding the date of redemption] at the option of the Issuer on any Principal
Payment Date on or after [insert Bond Redemption Date] (or on an earlier
Principal Payment Date, if, either before or after giving effect to the payment
of principal otherwise required to be made on such Payment Date, the Class ___
Bonds shall be in an Aggregate Current Principal Amount which is less than
[insert Bond Redemption Amount]). The Issuer, at its option, may redeem the
Class ___ Bonds in whole or in part on any Principal Payment Date for such Class
but in an aggregate amount not to exceed the amount by which the Spread for such
Principal Payment Date exceeds the Spread Distribution Amount for such Principal
Payment Date, at 100% of the principal amount thereof, together with accrued and
unpaid interest thereon to the last day of the Interest Accrual Period next
preceding such Principal Payment Date, if the Bond Interest Rate at which
interest on the Class ___ Bonds accrues during the Interest Accrual Period
preceding such Principal Payment Date is equal or deemed to be equal to the
Maximum Floating Interest Rates.
In the event of any redemption at the option of the Issuer, future payments
of principal and interest on Series ___ Bonds not redeemed will be made as if
such redemption had not occurred.
If provision is made for the redemption or Special Redemption of this Bond
in accordance with the Indenture, the portion of the principal amount of this
Bond so redeemed shall thereupon cease to bear interest from and after the
[Redemption Date or special Redemption Date as the case may be] [day preceding
the day of the month that is a full ___ preceding such Redemption Date or
Special Redemption Date, in the case of the Class ___ Bonds, Class ___ Bonds and
Class ___ Bonds and from and after the Redemption Date or Special Redemption
Date in the case of the Class ___ Bonds].
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<PAGE> 46
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Bond may be registered on the Bond Register of the
Issuer, upon surrender of this Bond for registration of transfer at the office
or agency designated by the Issuer pursuant to the Indenture, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Series ___ Bonds of the same Class, of
authorized denominations and in the same aggregate initial principal amount,
will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of this Bond, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Bond is registered (i) on any Record Date or Special
Record Date, for purposes of making payments, and (ii) on any other date for any
other purpose, as the owner hereof, whether or not this Bond shall be overdue,
and neither the Issuer, the Trustee nor any such agent shall be affected by
notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Series ___ Bonds under the Indenture
at any time by the Issuer with the consent of the Holders of the Series ___
Bonds representing two-thirds of the Aggregate Current Principal Amount of the
Series ___ Bonds at the time Outstanding. The Indenture also contains provisions
permitting the Holders of Bonds representing specified percentages of the then
Aggregate Current Principal Amount of the Series ___ Bonds to waive compliance
by the Issuer with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Bond (or any one or more Predecessor Bonds) shall be conclusive
and binding upon such Holder and upon all future Holders of this Bond and of any
Bond issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Bond. The Indenture also permits the Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of Holders
of the Series ___ Bonds issued thereunder.
The term "Issuer" as used in this Bond includes any successor to the Issuer
under the Indenture.
The Series ___ Bonds are issuable only in registered form in denominations
as provided in the Indenture and subject to certain limitations therein set
forth. The Series ___ Bonds are exchangeable for a like aggregate principal
amount of Series ___ Bonds of the same Class of different authorized
denominations, at requested by the Holder surrendering same.
[THIS SECTION BOLD IN EXECUTION COPY] As provided in the Indenture, this
Bond and the Indenture creating the Series of Bonds of which this Bond is a part
shall be construed in accordance with, and governed by, the laws of the State of
___ applicable to agreements made and to be performed therein.
No reference herein to the Indenture and no provision of this Bond or of
the Indenture (other than provisions of the Indenture limiting interest to the
maximum permitted by law) shall
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<PAGE> 47
alter or impair the obligation of the Issuer, which is absolute and
unconditional to the extent permitted by applicable law, to pay the principal
and interest on this Bond at the times, place and rate, and in the coin or
currency, herein prescribed.
Unless the certificate of authentication hereon has been executed by an
authorized signatory of the Trustee or any Authenticating Agent whose name
appears below by manual signature, this Bond shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, ___________________ has caused this instrument to be
duly executed by its _____________ by facsimile signature of the ______________
of such __________.
Dated:
----------------------- -----------------------------------------
By:
By:
-------------------------------
[Title]
(b) Except as otherwise provided in the related Terms Indenture, the
form of Compound Interest is as follows:
INTEREST ACCRUES ON THIS BOND BUT WILL NOT BE PAYABLE UNTIL THE ENTIRE
UNPAID PRINCIPAL AMOUNT OF EACH CLASS OF THE SERIES ___ BONDS [OTHER THAN
CLASS ___ BONDS] HAVING AN EARLIER STATED MATURITY HAS BEEN PAID IN FULL.
BECAUSE SUCH UNPAID INTEREST IS ADDED TO THE PRINCIPAL OF THIS BOND AND
BECAUSE PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS, IN EACH CASE AS
SET FORTH HEREIN, THE OUTSTANDING AMOUNT OWED BY THE ISSUER ON THIS BOND AT
ANY TIME MAY BE SIGNIFICANTLY DIFFERENT FROM THE AMOUNT SHOWN ON THE FACE
HEREOF.
[OID Legend]
[Legend stating that the Bond is an interest in REMIC]
[Legend regarding ERISA transfer restrictions]
---------------------------
(a _________________________)
COLLATERALIZED MORTGAGE OBLIGATION
SERIES ____
CLASS _____
DUE _________, ____
ACCRUAL DATE _________, ____
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<PAGE> 48
$_______________ No. ____
_____________________________, a ______________________ duly organized and
existing under the laws of the State of _________ (the "Issuer"), for value
received, hereby promises to pay to ________ _______, or registered assigns, the
principal sum of __________________________ Dollars in [insert Principal Payment
frequency] installments on [insert Principal Payment Dates] (the "Principal
Payment Dates") in each year, ending on or before [insert Stated Maturity of
Principal] (the "Stated Maturity" of such final installment of principal) and to
pay interest (computed on the basis of a 360-day year of twelve 30-day months)
on the unpaid principal amount of this Bond outstanding from time to time
(including interest accrued but not paid on this Bond and added to principal
hereof as described below) from [insert Accrual Date] (the "Accrual Date"), or
such later date to which interest has been paid [through the ___ day of the ____
month preceding the date on which] [until] the principal amount of this Bond is
paid in full, at the rate of ____ percent (___%) per annum, such interest being
payable [insert Interest Payment frequency], on [insert Interest Payment Dates]
(the "Interest Payment Dates") in each year, commencing on the Initial Interest
Payment Date specified below, provided, however, that the amount of interest
payable on this Bond on the Initial Interest Payment Date for this Bond [and one
or more Interest Payment Dates thereafter] may, as described below, be less than
the entire amount of interest accrued hereon [since the immediately preceding
Interest Payment Date for the Series ___ Bonds (or since the Accrual Date if no
Interest Payment Date for the Series______ Bonds has yet occurred)] [from the
___ day of the ________ month preceding the preceding Interest Payment Date (or
from the Accrual Date in the case of the first Interest Payment Date) through
the ____ day of the month preceding such Initial Interest Payment Date].
[Interest payable on this Bond on an Interest Payment Date or, prior to the
Initial Interest Payment Date, interest accrued and added to principal on a
Compound Date as provided below shall be calculated based on the amount of
interest that has accrued from the ____ day of the month preceding the preceding
Interest Payment Date or Compound Date, as the case may be (or from the Accrual
Date in the case of the first Interest Payment Date or Compound Date), through
the ____ day of the ____ month preceding the Interest Payment Date or Compound
Date for which interest is being calculated (the "Interest Accrual Period").
Interest accrued on this Bond during any Interest Accrual Period will be
calculated on the assumption that any principal payment made on this Bond during
such Interest Accrual Period was instead made ___ month(s)] prior to the date of
such principal payment.]
Prior to the initial Interest Payment Date for this Bond, interest on this
Bond shall not be payable to the Holder of this Bond but shall instead accrue at
the rate and in the manner described above and shall be added to the outstanding
principal of this Bond on each [insert Interest Payment Dates] (the "Compound
Dates"). [Except as provided below with respect to an Initial Interest Payment
Date occurring on or before the first Interest Payment Date for the Series ___
Bonds after the end of the Shortfall Period for the GPM Mortgage Certificates
securing the
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<PAGE> 49
Series ___ Bonds, on] [On] the Principal Payment Date, if any, on which the
outstanding principal of the Class [insert Class designation of the Class of
Bonds, other than SAB Bonds, having a final installment of principal with the
latest Stated Maturity prior to the Stated Maturity of the final installment of
principal of such Compound Interest Bonds] Bonds referred to on the reverse
hereof is paid in full (the "Initial Interest Payment Date" for this Bond), the
amount, if any, of the installment of interest due and payable on this Bond
shall be equal to the lesser of (a) the product of (i) the Debt Service
Requirement for the Series ___ Bonds on such Payment Date less the aggregate
amount of principal of and interest on all other Classes of Series ___ Bonds
paid on such Payment Date, and (ii) a fraction, the numerator of which is the
original principal amount of this Bond and the denominator of which is the
Aggregate Current Principal Amount of all Class [insert Class designation of
such Compound Interest Bond] Bonds, and (b) the amount of interest accrued, at
the rate and in the manner specified above on this Bond during the period from
[the immediately preceding Interest Payment Date for the Series ___ Bonds (or
from the Accrual Date if no Interest Payment Date for the Series ___ Bonds has
yet occurred) to the] [the ______ day of the______ month preceding the preceding
Interest Payment Date (or from the Accrual Date in the case of the first
Interest Payment Date) through the ___ day of the ___ month preceding the]
Initial Interest Payment Date for this Bond. The excess, if any, of the amount
of interest accrued on this Bond during the period referred to in clause (b) of
the preceding sentence over the amount of the installment of interest due and
payable on this Bond on the Initial Interest Payment Date for this Bond shall be
added to the outstanding principal of this Bond on such Initial Interest Payment
Date.
[If the Initial Interest Payment Date for this Bond occurs on or before
[insert the date of the first Interest Payment Date for such Series occurring
after the end of the Shortfall Period for the GPM Mortgage Certificates securing
such Series] (the first Interest Payment Date for the Series ___ Bonds after the
end of the Shortfall Period for the GPM Mortgage Certificates securing the
Series ___ Bonds), then, for each Interest Payment Date thereafter until the
[second] [first] Interest Payment Date after [insert same date as was inserted
above], the Debt Service Requirement for the Series ___ Bonds may be an amount
less than the aggregate amount of interest accrued on the Class [insert class
designation of such Compound Interest Bonds] [since the immediately preceding
Interest Payment Date for the Series ___ Bonds] [from the ___ day of the ___
month preceding the preceding Interest Payment Date (or from the Accrual Date in
the case of the first Interest Payment Date) through the ___ day of the ___
month preceding such Initial Interest Payment Date]. In such event, the amount
of interest payable on this Bond on each such Interest Payment Date shall be the
product of (a) the Debt Service Requirement for such Payment Date less all
payments of interest, if any, required to be made on such Interest Payment Date
on all other Bonds of such Series then Outstanding, and (b) a fraction, the
numerator of which is the original principal amount of this Bond and the
denominator of which is the aggregate original principal amount of all
Outstanding Class [insert Class designation of such Compound Interest Bond]
Bonds. The excess, if any, of (a) the amount of interest so accrued on this Bond
during the period from [the immediately preceding Interest Payment Date for the
Series Bonds to] [the ___ day of the ___ month preceding the preceding Interest
Payment Date (or from the Accrual Date in the case of the first Interest Payment
Date) through the ____ day of the______ month preceding] such Interest Payment
Date over (b) the amount of the installment of interest then due and payable on
this Bond shall be added to the outstanding principal of this Bond on each such
Initial Interest Payment Date.]
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<PAGE> 50
Installments of principal of this Bond will be due and payable in the
amounts and on the dates described on the reverse hereof [below].
[The remainder of the form of Compound Interest Bond shall be as set forth
in subsection (a) of this Section 2.02, beginning at the place marked "Reference
Point B" therein.]
(c) Except as otherwise specified in the related Terms Indenture, the
form of Principal Priority Bonds is as follows:
[THE PRINCIPAL OF THIS BOND IS SUBJECT TO FULL OR PARTIAL REDEMPTION
FROM TIME TO TIME WITHOUT NOTATION ON THIS BOND. ACCORDINGLY, THE
UNPAID PRINCIPAL AMOUNT OF THIS BOND MAY BE LESS THAN THAT SET
FORTH BELOW.]
[OID Legend]
[Legend stating that the Bond is an interest in REMIC]
[Legend regarding ERISA transfer restrictions]
------------------------
(a ______________________)
COLLATERALIZED MORTGAGE OBLIGATION
SERIES _____
CLASS _____
DUE __________, ____
ACCRUAL DATE: __________, ____
$__________ NO. _____
__________________________________, a ________________________ duly
organized and existing under the law of the State of ____________ (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
________________________ or registered assigns, the principal sum of
_______________________ Dollars on ____________, and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) on the unpaid principal
amount of this Bond outstanding from time to time from [insert Accrual Date]
(the "Accrual Date"), or such later date to which interest has been paid [until]
[through the ____ day of the ____ month preceding the day on which] the
principal amount of this Bond is paid in full, at the rate of ____ percent
(___%) per annum, such interest being payable [insert Interest Payment
frequency] on [insert Interest Payment Dates] in each year, commencing on
__________, ____ (the "Interest Payment Dates" and the "Principal Payment
Dates").
[At this point the form of Principal Priority Bond shall be as set forth in
subsection (a) of this Section 2.02, beginning at the place marked "Reference
Point A" and ending at the place marked "Reference Point C".]
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<PAGE> 51
Unless the Series ___ Bonds have been declared due and payable prior to
their Stated Maturity by reason of an Event of Default, a Holder of Class ___
Bonds has the right to request the redemption of Class _____ Bonds held by such
Holder prior to their Stated Maturity. Commencing on the Principal Payment Date
for the Class _____ Bonds immediately following the payment of the entire
principal amount of all Outstanding Class _____ Bonds, and on each Principal
Payment Date or Special Redemption Date thereafter (each such date being a
"Class ___________ Redemption Date"), the Issuer will redeem Class _____ Bonds
with respect to which redemption has been requested, at a price (the "Bondholder
Redemption Price") equal to 100% of their principal amount, together with
accrued interest through the Interest Accrual Period for the Class _____
Redemption Date, subject to the limitations that (i) except as set forth below,
the Issuer will not on any Class _____ Redemption Date redeem (a) Class _____
Bonds presented by any one or more of the (1) personal representative, (2)
surviving joint tenant or (3) surviving tenant by the entirety, or (4) personal
representative joined by any surviving tenant(s) in common of a deceased Holder
exceeding $100,000 in original aggregate principal amount or (b) Class _____
Bonds presented by a Holder other than a deceased Holder exceeding $10,000 in
original aggregate principal amount, (ii) redemption will be made only to the
extent of the aggregate amount of principal payments to be applied to the Class
_____ Bonds on such Class _____ Redemption Date as set forth above (the "Class
_____ Redemption Amount") and (iii) redemption of Bonds held by any Holder will
be made only in principal amounts of $1,000 or any multiple thereof. Class _____
Bonds will be redeemed in order of the receipt by the Trustee of requests
therefor, except that redemption of Class _____ Bonds requested by the personal
representative joined by any surviving tenant(s) in common, surviving joint
tenant or tenant by the entirety, of a Deceased Holder will be redeemed prior to
the redemption of other Class _____ Bonds. With respect to each Class _____
Redemption Date, the Issuer will accept for redemption Class _____ Bonds as to
which redemption previously was requested on behalf of deceased Holders in
excess of the $100,000 limitation to the extent that the Class _____ Redemption
Amount exceeds the aggregate principal amount of Class _____ Bonds to be
redeemed within the $100,000 limitation and the $10,000 limitation described
above. In addition, with respect to each Class _____ Redemption Date, the Issuer
will accept for redemption Class _____ Bonds as to which redemption previously
was requested on behalf of Holders other than deceased Holders in excess of the
$10,000 limitation to the extent that the Class _____ Redemption Amount exceeds
the aggregate principal amount of Class _____ Bonds to be redeemed pursuant to
all other requests for redemption of Class _____ Bonds which have been accepted
as described above. For the purposes hereof, a Class _____ Bond held by tenants
by the entirety, joint tenants or tenants in common is considered to be held by
a single Holder or Beneficial Owner, the death of a tenant by the entirety,
joint tenant or tenant in common will be deemed the death of a Holder, the death
of a beneficiary of a trust with respect to which a Class ______ Bond is
registered in the name of a trustee will be deemed to be the death of the Holder
of such Class _____ Bond to the extent of such beneficiary's beneficial interest
in such Class _____ Bond, and the entire principal amount of the Class _____
Bond so held will be subject to priority in redemption. For the purpose of
determining priority in redemption, the death of a person who, during his
lifetime, was entitled to substantially all of the beneficial interests of
ownership of a Class _____ Bond will be deemed the death of the Holder,
regardless of the registered Holder, if such beneficial interest can be
established to the satisfaction of the Trustee. Such beneficial interest shall
be deemed to exist in cases of street name or nominee ownership, ownership by a
trustee, ownership under the Uniform Gifts to Minors Act, community property
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<PAGE> 52
or other joint ownership arrangements between a husband and wife, and trust and
certain other arrangements where one person has substantially all of the
beneficial ownership interests in the Class _____ Bond during his lifetime.
Beneficial interests shall include the power to sell, transfer or otherwise
dispose of a Class _____ Bond and the right to receive the proceeds therefrom,
as well as interest and principal payable with respect thereto.
A Holder may request redemption of a Class _____ Bond by delivering the
following to the Trustee at its Corporate Trust Office on or before the______
day of the [_________] month preceding the month in which a Class ____
Redemption Date occurs: (i) a written request for redemption in the form
appearing on this Bond or on any other form prescribed by the Trustee or by the
Indenture and signed by the Holder or the Holder's legal representative (with
appropriate evidence of authority), (ii) the certificates representing the Class
_____ Bond or Bonds for which redemption is being requested and (iii) in the
case of a request on behalf of a deceased Holder, appropriate evidence of death
and any tax waivers required by the Trustee. Requests for redemption Bond
received after the ____ day of [the ____ month immediately preceding the month
in which a Class _____ Redemption Date occurs, and requests for redemption not
accepted in respect of the forthcoming Class _____ Redemption Date, whether on
behalf of a deceased Holder or otherwise, will be treated as a request for
redemption on the next succeeding Class ______ Redemption Date, and the Class
_____ Bonds submitted will be held by the Trustee, until the request is accepted
or withdrawn. [On or before the ____ day prior to a Class _____ Redemption Date,
this Trustee shall notify each Holder whose Class _____ Bonds have been accepted
for redemption in whole or in part.] Class ___ Bonds or portions thereof, which
have been accepted for redemption shall become due and payable on the applicable
Class _____ Redemption Date and shall cease to bear interest [on] [as of the end
of the Interest Accrual Period for] such Class _____ Redemption Date. A Holder
may withdraw his request for redemption by written notice received by the
Trustee not later than the ___ day of the [___ month preceding the] month in
which a Class _____ Redemption Date occurs. If not so withdrawn, the redemption
request will be irrevocable with respect to the selection of Bonds for
Redemption on such Class _____ Redemption Date. The Trustee may establish such
procedures it may in its sole discretion deem appropriate in order to determine
the order of receipt of requests of redemption.
On each Class ____ Redemption Date, Class ____ Bonds will be redeemed
mandatorily at the Bondholder Redemption Price if and to the extent that the
Class ______ Redemption Amount exceeds the aggregate amount of Class ____ Bonds
to be redeemed at the request of Holders as set forth above. Class ____ Bonds to
be so redeemed mandatorily shall be selected by the Trustee by random lot with
each Class ____ Bond being deemed to be a separate number of individual Class
___ Bonds of $_____ each. Notice of such mandatory redemption shall be mailed no
later than [insert applicable day] of the [month prior to the] month in which
the Class ____ Redemption Date occurs to the registered Holder hereof as of the
[insert applicable day] of the [second] [month prior to the] month in which the
Class ___ Redemption Date occurs and the Bondholder Redemption Price shall be
payable only upon presentation and surrender of this Bond at the Corporate Trust
Office of the Trustee or at such office or agency of the Issuer maintained for
such purpose.
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<PAGE> 53
[At this point the form of Principal Priority Bond shall be as set forth in
subsection (a) of this Section 2.02, beginning at the place marked "Reference
Point D" and ending at the end of such subsection (a). The form of the Principal
Priority Bonds shall conclude as follows:]
REQUEST FOR REDEMPTION
The undersigned Holder, or legal representative of
the Holder, hereby presents the within Bond of
_______ redemption on the next Redemption Date upon
which such Bond would be eligible for redemption in
accordance with, and subject to, the terms and
conditions of the within Bond and the Indenture.
Dated
------------------------ ---------------------------------------------
Notice: The signature to this presentment
must correspond with the name as written upon
the face of this Bond in every particular
without alteration or enlargement or any
change whatever, except with respect to
redemptions of Deceased Holder Bonds. The
signature must be guaranteed by an officer of
a commercial bank or by a member firm of the
New York Stock Exchange or another national
securities exchange. Notarized or witnessed
signatures are not acceptable.
(d) The form of the Trustee's or Authenticating Agent's certificate of
authentication is as follows:
This is one of the Series ___ Bonds referred to in the within mentioned
Indenture.
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
as Authenticating Agent
, as Trustee
- -------------------------
or
By: By:
---------------------------------- -----------------------------------
Authorized Signature Authorized Signature
(e) The form of transfer is as follows:
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
---------------------------------------
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<PAGE> 54
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Please print or typewrite name and address of assignee
the within Bond of __________________________________ and does hereby
irrevocably constitute and appoint ___________________________________ Attorney
to transfer the said Bond on the books of the within named Issuer, with full
power of substitution in the premises.
Dated:
-----------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of this Bond in every
particular without alteration or
enlargement or any change whatever.
-------------------------------------------
SIGNATURE GUARANTEED:
The signature must be guaranteed by an
officer of a commercial bank, trust company
or by a member firm of the New York Stock
Exchange or another national securities
exchange. Notarized or witnessed signatures
are not acceptable.
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SECTION 2.03 General Provisions with Respect to Issuance of Bonds; Bonds
Issuable in Series and Classes; Certain Related Provisions.
(a) The aggregate principal amount of Bonds which may be authenticated
and delivered pursuant to the Indenture is unlimited. The aggregate
principal amount of Bonds of a particular Series which may be authenticated
and delivered pursuant to the Indenture is limited to the aggregate amount
of the Bonds of the respective Classes specified in the related Terms
Indenture.
(b) The Bonds may, at the election of and as authorized by (i) the
Issuer acting under authorization of its Board of Directors (if FAIC II is
the Issuer), or (ii) the Owner Trustee on behalf of the Issuer (if the
Issuer is a trust), be issued in one or more Series, each of which Series
may consist of only one Class of Bonds or may be divided into two or more
Classes, and shall be designated generally as the "Collateralized Mortgage
Obligations" of the Issuer, with such further particular designations added
or incorporated in such title for the Bonds of any particular Class as the
Issuer (if FAIC II is the Issuer), or Owner Trustee (if the Issuer is a
trust), may determine. Each Class within a Series will be either Pro Rata
Bonds or Principal Priority Bonds. Each Series shall include at least one
Class of Bonds which are not Compound Interest Bonds and may, but need not
include one or more Classes of Compound Interest Bonds, Floating Interest
Rate Bonds and/or SAB Bonds. Each Bond shall bear upon the face thereof the
designation so selected for the Class to which it belongs. Except as
provided in Section 9.06, all Bonds of the same Series and Class at any
time Outstanding shall be identical in all respects except for the
denominations and dates thereof. All Bonds of all Classes within one Series
at any time Outstanding (other than the Compound Interest Bonds in such
Series) shall be identical except for differences among the Bonds of the
different Classes in Bond Interest Rates, Record Dates, Accrual Dates,
provisions for redemption, priorities as to payment of principal, method of
calculation of interest, Stated Maturities of principal and differences
among any Compound Interest Bonds included in such Series, any SAB Bonds
included in such Series, any Principal Priority Bonds included in such
Series and any Bonds included in such Series that are not Compound Interest
Bonds, SAB Bonds or Principal Priority Bonds. All Bonds of a particular
Series issued under the Indenture shall be in all respects equally and
ratably entitled to the benefits hereof without preference, priority or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of the Indenture.
(c) Each Series of Bonds shall be created by the Terms Indenture
authorized by (a) the Issuer acting through its Board of Directors (if FAIC
II is the Issuer), or (b) the Deposit Trust Agreement (if the Issuer is a
trust). The Terms Indenture shall establish the terms and provisions of
such Series, specify the collateral therefor, and Grant such collateral as
security for the Series created thereby. The Terms Indenture will specify,
to the extent provided in these Standard Indenture Provisions, any of the
following matters with respect to the several Series:
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(1) designation of the Series, of the Issuer, the address of such
Issuer and the Trustee and the Owner Trustee and Deposit Trust
Agreement (if the Issuer is a trust);
(2) dating of the Bonds of the Series and Accrual Date;
(3) whether the Bonds of each Class are Pro Rata Bonds or Principal
Priority Bonds; the number of Classes, including the number of Classes
of Compound Interest Bonds, Floating Interest Rate Bonds and SAB Bonds,
if any, and the maximum aggregate principal amount of Bonds of each
such Class which may be issued;
(4) Bond Interest Rate for each Class;
(5) Stated Maturity of the final installment of principal for each
Class;
(6) priority of principal payments among the Classes and within
each Class of the Series;
(7) place or places for the payment of principal;
(8) denominations;
(9) Interest Payment Dates, Principal Payment Dates and Special
Payment Dates;
(10) the amount, if any, to be deposited at the Closing Date in the
Collection Account for such Series;
(11) whether there will be a Debt Service Reserve Fund for such
Series, and, if so, the amount to be deposited in such Debt Service
Reserve Fund, the method for determining the amount required to be on
deposit with respect to Monthly Payment Deficits and Bond Value Related
Shortfall, whether withdrawals from such Debt Service Reserve Fund are
to be made with respect to Monthly Payment Deficits on the GPM Loans
underlying any GPM Mortgage Certificates securing such Series, and
whether a Qualified Letter of Credit may be delivered to the Trustee in
lieu of a cash deposit to such Debt Service Reserve Fund and, if so,
the standards applicable to such Qualified Letter of Credit;
(12) whether there will be a Reserve Fund for such Series and, if
so, the amount to be deposited in such Reserve Fund, the Requisite
Amount of the Reserve Fund for such Series, and whether a Qualified
Letter of Credit may be delivered to the Trustee in lieu of a cash
deposit in such Reserve Fund, and, if so, standards applicable to such
Qualified Letter of Credit;
(13) whether any surplus funds in the Collection Account for such
Series are required to be used pursuant to Section 8.02(d) to restore
amounts on
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deposit in the related Debt Service Reserve Fund and/or Reserve Fund to
the respective minimum amounts required to be on deposit therein;
(14) whether a Qualified GIF is to be Granted to the Trustee with
respect to the investment of funds in any Trust Account for such
Series, and, if so, the standards applicable to such Qualified GIC,
including the conditions, if any, under which the Trustee shall be
required to terminate such Qualified GIC;
(15) any items required to be delivered to the Trustee on the
Closing Date for such Series pursuant to the last paragraph of Section
2.12;
(16) whether calculations with respect to the mortgage loans
underlying the Certificates securing such Series are to be made on a
mortgage loan-by-mortgage loan basis or on the basis of the assumptions
set forth in Section 1.02, and, if applicable, any modifications to
such assumptions to be used in making calculations with respect to the
Certificates securing such Series;
(17) if calculations with respect to the mortgage loans underlying
the Certificates securing such Series are to be made an a basis other
than mortgage loan-by-mortgage loan, the characteristics to be used in
grouping such Certificates into Certificate Groups;
(18) provisions with respect to the following terms for which the
definitions set forth in Article I require or permit further
specification in the related Terms Indenture:
(a) "Accrual Date",
(b) "Assumed Date of Receipt",
(c) "Assumed Reinvestment Rate",
(d) "Authenticating Agent",
(e) "Available Reinvestment Income",
(f) "Bond Interest Rate",
(g) "Bond Redemption Amount",
(h) "Bond Redemption Date",
(i) "Bond Value",
(j) "Compound Dates",
(k) "Conventional Certificate Servicer",
(1) "Corporate Trust Office",
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(m) "Debt Service Requirement",
(n) "Debt Service Requirement Determination Date",
(o) "Deceased Holder Preference",
(p) "Due Period",
(q) "FHLMC Reserve Amount",
(r) "First SAB Paydown Date",
(s) "Floating Interest Rate Bond Redemption Price",
(t) "Future Value",
(u) "Individual Bond",
(v) "Interest Accrual Period",
(w) "Interest Determination Date",
(x) "Issuer",
(y) "Letter Agreement",
(z) "LIBOR",
(aa) "Maximum Bond Interest Rate Assumption",
(bb) "Maximum Floating Interest Rate",
(cc) "Mortgage Loan Attributable Bond Value",
(dd) "New York Agent",
(ee) "New York Office",
(ff) "Overdue Bond Interest Rate",
(gg) "Paying Agent",
(hh) "Principal Distribution Amount",
(ii) "Principal Payment Date",
(jj) "Rating Agency",
(kk) "Record Date",
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(ll) "Redemption Date",
(mm) "Redemption Price",
(nn) "Reference Bank",
(oo) "Regular Holder Preference",
(pp) "Reinvestment Bonds",
(qq) "Requisite Amount of the Reserve Fund",
(rr) "Reserve Interest Rate",
(ss) "SAB Amount",
(tt) "SAB Bond",
(uu) "SAB Payment Date",
(vv) "SAB Principal Payment",
(ww) "Special Record Date",
(xx) "Special Redemption Determination Date",
(yy) "Spread",
(zz) "Spread Percentage", and
(aaa) "Tender Date";
(19) the authentication of Bonds of such Series by the
Authenticating Agent, if any;
(20) the city in which each of the Trustee and the Authenticating
Agent shall have its principal office;
(21) the amount, if any, of Trustee fees and Accountant's fees, and
other administrative fees to be deducted in determining the Spread;
(22) whether the Bonds of such Series will be designated
Reinvestment Bonds, and, if so, the designation of Available
Reinvestment Income and the Assumed Reinvestment Rate;
(23) whether there will be an Expense Fund for such Series and, if
so, the amount to be initially deposited therein, whether, and the
extent to which, funds in the Collection Account are required to be
transferred to such Expense
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Fund pursuant to Section 8.02(d) and the Issuer Expenses to be paid
from amounts in such Expense Fund;
(24) if such Series is to be secured by any FHLMC Certificates, (a)
whether an agreement of the type described in Section 2.12(k) is
required to be delivered to the Trustee, (b) whether there shall be a
deposit to a Reserve Fund with respect to such FHLMC Certificates, and
(c) provisions regarding the time when principal distributions on such
FHLMC Certificates are assumed to be received;
(25) the circumstances, if any, under which the Bonds of such
Series will not be subject to Special Redemption and any supplements to
or modifications of the requirements of Section 10.01 which are to
apply to such Series;
(26) if such Series is to be secured by any Conventional
Certificates, (a) the requirements for verification of data supplied by
the related Conventional Certificate Servicer regarding the underlying
mortgage loans and any other requirements with respect to information
supplied by the Conventional Certificate Servicer, and (b) the
documents relating to such Conventional Certificates required to be
delivered to the Trustee pursuant to Section 2.12(m);
(27) redemption date or dates of maturity, provisions for optional
redemption, including redemption dates, and the provisions, if any, for
the giving of prior notice to Holders and Beneficial Owners of
redemptions at the request of Bondholders;
(28) provisions with respect to the deposit or withdrawal of
Certificates in addition to those specified in Section 8.11;
(29) whether any of the Bonds of any Class of the Series are to be
Book Entry Bonds pursuant to Section 2.13 and, if so, the provisions
with respect to such Book Entry Bonds referred to in Section 2.13;
(30) whether any of the Bonds of any Class of the Series are to be
Floating Interest Rate Bonds and, if so, provisions with respect to
such Floating Rate Bonds;
(31) whether the Issuer will elect to treat the Issuer or the Trust
Estate securing the Series as a REMIC; and
(32) any other provisions expressing or referring to the terms and
conditions upon which the Bonds of that Series are to be issued under
the Indenture which are not in conflict with the provisions of the
Indenture or which do not prevent the Bonds of that Series from being
rated in the Required Rating Category by each Rating Agency rating such
Series of Bonds.
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In authorizing the issuance of any Series, the Board of Directors shall
determine and specify all matters in respect of the Bonds of such Series set
forth in Clauses (1) to (32) inclusive and shall also determine and specify the
form or forms of Bonds of such Series.
SECTION 2.04 Denominations.
Subject to Section 2.01, the Bonds shall be issuable only as registered
Bonds in the authorized denominations prescribed by the terms of the Terms
Indenture creating the particular Series.
SECTION 2.05 Execution, Authentication, Delivery and Dating.
The Bonds shall be executed (a) by the Chairman, President or one of the
Vice Presidents of the Issuer (if the Issuer is a corporation), (b) on behalf of
the Issuer by an Authorized Officer of the Owner Trustee (if the Issuer is a
trust), and in any such case be imprinted or otherwise reproduced thereon. The
signature of any of these officers on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signature of individuals who were at
any time the proper officers of the Issuer (if the Issuer is a corporation) or
the Owner Trustee (if the Issuer is a trust), as the case may be, shall bind the
Issuer, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Bonds or did not
hold such offices at the date of such Bonds.
At any time and from time to time after the execution and delivery of the
Indenture, the Issuer may deliver Bonds executed by the Issuer to the Trustee
for authentication; and an authorized signatory of the Trustee shall
authenticate and deliver such Bonds as in the Indenture provided and not
otherwise.
Each Bond shall be dated as of the date specified in the related Terms
Indenture.
No Bond shall be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose, unless there appears on such Bond a certificate of
authentication substantially in the form provided for herein executed by the
Trustee or the Authenticating Agent by the manual signature of one of its
authorized signatories, and such certificate upon any Bond shall be conclusive
evidence, and the only evidence, that such Bond has been duly authenticated and
delivered hereunder.
SECTION 2.06 Temporary Bonds.
Pending the preparation of definitive Bonds, the Issuer may execute, and
upon Issuer Order the Trustee shall authenticate and deliver, temporary Bonds
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any denomination substantially of the tenor of the definitive Bonds
in lieu of which they are issued and with such variations as the officers of the
Issuer executing such Bonds may determine, as evidenced by their execution of
such Bonds.
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If temporary Bonds are issued, the Issuer will cause definitive Bonds to be
prepared without unreasonable delay. After the reparation of definitive Bonds,
the temporary Bonds shall be exchangeable for definitive Bonds upon surrender of
the temporary Bonds at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge the Holder. Upon surrender or
cancellation of any one or more to temporary Bonds, the Issuer shall execute and
the Trustee shall authenticate and deliver and exchange therefor a like
principal amount of definitive Bonds of the same Series and Class and of
authorized denominations. Until so exchanged, the temporary Bonds shall in all
respects be entitled to the same benefits under the Indenture as definitive
Bonds of the same Class and Series.
The provisions of this Section 2.06 shall be inapplicable with respect to
Book Entry Bonds.
SECTION 2.07 Registration, Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Bond Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Bonds and the registration of transfers of
Bonds. The Trustee is hereby initially appointed "Bond Registrar" for the
purpose of registering Bonds and transfers of Bonds as herein provided. Upon any
resignation of any Bond Registrar appointed by the Issuer, the Issuer shall
promptly appoint a successor or, in the absence of such appointment, shall
assume the duties of Bond Registrar and shall give notice to the Trustee of the
successor Bond Registrar if other than the Trustee.
Each Authenticating Agent for a Series, unless it is appointed Bond
Registrar for such Series, and the Trustee, for any Series for which it is not
the Bond Registrar, shall be a co-Bond Registrar for such Series. The Issuer
shall cause each co-Bond Registrar for a Series to furnish the Bond Registrar
for such Series promptly after each authentication of a Bond by it the
appropriate information with respect thereto for entry by the Bond Registrar
into the Bond Register.
Subject to the restrictions, if any, in the related Terms Indenture, upon
surrender for registration of transfer of any Bond at the office or agency of
the Issuer to be maintained as provided in Section 3.02, the Issuer shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Bonds of any authorized
denominations, of the same Series and of a like aggregate principal amount and
Class.
At the option of the Holder, Bonds may be exchanged for other Bonds of any
authorized denominations, of the same Series and of a like aggregate principal
amount and Class, upon close surrender of the Bonds to be exchanged at such
office or agency. Definitive Bonds of a Class of Principal Priority Bonds
redeemed in part, but not in whole, pursuant to Section 10.02 shall be
surrendered at such office or agency in exchange for new Definitive Bonds,
without service charge, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the Principal of the Definitive Bond so
surrendered. Whenever any Bonds are so surrendered for exchange, the Issuer
shall execute, and the Trustee shall authenticate and deliver, the Bonds which
the Bondholder making the exchange is entitled to receive.
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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 the Indenture, as the Bonds surrendered upon
such registration of transfer or exchange.
Subject to the provisions of Section 2.09, each Bond delivered under the
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Bond shall carry the rights to unpaid principal, premium, if any, and
interest that were carried by such other Bond.
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, the Trustee or the Bond Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge, and
in the case of an exchange pursuant to Section 2.08, any reasonable expenses,
that may be imposed in connection with any registration of transfer or exchange
of Bonds, other than exchanges pursuant to Section 2.06, Section 9.06 or the
fourth preceding paragraph of this Section 2.07 not involving any transfer, and
any Clearing Agency may collect its usual and customary fees, charges and
expenses from Clearing Agency Participants.
Except as otherwise specified in the related Terms Indenture, neither the
Issuer nor the Bond Registrar shall be required to issue, register the transfer
of, or exchange any Principal Priority Bonds of any Series during a period
beginning at the opening of business five (5) Business Days prior to the
selection of Bonds of that Series to be redeemed pursuant to Bondholder
Redemption and ending at the close of business on the day of the mailing of any
relevant notice of redemption. No Bond which has been tendered for Bondholder
Redemption may be transferred or exchanged unless such request for redemption is
withdrawn.
In the case of a Class of Book Entry Bonds, the provisions of this Section
2.07 may be supplemented by provisions in the related Terms Indenture and by
applicable rules established by the Clearing Agency and for such Class providing
for transfer of registration of Book Entry Bonds on the books of the Clearing
Agency.
SECTION 2.08 Mutilated, Destroyed, Lost or Stolen Bonds.
If (1) any mutilated Bond is surrendered to the Bond Registrar or the
Issuer, the Bond Registrar receive evidence to their satisfaction of the
destruction, loss or theft of any Bond, and (2) there is delivered to the
Issuer, the Trustee and the Bond Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Issuer, the Bond Registrar or the Trustee that such Bond has been
acquired by a bona fide purchaser, the Issuer shall execute and upon its request
the Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Bond, a new Bond of the same Series,
tenor, principal amount and Class bearing a number not contemporaneously
outstanding; provided, however, that if any such mutilated, destroyed, lost or
stolen Bond shall have become or shall be about to become due and payable, or
shall have been subject to Redemption or Special Redemption in full, instead of
issuing a new Bond, the Issuer may pay
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such Bond without surrender thereof, except that any mutilated Bond shall be
surrendered. If, after the delivery of such new Bond or payment of a destroyed,
lost or stolen Bond pursuant to the proviso to the preceding sentence, 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 (or such payment) from the Person to whom
it was delivered or any Person taking such new Bond from such Person, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Issuer or the Bond Registrar in connection therewith.
Upon the issuance of any new Bond under this Section, the Issuer, the
Trustee 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 connected therewith.
Every new Bond issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Issuer, whether or not the mutilated, destroyed,
lost or stolen Bond shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of the Indenture equally and proportionately with
any and all other Bonds of the same Series and 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 except with respect to
certificates of Bonds cancelled by the Trustee pursuant to Section 10.02(c).
SECTION 2.09 Payment of Principal and Interest.
(a) Any installment of interest or principal payable on any Bonds of
any Series which is punctually paid or duly provided for by the Issuer on
the applicable Payment Date or Special Redemption 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 or Special Record
Date for such Payment Date, or Special Redemption Date by check mailed to
such Person's address as it appears in the Bond Register on such Record
Date or Special Record Date, except for the final installment of principal
payable with respect to such Bond (or the Redemption Price for any Bond
called for Redemption or the Special Redemption Price for any Bond called
for Special Redemption if such Redemption or Special Redemption will result
in retirement of the then entire outstanding principal amount of such
Bond), which shall be payable as provided in subsection (c) of this Section
2.09, provided, however, that payment of principal with respect to
Bondholder Redemption shall be made as provided in Section 10.02. Any
installment of interest or principal not so punctually paid or duly
provided for shall be payable in the manner and to the Persons specified in
subsection (d) of this Section 2.09.
(b) All payments of principal on the Bonds of a Series shall be applied
among the Classes of such Bonds as specified in the related Terms
Indenture. Payments of principal on each Class of Pro Rata Bonds shall be
made pro rata among all Outstanding
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Bonds of such Class, without preference or priority of any kind and shall
be made in installments ending no later than the Stated Maturity of the
final installment of the principal thereof unless the unpaid principal of
such Bond becomes due and payable at an earlier date by declaration of
acceleration, call for Special Redemption or Redemption or otherwise. Each
Principal Priority Bond shall be due and payable on its Stated Maturity
unless such Bond becomes due and payable at an earlier date by declaration
of acceleration, call for Special Redemption or Redemption, Bondholder
Redemption or otherwise.
The aggregate amount of principal of and interest on the Bonds of a
Series due and payable on each Payment Date for such Series shall be equal
to the Debt Service Requirement for such Series for such Payment Date. 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. Except as otherwise specified in the related Terms Indenture, all
computations of interest accrued on any Bond shall be made on the basis of
a 360-day year consisting of twelve months of thirty days each.
Interest, if any, on the unpaid principal amount of each Outstanding
Bond of a Series (other than interest on any Compound Interest Bonds of
such Series, which shall be payable as described below) shall be payable on
each Interest Payment Date for such Series at the Bond Interest Rate
applicable to such Bond for the Interest Accrual Period for such Interest
Payment Date in an amount equal to the amount of interest accrued on the
Current Principal Amount of such Bond during such Interest Accrual Period.
Except as otherwise specified in the related Terms Indenture, interest
accrued on the Bonds of any Class of any Series during an Interest Accrual
Period shall be calculated based on the assumption that any payment of
principal on the Bonds of such Class during such Interest Accrual Period
occurred on a date that preceded the actual date of payment by a period of
time equal to the Interest Delay Period, if any.
Interest at the applicable Bond Interest Rate shall accrue on the
Current Principal Amount of each Outstanding Compound Interest Bond of a
Series from the Accrual Date for such Series, but none of such accrued
interest shall be payable until the Initial Interest Payment Date for such
Compound Interest Bond (or the first Interest Payment Date thereafter if
the Debt Service Requirement for such Initial Interest Payment Date is
exactly equal to the aggregate amount of principal of and Interest on all
other Classes of Bonds of such Series which is payable on such Initial
Interest Payment Date). On each Interest Payment Date prior to the Initial
Interest Payment Date for a Compound Interest Bond, interest which had
accrued (determined as described above) on such Bond during the related
Interest Accrual Period shall be added to the Current Principal Amount of
such Bond and shall thereafter accrue interest. On the Initial Interest
Payment Date for the Compound Interest Bonds of a Class and Series,
interest accrued on such Bonds during the related Interest Accrual Period
shall be payable in an amount not in excess of the difference between (a)
the Debt Service Requirement on the related Series for such Initial
Interest Payment Date and (b) the aggregate amount of principal of and
interest on all other Bonds of the related Series required to be paid on
such date. The portion, if any, of such interest which is not paid on such
Initial Interest Payment Date shall be added to the principal of such
Compound Interest Bonds and shall thereafter accrue interest in the
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manner set forth above. On each Interest Payment Date after the Initial
Interest Payment Date for a Class of Compound Interest Bonds interest on
the Aggregate Current Principal Amount of the Bonds of such Class shall be
payable at the Bond Interest Rate of such Class for the Interest Accrual
Period for such Interest Payment Date in an amount equal to the amount of
interest accrued (determined as described above) on the Current Principal
Amount of such Bonds during such Interest Accrual Period.
In the case of a Class or Classes of Bonds which are Floating Interest
Rate Bonds, the related Terms Indenture shall specify the method of
calculating the Bond Interest Rate at any time to be borne by such Floating
Interest Rate Bonds. On each Interest Determination Date until such
Floating Interest Rate Bonds are paid in full, the Trustee shall determine
LIBOR and the resulting Bond Interest Rate to be applicable to such
Floating Interest Rate Bonds for the next Interest Accrual Period for each
such Class.
Promptly after its determination thereof, the Trustee will advise the
Issuer of the rate of interest applicable to the Floating Interest Rate
Bonds for the next succeeding Interest Accrual Period and, unless otherwise
specified in the related Terms Indenture, will use its best efforts to
cause such rate of interest to be published in a newspaper of general
circulation in New York City.
In determining LIBOR and the resulting Bond Interest Rate for each
relevant Interest Accrual Period for the Floating Interest Rate Bonds, the
Trustee may conclusively rely and shall be protected in relying upon the
offered rates quoted (whether quoted in writing, electronically or orally)
by the Reference Banks or other banks as to LIBOR or the Reserve Interest
Rates, as appropriate, in effect from time to time. The Trustee shall have
no liability or responsibility to any Person for (i) its selection of other
banks for purposes of determining the Reserve Interest Rate or (ii) its
inability, following a good faith reasonable effort, to determine LIBOR or
the resulting Bond Interest Rate, all as provided for in the related Terms
Indenture.
The establishment of LIBOR and the resulting Bond Interest Rate for
each relevant Interest Accrual Period shall (in the absence of manifest
error) be final, conclusive and binding upon each Holder and the Issuer.
Except as otherwise specified in the related Terms Indenture, interest
accrued on the Bonds of any Class of any Series during an Interest Accrual
Period shall be calculated based on the assumption that any payment of
principal on the Bonds of such Class during such Interest Accrual Period
occurred on a date that preceded the actual date of payment by a period of
time equal to the Interest Delay Period, if any.
If a Series is secured by any GPM Mortgage Certificates and no deposit
to the related Debt Service Reserve Fund was required on the Closing Date
for such Series with respect to the Monthly Payment Deficits on the GPM
Loans underlying such GPM Mortgage Certificates and if the Initial Interest
Payment Date for any Class of the Compound Interest Bonds in such Series
occurs on or before the first Interest Payment Date for such Series
occurring after the end of the Shortfall Period for the GPM Mortgage
Certificates securing such Series, then, for each Interest Payment Date
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thereafter until the second Interest Payment Date after the end of the
Shortfall Period for such GPM Mortgage Certificates, the amount of interest
payable on such Class of Compound Interest Bonds on each Interest Payment
Date shall be the lesser of (a) the Debt Service Requirement for such
Interest Payment Date less all payments of interest if any, required to be
made on such Interest Payment Date on all other Bonds of such Series then
Outstanding, and (b) the actual amount of interest accrued (determined as
provided above) on such Class of Compound Interest Bonds during the
Interest Accrual Period for such Interest Payment Date. The excess, if any,
of (a) the amount of interest so accrued on such Class of Compound Interest
Bonds during such applicable Interest Accrual Period over (b) the amount of
the installment of interest due and payable on such Interest Payment Date
on such Class of Compound Interest Bonds shall be added to the outstanding
principal of such Class of Compound Interest Bonds on such Interest Payment
Date and shall thereafter accrue interest in the manner set forth above.
Notwithstanding any of the foregoing provisions with respect to payment
of principal of and interest on the Bonds, if the Bonds of a Series 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 and the provisions of Section 5.05(a) are not applicable to
such Series, then payments of principal of and interest on such Bonds shall
be made in accordance with Section 5.08.
(c) All reductions in the principal amount of a Bond (or one or more
Predecessor Bonds) effected by payments of installments of principal made
on any Payment Date or Special Redemption Date shall be binding upon all
future Holders and Beneficial Owners 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 such Bond (or the Special Redemption Price of
any Bond called for special Redemption or the Redemption Price of any Bond
called for Redemption, if such Special Redemption or Redemption will result
in payment of the entire outstanding principal amount of such Bond) shall
be payable only upon presentation and surrender thereof on or after the
Payment Date or Special Redemption Date therefor at the New York Office.
Whenever, on the basis of Distributions on the Certificates securing a
Series received and expected to be received during the related Due Period,
the Trustee expects that the entire remaining unpaid principal amount of
any Pro Rata Bonds of such Series other than Book Entry Bonds will become
due and payable (unless specified otherwise in the related Terms
Indenture), the Trustee shall no later than the fifth day after the Record
Date that would otherwise be applicable to such Principal Payment Date,
mail or cause to be mailed 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 Trustee expects that funds sufficient to pay such final
installment will be available in the Collection Account on such
Principal 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
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Bond at the New York Office (the address of which shall be set forth in
such notice), and (B) no interest shall accrue on such Bond after the
day preceding such Principal Payment Date.
Notices, if any, in connection with Redemptions, Bondholder Redemptions and
Special Redemptions of Bonds shall contain the information set forth in,
and be mailed in accordance with, Section 10.07.
(d) If the entire amount due and payable with respect to an installment
of principal of any Bond (or the entire Redemption Price payable in
connection with the Redemption in whole or the Special Redemption Price in
connection with the Special Redemption, in whole or in part, of any Bond)
or the entire amount of any installment of interest on any Bond due on any
Payment Date or Special Redemption Date shall not have been punctually paid
or duly provided for when and as due and payable (any Bond on which such an
amount due and payable has not been punctually paid or duly provided for
being hereinafter referred to as an "Overdue Bond"), then interest on the
amount not so punctually paid or duly provided for shall accrue, from the
date such amount was due through the Designated Interest Accrual Date
preceding the date such amount is paid, at the Bond Interest Rate for such
Bonds (but only to the extent that payment of such interest shall be
legally enforceable) and, to the extent funds are available therefor in the
related Collection Account, shall be payable on each subsequent Special
Payment Date to the Person entitled thereto as provided below. To the
extent that funds available in the related Collection Account on any such
Special Payment Date exceed such amount of interest payable on such overdue
payment, the Issuer shall be obligated to apply such excess funds in the
Collection Account to payment of the amount of such overdue payment on such
Special Payment Date.
Any reduction in the principal amount of any Overdue Bond (or one or
more Predecessor Bonds) effected by any payments made on a Special Payment
Date shall be binding upon all future 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.
Payments of interest on overdue payments of principal and/or interest and
payments of installments of overdue principal (or of any overdue portion of
the Redemption Price or Special Redemption Price of any Bond called for
Redemption or Special Redemption) shall, except as provided below with
respect to payment of the entire amount remaining due on an Overdue Bond,
be made to the Person entitled, thereto as provided below by check mailed
to such Person's address as it appears in the Bond Register. Any such
checks returned undelivered shall be held in accordance with Section 3.03.
If funds are expected to be available to pay the entire amount
remaining due on any Overdue Bonds of a particular Class on the next
Special Payment Date for such Series, as shown on the Special Payment Date
Statement for such Special Payment Date, then the Trustee, on behalf of the
Issuer, will notify each Person in whose name an Overdue Bond to be so
retired is registered at the close of business on the Special Record Date
that would otherwise be applicable to such Special Payment Date, by notice
mailed no later than five Business Days after such otherwise applicable
Special Record Date,
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that sufficient funds are expected to be available to make such payment and
that, if such funds are available, such payment will be made only upon
presentation and surrender of such Overdue Bond at the office or agency of
the Issuer maintained for such purpose pursuant to Section 3.02 (the
address of which shall be set forth in such notice). Upon the giving of
such notice, the entire amount then due and payable on such Overdue Bonds
shall, if sufficient funds are so available therefor, be payable only upon
presentation and surrender thereof to the office or agency of the Issuer
maintained for that purpose.
Other amounts payable with, respect to any Overdue Bond as provided
above on any Special Payment Date shall be payable to the Person in whose
name that Bond (or one or more Predecessor Bonds) is registered at the
close of business on the Special Record Date for such Special Payment Date.
Notwithstanding, the foregoing provisions of this paragraph, amounts
payable with respect to any Overdue Bond as provided above shall be payable
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Bond may be listed and upon such notice
as may be required by such exchange, if, after notice given by the Issuer
to the Trustee of the proposed payment pursuant to this provision, such
manner of payment shall be deemed practicable by the Trustee.
(e) Not later than each Debt Service Requirement Determination Date for
a Series, the Accounting Party shall prepare and deliver to the Report
Recipient a statement (the "Payment Date Statement") with respect to the
following Payment Date setting forth:
(i) the Debt Service Recruitment with respect to such Series for
the following Payment Date,
(ii) the aggregate amount of interest accrued during the Interest
Accrual Period relating to such Payment Date on all Outstanding Bonds
of such Series,
(iii) the aggregate amount of interest payable on each Class of
Bonds of such Series then Outstanding,
(iv) the aggregate amount of principal dividend on each Class of
Bonds of such Series then Outstanding,
(v) if such following Payment Date is an Initial Interest Payment
Date for any Class of Compound Interest Bonds of such Series, the
amount of interest payable thereon on such Interest Payment Date, the
amount of the installment of principal, if any, due and payable on such
Class of Compound Interest Bonds on such Payment Date, and the amount,
if any, of accrued interest to be added to the principal of such Class
of Compound Interest Bonds, on such Payment Date,
(vi) whether the amount expected to be available in the Collection
Account on such Payment Date will be sufficient to pay on such Payment
Date all amounts specified in clauses (iii) and (iv) above, and, if
applicable, (v) above and, if not, the percentages of each such amount
which may be paid in accordance with
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the priorities set forth in Section 8.02 from the amounts effected to
be available in the Collection Account for such Series,
(vii) the amounts included in such statement pursuant to clauses
(iii) and (iv) above and, if applicable, (v) above, expressed in each
case per Individual Bond, to be paid on such Payment Date,
(viii) the unpaid principal amount of Bonds of each Class of such
Series which will remain after giving effect to the payments to be made
on such Payment Date (and, in the case of Compound Interest Bonds,
after giving effect to the interest accrued during the Interest Accrual
Period for such Payment Date and added to the principal thereof)
expressed both on an aggregate basis and per Individual Bond,
(ix) if the related Terms Indenture provides for withdrawals from
the Debt Service Reserve Fund with respect to Monthly Payment Deficits:
(A) the amount, if any, of the Monthly Payment Deficits for
the related Due Period on the GPM Loans underlying any GPM Mortgage
Certificates securing such Series, and
(B) the amount, if any, required to be on deposit in the Debt
Service Reserve Fund after such Payment Date with respect to the
remaining Monthly Payment Deficits, if any, on the GPM Loans
underlying any GPM Mortgage Certificates securing such Series,
determined in accordance with the method specified in the Terms
Indenture related to such Series of Bonds,
(x) if the related Terms Indenture provides for amounts to be
maintained in the Debt Service Reserve Fund with respect to Bond Value
Related Shortfalls:
(A) the amount, if any, of the Bond Value Related Shortfall for
such Payment Date, and
(B) the amount, if any, required to be on deposit in the Debt
Service Reserve Fund after such Payment Date with respect to the
remaining Bond Value Related Shortfalls, if any, determined in
accordance with the method specified in the Terms Indenture related
to such Series of Bonds,
(xi) if applicable and if the Issuer desires to obtain a transfer
of surplus funds to the Collection Account or is required by the terms
of the related Terms Indenture to compute such amounts, the Requisite
Amount of the Reserve Fund, after giving effect to the payments of
principal of Bonds of such Series required to be made on such Payment
Date,
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(xii) the amount, if any, to be withdrawn from the Debt Service
Reserve Fund and deposited in the Collection Account on the following
Payment Date pursuant to Section 8.03(c)(ii), including a specification
of whether such amount was determined pursuant to clause (A) or (B) of
Section 8.03(c)(ii) and setting forth each item included in the
computation of such amount,
(xiii) the amount, if any, to be withdrawn from the Reserve Fund
and deposited in the Collection Account on the following Payment Date
pursuant to Section 8.04(c)(ii), including a specification of whether
such amount was determined pursuant to clause (A) or (B) of Section
8.04(c)(ii) and setting forth each item included in the computation of
such amount,
(xiv) the amount, if any, to be withdrawn from any Special Reserve
Fund and deposited in Collection Account on the following Payment Date
pursuant to the terms of the related Terms Indenture,
(xv) the amounts, if any, to be withdrawn from the Collection
Account after such following Payment Date and transferred to the Debt
Service Reserve Fund, Reserve Fund and/or Expense Fund pursuant to
Section 8.02(d),
(xvi) the amount, if any, to be withdrawn from the Collection
Account and paid over to the Trustee in respect of the following
Payment Date pursuant to Section 8.02(d),
(xvii) the amount, if any, to be withdrawn from the Collection
Account and paid over to any firm of Independent Accountants in respect
of the following Payment Date pursuant to Section 8.02(d), and
(xviii) the amount, if any, to be withdrawn from the Collection
Account and paid over to the Issuer in respect of the following Payment
Date pursuant to Section 8.02(d).
Each Payment Date Statement shall be delivered by the Accounting Party
to the Report Recipient and to the firm of Independent Accountants
appointed pursuant to Section 8.09(a).
If the Trustee shall not have received any Payment Date Statement with
respect to the Payment Date for a Series for which the Trustee is not the
Accounting Party on or before the second Business Day prior to the date on
which notice would be required to be given to Holders of Bonds of such
Series if a Class of Bonds of such Series were to be retired in full on
such Payment Date, then the Trustee shall prepare such Payment Date
Statement and deliver a copy thereof to the firm of Independent Accountants
appointed pursuant to Section 8.09(a). If the actual amount of
Distributions received by the Trustee during the last month of the related
Due Period differs from the expected amount of Distributions used by the
Accounting Party in accordance with Section 1.02(b) or 1.02(c), whichever
is applicable, in determining the Debt Service Requirement for such Payment
Date, then, immediately following the end of such Due Period (i) if the
Trustee is not the Accounting Party for such Series, the Trustee shall
promptly notify the Accounting Party,
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and (ii) the Accounting Party shall, immediately (upon receipt of notice
referred to in clause (i), if required) (A) recompute all amounts in the
related Payment Date Statement to reflect the actual amount of
Distributions received during the last month of such Due Period, (B) revise
such Payment Date Statement accordingly, and (C) deliver such revised
Payment Date Statement to the Report Recipient and such firm of Independent
Accountants. Upon such delivery, such revised Payment Date Statement shall
be controlling for all purposes under the Indenture.
(f) Not less than five days after the Special Record Date applicable to
any Special Payment Date for any Overdue Bond of a particular Series, the
Accounting Party shall prepare and deliver to the Recent Recipient a
statement (the "Special Payment Date Statement") with respect to such
Series setting forth:
(i) the amount of interest due and payable on such Special Payment
Date on the overdue principal (or any overdue portion of the Redemption
Price or Special Redemption Price of any Bond called for Redemption or
Special Redemption, respectively) of, and any unpaid interest on, all
Overdue Bonds of that Series, expressed both on an aggregate basis and
per Individual Bond of each Class included in such Overdue Bonds,
(ii) the amount of overdue principal (or any overdue portion of the
Redemption Price or Special Redemption Price of any Bond called for
Redemption or Special Redemption, respectively) of all Overdue Bonds of
that Series and all unpaid interest accrued on such Overdue Bonds
through the preceding Special Payment Date or the preceding Payment
Date (in the case of the first Special Payment Date after such Bonds
became Overdue Bonds) which was not paid on such preceding Special
Payment Date or Payment Date, expressed both on an aggregate basis and
per Individual Bond of each Class included in such Overdue Bonds,
(iii) if such Special Payment Date is also a Payment Date for that
Series, the information required to be set forth in clauses (i) through
(v) of the Payment Date Statement with respect to such Payment Date,
(iv) whether the amount expected to be on deposit in the related
Collection Account and available for payment to the Bondholders as
provided in Section 8.02 is sufficient to pay on such Special Payment
Date all amounts specified in clauses (i) through (iii) above, and, if
not, the percentages of each amount specified in clauses (i) through
(iii) above which may be paid, in accordance with the priorities set
forth in said Section 8.02, from the amount expected to be available in
the Collection Account for that Series, and
(v) the amounts included in such statement pursuant to clauses (i)
through (iii) above, expressed in each case per Individual Bond of each
Class of Bonds of such Series covered by such statement which will
remain unpaid after giving effect to payment of the amounts expected to
be on deposit in the related Collection Account and available for
payment on such Payment Date or Special Payment Date.
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SECTION 2.10 Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Bond, the
Issuer, the Trustee, any Agent and any other agent of the Issuer or the Trustee
may treat the Person in whose name any Bond is registered as the owner of such
Bond (a) on the applicable Record Date or Special Record Date for the purpose of
receiving payments of the principal of, premium, if any, and interest on such
Bond and (b) on any other date for all other purposes whatsoever, whether or not
such Bond be overdue, and neither the Issuer, the Trustee, any Agent nor any
other agent of the Issuer or the Trustee shall be affected by notice to the
contrary.
SECTION 2.11 Cancellation.
All Bonds surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Issuer may
at any time deliver to the Trustee for cancellation any Bond previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the
Trustee. No Bonds shall be authenticated in lieu of or in exchange for any Bonds
cancelled as provided in this Section, except as expressly permitted by the
Indenture. All cancelled Bonds held by the Trustee shall be destroyed after the
appropriate period of retainment or returned to the Issuer in accordance with
the Trustee's normal procedures with regard to cancelled Bonds.
SECTION 2.12 Authentication and Delivery of Bonds.
Bonds of any one or more Series may from time to time be executed by the
Issuer and delivered to the Trustee for authentication and thereupon the same
shall be authenticated and delivered by the Trustee upon Issuer Request and upon
receipt by the Trustee (which receipt, in the case of cash, shall be deemed to
have occurred if such cash is delivered as part of the proceeds from the sale of
Bonds by the Issuer and if the authentication and delivery of such Bonds by the
Trustee and the sale of such Bonds by the Issuer occur in a common closing) of
the items specified in subsections (a) through (r) below:
(a) An Issuer Order authorizing the execution, authentication and
delivery of such Bonds by the Issuer and specifying the Series, the Classes
within such Series and their respective Stated Maturities of principal and
the principal amounts and Bond Interest Rates of each Class of such Bonds
to be authenticated and delivered.
(b) In case the Bonds to be authenticated and delivered are of any
Series not theretofore created, an appropriate Terms Indenture, accompanied
by an Issuer Order authorizing such Terms Indenture designating the new
Series to be created and prescribing, consistent with the applicable
provisions of the Indenture, the terms and provisions relating to the Bonds
of such Series.
(c) Opinions of Counsel addressed to the Trustee, dated the Closing
Date, complying with the requirements of Section 11.01(f), and to the
effect that:
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(i) all instruments furnished to the Trustee in connection with
such Bonds conform in all material respects as to form to the
requirements of the Indenture and constitute all the documents required
to be delivered thereunder for the Trustee to authenticate and deliver
the Bonds then applied for,
(ii) all conditions precedent provided for in the Indenture
relating to the authentication and delivery of the Bonds have been
complied with,
(iii) the Issuer has power to execute and deliver the Terms
Indenture relating to such Bonds and to issue the Bonds and has duly
taken all necessary action for those purposes, and the Owner Trustee
(if the Issuer is a trust), if any, has the power to act as such and
has taken all necessary action for those purposes,
(iv) assuming due authorization, execution and delivery by the
Trustee, the related Terms Indenture, as executed and delivered, is a
valid and binding obligation of the Issuer, and enforceable against the
Issuer in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, reorganization,
insolvency, or other, similar laws affecting the enforcement of
creditor's rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law),
(v) that the Bonds then applied for, assuming in each case due
authorization, execution and delivery of the Terms Indenture by the
Trustee, when authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the purchasers thereof, will
be validly issued and outstanding obligations of the Issuer entitled to
the benefits of the related Terms Indenture,
(vi) the Terms Indenture delivered to the Trustee with such Opinion
of Counsel subjects the Certificates securing such Series and all
proceeds therefrom and the Trust Accounts for such Series to the lien
and security interest of the Indenture,
(vii) such action has been taken with respect to delivery of
possession of the Trust Estate and with respect to the recording and
filing of the Indenture, the Terms Indenture for such Series, any other
indentures supplemental hereto and any other requisite documents and
with respect to the execution and filing of any financing statements as
is necessary to perfect a first priority security interest created by
the Indenture in the Trust Estate for such Series in favor of the
Trustee with either the details of such action being recited therein,
or the absence of any such action being necessary to make such lien and
security interest effective being stated therein; and, with any
recording, filing, re-recording and re-filing of the Indenture, the
Terms Indenture for such Series, any other indentures supplemental
hereto and any other requisite documents and any execution and filing
of any financing statements and continuation statements that will, in
the opinion of such counsel, be required to maintain the lien and
security interest created by the Indenture in the Trust Estate for such
Series until February 15 of the year in
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which the first Opinion of Counsel with respect to such Series is
required to be delivered under Section 3.06 being described therein,
(viii) the Issuer has full power and authority to Grant the Trust
Estate for such Series to the Trustee as security for the Bonds of that
Series and has duly authorized such Grant to the Trustee by all
necessary action, and, in the event the Issuer is a trust, the Owner
Trustee of the Issuer has taken all necessary action in such capacity
to effect such Grant on behalf of the Issuer,
(ix) the Indenture and the related Terms Indenture have been duly
qualified under the TIA, or that no such qualification under the TIA is
necessary,
(x) in the event Conventional Certificates are Granted to the
Trustee in respect of such Series, the Pooling and Servicing Agreement
for each such Conventional Certificate has been duly authorized,
executed and delivered by the Conventional Certificate Servicer and
constitutes the legal, valid and binding agreement of the Conventional
Certificate Servicer enforceable in accordance with its terms, subject
to bankruptcy, reorganization, insolvency and other laws affecting
creditors rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity),
(xi) in the event Conventional Certificates are Granted to the
Trustee in respect of such Series, each such Conventional Certificate
has been duly and validly authorized by all necessary action on the
part of the Conventional Certificate Servicer and is validly issued and
outstanding and entitled to the benefit of the related Pooling and
Servicing Agreement,
(xii) no authorization, approval or consent of any governmental
body having jurisdiction in the premises which has not been obtained by
the Issuer is required for the execution and delivery of the Indenture
or the related Terms Indenture and the valid issuance and delivery of
the Bonds,
(xiii) if an election has been or will be made to treat the Trust
Estate securing the Series as a REMIC, (1) assuming the proper making
of such election, (2) compliance with the pertinent provisions of the
Indenture, and (3) continuing compliance with the applicable provisions
of the Code and any applicable Treasury regulations adopted thereunder,
the Trust Estate securing the Series will qualify as a REMIC, and each
Class of Bonds specified in the related Terms Indenture as "regular
interests" will be treated as "regular interests," in such REMIC and
the Class of Bonds or other security specified in the related Terms
Indenture as the "residual interests" will be treated, in the
aggregate, as the single class of "residual interests" in such REMIC,
both as defined in the related Terms Indenture, and
(xiv) if an election has been or will be made to treat the Issuer
as a REMIC, (1) assuming the proper making of such election, (2)
compliance with the pertinent provisions of this Indenture and the
applicable organizational
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document of the Issuer, and (3) continuing compliance with the
applicable provisions of the Code and any applicable Treasury
regulations adopted thereunder, the Issuer will qualify as a REMIC.
(d) An Officers' Certificate complying with the requirements of Section
11.01 stating that:
(i) the Issuer is not in Default under the Indenture and that the
issuance of the Bonds applied for will not result in any breach of any
of the terms, conditions or provisions of, or constitute a default
under, the Issuer's Governing Documents or any material 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 the Indenture relating to the
authentication and delivery of the Bonds applied for have been complied
with,
(ii) the Issuer is the owner of each Certificate securing such
Series, has not assigned any other interest or participation in any
such Certificate (or, if any such interest or participation has been
assigned, it has been released) and has the full right to Grant such
Certificate to the Trustee,
(iii) the information set forth in the Schedule of Certificates
attached as Schedule A to the Terms Indenture for such Series with
respect to each such Certificate is correct,
(iv) the Issuer has Granted to the Trustee all of its right, title,
and interest in each such Certificate,
(v) each such Certificate constitutes a FNMA Certificate, a GNMA
Certificate, a FHLMC Certificate, a Non-Agency Certificate or a
Conventional Certificate, respectively, as such terms are defined in
Section 1.01 and such Certificates, in the aggregate, satisfy the
requirements of subsection (f) below, and
(vi) attached thereto is a true and correct copy of a letter signed
by the Rating Agency or Agencies for such Series (or other evidence
satisfactory to the Trustee) confirming that the Bonds of the new
Series have been rated in the Required Rating Category by such Rating
Agency or Agencies.
(e) A certificate, addressed to the Trustee and complying with the
requirements of Section 11.01, of a firm of Independent Accountants of
recognized national reputation to the effect that:
(i) they have performed the following procedures (which need not
constitute an examination in accordance with generally accepted
auditing standards):
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(A) they have read the Schedule of Certificates attached as
Schedule A to the related Terms Indenture, and, if applicable, the
list of FHLMC Certificates covered by the agreement of FHLMC with
respect to such Certificates that is to be delivered pursuant to
clause (i) of subsection (k) below, examined each Certificate
listed thereon, and compared the pool number, original principal
amount, maturity date and coupon rate set forth in each such
Certificate to the corresponding item in such Schedule of
Certificates, and in the case of any FHLMC Certificates, if
applicable, to the corresponding item in the related agreement of
FHLMC; provided, however, that in the case of a Certificate that is
issued in book-entry form, they have reviewed the pool number,
original principal amount and coupon rate set forth in the
confirmation form provided by the Person on whose books ownership
records are being maintained pursuant to the related Terms
Indenture;
(B) they computed the principal balance of each Certificate as
of the date as of which such balances are set forth in such
Schedule of Certificates, and with respect to Certificates that are
issued in book-entry form, they confirmed the maturity dates of
each such certificate, in each case using a pool balance and factor
reference source (specified in such certificate) for each
Certificate other than any Conventional Certificates and using
information furnished by the related Conventional Certificate
Servicer for each Conventional Certificate (such information shall
comply with any requirements with respect thereto set forth in the
related Terms Indenture);
(C) they compared the principal balance computed by them for
each such Certificate as described in paragraph (B) above to the
principal balance thereof shown on such Schedule of Certificates;
(D) they examined each other asset, if any, included in any
Bond Value Group and compared (to the extent applicable) the
principal amount, interest rate and maturity date thereof to the
information with respect to such asset set forth in the related
Terms Indenture;
(E) using the formula and methodology specified in the
definition of "Bond Value" in the related Terms Indenture, they
calculated the aggregate of the Bond Values for all of the Bond
Value Groups and compared the total of the Bond Values for each
Bond Value Group calculated by the Issuer to the aggregate of the
Bond Values calculated by them for such Bond Value Groups and
compared the aggregate Bond Value calculated by them to the
aggregate initial principal amount of the Bonds proposed to be
authenticated and delivered;
(F) in accordance with the provisions of Section 1.02, they
computed the amount of cash which will be deposited in the
Collection
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Account during each Due Period (or on or prior to the Payment Date
immediately following the end of each such Due Period) as a result
of:
(1) the Distributions due and payable on such Certificates
during each such Due Period,
(2) the amount, if any, to be deposited in the Collection
Account on the Closing Date pursuant to clause (g) below,
(3) the amounts, if any, of the Bond Value Related
Shortfalls available to be withdrawn from the Debt Service
Reserve Fund and deposited in the Collection Account on or
prior to the Payment Date immediately following the end of
each such Due Period, and
(4) all other amounts, if any, available for such purpose
and required hereby or by the related Terms Indenture to be
deposited in the Collection Account on or prior to the Payment
Date immediately following the end of each such Due Period;
(G) in accordance with Section 1.02, they computed the income
which can be earned and deposited in the Collection Account in each
Due Period through the reinvestment of each of the amounts
described in paragraph (F) above;
(H) if applicable to such Series, they computed the Bond Value
Related Shortfall, if any, for each month for each Due Period and
of the amount required to be deposited by the Issuer on the Closing
Date in the Debt Service Reserve Fund with respect to such Bond
Value Related Shortfalls pursuant to subsection (h) below;
(I) they computed the Requisite Amount of the Reserve Fund,
the FHLMC Reserve Amount and the required amount of the Special
Reserve (to the extent each such amount is applicable to such
Series) and of the amounts, if any, required to be deposited by the
Issuer on the Closing Date in the Reserve Fund, Debt Service
Reserve Fund or Special Reserve Fund in respect of such amounts;
and
(J) on the assumption that the aggregate of the amounts
computed by them pursuant to paragraphs (E) through (I) above is
the aggregate of the amounts of Distributions, Bond Value Related
Shortfalls, Reinvestment Income and other amounts, if any, that
will actually be deposited in the Collection Account in each Due
Period and that such amounts are applied, in accordance with the
terms hereof and of the related Terms Indenture, to payments of
principal of and interest on the Bonds proposed to be authenticated
and delivered, they computed the amounts of principal of and
interest on such Bonds which would be payable on each Payment Date
for such Bonds (in the case of a Series of
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Bonds subject to Special Redemption, such calculations may be based
upon the assumption that Bonds are redeemed on any one or more
Special Redemption Dates); and
(ii) based upon the above-specified procedures, nothing has come to
such firm's attention which causes it to believe that:
(A) the information set forth on the Schedule Certificates
which was read by them as described in paragraphs (i)(A) and (i)(C)
above did not accurately reflect the term of each Certificate
listed on such Schedule of Certificates (subject to the accuracy of
the pool factors set forth in the reference source used by them,
or, in the case of any Conventional Certificates, provided them by
the related Conventional Certificate Servicer) or that the
information with respect to any other assets included in a Bond
Value Group that is set forth in the related Terms Indenture which
was read by them as described in paragraph (i)(D) above accurately
did not reflect the terms of such assets;
(B) the aggregate of the Bond Values for each Bond Value Group
calculated by the Issuer exceeds the aggregate of the Bond Values
for all of the Bond Value Groups calculated by them in accordance
with the terms of such Terms indenture and the aggregate of the
Bond Values calculated by them for all such Bond Value Groups is
less than the aggregate initial principal amount of the Bonds
proposed to be authenticated and delivered;
(C) the Issuer's calculations of the aggregate of the amounts
described in clauses (i)(F) and (i)(G) above and of each amount
described in clauses (i)(H) through (i)(J) above do not agree with
the results of their calculations of such amounts or are not
mathematically correct;
(D) for each Due Period, the aggregate of the amounts
described in clauses (i)(F) and (i)(G) above as calculated by the
Issuer and as computed by them do not exceed the aggregate amount
of principal of and interest on such Bonds payable on the following
Payment Date (and, if applicable, an each Special Redemption Date
within such Due Period), as set forth in the Issuer's calculations
of the amounts described in clause (i)(J) above and in their
calculations of such amounts;
(E) the Issuer's calculations of the amounts described in
clause (i)(J) above did not indicate that the aggregate of the
principal amounts of each Class of such Bonds payable on each
Principal Payment Date (and, if applicable, on any Special
Redemption Date) is an amount sufficient to repay the entire
principal amount of each such Class on or before the Stated
Maturity of its final installment of principal.
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For purposes of the foregoing clause (ii)(D), each Class of
Bonds which bears interest at a floating rate determined pursuant
to guidelines set forth in the related Terms Indenture shall be
assumed to bear interest during each interest payment period for
which the interest rate is determined pursuant to such floating
rate guidelines at the highest rate possible under such guidelines.
If the Trust Estate for the Bonds of a Series includes Non-Agency
Certificates, the certificate required by this Section 2.12(e)
shall also provide that the procedures set forth in Section
2.12(e)(i) were performed, and the statements set forth in Section
2.12(e)(ii) shall be made, with respect to the Non-Agency
Certificates, as if they were Bonds, and the Certificates backing
such Non-Agency Certificates.
(f) The Certificates pledged by the Issuer as collateral to secure
the Bonds, or, in the case of Uncertificated Certificates, Advice issued
for each such Uncertificated Certificate by the Person in whose name such
Uncertificated Certificate is registered, in each case as listed on
Schedule A to the applicable Terms Indenture; such Certificates
(i) shall have
(A) aggregate Bond Value at least equal to the initial
principal amount of the Bonds proposed to be authenticated and
delivered,
(B) aggregate scheduled Distributions in each Due Period
which, together with (1) the amount, if any, to be deposited in
the Collection Account on the Closing Date pursuant to clause
(g) below, (2) the amounts, if any, of the Monthly Payment
Deficits with respect to GPM Mortgage Certificates available to
be withdrawn from the Debt Service Reserve Fund and deposited
in the Collection Account on or prior to the Payment Date
immediately following the end of each such Due Period, (3) the
amounts, if any, of the Bond Value Related Shortfalls with
respect to such Certificates available to be withdrawn from the
Debt Service Reserve Fund and deposited in the Collection
Account on or prior to the Payment Date immediately following
the end of each such Due Period, (4) income that can be earned
from the reinvestment of Distributions and all other amounts
receivable with respect to the assets securing such Series,
computed in accordance with subsection (e)(i)(G) and (5) all
other amounts, if any, available for such purpose and required
by the Indenture and the related Terms Indenture to be
deposited in the Collection Account on or prior to the Payment
Date immediately following the end of each such Due Period are
sufficient, when applied, in accordance with the terms of the
Indenture, to payments on principal of and interest on the
Bonds, (under the maximum Bond Interest Rate Assumption if such
Series of Bonds includes a Class or Classes of Floating
Interest Rate Bonds,)
(1) to pay on each Payment Date for such Series (after
giving effect, if applicable, to any Special Redemption of
such Bonds on any Special Redemption Date during the
immediately
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preceding Due Period) all interest then due and payable on
the Bonds proposed to be authenticated and delivered, and
(2) to pay the entire principal amount of each Class of
such Bonds on or prior to the Stated maturity of the final
installment of principal thereof,
(ii) shall otherwise satisfy each of the requirements
established for such Certificates in the related Terms Indenture,
(iii) shall have been registered in the name of the Trustee or
a Qualified Trustee Nominee; provided that the Issuer may, at its
sole option, instead request the Trustee to cause all of such
Certificates to be so registered promptly following the Closing
Date for such Series, in which event such Certificates shall be
accompanied by such powers and shall otherwise be in such form as
shall permit the registration thereof in the name of the Trustee or
a Qualified Trustee Nominee without the taking of any further
action other than presentation for registration of transfer and
payment of the applicable fees in connection therewith. (The
Trustee, by its acceptance of such Certificates, shall be deemed to
have agreed to present them for registration of transfer no later
than the opening of business on the last Business Day of the Month
of Closing and to pay the applicable transfer fees, subject to its
right of reimbursement under Section 6.07), and, provided further
that in the case of Uncertificated Certificates the Issuer shall
have taken such actions to effect the Grant thereof to the Trustee
as are specified in the related Terms Indenture, and
(iv) with respect to Conventional Certificates securing a
Series to which a REMIC election is to be made according to the
related Terms Indenture, shall be issued pursuant to a Pooling and
Servicing Agreement that requires (A) that any "foreclosure
property" within the meaning of section 860G(a)(8) of the Code,
acquired pursuant to such Pooling and Servicing Agreement shall be
disposed of on or before the earlier of (1) two years after such
acquisition or such later date as determined by application to the
Secretary of the Treasury under Section 856(e)(3) of the Code, or
(2) the date set forth in Section 856(e)(4) of the Code, (B) that
no mortgage loan may be withdrawn from the related mortgage pool
except upon substitution of "qualified replacement mortgages"
within the meaning of Section 860(G)(a)(4) of the Code, and (C)
that no mortgage loan may be deposited into the related mortgage
pool unless such mortgage will constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, unless, with
respect to subclauses (A), (B) or (C) of this clause (iv), the
Trustee is furnished with a Non-Disqualification Opinion.
In determining whether the Certificates described in Schedule A to the
applicable Terms Indenture satisfy the requirements of subsections (i) and (ii)
above, the Trustee is entitled to rely conclusively on the certificate or
opinion of the Independent Accountants delivered under Section 2.12(e) hereof.
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(g) Cash in the amount, if any, required by the terms of the related
Terms Indenture to be deposited in the Collection Account for such Series and
held by the Trustee and applied in accordance with Section 8.02.
(h) If the related Terms Indenture provides for withdrawals from the
Debt Service Reserve Fund with respect to Monthly Payment Deficits on any GPM
Mortgage Certificates securing such Series, cash, Eligible Investments or (if
permitted by the related Terms Indenture) a Qualified Letter of Credit which
shall be held and applied by the Trustee in accordance with Section 8.03 and
which:
(i) in the case of cash, shall be in an amount which, together with
Available Reinvestment Income, if any, at the Assumed Reinvestment
Rate, shall provide on each Principal Reduction Date or Payment Date
for such Bonds, whichever is applicable, an amount sufficient to
satisfy the requirements of the related Terms Indenture with respect to
such Monthly Payment Deficits,
(ii) in the case of Eligible Investments, shall be in such
aggregate amount and have such principal and interest payment dates
that the aggregate amounts of principal and interest receivable with
respect thereto, together with Available Reinvestment Income, if any,
at the Assumed Reinvestment Rate, shall provide on each Principal
Reduction Date or Payment Date for such Bonds, whichever is applicable,
an amount sufficient to satisfy the requirements of the related Terms
Indenture with respect to such Monthly Payment Deficits, and
(iii) in the case of a Qualified Letter of Credit, shall provide an
aggregate amount available for drawing thereunder equal to the
aggregate of all such Monthly Payment Deficits and shall permit
drawings thereunder at such times and in such amounts as shall provide
on each Principal Reduction Date or Payment Date for such Bonds,
whichever is applicable, an amount sufficient to satisfy the
requirements of the related Terms Indenture with respect to such
monthly Payment Deficits.
If any combination of cash, Eligible Investments and a Qualified Letter of
Credit is delivered pursuant to this subsection (h), then the adequacy thereof
under clauses (i) through (iii) above shall be measured in the aggregate. The
Trustee shall be entitled to conclusively rely on the certificate or opinion of
the Independent Accountants delivered under Section 2.12(e) above as to the
adequacy of the deposits made under this Section 2.12(h).
(i) If for any period there are Bond Value Related Shortfalls with respect
to such Series, cash, Eligible Investments or (if permitted by the related Terms
Indenture) a Qualified Letter of Credit which shall be held and applied by the
Trustee in accordance with Section 8.03 and which:
(i) in the case of cash, shall be in an amount which, together with
Available Reinvestment Income, if any, at the Assumed Reinvestment Rate,
shall provide on each Principal Reduction Date or Payment Date for such
Bonds, whichever is applicable, an
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amount sufficient to satisfy the requirements of the related Terms
Indenture with respect to such Bond Value Related Shortfalls,
(ii) in the case of Eligible Investments, shall have such Future Values
sufficient to provide on each Principal Reduction Date or Payment Date for
such Bonds, whichever is applicable, an amount sufficient to satisfy the
requirements of the related Terms Indenture with respect to such Bond Value
Related Shortfalls, and
(iii) in the case of a Qualified Letter of Credit, shall provide an
aggregate amount available for drawing thereunder equal to the aggregate of
all such Bond Value Related Shortfalls and shall permit drawings thereunder
at such times and in such amounts as shall provide on each Principal
Reduction Date or Payment Date for such Bonds, whichever is applicable, an
amount sufficient to satisfy the requirements of the related Terms
Indenture with respect to such Bond Value Related Shortfalls.
If any combination of cash, Eligible Investments and a Qualified Letter of
Credit is delivered pursuant to this subsection (i), then the adequacy thereof
under clauses (i) through (iii) above shall be measured in the aggregate. The
Trustee shall be entitled to conclusively rely on the certificate or opinion of
the Independent Accountants delivered under Section 2.12(e) above as to the
adequacy of the deposits made under this Section 2.12(i).
(j) If there is a Reserve Fund and/or Special Reserve Fund for such Series,
cash, Eligible investments or (if permitted by the related Terms Indenture) a
Qualified Letter of Credit or any other assets specified in or permitted by the
related Terms Indenture in the respective amounts, if any, required by the terms
of the related Terms Indenture to be maintained in the Reserve Fund and/or
Special Reserve Fund for such Series and held by the Trustee and applied in
accordance with Section 8.04 or Section 8.05.
(k) If such Series is secured by any FHLMC Certificates , unless otherwise
provided in the related Terms Indenture, either (i) an agreement of FHLMC
providing a guaranty of timely payment of scheduled principal payments on the
mortgage loans underlying such FHLMC Certificates, which agreement shall in form
and substance be satisfactory to the Rating Agencies rating the Bonds of such
Series (the issuance of a rating of such Bonds shall be conclusive evidence that
such FHLMC agreement is satisfactory to the Rating Agency which issued such
rating); or (ii) cash, Eligible investments or (if permitted by the related
Terms Indenture) a Qualified Letter of Credit in an aggregate amount equal to
the FHLMC Reserve Amount and to be applied in accordance with the related Terms,
Indenture.
(l) If there is an Expense Fund for such Series, cash or Eligible
Investments in the amount specified in the related Terms Indenture.
(m) If such Series is secured by any Conventional Certificates, such
certificates, insurance policies, surety bonds, instruments, opinions or other
documents as may be required by the term of the Terms Indenture creating such
Series.
(n) If such Series is directly insured, guaranteed or otherwise backed, the
Guaranty Agreement for such Series.
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(o) If the Issuer is a trust, an executed counterpart of the Deposit Trust
Agreement.
(p) An Issuer Order or Orders appointing the Independent Accountants
pursuant to Section 8.09 and the Independent Person referred to in clause (q) of
this Section 2.12.
(q) A certificate of an Independent Person appointed by an Issuer Order,
whose regular business activity includes valuing securities similar to the
Certificates securing such Series, as to the fair market value of such
Certificates, which determination of fair market value shall, unless otherwise
provided in the related Terms Indenture, be based upon generally available
market quotations as of a date not earlier than three Business Days prior to the
related Closing Date; provided, however, that the certificate of Independent
Person need not be delivered with respect to a Series which is secured by
Certificates consisting solely of GNMA Certificates.
(r) Such other documents, certificates, instruments or opinions as may be
required by the terms of the Terms Indenture creating such Series of Bonds.
SECTION 2.13 Book Entry Bonds.
Unless provided otherwise in the related Terms Indenture, each Class of
Principal Priority Bonds shall, and any other Class of any Series, may, if
specified in the related Terms Indenture, be issued initially as a single
certificate in the name of a Clearing Agency maintaining book entry records with
respect to ownership and transfer of such Bonds, or its nominee, or a custodian
bank of such Clearing Agency, or its nominee, and registration of such Bonds may
not be transferred by the Trustee or Bond Registrar except under the conditions,
if any, described in the related Terms Indenture. In such case, the Trustee
shall deal with the Clearing Agency and Clearing Agency Participants as
representatives of the Beneficial Owners of such Bonds for purposes of
exercising the rights of Bondholders hereunder, as provided in the related Terms
Indenture. 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 2.14 Termination of Book Entry System.
(a) Except as otherwise provided in the related Terms Indenture, the
book entry system through the Clearing Agency with respect to any Class of Book
Entry Bonds may be terminated upon the happening of any of the following:
(i) The Clearing Agency or the Issuer advises the Trustee that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities under the respective Letter Agreement and the Trustee
or the Issuer is unable to locate a qualified successor clearing agency
satisfactory to the Trustee and the Issuer;
(ii) The Issuer, in its sole discretion but with the consent of the
Trustee, elects to terminate the book entry system by notice to the
Clearing Agency and the Trustee; or
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(iii) After the occurrence of an Event of Default (at which time
the Trustee shall use its best efforts to promptly notify each
Beneficial Owner through the Clearing Agency of such Event of Default
when such notice shall be given pursuant to Section 6.02), the
Beneficial Owners of a majority in Aggregate Current Principal Amount
of the Book Entry Bonds advise the 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 Bond certificates being issued to any
person other than the Clearing Agency or its nominee is no longer in
the best interests of the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection (a) above,
the Trustee shall use its best efforts to notify all Beneficial Owners, through
the Clearing Agency, of the occurrence of such event and of the availability of
Definitive Bond certificates to Beneficial Owners requesting the same, in an
Aggregate Current. Principal Amount 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 or Special Redemption.
Definitive Bond certificates shall be issued only upon surrender to the Trustee
of the Bond by the Clearing Agency, accompanied by registration instructions for
the Definitive Bond certificates. Neither the Issuer nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon issuance of
Definitive Bond certificates, all references herein and in the Terms Indenture
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.
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 premium, if any, included in any Redemption Price or Special Redemption
Price) and interest, if any, due on the Bonds of each Series in accordance with
the terms of such Bonds and the Indenture.
SECTION 3.02 Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, the City of New York,
the State of New York, an office or agency where Bonds of each Series may be
presented or surrendered for payment, where Bonds of each Series 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 the Indenture may be
served. The Issuer will give prompt written notice to the Trustee of the
location, and of any change in the location, of such office or agency. Until
written notice of any change in the location of such office or agency is
delivered to the Trustee or if at any time the Issuer shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
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address thereof, Bonds may be so presented or surrendered and such notices may
be made or served, at the New York Office and the Issuer hereby appoints the New
York Agent as its agent in the City of New York, for the foregoing purposes.
The Issuer may also from time to time designate one or more other offices
or agencies (in or outside the City of New York) where the Bonds of a Series may
be presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that (i) no such designation
or rescission shall in any manner relieve the Issuer of its obligation to
maintain an office or agency in the Borough of Manhattan, the City of New York,
the State of New York for the purposes set forth in the preceding paragraph,
(ii) presentations or surrenders of Bonds for payment may be made only in the
City of New York, the State of New York and (iii) any designation of an office
or agency for payment of Bonds shall be subject to Section __.03. The Issuer
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 3.03 Money for Bond Payments to be Held in Trust.
All payments of amounts due and payable with respect to any Bonds which are
to be made from amounts withdrawn from the related Collection Account pursuant
to Section 8.02(c) or Section 5.08 shall be made on behalf of the Issuer by the
Trustee or by a Paying Agent, and no amounts so withdrawn from a Collection
Account for payments of Bonds shall be paid over to the Issuer except as
provided in this Section 3.03 or in Section 5.08.
Whenever the Issuer shall have a Paying Agent other than the Trustee, it
will, on or before the Business Day next preceding each Payment Date, Special
Redemption Date and Special Payment Date for each Series of Bonds, direct the
Trustee to deposit with such Paying Agent an aggregate sum sufficient to pay the
amounts then becoming due (to the extent funds are then available for such
purpose in the Collection Account for such Series), such sum to be held in trust
for the benefit of the Persons entitled thereto. Any moneys deposited with a
Paying Agent in excess of an amount sufficient to pay the amounts then becoming
due on the Bonds with respect to which such deposit was made shall, upon Issuer
Order, be paid over by the Paying Agent to the Trustee for application in
accordance with Article VIII.
Any Paying Agent shall be appointed by Issuer Order. The Issuer shall not
appoint any Paying Agent (other than the Trustee) which is not, at the time of
such appointment, a depository institution or trust company whose obligations
would be Eligible Investments pursuant to clause (ii)(A) of the definition of
the term "Eligible Investments". The Issuer will cause each Paying Agent other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee (and if the Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section,
that such Paying Agent will:
(1) allocate all sums received for payment to the Holders of Bonds of
each Series for which it is acting as Paying Agent on each Payment Date,
Special Redemption Date and Special Payment Date among such Holders in the
proportion specified in the applicable Payment Date Statement, Special
Redemption Date Statement and Special Payment Date Statement, as the case
may be, in each case to the extent permitted by applicable law;
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(2) hold all sums held by it for the payment of amounts due with
respect to the Bonds in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(3) if such Paying Agent is not the Trustee, immediately resign as a
Paying Agent and forthwith pay to the Trustee all sums held by it in trust
for the payment of Bonds if at any time it ceases to meet the standards set
forth above required to be met by a Paying Agent at the time of its
appointment;
(4) give the Trustee notice of any Default by the issuer (or any other
obligor upon the Bonds) in the making of any payment required to be made
with respect to any series of Bonds for which it is acting as Paying Agent;
(5) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(6) comply with all requirements of the Code and all regulations
thereunder, with respect to the withholding from any payments made by it on
any Bonds of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
With respect to withholding and reporting requirements applicable to the
calculation of original issue discount, if any, accrual of market discount
if any, or amortization of bond premium, if any, on any Class of Bonds the
Issuer shall timely furnish the applicable calculations to each Paying
Agent.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of the Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which sums were held by such Paying Agent; and upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Except as otherwise required by applicable law, any money held by the
Trustee or any Paying Agent in trust for the payment of any amount due with
respect to any Bond and remaining unclaimed for one year after such amount has
become due and payable to the Holder of such Bond (or, if earlier, three months
prior to 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 Trustee or such
Paying Agent with respect to such trust money shall thereupon cease. The Trustee
may adopt and employ, at the expense of the Issuer, any reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Bonds have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Trustee or any
Agent, at the last address of record for each such Holder).
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SECTION 3.04 Existence.
(a) In the event the Issuer is a corporation, except as otherwise
permitted in Section 3.08(g), the Issuer will keep in full effect its
existence, rights and franchises as a corporation under the laws of its
jurisdiction of organization (unless it becomes reorganized under the laws
of any other jurisdiction or the United States of America), and will obtain
and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Bonds or any
of the Certificates.
(b) Any corporation into which the Owner Trustee hereunder may be
merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which such Owner Trustee hereunder
shall be a party, shall be the successor Owner Trustee under the Indenture
without the execution or filing of any paper, instrument or further act to
be done on the part of the parties hereto, anything herein, or in any
agreement relating to such merger or consolidation, by which any such Owner
Trustee may seek to retain certain powers, rights and privileges
theretofore obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding;
(iii) Any successor to the Owner Trustee appointed pursuant to the
Deposit Trust Agreement shall be the successor Owner Trustee under the
Indenture without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto; and
(iv) Upon any consolidation or merger of or other succession to the
Owner Trustee in accordance with this Section 3.04, the Person formed
by or surviving such consolidation or merger (if other than the Issuer)
or the Person succeeding to the Owner Trustee under the Deposit Trust
Agreement may exercise every right and power of, the Owner Trustee, on
behalf of the Issuer, under the Indenture with the same effect as if
such Person had been named as the Owner Trustee herein.
SECTION 3.05 Protection of Trust Estate.
The Issuer will from time to time execute and deliver all such supplements
and amendments hereto and all such financing statements, continuation
statements, instruments of further assurance, and other instruments, and will
take such other action as the Trustee deems necessary or advisable to
(a) Grant more effectively all or any portion of a Trust Estate,
(b) maintain or preserve the lien of the Indenture or carry out more
effectively the purposes hereof,
(c) perfect, publish notice of, or protect the validity of, any Grant
made or to be made by the Indenture,
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(d) enforce any of the Certificates, or
(e) preserve and defend title to the Trust Estate and the rights of the
Trustee, and of the Bondholders of the Series secured thereby, in such
Trust Estate against the claims of all persons and parties.
The Issuer hereby designates the Trustee, its agent and attorney-in-fact to
execute, upon the Issuer's failure to do so, any financing statement,
continuation statement or other instrument required pursuant to this Section
3.05; provided, however, that such designation shall not be deemed to create a
duty in the Trustee to monitor the compliance of the Issuer with the foregoing
covenants and provided further that the duty of the Trustee to execute any
instrument required pursuant to this Section 3.05 shall, arise only if a
Responsible Officer assigned to the Trustee's Corporate Trust Department has
actual knowledge of any failure of the Issuer to comply with the provisions of
this Section 3.05 or if written notice of such failure is received by such
Trustee at the Corporate Trust Office, and such notice references the Bonds, the
Issuer, the Trust Estate or the related Terms Indenture.
SECTION 3.06 Opinions as to Trust Estate.
On or before February 15, in each calendar year, beginning with the first
calendar year commencing after the year in which the Closing Date for a series
occurs, the Issuer shall furnish to the Trustee an opinion of Counsel either
stating that (i) in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and re-filing of the Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest created by
the Indenture with respect to the Trust Estate for such Series and reciting the
details of such action, or (ii) in the opinion of such counsel, no such action
is necessary to maintain such lien and security interest. Such opinion of
Counsel shall also describe the recording, filing, re-recording and re-filing of
the Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of the Indenture with respect to the
Trust Estate for such Series until February 15 in the following calendar year.
The Trustee shall not remove any portion of any 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 the most recent Opinion of Counsel
was delivered pursuant to this Section 3.06 (or from the jurisdiction which it
was held as described in the Opinion of Counsel delivered at the Closing Date
pursuant to Section 2.12(c), if no opinion of Counsel has yet been delivered
pursuant to this Section 3.06) or cause or permit any change of registration or
recordation of any portion of the Trust Estate that consists of Uncertificated
Certificates from the registration and recordation as of such date or cause or
permit any portion of the Trust Estate that consists of book entry securities
other than Uncertificated Certificates 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 date unless, in any such case, the
Trustee shall have first received an Opinion of Counsel to the effect that the
lien and security interest created by the Indenture with
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respect to such property will continue to be maintained after giving effect to
such action or actions.
SECTION 3.07 Performance of Obligations.
The Issuer will not take any action or permit any action to be taken by
others which would release any Person from any of such Person's covenants or
obligations under any instrument included in a Trust Estate, or which would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument, except as
expressly provided in the Indenture or other instrument.
The Issuer may contract with or otherwise obtain the assistance of other
Persons (including, without limitation, the Manager under any management
agreement entered into by the Owner Trustee in respect of action to be taken by
an Issuer that is a trust) to assist it in performing its duties hereunder and
any performance of such duties (other than the delivery of Officers'
Certificates of the Issuer and Issuer Orders and Issuer Requests) by a Person
identified to the Trustee in an Officers' Certificate of the Issuer shall be
deemed to be action taken by the Issuer.
SECTION 3.08 Negative Covenants.
The Issuer will not:
(a) sell, transfer, exchange or otherwise dispose of any portion of the
Trust Estate except as expressly permitted elsewhere by the Indenture and
except that the Issuer may transfer all or any portion of its assets to a
trust of which it owns substantially all of the beneficial interest as of
the date of such transfer provided that:
(i) the transferee trust shall be a trust organized under the laws
of the United States or any state thereof;
(ii) the transferee trust shall expressly assume by an indenture
supplemental hereto all of the obligations of the Issuer hereunder;
(iii) the consummation of such transfer shall not result in the
lowering of any rating of the Outstanding Bonds of any Series of Bonds;
and
(iv) immediately after consummation of such transfer no Default or
Event of Default shall exist with respect to any Series;
(b) claim any credit on, or make any deduction from, the principal of,
or interest on, any of the Bonds by reason of the payment of any taxes
levied or assessed upon any part of the Trust Estate;
(c) engage in any business or activity other than in connection with or
relating to the issuance of Bonds pursuant to the Indenture and the
Governing Documents;
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(d) as to the issuance of bonds under any other indenture, issue any
such bonds unless such bonds have been rated by each Rating Agency rating
any Series of Outstanding Bonds of the Issuer in a category that is at
least as high as the Required Rating Category of each such Series;
(e) incur, assume or guaranty any indebtedness of any Person, except
for such indebtedness as may be incurred by the Issuer in connection with
the issuance of Bonds pursuant to the Indenture or as permitted under
clause (d) above or indebtedness which, if consisting of indebtedness other
than Bonds or indebtedness permitted under clause (d) above, (i) shall
either be (1) subordinate to the Bonds or (2) secured by collateral other
than the Trust Estate and to which the creditor with respect to such
indebtedness has recourse only to such collateral and not to any other
assets of the Issuer and (ii) shall provide that the holder thereof may not
file a petition in any bankruptcy or insolvency Proceeding with respect to
the Issuer until not less than 91 days after payment in full of all
Outstanding Bonds issued pursuant to the Indenture;
(f) liquidate in whole or in part, or dissolve and terminate;
(g) merge or consolidate with any corporation or other Person, except
that the Issuer (if FAIC is the Issuer) may merge or consolidate with an
Affiliate of the Issuer; any such merger or consolidation with another
Affiliate of the Issuer to be subject to the following conditions:
(i) the surviving or resulting entity shall be a corporation
organized under the laws of the United States or any state thereof;
(ii) the surviving or resulting corporation (if other than the
Issuer), shall expressly assume by an indenture supplemental hereto all
of the obligations of the Issuer hereunder;
(iii) the consummation of such merger or consolidation shall not
result in the lowering of any rating of the Outstanding Bonds of any
Series by the Rating Agency that rated the initial Series of Bonds; and
(iv) immediately after consummation of the merger or consolidation
no Default or Event of Default shall exist with respect to any Series;
(h) permit the validity or effectiveness of the Indenture or any Grant
hereunder to be impaired, or permit the lien of the Indenture to be
amended, hypothecated, subordinated, terminated or discharged with respect
to any Series, or permit any Person to be released from any covenants or
obligations with respect to any Series under the Indenture, except as may
be expressly permitted hereby or by any Terms Indenture;
(i) permit any lien, charge, security interest, mortgage or other
encumbrance (other than the lien of the Indenture or any Permitted
Encumbrance) to be created on or extend to or otherwise arise upon or
burden the Trust Estate for any Series or any part thereof or any interest
therein or the proceeds thereof;
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(j) permit the lien of the Indenture not to constitute a valid first
priority security interest in the Trust Estate securing any Series; or
(k) issue any Series of Bonds which would have the effect of lowering
the ratings on any outstanding Series of Bonds.
SECTION 3.09 Successor Substituted.
In the event FAIC is the Issuer, upon any consolidation or merger in
accordance with Section 3.08(g), the person resulting from or surviving such
consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of the Issuer under the
Indenture with the same effect as if such Person had been named as the Issuer
herein. Promptly upon the occurrence of any such succession, such Person shall
give notice thereof to the Trustee.
SECTION 3.10 Annual Statement as to Compliance.
On or before 120 days after the end of the first fiscal year of the Issuer
which ends more than three months after the Closing Date for a Series, and each
fiscal year thereafter, the Issuer shall deliver to the Trustee (a) a written
statement with respect to the Series, signed by its Chairman or President or a
Vice President and by its Treasurer or an Assistant Treasurer or its Comptroller
or an Assistant Comptroller, (if the Issuer is a corporation), or (b) an
Officers' Certificate of the Owner Trustee (if the Issuer is a trust), stating
in each such case, as to each signer thereof, that
(a) a review of the activities of the Issuer during such year and of
performance under the Indenture have been made under such officer's
supervision; and
(b) to the best of such officer's knowledge, based on such review, the
Issuer has fulfilled all its obligations under the Indenture throughout
such year, or, if there has been a Default in the fulfillment of any such
obligation, specifying each such Default known to such officer and the
nature and status thereof.
For purposes of this Section 3.10, the fiscal year of the Issuer shall be
December 31.
SECTION 3.11 Amendments.
The Trustee shall consent to any amendment of the Governing Documents of
the Issuer which does not conflict with the provisions of this Article III and,
with the consent of the Holders of 66-2/3% of the then Aggregate Current
Principal Amount of the Bonds, to any amendment thereof which does so conflict.
The Trustee shall be entitled to rely on an opinion of Counsel in consenting to
any such amendment.
SECTION 3.12 Covenants of the Issuer.
All covenants in the Indenture of each Issuer that is a trust are covenants
of the Issuer and are not covenants of the Owner Trustee in its individual
capacity. In no case whatsoever shall the Bank or any successor Owner Trustee
under the related Deposit Trust Agreement be
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personally liable on, or for any loss in respect of, any of the statements,
representations, warranties or obligations of the Issuer under the Indenture, as
to all of which the Trustee and Bondholders may look solely to the property of
the Issuer.
SECTION 3.13 Contribution of Assets.
Except as otherwise provided in the related Terms Indenture, if an election
has been made or will be made to treat the Trust Estate securing the Series or
the Issuer as a REMIC, following the Closing Date, the Issuer will not
contribute nor shall the Trustee accept any contribution of additional assets to
the Trust Estate unless the Trustee receives a Non-Disqualification Opinion with
respect thereto.
SECTION 3.14 Notice of Event of Default.
The Issuer will deliver to the Trustee, within five (5) Business Days after
becoming aware of the occurrence thereof, written notice of any Event of
Default, other than an Event of Default arising pursuant to Sections 5.01(a) or
5.01(b) hereof.
SECTION 3.15 Further Assurances and OID Certificates.
The Issuer shall promptly deliver to the Trustee additional Officers'
Certificates continuing such further assurances as the Trustee may reasonably
request including, but not limited to, any calculations of original issue
discount for purposes of any reporting requirements as to which the Trustee may
have to comply for federal income or other tax purposes.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01 Satisfaction and Discharge of Indenture.
Whenever the following conditions shall have been satisfied with respect to
a Series:
(a) either
(i) all Bonds of such Series theretofore authenticated and
delivered (other than (A) Bonds which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
2.08, and (B) Bonds for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Trustee for
cancellation; or
(ii) all Bonds of such Series not theretofore delivered to the
Trustee for cancellation (including any Book Entry Bonds)
(A) have become due and payable, or
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(B) will become due and payable at the Stated Maturity of
their principal within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Issuer,
and the Issuer, in the case of clauses (A), (B) or (C) above, has
delivered to the Trustee a Non-Disqualification opinion relevant to
such actions, and in the case of clause (A) above, has irrevocably
deposited or caused to be deposited with the Trustee, in trust for such
purpose, and, in the case of clauses (B) and (C) above, has deposited
or caused to be deposited in trust with the Trustee, under the terms of
an irrevocable trust agreement in form and substance satisfactory to
the Trustee, an amount of cash sufficient (in the case of clauses (B)
and (C) above, without regard to investment or reinvestment thereof) to
pay and discharge the entire indebtedness on such Bonds not theretofore
delivered to the Trustee for cancellation, for principal, premium, if
any, and interest through the Interest Accrual Period for the Stated
Maturity of their principal or for the Redemption Date (if such Bonds
shall have been called for redemption pursuant to Section 10.01), as
the case may be, and in the case of Bonds which were not paid at their
Stated Maturity, for all overdue principal and all interest payable on
such Bonds to the next succeeding Special Payment Date therefor and if
such Bonds have been called for Redemption pursuant to Article X, the
Trustee shall have received from the Issuer irrevocable instructions to
give notice of Redemption of such Bonds on the Redemption Date and to
apply said monies to the payment of the Bonds on the Redemption Date;
(b) the Issuer has paid or caused to be paid all other sums, including
all sums payable pursuant to Section 6.07 hereunder by the Issuer with
respect to such Series;
(c) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for the satisfaction and discharge of the indenture with respect
to such Series have been complied with; and
(d) the Trustee shall have received such other documents and assurances
as the Trustee may reasonably request;
then, upon Issuer Request (but subject to Section 4.04 of the Indenture) the
Indenture and the related Terms Indenture and the lien, rights and interests
created hereby and thereby shall cease to be of further effect, except as
hereinafter provided with respect to such Series, and the Trustee and each
co-trustee and separate trustee, if any, then acting as such hereunder shall, at
the expense of the Issuer, execute and deliver all such instruments as may be
necessary to acknowledge the satisfaction and discharge of the Indenture and the
related Terms Indenture to the extent effected under this Article IV and the
related Terms Indenture with respect to such Series and shall pay, or assign or
transfer and deliver all cash, securities and other property held
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by it as part of the Trust Estate for such Series remaining after satisfaction
of the conditions set forth in clauses (i) and (ii) above to the Residual Payee.
In the absence of an Issuer Request, the payment of all Outstanding Bonds
of all Series shall not render the Indenture inoperative or prevent the Issuer
from issuing additional Series of Bonds from time to time thereafter as herein
provided.
Notwithstanding the satisfaction and discharge of the Indenture with
respect to a Series, the obligations of the Issuer to the Trustee under Section
6.07 and under any reporting or notice requirements or provisions, and the
obligations of the Trustee to the Bondholders of such Series under Sections 3.03
and 4.02, and the obligation of the Trustee, if any, to determine and publish
notices of the rates to be borne by the Floating Interest Rates Bonds of such
Series, if any, the rights, privileges and immunities of the Trustee pursuant to
Article VI and the provisions of Article II with respect to lost, destroyed or
mutilated Bonds of such Series and with respect to the registration of transfers
of Bonds of such Series shall survive.
SECTION 4.02 Application of Trust Money.
All money deposited with the Trustee pursuant to Sections 3.03 and 4.01
shall be held in trust and applied by it, in accordance with the provisions of
the Bonds and the Indenture, to the payment, either directly or through any
Paying Agent, as the Trustee may determine, to the Persons entitled thereto, of
the principal, premium, if any, and interest for whose payment such money has
been deposited with the Trustee, and to the payment of any amount due to other
Persons pursuant to Section 6.07 and 8.02.
SECTION 4.03 REMIC Termination.
Except as otherwise provided in the related Terms Indenture, where an
election has been made or will be made to treat the Trust Estate securing the
Series or the Issuer as a REMIC, unless the Issuer has delivered to the Trustee
a Non-Disqualification Opinion with respect to the failure of the Issuer to
comply with the requirements of this Section, or unless an Event of Default has
occurred under Article V and the consequences of such Event of Default are
continuing, the REMIC shall be terminated as follows:
(i) Within 90 days prior to the time of making of the final payment on
the Bonds of such Series (which shall include a final payment by virtue of
an election to effect an optional redemption pursuant to Section 10.01
hereof), the Issuer shall adopt (or, if the Issuer does not adopt, shall be
deemed to have adopted) a plan of complete liquidation of the REMIC with
the consent of the Residual Interest Holders, such consent being deemed to
have been given by such Residual Interest Holders by virtue of their
acquisition and ownership of the Residual Interest;
(ii) At or after the time of adoption by the Issuer of the plan of
complete liquidation of the REMIC and at or prior to the time of making of
the final payment on the Bonds of such Series, the Issuer shall instruct
the Trustee to sell all of the Trust Estate (except for (a) cash on hand
and (b) any asset, including the Certificates, which pursuant to the terms
of the instrument evidencing such asset will be fully converted solely into
cash before the final payment of such Bonds) for cash; and
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(iii) At the time of making of the final payment on the Bonds of such
Series, all cash on hand (other than cash retained to meet claims) shall be
distributed or credited to the Residual Interest Holders and the REMIC
shall terminate at that time.
SECTION 4.04 Reinstatement
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Sections 4.01 and 4.02 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Issuer's
obligations under the Indenture and the Bonds shall be revived and reinstated as
though no deposit had occurred pursuant to Section 4.01 until such time as the
Trustee or such Paying Agent is permitted to apply all such money or obligations
in accordance with Sections 4.01 and 4.02; provided, however, that if the Issuer
has made payment of interest on or principal of any of the Bonds because of the
reinstatement of its obligations, the Issuer shall be subrogated to the Holders
of the Bonds to receive such payment from the money or obligations held by the
Trustee or such Paying Agent.
ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01 Event of Default.
"Event of Default", wherever used herein, means, with respect to a Series
of 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):
(a) If the Issuer shall default in the payment of any principal on any
Bond of that Series when due; or
(b) if the Issuer shall default in the payment of any interest on any
Bond of that Series and such default shall continue for a period of ten
days; or
(c) if the Issuer shall default in the due observance of any of clauses
(a) through (j) of Section 3.08 or the provisions of Section 10.01 relating
to Redemptions of Bonds of that Series; or
(d) if the Issuer shall default in the due observance or performance of
any other of its covenants in the Indenture, and if any of the foregoing
Defaults shall continue for a period of 30 days after there shall have been
given, by registered or certified mail, to the Issuer by the Trustee or to
the Issuer and the Trustee by the Holders of Bonds representing at least
25% of the then Aggregate Current Principal Amount of the Bonds of that
Series, a written notice specifying such Default and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
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(e) if any representation or warranty of the Issuer made in the
Indenture or in any certificate or other writing delivered pursuant here to
or in connection herewith with respect to such Series 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 by the
Trustee or to the Issuer and the Trustee by the Holders of Bonds
representing at least 25% of the then Aggregate Current Principal Amount of
the Bonds of that Series (with notice also given to the Trustee if the
notice is given by Bondholders), the circumstances or condition in respect
of which such representation or warranty was incorrect shall not have been
eliminated or otherwise cured; or
(f) 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 90 consecutive days; or
(g) 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 (other than Bonds
issued hereunder) as such debts become due or the taking of action by the
Issuer in furtherance of any of the foregoing.
SECTION 5.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing with respect to a Series,
then the Trustee may, and on request of the Holders of Bonds representing more
than 25% of the then Aggregate Current Principal Amount of the Bonds of that
Series the Trustee shall, declare all the Bonds of that Series to be immediately
due and payable, by a notice in writing to the Issuer (and to the Trustee if
given by Bondholders), and upon any such declaration the Aggregate Current
Principal Amount of such Bonds together with accrued and unpaid interest, if
any, thereon to the date of such acceleration, shall become immediately due and
payable.
At any time after such a declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided, the Holders of
Bonds representing more than 50% of the then Aggregate Current Principal Amount
of the Bonds of that Series which has been declared due and payable as herein
provided, by written notice to the Issuer and the Trustee, may rescind and annul
such declaration and its consequences if
(a) the Issuer or such Holders have delivered to the Trustee a
Non-Disqualification opinion regarding the actions described in this
subsection (a), if an
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election has been made or will be made to treat the Issuer or the Trust
Estate securing the Series as a REMIC, and the Issuer has paid or deposited
with the Trustee as sufficient to pay
(i) all payments of principal, premium, if any, and interest on all
Bonds of that Series (including overdue installments of principal and
interest, if any, together with the interest on such overdue
installments to the extent such interest is lawful) and all other
amounts which would then be due hereunder or upon such Bonds if the
Event of Default giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default in respect to such Series, other than the
nonpayment of the principal of Bonds of that Series which have become due
solely by such acceleration, have been cured or waived as provided in
Section 5.15.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Issuer covenants that if an Event of Default shall occur and be
continuing in respect to any Series of Bonds and the Bonds of such Series have
been declared due and payable and such declaration and its consequences have not
been rescinded and annulled, the Issuer will, upon demand of the Trustee,
deliver a Non-Disqualification Opinion regarding such actions, if an election
has been made or will be made to treat the Issuer or the Trust Estate securing
the Series as a REMIC, and will pay to it, for the benefit of the Holders of the
Bonds of such Series, (a) the Aggregate Current Principal Amount (including
interest accrued and unpaid as of the preceding Payment Date on all Compound
Interest Bonds) of all Bonds of such Series; (b) accrued interest through the
Designated Interest Accrual Date preceding the date of payment pursuant to such
demand, at the respective Bond Interest Rates borne by such Bonds, on the
Aggregate Current Principal Amount of all Bonds of such Series and interest on
any installment of interest on such Bonds which was not paid at the Stated
Maturity of such installment from the date due through the Designated Interest
Accrual Date preceding the date of such demand, but only to the extent that
payment of such interest on overdue interest shall be legally enforceable, and
(c) in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Except as otherwise provided in the related Terms Indenture, in the event
an election has been made to treat the Trust Estate securing the Series as a
REMIC, and in the event that the Issuer makes a payment under this Section 5.03,
the provisions of Section 4.03 will apply and the payment by the Issuer will be
deemed to be a purchase of the Trust Estate for purposes of Section 4.03. Such
purchase will be a purchase of an undivided interest in the Trust Estate which
is equal to a fraction, the numerator of which is the amount of the payment and
the
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denominator of which is the fair-market value of the Trust Estate as of the date
of such purchase, however such fraction shall not exceed one.
If the Issuer fails to pay such amounts forthwith upon such demand, or if
the Issuer shall otherwise default in any payment of principal of, or interest
on, any Bonds, the Trustee, in its own name and as trustee of an express trust,
may institute a Proceeding for the collection of the sums so due and unpaid, and
may prosecute such Proceeding to judgment or final decree, and may enforce the
same against the Issuer or any other obligor upon the Bonds of such Series and
collect, out of the property, wherever situated, of the Issuer (subject,
however, to Section 5.20) or any such other obligor on such Bonds, the moneys
adjusted or decreed to be payable in the manner provided by law.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Bondholders by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in the Indenture or in aid of the
exercise of any power granted herein, or enforce any other proper remedy.
SECTION 5.04 Remedies.
If an Event of Default shall have occurred and be continuing with respect
to a Series of Bonds and the Bonds of such Series have been declared due and
payable and such declaration and its consequences have not been rescinded and
annulled, the Trustee may do one or more of the following:
(a) institute Proceedings for the collection of all amounts then payable on
the Bonds of that Series, or under the Indenture in respect to that Series of
Bonds, whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer (other than from the Trust Estate securing any other
Series of Bonds) moneys adjudged due;
(b) in accordance with Section 5.18, sell the Trust Estate securing the
Bonds of that Series 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 the Indenture with respect to the Trust Estate souring the Bonds
of that Series; and
(d) exercise any remedies of a secured party under the Uniform Commercial
Code and take any other appropriate action to protect and enforce the rights and
remedies of the Trustee of the Holders of the Bonds hereunder.
SECTION 5.05 Optional Preservation of Trust Estate.
(a) If the Bonds of a Series have been declared due and payable following
an Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Trustee may, in its sole discretion and to the
extent permitted by applicable law, refrain from selling the Trust Estate
securing such Series and in such event shall apply all Distributions and other
amounts receivable with respect to such Trust Estate to the payment of the
principal of and
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interest on the Bonds of such Series as and when such principal and interest
would have become due pursuant to the terms hereof and of such Bonds if there
had not been a declaration of acceleration of the maturity of such Bonds,
provided that:
(i) the Trustee shall have determined that the Distributions and other
amounts receivable with respect to such Trust Estate are sufficient to
provide the funds required to pay the principal of and interest on such
Bonds as and when such principal and interest would have become due
pursuant to the terms hereof, of the related Terms Indenture and of such
Bonds if there had not been a declaration of acceleration of the maturity
of such Bonds;
(ii) the Holders of the Bonds of such Series shall not have directed
the Trustee in accordance with Section 5.14 (subject, however, to Section
5.18(b)) to sell the Trust Estate securing such Bonds;
(iii) if there are any Compound Interest Bonds of such Series then
Outstanding, there shall have been delivered to the Trustee an Opinion of
Counsel to the effect that notwithstanding the acceleration of the maturity
of such Compound Interest Bond;
(A) the Issuer is legally obligated to make payments of principal
of and interest on such Compound Interest Bonds in the same manner and
amounts as it was legally obligated to make such payments prior to the
acceleration of the maturity of such Compound Interest Bonds, and
(B) such obligation is legally enforceable under applicable law,
subject to bankruptcy, reorganization, insolvency and other laws
affecting the enforcement of creditors' rights generally and to general
principles of equity (regardless whether such enforceability is
considered in a proceeding in equity or at law);
(iv) the Issuer shall have complied with the conditions applicable to
the taking of such action pursuant to Section 9-505 of the Uniform
Commercial Code as adopted and in effect in the applicable jurisdiction (if
any) or any similar provision of applicable law; and
(v) provision reasonably satisfactory to the Trustee shall have been
made for payment of the Trustee's fees and expenses.
(b) The Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking firm of national reputation or of a firm of
Independent Accountants of national reputation as to the feasibility of any
action proposed to be taken in accordance with subsection (a) of this Section
5.05 and as to the sufficiency of the Distributions and other amounts receivable
with respect to the Trust Estate securing the affected Series to make the
required payments of principal of and interest on the Bonds of such Series,
which opinion shall be conclusive evidence as to such feasibility or
sufficiency.
(c) Until the conditions of clauses (i) through (iv) of subsection (a) of
this Section 5.05 are satisfied with respect to a Series of Bonds that have been
declared due and
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payable following an Event of Default or until the Trustee determines to take
the action specified in said subsection (a), then all amounts collected by the
Trustee with respect to such Series pursuant to this Article V, or otherwise
shall be applied in accordance with Section 5.08; provided, however, that if the
Trustee shall have acquired the entire Trust Estate securing such Series by
purchasing it at any public or private Sale conducted pursuant to Section 5.18,
the Trustee shall, to the extent permitted by applicable law, apply all
Distributions and other amounts receivable with respect to such Trust Estate
pursuant to Section 5.05(a) if the Trustee determines that the conditions set
forth in Section 5.05(a)(i) and (iv) are satisfied and if the Trustee obtains
(i) if no election has been made or will be made to treat the Trust Estate
securing the Series or the Issuer as a REMIC, an Opinion of Counsel to the
effect that such Trust Estate will not as a result of such action be deemed to
be an association taxable as a corporation under federal tax laws, (ii) except
as otherwise provided in the related Terms Indenture, a Non-Disqualification
Opinion (if an election has been made or will be made to treat the Trust Estate
securing the Series or the Issuer as a REMIC) and (iii) an Opinion of Counsel to
the effect that, notwithstanding the acquisition of such Trust Estate by the
Trustee, the rights, powers and duties of the Trustee with respect to such Trust
Estate (or the proceeds thereof) and the related Bondholders and the rights of
such Bondholders shall continue to be governed by the terms of the Indenture and
the related Terms Indenture.
(d) Notwithstanding anything in the Indenture to the contrary, if an Event
of Default specified in Section 5.01(a) or (b) is the Event of Default, or one
of the Events of Default, on the basis of which the Bonds of a Series have been
declared due and payable, then the Trustee may, in its sole discretion and to
the extent permitted by applicable law, but subject to Section 5.14, retain the
Trust Estate securing such Series without compliance with this Section 5.05
provided, however, that if the Trustee is unable to make the determination
required by Section 5.05(a)(i), in respect of which determination the Trustee
may act pursuant to Section 5.05(b), all Distributions and other amounts
receivable with respect to the Trust Estate shall be applied by the Trustee
pursuant to Section 5.08.
SECTION 5.06 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
Proceeding relative to the Issuer or any other obligor upon any of the Bonds or
the property of the Issuer or of such other obligor or their creditors, the
Trustee (irrespective of whether the Bonds of any Series shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Issuer for the payment of
any overdue principal or interest) shall be entitled and empowered, by
intervention in such Proceeding or otherwise, to
(a) file and prove a claim for the whole amount owing and unpaid in
respect of the Bonds of each Series issued hereunder and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Bondholders allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
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and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such Proceeding is hereby authorized by each
Bondholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due to the Trustee under Section
6.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Bondholder any
plan of reorganization, arrangement, adjustment, or composition affecting
any of the Bonds or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Bondholder in any such
Proceeding.
SECTION 5.07 Trustee May Enforce Claim C without Possession of Bonds.
All rights of action and claims under the Indenture or any of the Bonds may
be prosecuted and enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any Proceeding relating thereto, and any such
Proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall be for the ratable
benefit of the Holders of the Bonds of that Series in respect of which such
judgment has been recovered and applied as set forth in Section 5.08.
SECTION 5.08 Application of Money Collected.
If the Bonds of a Series have been declared due and payable following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, any money collected by the Trustee with respect to such
Series of Bonds pursuant to this Article or otherwise and any moneys that may
then be held or thereafter received by the Trustee shall (unless such money is
being applied in accordance with Section 5.05(a)) be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of the entire amount due on account of principal of, premium, if
any, and interest on any Definitive Bond, upon presentation and surrender,
thereof:
First: To the payment of all expenses incurred by the Trustee in
connection with collecting any amounts due hereunder and all fees and
expenses of the Trustee under Section 6.07;
Second: To the payment of all amounts then due and unpaid upon the
Bonds of such Series for:
(a) interest (including any interest accrued on any Compound Interest
Bonds of such Series from the first day of the first Interest
Accrual Period for such Series for which interest has not been paid
preceding the declaration of acceleration of the maturity of the
Bonds of such Series) on the Aggregate Current Principal Amount of
the Bonds of such Series through the Designated Interest Accrual
Date preceding the Trustee's demand for payment pursuant to Section
5.03, at the respective Bond Interest Rates borne by such Bonds;
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(b) interest on the Aggregate Current Principal Amount of the Bonds of
such Series from the date of the Trustee's demand for payment
pursuant to Section 5.03 through the Designated Interest Accrual
Date at the Overdue Bond Interest Rate for such Series or such
lower rate at which payment of such interest shall be legally
enforceable; and
(c) interest (but only to the extent payment thereof shall be legally
enforceable) on any overdue installments of interest on the Bonds
of such Series from the Stated Maturity of any such installments
through the Designated Interest Accrual Date at the respective Bond
Interest Rates at which such interest accrued and thereafter at the
Overdue Bond Interest Rate for such Series or such, lower rate at
which payment of such interest shall be legally enforceable;
all such amounts to be paid ratably among the Bonds without regard to their
respective Classes and without preference or priority of any kind;
Third: To the payment of the amounts then due and unpaid upon the Bonds
of such Series with respect to the Current Principal Amount of such Bonds
ratably, without regard to their Classes and without preference or priority
of any kind; and
Fourth: To the payment of the remainder, if any, to the Residual Payee
or any other Person legally entitled thereto.
SECTION 5.09 Limitation of Suits.
No Holder of any Bond shall have any right to institute any Proceedings,
judicial or otherwise, with respect to the Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to such Series;
(b) the Holders of Bonds representing not less than 25% of the then
Aggregate Current Principal Amount of the Bonds of the Series of which such
Holder's Bond is a part shall have made written request to the Trustee to
institute Proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity satisfactory to it against the costs, expenses and liabilities to
be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such Proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of Bonds
representing at least 50% of the then Aggregate Current Principal Amount of
the Bonds of that Series;
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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 the 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 the Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders of Bonds. of
the same Series.
SECTION 5.10 Unconditional Rights of Bondholders to Receive Principal and
Any Premium and Interest.
Notwithstanding any other provision in the Indenture, the Holder of any
Bond shall have the right, which right is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and interest on such Bond on
or after the respective Stated Maturities of such principal and interest
expressed in such Bond (or, in the case of any Bond called for redemption, on
the date fixed for redemption) in the manner provided herein and in the related
Terms Indenture and to institute suit for the enforcement of any such payment on
or after such respective Stated Maturities, and such right shall not be impaired
without the consent of such Holder, except that no Bondholder may institute any
such suit if and to the extent that the institution or prosecution thereof or
the entry of judgment thereon would, under applicable law, result in the
surrender, impairment, waiver, or loss of the lien of the Indenture upon any
portion of the Trust Estate for the related Series.
SECTION 5.11 Restoration of Rights and Remedies.
If the Trustee or any Bondholder has instituted any Proceeding to enforce
any right or remedy under the Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or such Bondholder, then and in every such case the issuer, the
Trustee and the Bondholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
thereunder, and thereafter all rights and remedies of the Trustee and the
Bondholders shall continue as though no such Proceeding had been instituted.
SECTION 5.12 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee or to
the Bondholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.13 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Bond to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiesce therein. Every right and remedy given by this Article or by law to the
Trustee or to the Bondholders may be exercised from time to time,
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and as of ten as may be deemed expedient, by the Trustee or by the Bondholders,
as the case may be.
SECTION 5.14 Control by Bondholders.
Subject to Section 6.03(e), the Holders of Bonds representing more than 50%
of the then Aggregate Current Principal Amount of the Bonds of a Series shall
have the right to direct the time, method and place of conducting any Proceeding
or any remedy available to the Trustee with respect to such Series or exercising
any trust or power conferred on the Trustee with respect to such Series;
provided that
(a) such, direction shall not be in conflict with any rule of law or
with the Indenture,
(b) any sale of any portion of the Trust Estate shall be subject to
Section 5.18(b), and
(c) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; provided, however, that,
subject to Section 6.01, the Trustee need not take any action which it
determines might involve it in liability or be unjustly prejudicial to the
Bondholders not consenting.
SECTION 5.15 Waiver of Past Defaults.
The Holders of Bonds representing more than 50% of the then Aggregate
Current Principal Amount of the Bonds of a Series may on behalf of the Holders
of all the Bonds of such Series waive any past Default hereunder and its
consequences, except a Default
(1) in the payment of principal of, premium, if any, or interest on any
Bond of that Series, or
(2) in the respect of a covenant or provision hereof which under
Section 9.02 cannot be modified or amended without the consent of the
Holder of each Outstanding Bond affected.
Upon any such waiver, such Default shall cease to exist and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of the Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 5.16 Undertaking for Costs.
All parties to the 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
the Indenture, or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party
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litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Bondholder, or group of
Bondholders, holding Bonds representing more than 10% of the then Aggregate
Current Principal Amount of the Bonds of the affected Series, or to any suit
instituted by any Bondholder for the enforcement of the payment of the principal
of, premium, if any, or interest on any Bond on or after the Stated Maturity
thereof expressed in such Bond (or, in the case of any Bond called for
redemption, on or after the applicable date fixed for redemption).
SECTION 5.17 Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants in or the
performance of the Indenture; and the Issuer (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 5.18 Sale of Trust Estate.
(a) The power to effect any sale (a "Sale") of any portion of a Trust
Estate pursuant to Section 5.04 is subject to Section 5.05 and shall not be
exhausted by any one or more Sales as to any portion of such Trust Estate
remaining unsold, but shall continue unimpaired until the entire such Trust
Estate shall have been sold or all amounts payable on the Bonds of the Series
secured thereby and under the Indenture with respect thereto shall have been
paid. The Trustee may from time to time postpone any public Sale by public
announcement made at the time and place of such Sale. The Trustee hereby
expressly waives its right to any amount fixed by law as compensation for any
Sale.
(b) Unless an Event of Default set forth in Section 5.01(a) or (b) shall
have occurred and be continuing, the Trustee shall not in any private Sale sell
or otherwise dispose of the Trust Estate, or any portion thereof, securing a
Series of Bonds which has been declared due and payable unless
(1) the Holders of all Outstanding Bonds of such Series consent to, or
direct the Trustee to make, such Sale,
(2) the proceeds of such Sale would be not less than the entire amount
which would be distributable to the Holders of the Bonds of such Series, in
full payment thereof in accordance with Section 5.08, on the Special
Payment Date next succeeding the date of such Sale, or
(3) the Trustee determines, in its sole discretion, that the conditions
for retention of such Trust Estate set forth in Section 5.05(a)(i) and (iv)
cannot be satisfied (in making any such determination, the Trustee may
obtain and rely upon an opinion of an Independent investment banking firm
or firm of Independent Accountants as provided in Section 5.05(b)), and the
Holders of Bonds representing at least 66-2/3% of the
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Aggregate Current Principal Amount of the Outstanding Bonds of such Series
consent to such Sale.
The foregoing provisions shall not preclude or limit the ability of the Trustee
to purchase all or any portion of the Trust Estate at a private Sale; provided,
that unless otherwise specified in the related Terms Indenture, in no event
(except as may be compelled or required by applicable law or court order in
which case the provisions of Section 4.03 shall apply if appropriate) shall the
Trustee purchase or sell the Trust Estate or any portion thereof (if an election
has been made to treat the Trust Estate securing the Series or the Issuer as a
REMIC) unless it either (i) has received a Non-Disqualification Opinion, or (ii)
the proceeds of such Sale net of any tax on "prohibited transactions" as defined
in Section 860F of the Code that is payable from the Trust Estate would be not
less than the entire amount that would be distributable to the Holders of the
Bonds, in full payment thereof in accordance with Section 5.08, or on the
Special Payment Date next succeeding the date of such Sale, and such Sale meets
the requirements of Section 4.03; and provided further, however, that the
Trustee shall not be precluded from such purchase by its inability to comply
with Section 4.03 or to receive a Non-Disqualification Opinion in the event that
the conditions for retention of the Trust Estate set forth in Section 5.05(a)(i)
through (iv) cannot be satisfied.
(c) Except as otherwise provided in the related Terms Indenture, unless the
Holders of all Outstanding Bonds have otherwise consented or directed the
Trustee, at any public Sale of all or any portion of a Trust Estate at which a
minimum bid equal to or greater than the sum of the amount described in
subdivision (2) of subsection (b) of this Section 5.18, plus the amount of any
tax on "prohibited transactions" as defined in Section 860F of the Code that
would be, payable from the Trust Estate if an election has been made or will be
made to treat the Trust Estate securing the Series or the Issuer as a REMIC, has
not been established by the Trustee and no Person bids an amount equal to or
greater than such sum, the Trustee shall bid an amount at least $1.00 more than
the highest other bid.
(d) in connection with a Sale of all or any portion of a Trust Estate
(1) any Holder or Holders of Bonds of the Series secured thereby 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 of such Series or claims for
interest thereon in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
Bonds, in case the 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 Trustee may bid for and acquire the property offered for Sale
in connection with any public Sale thereof, and, in lieu of paying cash
therefor, may make settlement for the purchase price by crediting the gross
Sale price against the sum of (A) the amount which would be distributable
to the Holders of the Bonds of the Series secured thereby as a result of
such Sale in accordance with Section 5.08 on the Special Payment Date next
succeeding the date of such Sale and (B) the expenses of the Sale and
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of any Proceedings in connection therewith which are reimbursable to it,
without being required to produce the Bonds of such Series in order to
complete any such Sale or in order for the net Sale price to be credited
against such Bonds, and any property so acquired by the Trustee shall be
held and dealt with by it in accordance with the provisions of the
Indenture;
(3) the Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of such Trust Estate in
connection with a Sale thereof;
(4) the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to transfer and convey its interest in any
portion of such Trust Estate in connection with a Sale thereof, and to take
all action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(e) Notwithstanding anything in the Indenture to the contrary, if an Event
of Default specified in Section 5.01(a) or (b) is the Event of Default, or one
of the Events of Default on the basis of which the Bonds of a Series have been
declared due and payable, then the Trustee may, in its sole discretion, sell the
Trust Estate securing such Series without compliance with this Section 5.18,
but, except as otherwise provided in the related Terms Indenture, subject to and
in compliance with Section 4.03 or the Trustee's receipt of a
Non-Disqualification Opinion, if an election has been made or will be made to
treat the Trust Estate securing the Series or the Issuer as a REMIC; provided,
however, that the Trustee shall not be precluded from such sale by its inability
to comply with Section 4.03 or to receive a Non-Disqualification opinion in the
event that the conditions for retention of the Trust Estate set forth in Section
5.05(a)(i) through (iv) cannot be satisfied.
SECTION 5.19 Action on Bonds.
The Trustee's right to seek and recover judgment on a Series of Bonds or
under the Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to the Indenture. Neither
the lien of the Indenture nor any rights or remedies of the Trustee or the
Holders of Bonds of any Series shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate securing such Series.
SECTION 5.20 Recourse to Trust Estate.
The Trust Estate Granted to the Trustee as security for a particular Series
will serve as security only for that Series. Notwithstanding any provision of
the Indenture to the contrary, Holders of Bonds of one Series shall have no
recourse against the Trust Estate Granted to the Trustee as security for any
other Series, and no judgment against the Issuer for any amount due with respect
to one Series of Bonds may be enforced against the Trust Estate securing any
other Series, nor may any prejudgment lien or other attachment be sought against
any such other Trust Estate.
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ARTICLE VI
THE TRUSTEE
SECTION 6.01 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in the Indenture and no implied covenants
shall be read into the Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of the Indenture; but in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of the Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by the Indenture, and
use the same degree of care and skill in their exercise, as a reasonable prudent
man would exercise or use under the circumstances in the conduct of his own
affairs.
(c) No provision of the Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:
(1) this Subsection (c) shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of
the Holders of Bonds representing at least 50% of the then Aggregate
Current Principal Amount of the Bonds of any Series relating to the time,
method and place of conducting any Proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee,
under the Indenture with respect to such Series.
(d) Whether or not therein expressly so provided, every provision of the
Indenture relating to the conduct or affecting the liability of and affording
protection to the Trustee shall be subject to the provisions of Subsections (a),
(b) and (c) this Section.
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(e) No provision of the Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it; provided, however, that the Trustee shall not refuse to perform,
any of its duties hereunder, solely as a result of the Issuer's failure to pay
the Trustee's fees and expenses. Notwithstanding the foregoing, nothing in this
Section 6.01(e) shall be construed to limit the exercise by the Trustee of any
right or remedy permitted under the Indenture or otherwise in the event of the
Issuer's failure to pay the Trustee's fees and expenses pursuant to Section
6.07.
(f) The provisions of this Section 6.01 shall also apply to any co-trustee
or separate trustee authorized under Section 6.14.
SECTION 6.02 Notice of Default.
Within 90 days after the occurrence of any Default hereunder, the Trustee
shall transmit by mail to all the Bondholders affected by such Default, in the
manner and to the extent provided in TIA Section 313(c), notice of each such
Default known to the Trustee, unless such Default shall have been cured or
waived; provided, however, that except in the case of a Default in the payment
of the principal of or any interest on any Bond, the Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders of the Bonds of the Series affected by
such Default; and provided, further, that in the case of any Default of the
character specified in Section 5.01(d) or 5.01(e) no such notice to the Holders
of the Bonds of the Series affected by such Default shall be given until at
least 30 days after the occurrence thereof. The provisions of this Section 6.02
shall also apply to any co-trustee or separate trustee authorized under Section
6.14.
SECTION 6.03 Certain Rights of Trustee.
Except as otherwise provided in Section 6.01:
(a) In the absence of bad faith or negligence, the Trustee may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note, or other paper or document reasonably believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer order and, in the event
the Issuer is a corporation, any resolution of the Board of Directors of the
Issuer may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of the Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder,
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the Trustee (unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, obtain and rely upon an Officers'
Certificate or an Opinion of Counsel;
(d) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by the Indenture at the request or direction of any of
the Bondholders pursuant to the Indenture, unless such Bondholders shall have
offered to the Trustee reasonable security or indemnity satisfactory to it
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may deem appropriate,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or under
the related Terms Indenture or perform any duties hereunder or under the related
Terms Indenture either directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by the Indenture.
SECTION 6.04 Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein, in any indenture supplemental hereto and in
the Bonds, except the certificates of authentication on the Bonds, shall be
taken as the statements of the Issuer, and the Trustee shall have no
responsibility for their correctness. The Trustee makes no representations with
respect to any Trust Estate securing a Series of Bonds or as to the validity or
sufficiency of the Indenture or of the Bonds. The Trustee shall not be
accountable for the use or application by the Issuer of either the Bonds or the
proceeds thereof.
SECTION 6.05 May Hold Bonds.
The Trustee, any Agent or any other agent of the Issuer, in its individual
or any other capacity, may become the owner or pledgee of Bonds and, subject to
Sections 6.08 and 6.13, may otherwise deal with the Issuer with the same rights
it would have if it were not Trustee, Agent or such other agent.
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SECTION 6.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by the Indenture or by law, but shall
be accounted for separately for each Series. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Issuer and except to the extent of income or other gain on
investments that are obligations of the Trustee, as principal obligor, and
income or other gain actually received by the Trustee on investments that are
obligations of others. Subject to Section 6.01, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Trust Account, including,
but not limited to, any insufficiency resulting from any loss of investment in
Eligible Investments, except for losses attributable to the Trustee's failure to
make payments on Eligible Investments of the Trustee, as principal obligor, in
accordance with their terms.
SECTION 6.07 Compensation and Reimbursement.
The Issuer agrees
(a) to pay the Trustee reasonable compensation as agreed upon from time to
time as compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in connection with the acceptance or
administration of this Trust in accordance with any provision of the Indenture
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or willful misconduct; and
(c) to indemnify the Trustee and its agents for, and to hold them harmless
against, any loss, liability or expense incurred without negligence or willful
misconduct on their part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of counsel to
defend themselves against any claim or liability in connection with the exercise
or performance of any of their powers or duties hereunder, provided that:
(i) with respect to any such claim, the Trustee shall have given the
Issuer written notice thereof promptly after the Trustee shall have
knowledge thereof;
(ii) while maintaining absolute control over its own defense, the
Trustee shall, unless its interests are adverse to that of the Issuer,
cooperate and consult fully with the Issuer in preparing such defense;
(iii) notwithstanding any other provision of this Section 6.07(c), the
Issuer shall not be liable for settlement of any such claim by the Trustee
entered into without the prior written consent of the Issuer; and
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(iv) the Trustee and its agents, as a group, shall be entitled to
counsel, separate from the Issuer to the extent, the Issuer's interests are
adverse to the Trustee's or the interests of such agents.
As security for the performance of the Issuer under this Section, the
Trustee shall have a lien ranking junior to the lien of the Bonds of the Series
with respect to which any claim of the Trustee under this Section arose (but
senior to all other liens, if any) upon all property and funds held or collected
as part of the Trust Estate for such Series by the Trustee in its capacity as
such. The Trustee shall not institute any Proceeding seeking the enforcement of
such lien against any Trust Estate unless (i) such Proceeding is in connection
with a Proceeding for enforcement of the lien of the Indenture for the benefit
of the Holders of Bonds secured by such Trust Estate after the occurrence of an,
Event of Default (other than one arising from the Issuer's failure to pay
amounts due the Trustee under this Section 6.07), or (ii) such Proceeding is not
a bankruptcy proceeding and does not seek a Sale or other disposition of such
Trust Estate. Failure to pay the Trustee the amount due under this Section 6.07
will not constitute an Event of Default.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Sections 5.01(f) or (g), the expenses and compensation for
its services are intended to constitute expenses of administration under any
applicable bankruptcy law.
SECTION 6.08 Disqualification; Conflicting Interests.
The Indenture shall always have a Trustee who satisfies the requirements of
TIA Section 310(a)(1). The Trustee shall always have a combined capital and
surplus as stated in Section 6.09. The Trustee shall be subject to TIA Section
310(b), including the optional provision permitted by the second sentence of TIA
Section 310(b)(9). For purposes of this Section, the Trustee shall include any
co-trustee or separate trustee authorized under Section 6.14.
In addition to the conflicting interests specified in TIA Section 310(b),
the Trustee shall be deemed to have a conflicting interest prohibited by Section
310(b)(1), and therefore prohibited by this Section 6.08 if the Trustee serves
as trustee for more than one Series under the same Indenture and by reason of
supplements or amendments to the Indenture as originally executed there shall be
created covenants, restrictions, conditions or additional events of default
which are applicable to less than all Series of Bonds and the existence of which
(1) would give the Holders of Bonds of any Series any rights with
respect to the Trust Estate or any other property held by the Trustee for
the benefit of Holders of Bonds of any other Series with respect to which
it is also serving as Trustee,
(2) would cause the Bonds of one or more Series not to rank equally
with the Bonds of any other Series, provided, however, that differences
among the Trust Estates securing the Bonds of various Series or differing
values of other property held by the Trustee for the benefit of Holders of
Bonds of various Series shall not be deemed to cause Bonds of any Series
not to rank equally with Bonds of any other Series, or
(3) is sufficiently likely to involve a material conflict of interest
between Series of Bonds that it is advisable in the public interest or for
the protection of Holders
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of Bonds of any Series that the Trustee disqualify itself from acting as
such with respect to one or more applicable Series of Bonds.
SECTION 6.09 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder (a) which shall be a
corporation organized and doing business under the laws of the United States of
America or any State, (b) authorized under such laws to exercise corporate trust
powers, (c) having a combined capital and surplus of at least $25,000,000 or
being a member or subsidiary of a bank holding system, the aggregate combined
capital and surplus of which is at least $25,000,000 (provided that the
Trustee's separate capital and surplus shall at all times be at least the amount
required by TIA Section 310(a)(2)), and (d) subject to supervision or
examination by federal or state authority and having an office within the United
States of America. If the Trustee or the members of the bank holding company
system of which it is a part publish annual reports of condition of the type
described in TIA, Section 310(a)(2) its (or such bank holding company systems)
combined capital and surplus for purposes of this Section 6.09 shall be as set
forth in the latest such report or reports. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article. No successor Trustee shall be eligible hereunder if its
appointment would adversely affect the rating on any Series of Bonds
Outstanding.
SECTION 6.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Bonds of one or
more Series by giving written notice thereof to the Issuer. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time with respect to any Series by
Act of the Holders representing at least 50% of the then Aggregate Current
Principal Amount of the Bonds of that Series, delivered to the Trustee and to
the Issuer.
(d) If at any time:
(1) the Trustee shall have a conflicting interest prohibited by Section
6.08 and shall fail to resign or eliminate such conflicting interest in
accordance with Section 6.08 after written request therefor by the Issuer
or by any Bondholder who has been a bona fide Holder of a Bond for at least
six months, or
(2) the Trustee shall cease to be eligible under Section 6.09 and shall
fail to resign after written request therefor by the Issuer or by any such
Bondholder, or
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(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer by an Issuer Order may remove the
Trustee, or (ii) subject to Section 5.16, any Bondholder who has been a bona
fide Holder of a Bond for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Issuer, by an Issuer Order shall promptly appoint a successor Trustee. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of the notice of such removal, the
removed Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee. If within one year after such resignation,
removal or incapability or the occurrence of such vacancy a successor Trustee
with respect to any Series shall be appointed by Act of the Holders of Bonds
representing more than 50% of the then Aggregate Current Principal Amount of the
Outstanding Bonds of that Series delivered to the Issuer and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee and supersede the successor
Trustee appointed by the Issuer. If no successor Trustee shall have been so
appointed by the Issuer or Bondholders and shall have accepted appointment in
the manner hereinafter provided, any Bondholder who has been a bona fide Holder
of a Bond for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders of Bonds
of each Series affected thereby. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Issuer and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and the retiring or removed Trustee shall be discharged
and released and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Issuer or the successor Trustee,
such retiring Trustee shall, upon payment of its charges and any amounts due to
the Trustee pursuant to Section 6.07, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee (provided, however, that unless the retiring Trustee has been
removed, pursuant to Section 6.10(c), with respect to each Series for which it
is Trustee, then such transfer shall be limited to its rights and powers with
respect to each Series with respect to which it has been removed), and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder (provided, however, that if the
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retiring Trustee has been removed, pursuant to Section 6.10(c), with respect to
less than all Series for which it is Trustee, then such assignment, transfer and
delivery by the retiring Trustee shall be limited to the property and money held
by it for the benefit of the Holders of Bonds of the Series with respect to
which it has been removed) subject nevertheless to its lien, if any, provided
for in Section 6.07. Upon request of any such successor Trustee, the Issuer
shall execute and deliver any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
The indemnity provided for in Section 6.07 shall continue to be binding
upon the Issuer for the benefit of the retiring or removed Trustee.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of
Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Bonds have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Bonds so authenticated with the same effect as if
such successor Trustee had authenticated such Bonds.
SECTION 6.13 Preferential Collection of Claims Against Issuer.
The Trustee, and any co-trustee or separate trustee authorized in Section
6.14, shall be subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b), and a Trustee, co-trustee or separate
trustee who has resigned or been removed shall be subject to TIA Section 311(a)
to the extent indicated.
SECTION 6.14 Co-trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal requirements of
any jurisdiction in which any part of the Trust Estate securing a Series may at
the time be located, the Issuer and the Trustee shall have the power to appoint,
and, upon the written request of the Trustee or of the Holders of Bonds
representing more than 50% of the then Aggregate Current Principal Amount of the
Bonds of such Series secured by the Trust Estate with respect to which a
co-trustee or separate trustee is being appointed, the Issuer shall for such
purpose join with the Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint one or more Persons
approved by the Trustee either to act as separate trustee or trustees, or
co-trustee or co-trustees jointly with the Trustee of all or any part of such
Trust Estate, in either case with such powers as may be provided in the
instrument of the appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power
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deemed necessary or desirable, subject to the other provisions of this Section.
If the Issuer does not join in such appointment within 15 days after the receipt
by it of a request to do so, or in case an Event of Default has occurred and is
continuing, the Trustee alone shall have power to make such appointment.
Should any written instrument from the Issuer be required by any co-trustee
or separate trustee so appointed for more fully confirming to such co-trustee or
separate trustee such property, title, right or power, any and all such
instruments shall, on request, be executed, acknowledged and delivered by the
Issuer.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms:
(1) The Bonds shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised solely
by the Trustee.
(2) The rights, powers, duties and obligations hereby conferred or
imposed upon trustees hereunder shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such co-trustee
or separate, trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act is to be
performed, the Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations shall be
exercised and performed by such co-trustee or separate trustee.
(3) The Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Issuer evidenced by an Issuer Order may
accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, if the Issuer does not join in such
action within 15 days after the receipt by it of a request to do so, or in
case an Event of Default has occurred and is continuing, the Trustee shall
have power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Issuer. Upon the written
request of the Trustee, the Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A successor
to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section.
(4) Neither the Trustee nor any co-trustee or separate trustee
hereunder shall be personally liable by reason of any act or omission of
any other Trustee, co-trustee or separate trustee.
(5) Any Act of Bondholders delivered to the Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee as
effectually as if delivered to each of them.
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SECTION 6.15 Authenticating Agent.
Upon the request of the Issuer, the Trustee shall appoint an Authenticating
Agent with power to act on its behalf and subject to its direction in the
authentication and delivery of the Bonds of each Series designated for such
authentication by the Issuer and containing provisions therein for such
authentication (or with respect to which the Issuer has made other arrangements,
satisfactory to the Trustee and such Authenticating Agent, for notation on the
Bonds of such Series of the authority of an Authenticating Agent appointed after
the initial authentication and delivery of such Bonds) in connection with
transfers and exchanges under Sections 2.06 and 2.07, as fully to all intents
and purposes as though the Authenticating Agent had been expressly authorized by
those Sections to authenticate and deliver Bonds of such Series. If an
Authenticating Agent for a Series is designated in the related Terms Indenture,
no separate request or appointment shall be required. For all purposes of the
Indenture, the authentication and delivery of Bonds by the Authenticating Agent
pursuant to this Section shall be deemed to be the authentication and delivery
of Bonds "by the Trustee." Such Authenticating Agent shall at all times be a
bank or trust company having its principal office in the city designated in the
applicable Terms Indenture, and shall at all times be a Person that meets the
requirements of Section 6.09 for the Trustee hereunder.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of the Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any further act on the part of the
parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and the Issuer. The Trustee may at any time terminate
the agency of any Authenticating Agent by giving written notice of termination
to such Authenticating Agent and the Issuer. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent, shall give written
notice of such appointment to the Issuer and shall mail notice of such
appointment to all Holders of Bonds of the applicable Series.
The Issuer agrees to pay to the Authenticating Agent from time to time
reasonable compensation for its services unless an arrangement has been made
between the Issuer and the Trustee pursuant to which the Trustee shall make such
payments and, in such case, the Trustee shall be entitled to be reimbursed for
such payments, subject to Section 6.07. The provisions of Sections 2.20, 6.04
and 6.05 shall be applicable to any Authenticating Agent.
SECTION 6.16 Actions Necessary to Preserve Trust Estate.
If the Issuer fails to take any action required by Section 3.05 with
respect to which a Responsible Officer assigned to the Corporate Trust
Department of the Trustee has notice, then,
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subject to the provisions of this Article VI, the Trustee will use its best
efforts to take such action or cause such action to be taken.
ARTICLE VII
BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01 Issuer to Furnish Trustee Names and Addresses of Bondholders.
The Issuer will furnish or cause to be furnished to the Trustee (i)
semi-annually, not less than 45 days nor more than 60 days after each Interest
Payment Date for a Series, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Bonds of such Series as of
such Interest Payment Date, and (ii) at such other times, as the Trustee may
request in writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Trustee is the Bond Registrar, no such list shall be required to be furnished.
If the Bonds of a particular Series have Interest Payment Dates which are more
frequent than semiannual, then the applicable Interest Payment Dates for
purposes of clause (i) of the preceding sentence shall be the Interest Payment
Date occurring closest to six months after the Closing Date for such Series and
each Interest Date occurring at six-month intervals thereafter.
SECTION 7.02 Preservation of Information; Communications to Bondholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Bonds contained in the
most recent list, if any, furnished to the Trustee as provided in Section 7.01
and the names and addresses of the Holders of Bonds received by the Trustee in
its capacity as Bond Registrar. The Trustee may destroy any list furnished to it
as provided in Section 7.02 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 the Indenture or under the Bonds.
(c) The Issuer, the Trustee and the Bond Registrar shall have the
protection of TIA Section 312(c).
SECTION 7.03 Reports by Trustee.
(a) Within 60 days after may 15 of each year (the "reporting date"),
commencing with the year after the issuance of any Series of Bonds, (i) the
Trustee shall mail to all Holders of such Series a brief report dated as of such
reporting date with respect to such Series that complies with TIA Section
313(a); (ii) the Trustee shall also mail to Holders of Bonds of any Series with
respect to which it has made advances, any reports with respect to such advances
that are required by TIA Section 313(b)(2) and (iii) in the event that any
Series of Bonds is issued under a Terms Indenture that provides for release, or
release and substitution, of collateral securing such Series, the Trustee shall
also mail to Holders of Bonds of such Series any reports required by TIA Section
313(b)(1). For purposes of the information required to be included in
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any such reports pursuant to TIA Section 323(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 Aggregate Current
Principal Amount of the then Outstanding Bonds of the particular Series covered
by the report. The Trustee shall also mail the foregoing reports to such Holders
of Bonds as have filed within the two years preceding such transmission their
names and addresses with the Trustee for that purpose, and, except in the case
of reports required under TIA Section 323(b), to all Holders of Bonds whose
names and addresses have been furnished to or received by the Trustee pursuant
to TIA Section 312.
(b) A copy of each report required under this Section 7.03 shall, at the
time of such transmission to Holders of Bonds of the Series covered by such
report, be filed by the Trustee with the Commission and with each securities
exchange upon which the Bonds of such Series are listed. The Issuer shall notify
the Trustee when the Bonds of any Series are listed on any securities exchange.
For purposes of this Section 7.03, the reference to Trustee shall include
any co-trustee or separate trustee authorized under Section 6.14.
SECTION 7.04 Reports by Issuer.
The Issuer will
(1) file with the Trustee, within 15 days after the Issuer is required
to file the same with the Commission, copies of the annual reports and of
the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended; or, if the Issuer is not required to file
information, documents or reports pursuant to either of said Sections, then
it will file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants of the Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to all Holders of Bonds of each Series as their
names and addresses appear in the Bond Register for such Series of Bonds,
or in the list of Bondholders most recently provided to the Trustee by the
Issuer under Section 7.01, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required
to be filed by the Issuer pursuant to clauses
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(1) and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission; and
(4) upon request from a Holder of a Principal Priority Bond of the
respective Class of Principal Priority Bonds, notify such Bondholder of the
aggregate principal amount, as of the last day of the preceding calendar
year, of unaccepted requests for Bondholder Redemption by deceased
Bondholders and by other Bondholders of the respective Class of Principal
Priority Bonds.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01 Collection of Moneys.
Except as otherwise expressly provided herein, the Trustee may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Trustee pursuant to the
Indenture, including all payments due on the Certificates securing the Bonds in
accordance with the terms and conditions of such Certificates. The Trustee shall
hold all such money and property received by it as part of the Trust Estate with
respect to which it was received, and shall apply it as provided in the
Indenture. If the Trustee shall not have received a Distribution with respect to
any Certificate by the first Business Day after the related Due Date, the
Trustee shall, unless the Issuer shall have made provisions satisfactory to the
Trustee for delivery to the Trustee of any amount equal to such Distribution,
request that GNMA, FNMA, FHLMC, the Conventional Certificate Servicer or the
Certificate Trustee, as the case may be, make available to the Trustee in
immediately available funds such payments, or take such other action as the
Trustee shall determine in accordance with the procedures of GNMA, FNMA, FHLMC,
the Conventional Certificate Servicer or the Certificate Trustee then in effect,
including procedures under any agreements with the Issuer. Notwithstanding any
other provision of the Indenture, the Trustee shall deliver to the Issuer or its
designee any Distribution received with respect to any Certificate after the
related Distribution Due Date to the extent that the Issuer previously made
payment with respect to such Distribution in accordance with this Section 8.01,
and any such Distribution will not be deemed part of the Trust Estate for the
related Series.
Except as otherwise provided in the Indenture, if, following such request
for payment, any default occurs in the making of such payment or in any other
performance required under any Certificate with respect to any Series, the
Trustee may, and upon the request of Holders of Bonds representing more than 50%
of the then Aggregate Current Principal Amount of the Bonds of the affected
Series shall, take such action as may be appropriate to enforce such payment or
performance including the institution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default with respect to such Series under the Indenture and to proceed
thereafter as provided in Article V hereof.
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SECTION 8.02 Collection Accounts.
(a) Prior to the initial authentication and delivery of Bonds of a Series,
the Issuer shall open, at the Corporate Trust Office, one or more trust accounts
(collectively, the "Collection Account") for such Series. All payments to be
made from time to time to the Bondholders of such Series out of funds in the
Collection Account for such Series pursuant to the Indenture shall be applied in
accordance with Sections 3.03, 5.05 or 5.08. The Trustee shall promptly deposit
in such Collection Account all Distributions received by it with respect to
Certificates securing the Bonds of a Series (except for late Distributions with
respect to a Distribution to be delivered to the Issuer pursuant to Section
8.01). All moneys deposited from time to time in a Collection Account, including
any amount required by the related Terms Indenture to be deposited in the
Collection Account for a Series on the Closing Date and all deposits therein
pursuant to the Indenture, and all investments made with such moneys, including
all Available Reinvestment Income thereon, if any, shall be held by the Trustee
in such Collection Account as part of the Trust Estate for the related Series as
herein provided, subject to withdrawal by the Trustee for the purposes set forth
in Subsections (c) and (d) of this Section 8.02 and the terms of the related
Terms Indenture.
(b) Except as otherwise provided in the related Terms Indenture, so long as
no Default or Event of Default shall have occurred and be continuing with
respect to the related Series, all or a portion of a Collection Account, shall
be invested and reinvested by the Trustee at the Issuer's direction or pursuant
to the provisions of the related Terms Indenture in one or more Eligible
Investments bearing interest or sold at discount. All income or other gain from
investments of moneys deposited in a Collection Account shall be deposited by
the Trustee in such Collection Account immediately upon receipt, and any loss
resulting from such investments shall be charged to such Collection Account.
Unless otherwise provided in the related Terms Indenture, the maximum
permissible maturities of any such investments pursuant to this Section 8.02(b)
on any date shall not be later than the Business Day immediately preceding the
earlier of the next Principal Reduction Date for such Series (or the second
succeeding Principal Reduction Date if such investment is made on or after the
Special Redemption Determination Date for such next Principal Reduction Date)
unless
(i) at the time of such investment such Series is not subject to
Special Redemption or
(ii) prior to making such investment
(A) the Accounting Party shall have determined that, as of the
preceding Special Redemption Determination Date, the Issuer would not
have been obligated under Section 10.01 to make a Special Redemption of
Bonds of the related Series on the Special Redemption Date following
such preceding Special Redemption Date (after giving effect, on a
pro-forma basis, to such proposed investment and all other investments
made since such preceding Special Redemption Date) and shall have
prepared an Investment Statement with respect to such determination,
and
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(B) the Issuer shall have delivered to the Trustee an Issuer Order
directing the Trustee to make such proposed investment subject to the
Accounting Party's determination pursuant to the foregoing clause (A),
as evidenced by its Investment Statement.
Notwithstanding the foregoing,
(i) except as permitted by clause (ii) below, no investment of any
amount held in a Collection Account may mature later than the Business Day
immediately preceding the next Payment Date for Bonds of the related
Series,
(ii) any investment (including repurchase agreements) on which the
Trustee (or other Person acceptable to each Rating Agency rating the
respective Series) is the obligor, may mature on a Payment Date, Special
Redemption Date or Special Payment Date if, under this Section 8.02 and
under Article X, such investment could otherwise mature on the Business Day
immediately preceding such Payment Date, Special Redemption Date or Special
Payment Date, and
(iii) if Bonds of a Series have been called for Special Redemption and
not so redeemed, or if there are any Overdue Bonds of such Series
Outstanding, funds then in the related Collection Account may be invested
in investments maturing later than the Business Day immediately preceding
the next Special Redemption Date or Special Payment Date, as the case may
be, only to the extent that after giving effect to such proposed investment
the amount of funds that would be on deposit in the Collection Account and
in the related Debt Service Reserve Fund, Reserve Fund and Special Reserve
Fund (including therein the amount of Distributions and proceeds of
investments scheduled to be deposited in such Collection Account, Debt
Service Reserve Fund, Reserve Fund and Special Reserve Fund prior to such
next Special Redemption Date or Special Payment Date) and would be
available to make payments on the Bonds of such Series on such next Special
Redemption Date or Special Payment Date, exceeds the sum of
(A) the Special Redemption Price payable with respect to any such
Bonds called for Special Redemption on such next Special Redemption
Date, and
(B) any payments of principal of or interest on any Overdue Bonds
of such Series due and payable on such next Special Payment Date.
(c) Except as otherwise provided in the related Terms Indenture, unless the
Bonds of the related Series have been declared due and payable pursuant to
Section 5.02 and moneys collected by the Trustee with respect to such Series are
being applied in accordance with Section 5.08, all amounts on deposit in a
Collection Account on any Payment Date, Special Redemption Date or Special
Payment Date shall be withdrawn from such Collection Account, in the amounts
required, for application as follows:
(i) on any Special Payment Date,
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first, to the payment, to the extent permitted by applicable law,
of interest due with respect to any Overdue Bonds of the related Series
then Outstanding, pro rata without any preference or priority as to
Maturity, and
second, to the payment of amounts due with respect to principal of
such Overdue Bonds (including any portion of an installment of
principal required to be paid which was not paid therefor, and any
amounts remaining unpaid on Bonds with respect to which the Special
Redemption Price was not paid in full on the applicable Special
Redemption Date), in the order in which such amounts became due and
among all amounts which became due on the same date; and
(ii) on any Payment Date or Special Redemption Date,
first, to payments on any Overdue Bonds of the related Series then
Outstanding, in accordance with the priorities set forth in clause (i)
above,
second, to the payment of any installments of interest then due on
any Bonds of such Series which are not Overdue Bonds, and
third, to the payment of the unpaid principal amount of any Bonds
of the related Class and Series then Outstanding, and the installments
of principal then required to be paid on such Series, pursuant to terms
of the Indenture (including the redemption of any Bonds of that Series
called or accepted for redemption),
each such amount being the amount thereof set forth in the applicable Special
Payment Date Statement, Payment Date Statement or Special Redemption Date
Statement, as the case may be.
(d) Except as otherwise provided in the related Terms Indenture, on or
after each Payment Date for a Series, so long as the Accounting Party shall have
prepared a Payment Date Statement in respect of such Payment Date and the issuer
shall have made, or, in accordance with Section 3.03, set aside from amounts in
the Collection Account for such Series an amount sufficient to make the payment
of principal of and interest on the Bonds of such Series then required to be
made as indicated in such Payment Date Statement, the cash balance, if any, then
remaining in the related Collection Account, less the amount of Distributions
due on the related Certificates but not received during the prior Due Period,
shall be withdrawn from such Collection Account by the Trustee and applied
(i) first, to the extent required by the related Terms Indenture, to
restore the amount then on deposit in the related Debt Service Reserve Fund
to an amount equal to the amount, if any, then required to be on deposit
therein, as determined in accordance with the related Terms Indenture,
(ii) second, to the extent required by the related Terms Indenture, to
restore the amount then on deposit in the related Reserve Fund and/or
Special Reserve Fund to an amount equal to the Requisite Amount of the
Reserve Fund with respect to such Reserve Fund, or the amount required to
be on deposit in the Special Reserve Fund according to the related Terms
Indenture, as the case may be, determined, in either case, after giving
effect to the payment of the installment of principal of the Bonds of such
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Series due and payable on such Payment Date and the redemption of Bonds, if
any, on such Payment Date,
(iii) third, to the payment of any unpaid amount due the Trustee
pursuant to Section 6.07,
(iv) fourth, to the payment of any unpaid amount due any firm of
Independent Accountants pursuant to Section 8.09(a), and
(v) fifth, to the extent required by the related Terms Indenture,
transferred to the Expense Fund (any amount so transferred being deemed
released from the lien of the Indenture).
The balance, if any, of the amount so withdrawn shall be released from the lien
of the Indenture and paid, except as otherwise provided in the related Terms
Indenture (a) with respect to any Series for which an election to treat the
Trust Estate securing the Series or the Issuer as a REMIC has not and will not
be made, to the Issuer or such other Person designated by Issuer Order, or (b)
with respect to any Series for which an election to treat the Trust Estate
securing the Series or the Issuer as a REMIC has been or will be made, to the
Person designated in the related Terms Indenture, subject, in either case, to
satisfaction of the following conditions:
(i) no Default or Event of Default shall have occurred and be
continuing,
(ii) the Issuer shall have paid all amounts due to all Persons under
the Indenture, including all reasonable fees and expenses of the Trustee,
(iii) the Accounting Party shall have delivered to the Report Recipient
the Payment Date Statement in respect of such Payment Date,
(iv) the Issuer shall have delivered to the Trustee the report or
certificate of Independent Accountants required by Section 8.09(b) with
respect to the most recent Payment Date for which such a report is required
by the Indenture,
(v) the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent to such release specified
in this subsection (d) have been satisfied, and
(vi) the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that all documents delivered to the Trustee in
connection with such release comply as to form with the requirements of
this subsection (d) and all conditions precedent to such release specified
in this subsection (d) have been satisfied.
SECTION 8.03 Debt Service Reserve Funds.
(a) On or before the Closing Date for a Series with respect to which a Debt
Service Reserve Fund is required to be established and maintained, the Issuer
shall open, at the Corporate Trust Office, one or more trust accounts which
shall collectively be the "Debt Service Reserve Fund" for such Series. Any and
all moneys received by the Trustee pursuant to Section 2.12(h)
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or section 2.12(i) (including any Eligible Investments delivered to the Trustee
pursuant to said Section 2.12(h) or Section 2.12(i) in lieu of cash), or
transferred from the related Collection Account pursuant to Section 8.02(d),
together with any Eligible Investments in which such moneys are or will be
invested or reinvested during the term of the Indenture, shall be held by the
Trustee in the Debt Service Reserve Fund for the related Series as part of the
Trust Estate Granted to secure the Bonds of such Series, subject to disbursement
and withdrawal as herein provided.
(b) Except as otherwise specified in the related Terms Indenture, so long
as no Default or Event of Default shall have occurred and be continuing with
respect to the related Series all or a portion of any moneys in a Debt Service
Reserve Fund shall be invested and reinvested by the Trustee at the Issuer's
direction or pursuant to the provisions of the related Terms Indenture in one or
more Eligible Investments bearing interest or sold at discount. The maturities
of any such investments pursuant to this Section 8.03(b) on any date shall be
such that, on the Business Day immediately preceding either
(i) each Principal Reduction Date for the Bonds of the related Series,
if at the time of such investment the Special Redemption provisions of
Article X are applicable to such Bonds and the related Terms Indenture
requires that amounts in such Debt Service Reserve Fund be available for
withdrawal on such Principal Reduction Date, or
(ii) each Payment Date for the Bonds of the related Series, if at the
time of such investment such Series is not subject to Special Redemption or
if the related Terms Indenture provides that amounts in such Debt Service
Reserve Fund need be available for withdrawal only on the Payment Dates for
the related Series and that such amounts need not be available on any other
Principal Reduction Date.
There shall be available in such Debt Service Reserve Fund an amount equal
to the aggregate amount, if any, then required to be available for withdrawal
from such Debt Service Reserve Fund, as specified in the related Terms
Indenture. Notwithstanding the foregoing, investments (including repurchase
agreements) on which the Trustee (or any agent of the Trustee acceptable to each
Rating Agency rating the Bonds) is the obligor may mature on the applicable
Principal Reduction Date, rather than on the immediately preceding Business Day.
All income or other gain from investments of money held in a Debt Service
Reserve Fund shall be deposited by the Trustee in such Debt Service Reserve Fund
immediately upon receipt, and any loss resulting from such investments shall be
charged to such Debt Service Reserve Fund.
(c) Except as otherwise provided in the related Terms Indenture, unless the
Bonds of the related Series have been declared due and payable pursuant to
Section 5.02 and moneys collected by the Trustee with respect to such Series are
being applied in accordance with Section 5.08, amounts on deposit in a Debt
Service Reserve Fund shall be applied as follows:
(i) on the Business Day prior to any Special Redemption Date the
Trustee shall withdraw from such Debt Service Reserve Fund and deposit in
the related Collection Account an amount equal to the amount, if any,
required to be withdrawn therefrom on such Special Redemption Date pursuant
to the requirements, if any, of the related Terms Indenture; and
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(ii) on the Business Day prior to any Payment Date the Trustee shall
withdraw from any such Debt Service Reserve Fund and deposit in the related
Collection Account the amount, if any, specified in the related Payment
Date Statement prepared by the Accounting Party, such amount being equal to
the greater of
(A) the amount, if any, required to be withdrawn therefrom on such
Payment Date pursuant to the requirements, if any, of the related Terms
Indenture, and
(B) the difference between the amount then on deposit in such Debt
Service Reserve Fund and the minimum amount required to be on deposit
therein after such Payment Date, but only if, by Issuer Order, the
Issuer requests that the Trustee withdraw and transfer such amount to
the related Collection Account and the amount to be so transferred is
set forth in the related Payment Date Statement, the minimum amount so
required to be on deposit in such Debt Service Reserve Fund being equal
to the aggregate amount, if any, required to be available for
withdrawal from such Debt Service Reserve Fund, determined as specified
in the related Terms Indenture and after giving effect to the payment
of principal of and interest on the Bonds of the related Series
required to be made on such Payment Date.
References in this subsection (c) to withdrawals of funds from a Debt Service
Reserve Fund shall, if a Qualified Letter of a Credit has been delivered to the
Trustee in lieu of a cash deposit in such Debt Service Reserve Fund, be deemed
to refer to a drawing of the appropriate amount under such Qualified Letter of
Credit and the use of the funds so drawn to make the required deposit in the
related Collection Account; provided, however that if the amount referred to in
clause (B) above is greater than the amount referred to in clause (A) above,
only the amount referred to in clause (A) need be drawn under such Qualified
Letter of Credit unless by Issuer order the Issuer directs otherwise, and upon
Issuer Request the Trustee shall direct the issuer of such Qualified Letter of
Credit to reduce the amount remaining available for drawing under such Qualified
Letter of Credit to an amount equal to the aggregate amount, if any, required to
be available for withdrawal from such Debt Service Reserve Fund, as specified in
the related Terms Indenture, determined after giving effect to the payment of
principal of and interest on the Bonds of the related Series required to be made
on such Payment Date.
SECTION 8.04 Reserve Funds.
(a) On or before the Closing Date for a Series with respect to which a
Reserve Fund is required to be established and maintained, the Issuer shall
open, at the Corporate Trust Office, one or more trust accounts which shall
collectively be the "Reserve Fund" for such Series. Any moneys received by the
Trustee for deposit in the Reserve Fund for a Series pursuant to Section 2.12(j)
or Section 2.12(k) (including any Eligible Investments delivered to the Trustee
pursuant to said Section 2.12(j) or Section 2.12(k) in lieu of cash) or
transferred from the related Collection Account pursuant to Section 8.02(d),
together with any Eligible Investments in which such moneys are or will be
invested or reinvested during the term of the Bonds of such Series, shall be
held by the Trustee as part of the Trust Estate Granted to secure the Bonds of
such Series, subject to disbursement and withdrawal as herein provided.
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(b) Except as otherwise specified in the related Terms Indenture, so long
as no Default or Event of Default shall have occurred and be continuing with
respect to the related Series, all or a portion of a Reserve Fund shall be
invested and reinvested at the Issuer's direction in one or more Eligible
Investments bearing interest or sold at discount. No such investment shall
mature later than the Business Day immediately preceding the next Principal
Reduction Date (or the second succeeding Principal Reduction Date if such
investment is made on or after the Special Redemption Determination Date for
such next Principal Reduction Date) for such Series unless
(i) at the time of such investment such Series is not subject to
Special Redemption,
(ii) prior to making such investment
(A) the Accounting Party shall have determined that, as of the
preceding Special Redemption Determination Date, the Issuer would not
have been obligated under Section 10.01 to make a Special Redemption of
Bonds of the related Series on the Special Redemption Date following
such preceding Special Redemption Determination Date (after giving
effect, on a pro-forma basis, to such proposed investment and all other
investments made since such preceding Special Redemption Determination
Date) and shall have delivered to the Report Recipient an Investment
Statement with respect to such determination, and
(B) the Issuer shall have delivered to the Trustee an Issuer Order
directing the Trustee to make such proposed investment subject to the
Accounting Party's determination pursuant to the foregoing clause (A),
as evidenced by its Investment Statement.
Notwithstanding the foregoing,
(i) except as permitted by clause (ii) or (iii) below, no investment of
any amount held in a Reserve Fund may mature later than the Business Day
immediately preceding the earlier of the next Payment Date for Bonds of the
related Series,
(ii) after delivery of the certificate of an Independent Accountant
required under Section 8.09(b) with respect to a Payment Date for a Series,
all amounts held in the Reserve Fund for such Series which exceed the
amount, if any, required to be withdrawn therefrom on such Payment Date to
make the payment due on the Bonds of such Series on such Payment Date may
be invested in Eligible Investments maturing no later than the earlier of
(A) the Business Day immediately preceding the next Principal
Reduction Date after such Payment Date, if the Bonds of such Series are
subject to Special Redemption, and
(B) the next Payment Date for such Series, if the Bonds of such
Series are not subject to Special Redemption,
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(iii) any investment (including repurchase agreements) on which the
Trustee (or any other Person acceptable to the Rating Agency or Rating
Agencies that rated the Bonds) is the obligor, may mature on a Payment
Date, Special Redemption Date or Special Payment Date if, under this
Section 8.04 and under Article X, such investment could otherwise mature on
the Business Day immediately preceding such Payment Date, Special
Redemption Date or Special Payment Date, and
(iv) if Bonds of a Series have been called for Special Redemption and
not so redeemed, or if there are any overdue Bonds of such Series
Outstanding, funds then in the related Reserve Fund may be invested in
investments maturing later than the Business Day immediately preceding the
next Special Redemption Date or Special Payment Date, as the case may be,
only to the extent that after giving effect to the proposed investment the
amount of funds that would be on deposit in such Reserve Fund and in the
related Collection Account and Debt Service Reserve Fund (including the
amount of Distributions and proceeds of maturing investments scheduled to
be deposited in such Reserve Fund and related Collection Account and Debt
Service Reserve Fund prior to such next Special Redemption Date or Special
Payment Date) and would be available for withdrawal to make payments on the
Bonds of such Series on such next Special Redemption Date or Special
Payment Date, exceeds the sum of
(A) the Special Redemption Price payable with respect to any such
Bonds called for special Redemption on such next Special Redemption
Date, and
(B) any payments of principal of or interest on any Overdue Bonds
of such Series due and payable on such next Special Payment Date.
All income or other gains from investment of moneys deposited in a Reserve Fund
shall be deposited by the Trustee in such Reserve Fund immediately upon receipt,
and any loss resulting from such investment shall be charged to such Reserve
Fund.
(c) Except as otherwise specified in the related Terms Indenture, unless
the Bonds of a Series have been declared due and payable pursuant to Section
5.02 and moneys collected by the Trustee with respect to such Series are being
applied in accordance with Section 5.08, amounts on deposit in the related
Reserve Fund on any Payment Date or Special Redemption Date shall be withdrawn
from such Reserve Fund, in the amounts required, for application as follows:
(i) on the Business Day prior to any Special Redemption Date for such
Series the Trustee shall withdraw from such Reserve Fund and deposit in the
related Collection Account an amount equal to the amount, if any, by which
the Special Redemption Price of Bonds of such Series to be redeemed on such
Special Redemption Date exceeds the sum of the amount, if any to be
transferred to such Collection Account from the related Debt Service
Reserve Fund and/or Special Reserve Fund on such Special Redemption Date
and the other amounts on deposit in the Collection Account and available
for payment of such Special Redemption Price, as set forth in the related
Special Redemption Date Statement; and
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(ii) on the Business Day prior to any Payment Date for such Series the
Trustee shall withdraw from such Reserve Fund and deposit in the related
Collection Account an amount equal to the greater of
(A) the amount, if any, by which the Debt Service Requirement for
such Payment Date exceeds the sum of the amount, if any, transferred to
such Collection Account from the related Debt Service Reserve Fund
and/or Special Reserve Fund with respect to such Payment Date and the
other amounts on deposit in such Collection Account, and
(B) the difference between the amount then on deposit in such
Reserve Fund and the Requisite Amount of the Reserve Fund, determined
after giving effect to the payments of principal of Bonds of such
Series to be made on such Payment Date, but only if by Issuer Order the
Issuer requests that the Trustee withdraw and transfer such amount to
the related Collection Account and the amount to be so transferred is
set forth in the related Payment Date Statement;
References in this subsection (c) to withdrawals of funds from a Reserve Fund
shall, if a Qualified Letter of Credit has been delivered to the Trustee in lieu
of maintaining cash in such Reserve Fund, be deemed to be a drawing of the
appropriate amount under such Qualified Letter of Credit and the use of the
funds so drawn to make the required deposit in the related Collection Account;
provided, however, that if the amount referred to in clause (ii)(B) above is
greater than the amount referred to in clause (ii)(A) above, only the amount
referred to in clause (ii)(A) need be drawn under such Qualified Letter of
Credit unless by Issuer Order the Issuer directs otherwise, and upon Issuer
Request the Trustee shall direct the issuer of such Qualified Letter of Credit
to reduce the amount remaining available for drawing under such Qualified Letter
of Credit to the Requisite Amount of the Reserve Fund.
SECTION 8.05 Special Reserve Funds.
(a) On or before the Closing Date for a Series, to the extent required by
the related Terms Indenture, the Issuer shall open, at the Corporate Trust
Office, one or more accounts which shall collectively be the "Special Reserve
Fund" for such Series. Any moneys or other assets received by the Trustee for
deposit in the Special Reserve Fund for a Series, together with any Eligible
Investments or other investments as permitted by the related Terms Indenture in
which such moneys are or will be invested or reinvested during the period from
the date of delivery thereof until such moneys are applied or are released to
the Issuer, as provided in this Article VIII or the applicable Terms Indenture,
shall be held by the Trustee as part of the Trust Estate Granted to secure the
Bonds of such Series, subject to disbursement and withdrawal as provided in the
related Terms Indenture.
(b) Unless the Bonds of a Series have been declared due and payable
pursuant to Section 5.02 and moneys collected by the Trustee with respect to
such Series are being applied in accordance with Section 5.08, amounts on
deposit in the related Special Reserve Fund at any time shall be invested in
accordance with the related Terms Indenture and shall be withdrawn from such
Special Reserve Fund for application as set forth in such Terms Indenture.
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SECTION 8.06 General Provisions Regarding Trust Accounts.
(a) Each Trust Account shall relate solely to the Bonds of the Series with
respect to which it was established and to the Certificates and other property
securing such Series. Funds and other property in each Trust Account shall not
be commingled with any other moneys or property of the Issuer or any Affiliate
thereof. Notwithstanding the foregoing, the Trustee may hold any funds or other
property received or held by it as part of a Trust Account in collective
accounts maintained by it in the normal course of its business and containing
funds or property held by it for other Persons (which may include the Issuer or
an Affiliate), provided that such accounts are under the sole control of the
Trustee and the Trustee maintains adequate records indicating the ownership of
all such funds or property and the portions thereof held for credit to each
Trust Account.
(b) The Issuer will not direct the Trustee to make any investment of any
funds in a Trust Account or to sell any investment held in a Trust Account
except under the following terms and conditions:
(i) each such investment shall be made in the name of the Trustee (in
its capacity as such) or in the name of a Qualified Trustee Nominee (or,
if, as indicated by an Opinion of Counsel delivered to the Trustee,
applicable law provides for perfection of pledges of an investment not
evidenced by a certificate or other instrument through registration of such
pledge on books maintained by or on behalf of the issuer of such
investment, such pledge may be so registered),
(ii) the Trustee shall have sole control over such investment, the
income thereon and the proceeds thereof,
(iii) any certificate or other instrument evidencing such investment
shall be delivered directly to the Trustee or its agent, and
(iv) the proceeds of each sale of such an investment shall be remitted
by the purchaser thereof directly to the Trustee for deposit in the Trust
Account in which such investment was held.
(c) Except as otherwise provided in the related Terms Indenture, if an
election has been made or will be made to treat the Trust Estate securing the
Series or the Issuer as a REMIC, prior to any disposition of any investment in a
Trust Account, prior to its maturity, that would result in a gain to the REMIC,
the Trustee shall inform the Issuer of its intention to dispose of such
investment and of the possibility that such disposition could result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code. If any amounts are needed for disbursement from a Trust Account and
sufficient uninvested funds are not available to make such disbursement, the
Issuer shall instruct the Trustee by Issuer Order as to the liquidation of
investments held therein in an amount sufficient to provide the required funds,
or, in absence of such Issuer Order, the Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such Trust
Account.
(d) The Trustee shall not in any way be held liable by reason of any
insufficiency in any Trust Account, including but not limited to any
insufficiency resulting from any loss on any
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Eligible Investment included therein except for losses attributable to the
Trustee's failure to make payments on Eligible Investments which are obligations
of the Trustee as primary obligor in accordance with their terms.
(e) All investments of funds in a Trust Account and all sales of
investments held in a Trust Account shall, except as provided below, be made by
the Trustee in accordance with an Issuer Order. Such Issuer Order shall specify
the Eligible Investments in which the funds are to be invested, the amount of
the investment, and shall state (i) that they are Eligible Investments, (ii) the
respective maturities thereof and (iii) that such maturities comply with these
Standard Indenture Provisions. Subject to compliance with the requirements of
Section 8.02(b), 8.03(b), 8.04(b) or 8.05(b), whichever is applicable, such
Issuer Order may authorize the Trustee to make the specific investments set
forth therein, to make investments from time to time consistent with the general
instructions set forth therein, or to make specific investments pursuant to
written instructions of the employees or agents of the Issuer identified
therein, in each case in such amounts as such Issuer Order shall specify.
In the event that:
(i) the Issuer shall have failed to give investment directions to the
Trustee by 12:00 noon Eastern Time on any Business Day authorizing the
Trustee to invest the funds then in a Trust Account,
(ii) a Default or Event of Default with respect to such Series shall
have occurred and be continuing but the Bonds of such Series shall not have
been declared due and payable pursuant to Section 5.02, or if such Bonds
shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the related Trust Estate are being
applied in accordance with Section 5.05, or
(iii) an Event of Default with respect to such Series shall have
occurred and be continuing, the Bonds of such Series shall have become or
been declared due and payable pursuant to Section 5.02, and amounts
collected or receivable from the related Trust Estate are being applied in
accordance with Section 5.08,
the Trustee shall invest and reinvest the funds then in each related Trust
Account, in such manner as the Trustee shall from time to time determine, but
only in one or more Eligible Investments bearing interest or sold at a discount.
All investments made by the Trustee pursuant to clause (i) above shall mature on
the next Business Day following the date of such investment, all such
investments made pursuant to clause (ii) above shall mature no later than the
maturity date therefor permitted by Section 8.02(b), 8.03(b), or 8.04(b), or by
the terms of any related Terms Indenture, whichever is applicable, and all
investments made pursuant to clause (iii) above shall mature no later than the
first date following the date of such investment on which the Trustee proposes
to make a distribution to Holders of Bonds of the related Series pursuant to
Section 5.08.
(f) Subject to the lien in favor of the Trustee created by Section 6.07,
promptly upon receipt of any funds constituting Reinvestment Income from funds
in any Trust Account which is not Available Reinvestment Income, the Trustee
shall pay over such amount to or union the
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order of the Residual Payee, whereupon such funds shall be released from the
lien of the Indenture.
(g) The Trustee may trade with itself or an Affiliate in the purchase or
sale of Eligible Investments.
SECTION 8.07 Reports by Trustee to Bondholders.
On each Payment Date or Special Redemption Date for a Series the Trustee
shall prepare and deliver a written report
(a) to each Bondholder of each Class of such Series on which a payment of
principal and interest is then being made providing the amount of such payment
which represents principal and the amount which represents interest, and the
principal amount of an Individual Bond of each such Class after giving effect to
the payment of principal made on such Payment Date;
(b) to each Bondholder of each Class of such Series on which a payment of
interest only is then being made, setting forth the Aggregate Current Principal
Amount of Bonds of each Class of such Series after giving effect to the payment
of principal made on such Payment Date and on any Special Redemption Date
occurring subsequent to the last such report and after including in the
Aggregate Current Principal Amount of Compound Interest Bonds the amount of any
accrued interest added to the principal amount thereof on such Payment Date; and
(c) to each Holder of Compound Interest Bonds of such Series (but only if
such Holders of Compound Interest Bonds shall not have received payments of
interest on such Payment Date equal to the entire amount of interest accrued on
such Bonds during the related Interest Accrual Period), setting forth
(i) the information contained in the report delivered pursuant to
clause (b) above, and
(ii) the interest accrued on an Individual Bond of such Class during
the Interest Accrual Period for such Payment Date and added to the
principal of such Individual Bond and the principal amount of an Individual
Bond of such Class of Compound Interest Bonds after giving effect to the
addition thereto of all interest accrued thereon through the Interest
Accrual Period preceding such Payment Date.
SECTION 8.08 Reports by Trustee.
The Trustee shall deliver to the Issuer and the Independent Accountants
appointed pursuant to Section 8.09, for a Series within five Business Days after
request therefor by either the Issuer or such Independent Accountants, a written
report setting forth the amount of each Trust Account for a Series and the
identity of the investments included therein. Without limiting the generality of
the foregoing, the Trustee shall, upon the request and at the expense of the
Issuer, promptly transmit to the Issuer copies of all accountings of, and
information with respect to, Distributions furnished it by the issuer of, or the
paying agent for, each Certificate and shall promptly notify the Issuer if, on
the fifth day after any Distribution Due Date in the case of a GNMA Certificate
or FHLMC Certificate or on the third Business Day after any Distribution
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Due Date in the case of a FNMA Certificate or Conventional Certificate, any
related Distribution then due or any portion thereof has not been received by
the Trustee.
SECTION 8.09 Reports by Independent Accountants.
(a) At the Closing Date for a Series the Issuer shall appoint a firm of
Independent Accountants of recognized national reputation as its Independent
Accountants for purposes of rendering the reports with respect to such Series
required by this Section 8.09. Upon any resignation by such firm of Independent
Accountants, the Issuer shall promptly appoint a successor thereto that shall
also be a firm of Independent Accountants of recognized national reputation and
shall notify the Trustee of such appointment. If the Issuer shall fail to
appoint any successor to a firm of Independent Accountants which has resigned
within fifteen days after such resignation, the Trustee shall promptly notify
the Issuer of such failure in writing. If the Issuer shall not have appointed a
successor within ten days thereafter the Trustee shall promptly appoint a
successor firm of Independent Accountants of recognized national reputation. The
fees of such successor shall be payable by the Issuer and may be paid by the
Trustee, on behalf of the Issuer, from amounts otherwise payable to the Issuer
pursuant to Section 8.02(d).
(b) The Issuer shall, or the Trustee may, on behalf of the Issuer, direct
the firm of Independent Accountants appointed pursuant to subsection (a) (or any
successor firm so appointed) to review, and prepare and deliver to the Trustee a
certificate or opinion with respect to
(i) each Payment Date Statement specified in the related Terms
Indenture and delivered by the Accounting Party pursuant to Section
2.09(e),
(ii) each Special Redemption Date Statement specified in the related
Terms Indenture and delivered by the Accounting Party pursuant to Section
10.01(c) since the preceding Principal Payment Date (or since the Closing
Date if no Payment Date has occurred), and
(iii) a sample, selected by such firm in a manner comparable to that
which would have been used had such accountants been performing an audit in
accordance with generally accepted auditing standards, of any Investment
Statements prepared by the Accounting Party pursuant to Section 8.02(b) or
Section 8.04(b) during the period covered by such Payment Date Statement.
Such certificate or opinion shall state to the effect that
(i) such Independent Accountants have read such Payment Date Statement,
each such Special Redemption Date Statement and such sample of Investment
Statements,
(ii) they have performed the calculations required to be made pursuant
to Sections 2.09(e) and 10.01(b),
(iii) they have reviewed the summary of transactions with respect to
the Collection Account furnished by the Accounting Party with respect to
the Due Period
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covered by such Payment Date Statement and, in the case of the
Distributions due in the last month of such Due Period but not yet
received, the applicable information specified in Section 1.02(c), and
(iv) based upon such review, no exceptions to the Accounting Party's
calculations set forth in any of such Statements have come to the attention
of such firm of Independent Accountants, or that all of such exceptions are
set forth in such report or certificate.
Such certificate or opinion shall be delivered to the Trustee, and a copy of
such certificate or opinion shall be delivered to the Issuer, prior to the close
of business on the second Business Day following the related Debt Service
Requirement Determination Date. If such firm of Independent Accountants sets
forth any exceptions to the Accounting Party's Payment Date Statement in its
certificate or opinion, the Accounting Party's Payment Date Statement shall be
deemed to have been amended to reflect such exceptions.
(c) If the Accounting Party shall fail to deliver to the Report Recipient
any Payment Date Statement or Special Redemption Date Statement by the due date
therefor, the Report Recipient shall at the opening of business on the next
Business Day following such due date direct the firm of Independent Accountants
appointed pursuant to subsection (a) to prepare and deliver to the Report
Recipient such Payment Date Statement, at the expense of the Issuer, no later
than 2:00 p.m. on the Business Day following the day on which such direction was
given. Any fees of such Independent Accountants not paid by the Issuer may be
paid by the Trustee, on behalf of the Issuer, only from amounts otherwise
payable to the Issuer from the related Collection Account pursuant to Section
8.02(d).
SECTION 8.10 Expense Fund.
(a) Except as otherwise provided in the related Terms Indenture, any cash
or Eligible Investments received by the Trustee for deposit in the Expense Fund
for a Series pursuant to Sections 2.12(l) or 8.02(d) hereof, together with any
other Eligible Investments in which amounts in such Expense Fund are or will be
invested or reinvested during the term of the Bonds of such Series, shall be
held by the Trustee subject to disbursement and withdrawal as herein provided,
but shall not be security for the Bonds of such Series.
(b) Except as otherwise provided in the related Terms Indenture, all or a
portion of the Expense Fund for a Series shall be invested and reinvested at the
Issuer's direction in one or more Eligible Investments.
(c) Except as otherwise provided in the related Terms Indenture, amounts on
deposit in the Expense Fund for a Series shall be applied by the Trustee to the
payment of Issuer Expenses relating to such Series specified in the related
Terms Indenture, to the extent that such Issuer Expenses have not been paid by
the Issuer or from other sources.
(d) Except as otherwise provided in the related Terms Indenture, upon full
and final payment of all Outstanding Bonds of the related Series and payment of
all unpaid Issuer Expenses covered by such Expense Fund, the Trustee shall pay
to or upon the order of the Issuer all amounts remaining on deposit in the
Expense Fund for such Series.
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SECTION 8.11 Substitution of Certificates with Eligible Substitute
Certificates.
(a) Except as otherwise provided in the related Terms Indenture, the Issuer
shall have the right to Grant one or more Eligible Substitute Certificates for
any one or more Certificates securing a Series of Bonds, any such substitution
to take place on any Payment Date, subject, however, to satisfaction of the
following conditions:
(i) no Default or Event of Default shall have occurred and be
continuing;
(ii) if the Eligible Substitute Certificates to be Granted in
substitution for the Certificates to be released are issued in definitive
or certificated form, such Eligible Substitute Certificates, registered in
the name of the Trustee (or, if requested by the Trustee, in the name of a
Qualified Trustee Nominee) shall have been delivered to the Trustee;
(iii) if the Eligible Substitute Certificates to be Granted in
substitution for the Certificates to be released are issuable in book-entry
form only, the Trustee shall have received (A) written notification or
confirmation from the operator of such book-entry system that ownership of
such Eligible Substitute Certificates has been registered in the name of
the Trustee or a Qualified Trustee Nominee or (B) notification from a bank,
broker, clearing corporation or other Person that maintains securities
accounts for the Issuer or the Trustee and is acting in that capacity with
respect to such Eligible Substitute Certificates that either (1) ownership
of such Eligible Substitute Certificates in the name of the Issuer and the
Grant thereof to the Trustee have been entered on the securities accounts
books of such Person or (2) ownership of such Eligible Substitute
Certificates in the name of the Trustee has been entered on the securities
accounts books of such Person;
(iv) the Trustee shall have received a certificate or opinion from a
firm of Independent Accountants stating that (A) such firm has reviewed (1)
the terms of the Certificates proposed to be released and of the Eligible
Substitute Certificates proposed to be Granted in substitution therefor,
(2) the Issuer's calculations of the Bond Value attributable to the
Certificates to be released and of the Eligible Substitute Certificates to
be granted in substitution therefor and (3) the Issuer's calculations
demonstrating that the Eligible Substitute Certificates proposed to be
Granted in substitution for the Certificates to be released satisfy all
conditions precedent to such release and substitution set forth in the
Indenture and the related Terms Indenture that are of a type that can be
verified by mathematical computations and (B) based on such review, nothing
has come to their attention that the Issuer's calculations were not made in
compliance with the terms of the Indenture and the related Terms Indenture
and are not mathematically correct;
(v) the Trustee shall have received an Officers' Certificate stating
that all conditions precedent to such release specified in this subsection
(a) and in the related Terms Indenture have been satisfied;
(vi) the Trustee shall have received an Opinion of Counsel to the
effect (A) that all documents delivered to the Trustee in connection with
such release comply as to form with the requirements of this subsection (a)
and the requirements, if any, set forth in
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the related Terms Indenture, (B) that all conditions to such release
specified in this subsection (a) and in the related Terms Indenture have
been satisfied and (C) of the opinion required by Section 2.12(c)(vii) and
(viii) but only as applicable to the portion of the Trust Estate comprised
of the Eligible Substitute Certificates; and
(vii) the Trustee shall have received a certificate of an Independent
Person, whose regular business activity includes valuing securities similar
to such Eligible Substitute Certificates, as to the fair market value of
such Eligible Substitute Certificates, which determination of fair market
value shall be based upon generally available market quotations as of a
date not earlier than three Business Days prior to the date of Grant to the
Trustee.
(b) Upon any such Grant, the Trustee shall transfer and assign the replaced
Certificates to the Issuer whereupon they shall be released from, and no longer
subject to, the lien of the Indenture.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01 Supplemental Indentures without Consent of Bondholders.
Without the consent of the Holders of any Bonds, the Issuer, when
authorized by a Board Resolution (if the Issuer is a corporation) or an Issuer
Order (if the Issuer is a trust) and the Trustee, at any time and from time to
time, may enter into one or more Indentures supplemental hereto, including
additional Terms Indentures, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to correct or amplify the description of any property at any time
subject to the lien of the Indenture, or better to assure, convey and
confirm unto the Trustee property subject or required to be subjected to
the lien of the Indenture, or to subject to the lien of the 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 Series of Bonds, as herein set forth, additional
conditions, limitations and restrictions thereafter to be observed;
(3) to set forth the terms of, and security for, any Series that has
not theretofore been authorized by a Terms Indenture;
(4) to modify or eliminate any of the terms of the Indenture; provided,
however, that
(A) such supplemental indenture shall expressly provide that any
such modifications or eliminations shall not be effective with respect
to any
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Outstanding Bond of any Series created prior to the execution of such
supplemental indenture; and
(B) the Trustee may, in its discretion, decline to enter into any
such supplemental indenture which, in its opinion, would adversely
affect its own rights, duties or immunities;
(5) to evidence the succession of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and
in the Bonds contained;
(6) to add to the covenants of the Issuer, for the benefit of the
Holders of all Bonds of any Series, or to surrender any right or power
herein conferred upon the Issuer;
(7) to cure any ambiguity, to correct or supplement any provision of
the Indenture which may be defective or inconsistent with any other
provision of the Indenture, or to amend any other provisions with respect
to matters or questions arising under the Indenture, provided that such
action shall not adversely affect the interests of the Holders of any
Series of Bonds;
(8) to provide for the issuance of Bonds of any Series (including Bonds
of a Series theretofore authorized and then outstanding) or any Class
within such Series in bearer form with coupons ("Bearer Bonds") and for the
exchangeability of Bearer Bonds and Bonds of the same Series and Class
issued in registered form ("Registered Bonds"); any such supplemental
indenture may provide for payments on Bearer Bonds only outside the United
States and for appointment of a foreign Paying Agent that does not satisfy
the requirements of clause (ii) of the definition of the term "Eligible
Investments" but is otherwise acceptable to the Rating Agencies rating such
Bonds, and may also contain any provisions as may in the Issuer s judgment
be necessary, appropriate or convenient (a) to permit the Bonds to be
issued and sold to or held in bearer form by non-United States Persons, (b)
to establish entitlement to an exemption from United States withholding tax
or reporting requirements with respect to payments on the Bonds, (c) to
comply, or facilitate compliance, with other applicable laws or
regulations, (d) to provide for usual and customary provisions for
communication (by notice publication, maintenance of lists of holders of
Bearer Bonds who have provided names and addresses for such purpose, or
otherwise) with holders of Bearer Bonds, or (e) to otherwise effectuate
provisions for the issuance of Bearer Bonds and their exchangeability with
Registered Bonds;
(9) to modify, eliminate or add to the provisions of the Indenture to
such extent as shall be necessary to effect the qualification of the
Indenture under the TIA or under any similar federal statute hereafter
enacted, and to add to the Indenture such other provisions as may be
expressly required by the TIA; or
(10) if an election has been made or will be made to treat the Trust
Estate securing the Bonds or the Issuer as a REMIC, to modify, eliminate or
add to the provisions of the Indenture to such extent as shall be necessary
(i) to maintain the
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qualification of the Trust Estate securing the Series or the Issuer as a
REMIC under the Code, or (ii) to avoid, or minimize the risk of, the
imposition of any tax on the Issuer, the Trust Estate, or another Person
under the Code that would be a claim against the Issuer, Trust Estate or
such other Person, as the case may be, or (iii) to prevent the REMIC from
entering into any "prohibited transaction" as defined in Section 860F of
the Code, provided that (a) there shall have been delivered an Opinion of
Counsel to the effect that such action is necessary to maintain such
qualification, or to avoid any such tax or minimize the risk of its
imposition, or to prevent such prohibited transaction, respectively, and
(b) such supplemental indenture shall not have any of the effects described
in paragraphs (2) through (6) of the proviso to Section 9.02 of the
Indenture.
SECTION 9.02 Supplemental Indentures with Consent of Bondholders.
With the consent of the Holders of Bonds representing not less than
two-thirds of the then Aggregate Current Principal Amount of the Bonds of each
Series to be affected, by Act of said Holders delivered to the Issuer and the
Trustee, the Issuer, when authorized by an Issuer Order, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions, of the Indenture relating to such Series or of modifying in any
manner the rights of the Holders of the Bonds of such Series under the
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Bond affected thereby:
(1) change the Stated Maturity of any installment of principal of, or
interest on, any Bond or reduce the principal amount thereof, the Bond
Interest Rate thereon (except as provided in the related Terms Indenture
with respect to any Class of Floating Interest Rate Bonds) or the
Redemption Price or Special Redemption Price with respect thereto, change
the Bond Redemption Amount or Bond Redemption Date for any Series of Bonds,
or change any place of payment where, or the coin or currency in which, any
Bond or any interest thereon is payable, or change the provisions of the
Indenture relating to the calculation of the Debt Service Requirement or
the rights of Bondholders to the benefits of any provisions pertaining to
Special Redemption or Bondholder Redemption contained in the Indenture, or
impair the right to institute suit for the enforcement of any such payment
of any such amount due on the Bonds on or after the Stated Maturity thereof
(or, in the case of Redemption or Special Redemption, on or after the
applicable Redemption Date or Special Redemption Date, respectively); or
(2) reduce the percentage of the Aggregate Current Principal Amount of
the Bonds of any Series, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of which
is required for any waiver of compliance with certain provisions of the
Indenture or certain defaults hereunder and their consequences provided for
in the Indenture; or
(3) modify any of the provisions of this Section, Section 5.14, 5.15 or
Section 5.18(b) with respect to requirements for consent or approval of
Bondholders, except to increase any percentage specified therein or to
provide that certain other provisions of the Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Bond
affected thereby;
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(4) modify or alter the provisions of the proviso to the definition of
the term "Outstanding";
(5) permit the creation of any lien ranking prior to or on a parity
with the lien of the Indenture with respect to any part of a Trust Estate
or terminate the lien of the Indenture on any property at any time subject
hereto or deprive the Holder of any Bond of the security afforded by the
lien of the Indenture; or
(6) modify any of the provisions of Section 10.02 or 10.03 relating to
redemptions at the option of the Holders or mandatory redemption, if such
modification would impair such right of redemption or the priorities or
preferences associated therewith.
The Trustee may in its discretion determine whether or not any Bonds of any
particular Series would be affected by any supplemental indenture and such
determination shall be conclusive upon the Holders of all Bonds, whether
theretofore or thereafter authenticated and delivered hereunder. The Trustee
shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Bondholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Issuer shall mail to the
Holders of the Bonds of each Series to which such supplemental indenture relates
a notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer 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 the Article or the modifications thereby of the trusts
created by the Indenture, the Trustee (i) shall require, as a condition of such
execution or acceptance if an election has been made or will be made to treat
the Trust Estate securing the Series or the Issuer as a REMIC, a
Non-Disqualification opinion and (ii) shall be entitled to receive, and (subject
to Section 6.01) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by the Indenture and that all
conditions precedent thereto have been complied with. The Trustee may, but shall
not (except to the extent required in the case of a supplemental indenture
entered into under Section 9.01(9)) be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under the Indenture or otherwise.
SECTION 9.04 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, the
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of the Indenture for all purposes; and every Holder
of Bonds of any Series to which such supplemental
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indenture relates which have theretofore been or thereafter are authenticated
and delivered hereunder shall be bound thereby.
SECTION 9.05 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA as then in effect so long as the
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 which relates to the Series of which such
Bonds are a part may, and if required by the Trustee shall, bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Issuer shall so determine, new Bonds so modified as to
conform, in the opinion of the Trustee and the Issuer, to any such supplemental
indenture which relates to the Series of which such Bonds are a part may be
prepared and executed by the Issuer and authenticated and delivered by the
Trustee, without service charge, in exchange for Outstanding Bonds of such
Series.
SECTION 9.07 Amendments to Governing Documents.
The Trustee shall, upon Issuer Request of any Issuer, 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 Trustee of:
(i) an Opinion of Counsel to the effect that such amendment or waiver
will not adversely affect the interests of the Holders of the Bonds of any
Series and that all conditions precedent to such consent specified in this
Section 9.07 have been satisfied;
(ii) 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
(iii) written confirmation from each of the Rating Agencies that rated
any Series of the Issuer's Bonds that the implementation of the proposed
amendment or waiver will not adversely affect their respective ratings of
any Series of Bonds.
Notwithstanding the foregoing, the Trustee may decline to consent to a
proposed waiver or amendment that adversely affects its own rights, duties or
immunities under the Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that any Person
obtain the consent of the Trustee to any amendment or waiver or any provision of
any document where the making of such amendment or the giving of such waiver
without obtaining the consent of the
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Trustee is not prohibited by the 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 Special Redemption.
(a) Except as otherwise provided in the related Terms Indenture, the
Bonds of any Series are subject to Special Redemption pursuant to this Article
X. For purposes of this Section 10.01, the following terms shall have the
meanings specified below with respect to any Series, except as otherwise
specified in the related Terms Indenture:
"Accrued Interest": With respect to any Special Redemption Determination
Date, the unpaid interest which will have accrued on the Non-Covered Bonds
through the Designated Interest Accrual Date for the second Principal Reduction
Date following such Special Redemption Determination Date; in determining the
Bond Interest Rates applicable to such Non-Covered Bonds, the Bonds that have
been treated as Covered Bonds in accordance with the definition thereof set
forth in this Section 10.01(a) shall be excluded.
"Adjusted Aggregate Bond Value": With respect to any Special Redemption
Determination Date, the sum of the amounts that would be the Bond Values of each
of the Certificate Groups as of the next Special Redemption Determination Date
if the Distributions on each of the Certificates in each such Certificate Group
in the month following the month in which such Special Redemption Determination
Date occurs is the Minimum Distribution.
"Available Cash": With respect to the second Principal Reduction Date
following any Special Redemption Determination Date, the sum of
(i) the cash in the Collection Account on such Special Redemption
Determination Date,
(ii) the amount of the Distributions due on the Distribution Due Dates
in the month in which such Special Redemption Determination Date occurs,
but not received prior to such Special Redemption Determination Date,
(iii) the Minimum Distribution,
(iv) the aggregate amount receivable as principal of, or interest on,
Eligible Investments maturing subsequent to such Special Redemption
Determination Date but on or before the Business Day prior to the second
Principal Reduction Date following such Special Redemption Determination
Date,
(v) the aggregate Available Reinvestment Income which could be earned
on each of the amounts described in the foregoing clauses (i) through (iv)
through reinvestment thereof at the Assumed Reinvestment Rate from (A) such
Special
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Redemption Determination Date, in the case of cash in the Collection
Account on such Special Redemption Determination Date, (B) the first
Business Day after the applicable Distribution Due Date, in the case of
each Distribution on a Certificate not received prior to such Special
Redemption Determination Date and in the case of the Minimum Distribution
on a Certificate, and (C) the maturity date of each Eligible Investment, in
each case to the last Business Day prior to the second Principal Reduction
Date following such Special Redemption Determination Date,
(vi) the aggregate amount, if any, available for withdrawal from the
Debt Service Reserve Fund on the second Principal Reduction Date after such
Special Redemption Determination Date, and
(vii) the Available Reserve Fund Withdrawal Amount for the second
Principal Reduction Date after such Special Redemption Determination Date.
"Available Reserve Fund Withdrawal Amount": With respect to the second
Principal Reduction Date following any Special Redemption Determination Date,
the excess of
(i) the sum of:
(A) the cash in the Reserve Fund on such Special Redemption
Determination Date,
(B) the aggregate amount receivable as principal of, or interest
on, Eligible Investments in the Reserve Fund maturing subsequent to
such Special Redemption Determination Date but on or before the
Business Day prior to the second Principal Reduction Date following
such Special Redemption Determination Date,
(C) the aggregate Available Reinvestment Income which could be
earned on each of the amounts described in the foregoing clauses (i)
and (ii) through reinvestment thereof at the Assumed Reinvestment Rate
from (A) such Special Redemption Determination, in the case of cash in
the Reserve Fund on such Special Redemption Determination Date, and (B)
the scheduled payment date for any payments of principal of or interest
on any Eligible Investment, in each case to the last Business Day prior
to the second Principal Redemption Date following such Special
Redemption Determination Date,
(ii) the amount which would be the Requisite Amount of the Reserve
immediately after the second succeeding Principal Reduction Date, assuming
that the Distribution on each of the Certificates in the month following
the month in which such Special Redemption Determination Date occurs is the
Minimum Distribution and that such second succeeding Principal Reduction
Date is an Interest Payment Date and a Principal Payment Date.
"Covered Bonds": With respect to any Special Redemption Determination Date,
the aggregate principal amount of Outstanding Bonds that can be repaid on each
Covered Bond Principal Reduction Date through the payment of an amount equal to
100% of the principal
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amount of the Bonds to be repaid, together with accrued and unpaid interest
thereon at the applicable Bond Interest Rate through the Designated Interest
Accrual Date for such Covered Bond Principal Reduction Date, assuming that the
Future Available Cash on each such Covered Bond Principal Reduction Date
(beginning with the last such Covered Bond Principal Reduction Date) is applied
to the payment of Outstanding Bonds (including the payment of all interest
accrued thereon through such Designated Interest Accrual Date) in the order of
their respective Bond Interest Rates (beginning with the highest such Bond
Interest Rate), so that no principal of an Outstanding Bond is assumed to be so
paid until the principal of all Outstanding Bonds having a higher Bond Interest
Rate is assumed to have been repaid in full. With respect to a Covered Bond
Principal Reduction Date, Covered Bonds shall be the amount obtained by dividing
the Future Available Cash on such Covered Bond Principal Reduction Date by the
sum of 1 + (BIR x N/12), where BIR is the applicable Bond Interest Rate
(expressed as a fraction having a denominator of 200 rather than as a
percentage) and N is the number of months (including any partial months) from
the end of the Interest Accrual Period for the Interest Payment Date next
preceding such Special Redemption Determination Date (or from the Accrual Date
if no interest Payment Date has occurred) through the Designated Interest
Accrual Date for such Covered Bond Principal Reduction Date.
"Covered Bond Principal Reduction Date": With respect to any Special
Redemption Determination Date, each Principal Reduction Date, if any, occurring
subsequent to the second Principal Reduction Date following such Special
Redemption Determination Date but no later than the next Principal Payment Date.
"Future Available Cash": With respect to any Covered Bond Principal
Reduction Date, the sum of (i) the aggregate of the amounts receivable in the
month preceding such Covered Bond Principal Reduction Date as principal of, or
interest on, Eligible Investments in the Collection Account at the time of
determination, and (ii) the aggregate Available Reinvestment Income which could
be earned on amounts described in clause (i) through reinvestment thereof at the
Assumed Reinvestment Rate from the date each such amount is receivable to the
last Business Day prior to such Covered Bond Principal Reduction Date.
"Minimum Distribution": With respect to any Certificate on any Special
Redemption Determination Date, the amount of the Scheduled Distributions on such
Certificate due in the month following the month in which such Special
Redemption Determination Date occurs, determined in accordance with Section
1.02.
"Non-Covered Bonds": With respect to any Special Redemption Determination
Date, the difference between the aggregate principal amount of all Outstanding
Bonds and the aggregate principal amount of Covered Bonds.
Notwithstanding any reference in this Section 10.01(a) to investments maturing
on or before the last Business Day prior to a Principal Reduction Date, any
amount receivable on a Principal Reduction Date as principal of, or interest on,
an Eligible Investment on which the Trustee (or any other Person acceptable to
each Rating Agency that rated the Bonds) is the obligor (including any
repurchase agreement on which the Trustee is liable as principal) shall be
deemed to be receivable on the Business Day prior to such Principal Reduction
Date and shall be included in Available Cash or the Future Available Cash for
such Principal Reduction Date.
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(b) Unless, as provided in the related Terms Indenture, the Bonds of such
Series are not then subject to Special Redemption pursuant to this Article X, on
each Special Redemption Determination Date for a Series, the Accounting Party
shall calculate the following or shall make such other calculations as may be
specified in the related Terms Indenture:
(i) the Adjusted Aggregate Bond Value;
(ii) the amount specified in each clause of the definition of Available
Cash;
(iii) the aggregate amount of Available Cash;
(iv) the Future Available Cash for each Covered Bond Principal
Reduction Date;
(v) the aggregate principal amount of Covered Bonds for each Covered
Bond Principal Reduction Date;
(vi) the aggregate principal amount of Non-Covered Bonds; and
(vii) the amount of Accrued Interest.
(c) Unless, as otherwise provided in the related Terms Indenture, the Bonds
of such Series are not then subject to Special Redemption pursuant to this
Article X, or unless the related Terms Indenture otherwise provides, on each
Special Redemption Determination Date for a Series the Accounting Party shall
also determine whether the sum of the Adjusted Aggregate Bond Value and
Available Cash is greater than or equal to the sum of the Accrued Interest plus
the aggregate principal amount of Non-Covered Bonds, and shall prepare and
deliver to the Report Recipient, no later than the first Business Day after such
Special Redemption Determination Date, a statement or report (a "Special
Redemption Date Statement") setting forth
(i) the Special Redemption Date to which such Special Redemption Date
Statement relates,
(ii) the information specified in subsection (b) of this Section 10.01,
(iii) whether the sum of the Adjusted Aggregate Bond Value plus
Available Cash is (A) greater than or equal to the sum of the Accrued
Interest plus the aggregate principal amount of Non-Covered Bonds, in which
case such Series shall be deemed to be "Non-Redeemable" for purposes of
this Article X, or (B) less than the sum of the Accrued Interest, plus the
aggregate principal amount of Non-Covered Bonds, in which case such Series
shall be deemed to be "Redeemable" for purposes of this Article X, and
(iv) if such Series is Redeemable, (A) the smallest principal amount of
Outstanding Bonds of such Series (the "Principal Amount of Redeemable
Bonds") that must be redeemed, in the manner described in subsection (d) of
this Section 10.01, such that, after giving effect to such redemption, such
Series is Non-Redeemable, such amount being the principal amount of such
Bonds to be paid on such Special Redemption Date, (B) the unpaid interest
that will have accrued on the Principal Amount of Redeemable
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Bonds through the Designated Interest Accrual Date for the next Special
Redemption Date, such amount being the amount of interest to be paid on
such Special Redemption Date as part of the Special Redemption Price for
the Bonds to be redeemed on such Special Redemption Date, (C) the amounts
included in such Special Redemption Date Statement pursuant to subclauses
(iv)(A) and (iv)(B) above, expressed in each case per Individual Bond of
each Class of Bonds other than Principal Priority Bonds to be so redeemed,
(D) the information specified in subsection (b) of this Section 10.01
recalculated to give effect to such redemption, and (E) the calculations
confirming that such Series is Non-Redeemable after giving effect to such
redemption.
If the Trustee shall not have received any Special Redemption Date
Statement with respect to a Principal Reduction Date for a Series for which the
Trustee is not the Accounting Party on or before the second Business Day prior
to the date on which notice would be required to be given to Holders of Bonds of
such Series if a Class of Bonds of such Series were to be retired in full on
such Special Redemption Date Statement and deliver a copy thereof to the firm of
Independent Accountants appointed pursuant to Section 8.09(a).
(d) If the Accounting Party has determined on any Special Redemption
Determination Date that the Bonds of a Series are Redeemable, the Trustee, on
behalf of the Issuer, shall, upon the giving of notice of redemption as provided
in Section 10.07, redeem the Principal Amount of Redeemable Bonds which, upon
the giving of such notice, shall be due and payable on the next Special
Redemption Date at the Special Redemption Price therefor.
Notwithstanding the foregoing, if there is a Special Reserve Fund for a
Series of Bonds that are Redeemable, then prior to redeeming any such Bonds the
Trustee shall first take the actions specified in the provisions of the related
Terms Indenture governing such Special Reserve Funds. After giving effect to the
taking of such actions and the realization of any cash to be deposited in the
related Collection Account on or before the last Business Day prior to the
second succeeding Special Redemption Date, the Trustee shall recalculate the
amount of Available Cash in accordance with subsequent (a) and (b) and shall
prepare a revised Special Redemption Date Statement in accordance with
subsection (c). Only if such revised Special Redemption Date Statement indicates
that the Bonds are to be redeemed shall the Trustee redeem any Bonds of such
Series. The amount of Bonds to be redeemed shall be the Principal Amount of
Redeemable Bonds set forth in the revised special Redemption Date Statement.
All payments of principal pursuant to any Special Redemption shall be
applied among the Classes of a Series and among Bonds within each Class in the
same priority and manner as would be applicable on the next succeeding Principal
Payment Date. The Bonds of a Series may be called for Special Redemption on more
than one Special Redemption Date during a particular Due Period so long as the
requirements of this Article X are complied with.
SECTION 10.02 Bondholder Redemption.
(a) Unless the Bonds of a Series have been declared due and payable prior
to their Stated Maturity by reason of an Event of Default, a Holder of Bonds of
a Class of Principal Priority Bonds of a Series may request the redemption of
such Bonds Series as provided in this Section 10.02 if so provided in the
related Terms Indenture. A Bondholder may request
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redemption by delivering the following items (the "Tender Documents") to the
Trustee on or before the Tender Date: (i) a written request for redemption in
form satisfactory to the Trustee (such as the form appearing on the back of each
Bond), by the Bondholder or the appropriate Person(s) described in paragraph (c)
below, with appropriate evidence of authority; (ii) in the case of a request on
behalf of a deceased Holder, appropriate evidence of death and any tax waivers
requested by the Trustee and (iii) in the case of Definitive Bonds, the
certificate or certificates representing the Bond or Bonds for which redemption
is being requested. Subject to the terms of the related Terms Indenture, on each
Principal Payment Date for such Class of Principal Priority Bonds, the Issuer
shall redeem Bonds with respect to which redemption has been properly requested
in the order of priority described in subsection (b) of this Section 10.02 and
subject to the limitations that (1) except as set forth in such subsection (b),
the Issuer shall not, on any one Payment Date, redeem from any personal
representative, surviving joint tenant or surviving tenant by the entirety of a
deceased Holder Bonds in a principal amount greater than the Deceased Holder
Preference for such Class or redeem from any other Holder Bonds in a principal
amount greater than the Regular Holder Preference for such Class and (2) with
respect to each Class of Principal Priority Bonds subject to redemption pursuant
to this Section 10.02, the Issuer shall, on each Principal Payment Date, only
make redemptions to the extent of the aggregate amount of payments of principal
to be applied to such Class on such Principal Payment Date, rounded down to the
nearest Individual Bond (the "Bondholder Redemption Amount" for such Class).
Bonds which have been accepted for redemption shall become due and payable on
the applicable Principal Payment Date and shall cease to bear interest
immediately following the Designated Interest Accrual Date for such Principal
Payment Date. Such Bonds shall be redeemed by the Issuer at the Bondholder
Redemption Price, together with accrued and unpaid interest through the
Designated Interest Accrual Date for the applicable Principal Payment Date.
Installments of interest due on or prior to the date of redemption shall
continue to be payable to the Holders of such Bonds as of the relevant Record
Date according to their terms and the provisions of Section 2.09.
(b) Subject to the limitations provided in subsection (a) of this Section
10.02, with respect to each Principal Payment Date for each Class of Principal
Priority Bonds, requests for redemption of Deceased Holder Bonds shall be
accepted in the order of receipt of such requests by the Trustee to the extent
of the Deceased Holder Preference; requests for redemption of Bonds other than
Deceased Holder Bonds shall be accepted in the order of receipt of such requests
by the Trustee to the extent of the Regular Holder Preference, after all
requests for redemption of Deceased Holder Bonds of the same Series theretofore
submitted have been accepted within the Deceased Holder Preference. With respect
to each Principal Payment Date for each such Class, the Issuer shall accept
requests for redemption of Deceased Holder Bonds in excess of the Deceased
Holder Preference, but only to the extent of the applicable Redemption Amount.
With respect to each such Principal Payment Date, the Issuer shall accept
requests for redemption of Bonds other than Deceased Holder Bonds in excess of
the Regular Holder Preference but only to the extent of the applicable
Bondholder Redemption Amount. Subject to the foregoing provisions, requests for
redemption shall be accepted in the order that they were received by the
Trustee.
(c) In order to obtain redemption pursuant to this Section 10.02 on a
Principal Payment Date, the Holder or the personal representative, or the
personal representative joined by any surviving tenant(s) in common, surviving
joint tenant or surviving tenant by the entirety of a
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deceased Holder must deliver to the Trustee the Tender Documents on or before
the Tender Date preceding such Principal Payment Date. Except as otherwise
provided in the related Terms Indenture, no particular forms of request for
redemption or authority to request redemption are necessary (but, with respect
to Definitive Bonds, the form set forth on the form of Bond in Section 2.02
shall be sufficient). Requests for redemption of Bonds received by the Trustee
after the Tender Date preceding a Principal Payment Date, and requests for
redemption not accepted in respect of such Principal Payment Date, whether on
behalf of a deceased Holder or otherwise, will be treated as a request for
redemption on the next succeeding Principal Payment Date, and any Definitive
Bonds submitted will be held by the Trustee, until the request is accepted or
withdrawn, except that the Trustee, in its discretion, may cancel the
certificates representing any such Definitive Bonds provided that it shall
maintain a record of the Definitive Bonds so cancelled and such Bonds shall
continue to be deemed Outstanding for all purposes. Only whole Individual Bonds
may be redeemed.
(d) For purposes of this Section, a Bond held by tenants by the entirety,
joint tenants or tenants in common is considered to be held by a single Holder
or Beneficial Owners, the death of a tenant by the entirety, joint tenant or
tenant in common will be deemed the death of a Holder or Beneficial Owner, the
death of a beneficiary of a trust will be deemed to be the death of the Holder
or Beneficial Owner of a Bond held by the trustee of the trust to the extent of
such beneficiary's beneficial interest in such Bond, and the entire principal
amount of the Bond so held will be deemed to be a Deceased Holder Bond. For
purposes of this Section, a Bond held by a trustee is considered to be held by
each beneficiary of the trust to the extent of such beneficiary's beneficial
interest therein. The death of a person who, during his lifetime, was entitled
to substantially all of the beneficial interests of ownership of a Bond will be
deemed the death of the Holder or Beneficial Owner, regardless of the registered
Holder, if such beneficial interest can be established to the satisfaction of
the Trustee. Such beneficial interest shall be deemed to exist in typical cases
of street name or nominee ownership, ownership by a trustee, ownership under the
Uniform Gifts to Minors Act, community property or other joint ownership
arrangement between husband and wife, and trust and certain other arrangements
where a person has substantially all of the beneficial ownership interests in
the Bonds during his or her lifetime. Beneficial interest shall include the
power to sell, transfer or otherwise dispose of a Bond and the right to receive
the proceeds therefrom, as well as interest and principal payable with respect
thereto.
(e) To the extent that the Bondholder Redemption Amount for a Class of
Principal Priority Bonds for a Principal Payment Date exceeds the aggregate
amount of Bonds of such Class to be redeemed on such Principal Payment Date at
the option of the Holders of such Class, Bonds of such Class shall be
mandatorily redeemed by the Issuer at the Bondholder Redemption Price. Unless
otherwise provided in the related Terms Indenture, if less than all of the Bonds
of any such Class are to be redeemed, the particular Bonds to be redeemed shall
be selected by the Trustee from the Outstanding Bonds of such Series not
previously called or accepted for redemption, not more than 30 days prior to the
applicable Principal Payment Date. The Trustee shall select the Bonds to be
redeemed by random lot. Only whole Individual Bonds may be redeemed. The
selection of Bonds to be redeemed shall provide for the selection for redemption
of portions (equal to an Individual Bond of such Class or any multiple thereof)
of the principal of Bonds of a denomination larger than an Individual Bond.
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The Trustee shall promptly notify the Issuer in writing of the Individual
Bonds selected for redemption pursuant to this Section 10.02(e) and, in the case
of any Bond selected for partial redemption, the principal amount thereof to be
redeemed.
(f) Beneficial Owners of Book Entry Bonds may tender their interest in
Bonds for redemption on any Principal Payment Date subject to the limitations in
amount and the priorities established in this Section 10.02 with respect to
Holders of Bonds if, and to the extent provided in the related Terms Indenture,
the Clearing Agency will receive requests for redemption and requests for
withdrawal, determine the order of receipt of request for redemption, select
Bonds to be mandatorily redeemed, provide notices of redemption and/or make
payments of the Bondholder Redemption Price and accrued interest, if any, in
accordance with the terms and provisions of the related Terms Indenture and the
rules and procedures of the Clearing Agency.
(g) Each of the terms and provisions of this Section 10.02 may be modified
with respect to any Series by the related Terms Indenture.
SECTION 10.03 Withdrawal of Requests.
Except as provided in Section 10.02(f) with respect to Book Entry Bonds,
any requests for Bondholder Redemption may be withdrawn by the persons making
the same upon the delivery of a written request for such withdrawal received by
the Trustee not later than the Tender Date for a given Principal Payment Date on
which such Bond would otherwise be redeemable pursuant to Section 10.02. If not
so withdrawn, the redemption request will be irrevocable with respect to the
selection of Bonds for redemption on the respective Principal Payment Date. In
the event a request for redemption has been withdrawn as provided in this
Section with respect to one or more Definitive Bonds, the Trustee shall return
the certificate representing the Bond or Bonds in respect of which the
redemption request has been withdrawn or, in the case of Definitive Bonds the
certificates of which were cancelled by the Trustee pursuant to Section
10.02(c), the Issuer shall execute, and the Trustee shall authenticate and
deliver, new certificates representing the Bonds in respect of which the
redemption request has been withdrawn, such new Bonds to be of the same date and
tenor as the Bonds cancelled under Section 10.02(c) in the amount which remains
outstanding.
SECTION 10.04 Redemption Register.
(a) The Trustee shall maintain at its Corporate Trust office a register in
which it shall record, in the order of receipt, all requests for redemption
received by the Trustee under Section 10.02(a). The Trustee may establish such
procedures as it may in its sole discretion deem appropriate in order to
determine the order of receipt of requests for redemption received by the
Trustee on a single day, and any such determination shall be conclusive. In
establishing procedures for determining the order of receipt of request for
redemption, the Trustee may designate from time to time any particular person,
department or office as the designated recipient of such requests and provide
that, after Holders have been notified in writing of such designation, no
request for redemption will be deemed received until received by the person,
department or office so designated. Unless withdrawn as provided in Section
10.03, all such requests shall remain in effect until the Bonds which are the
subject of such request have been redeemed.
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(b) To the extent, if any, provided in the related Terms Indenture for a
Class of Book Entry Bonds, the Clearing Agency will maintain a register for
requests for Bondholder Redemption and shall determine the order of receipt for
requests for redemption, in accordance with the terms and provisions of the
related Terms Indenture and the rules and procedures of the Clearing Agency.
SECTION 10.05 Redemption at the Option of the Issuer; Election to Redeem.
In addition to any other redemption or special redemption to which the
Bonds of a Series may be subject, such Bonds are subject to redemption in whole
or in part at the option of the Issuer at the Redemption Price in accordance
with the terms of the related Terms Indenture. If the Issuer elects so to redeem
Bonds of a Series then Outstanding, it shall, no later than 30 days prior to the
Redemption Date selected for such redemption, deliver notice of such election to
the Trustee, together with an Issuer Order directing the Trustee to effect such
redemption and the aggregate Redemption Price due on such Redemption Date for
deposit into the Collection Account.
SECTION 10.06 Optional Floating Interest Rate Bond Redemption.
Unless specified otherwise in the related Terms Indenture, the Issuer, at
its option, may use all or a portion of Spread to redeem any Class of Floating
Interest Rate Bonds, in whole or in part (an "Optional Floating Interest Rate
Bond Redemption"), on any Principal Payment Date for such Class ("Floating
Interest Rate Bond Redemption Date"), at the Floating Interest Rate Bond
Redemption Price, if the Bond Interest Rate at which interest on such Floating
Interest Rate Bonds accrues during the Interest Accrual Period next preceding
such Floating Interest Rate Bond Redemption Date is equal to the Maximum
Floating Interest Rate. If the Issuer elects so to redeem Bonds of a Series then
Outstanding, it shall, no later than 30 days prior to the Principal Payment Date
selected for such redemption, deliver notice of such election to the Trustee,
together with an Issuer Order directing the Trustee to effect such redemption.
SECTION 10.07 Redemption Notice.
Except as otherwise specified in the applicable Terms Indenture, notice of
redemption shall be given by the Trustee in the name of and at the expense of
the Issuer at the following times and to the following Persons:
(i) Except as provided in clause (iv) below, notice of any Special
Redemption of Bonds, other than a Special Redemption which will result in
the payment in full of the entire unpaid principal amount of the Bonds to
be redeemed and in connection with which presentment is required for
payment, shall be mailed no later than the fourth Business Day (or, if the
Accounting Party is the Trustee, no later than the second Business Day)
after the Special Record Date for the applicable Special Redemption Date to
the Persons who were Holders of the Bonds to be redeemed on such Special
Record Date;
(ii) Notice of any redemption of Bonds pursuant to Section 10.05 or
10.06 and notice of any redemption of Definitive Bonds pursuant to Section
10.02(e) shall be mailed no later than five days after the Record Date that
would otherwise be applicable to
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the Redemption Date or Floating Interest Rate Bond Redemption Date, as the
case may be, on which such Bonds are to be redeemed to the Persons who were
Holders of such Bonds on such otherwise applicable Record Date;
(iii) Except as provided in clause (iv) below, notice of any Special
Redemption of Bonds that will result in the payment in full of the entire
unpaid principal amount of the Bonds to be redeemed and in connection with
which presentment is required for payment, shall be mailed no later then
the fourth Business Day (or, if the Accounting Party is the Trustee, no
later than the second Business Day) next succeeding the Special Record Date
that would otherwise be applicable to the Special Redemption Date on which
such Bonds are to be redeemed to the Persons who were the Holders of such
Bonds on such otherwise applicable Special Record Date; and
(iv) Unless otherwise provided in the related Terms Indenture, no prior
notice of Bondholder Redemption or redemption of Book Entry Bonds pursuant
to Section 10.02(e) shall be required.
All notices of redemption shall state:
(1) the Special Redemption Date, Redemption Date or Floating
Interest Rate Bond Redemption Date, as the case may be,
(2) the Special Redemption Price, Redemption Price or Floating
Interest Rate Bond Redemption Price, as the case may be,
(3) if Bonds of a Class are not to be paid in full on a Special
Redemption Date, Redemption Date, or Floating Interest Rate Bond
Redemption Date, that on such Special Redemption Date, Redemption Date
or Floating Interest Rate Bond Redemption Date, the pro rata portion of
the Special Redemption Price, Redemption Price or Floating Rate Bond
Redemption Price, respectively, will become due and payable with
respect to each Individual Bond as specified in such notice, that the
amount payable in respect of the redeemed portion of each such Bond so
redeemed shall be limited to the pro rata portion of the Special
Redemption Price, Redemption Price or Floating Rate Bond Redemption
Price therefor and that no interest shall accrue on such principal
portion for any period after the Designated Interest Accrual Date for
the date fixed for redemption and that payment of the Special
Redemption Price, Redemption Price or Floating Rate Bond Redemption
Price will be paid by check mailed to the Persons whose names appear as
the registered Holders thereof on the Bond Register as of the Special
Record Date applicable to the Special Redemption Date or as of the
Record Date applicable to the Redemption Date or Floating Interest Rate
Bond Redemption Date, as the case may be, and identified in such notice
of redemption, and
(4) if Bonds of a Class are to be paid in full on such Special
Redemption Date, Redemption Date or Floating Interest Rate Bond
Redemption Date, the fact of such payment in full, the place where such
Bonds are to be
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surrendered for payment of the Special Redemption Price, Redemption
Price or Floating Rate Bond Redemption Price, as the case may be (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 Designated Interest Accrual Date for 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 10.08 Bonds Payable on Special Redemption Date, Redemption Date or
Floating Interest Rate Bond Redemption Date.
Notice of redemption, if applicable, having been given as provided in
Section 10.07, the Bonds or portions thereof so to be redeemed shall, on the
applicable Special Redemption Date, Redemption Date or Floating Rate Bond
Redemption Date, become due and payable at the Special Redemption Price,
Redemption Price or Floating Rate Bond Redemption Price, as the case may be, and
(unless the Issuer shall default in the payment of the Special Redemption Price,
Redemption Price or Floating Rate Bond Redemption Price) no interest shall
accrue on such Special Redemption Price, Redemption Price or Floating Rate Bond
Redemption Price for any period after the Designated Interest Accrual Date for
such Redemption Date, Special Redemption Date or Floating Interest Rate Bond
Redemption Date, as the case may be.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 TIA Certificates and Opinions.
(a) Conditions Precedent. Upon any application or request by the Issuer to
the Trustee to take any action under any provision of the Indenture, the Issuer
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in the Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of the Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
(b) Released Property. The Issuer shall furnish the Trustee, with respect
to a Series of Bonds, a certificate or opinion of an Accountant, appraiser, or
other expert as to the fair value of any Certificates, securities, cash or other
property to be released from the lien of the Indenture (the "Released
Property"), which certificate or opinion shall state that in the opinion of the
person making the same the proposed release will not impair the security of the
Bonds of such Series under the Indenture in contravention of the provisions
hereof. If, with respect to a Series of Bonds, the fair value of such Released
Property and all other Released Property released since the commencement of the
calendar year in which such certificate or opinion is given, as set forth in
such certificate or opinion, is 10 percent or more of the Aggregate Current
Principal Amount of the Bonds of such Series, then such certificate or opinion
shall be made by an Independent
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Accountant, appraiser, or other expert. However, such a certificate or opinion
of an Independent Accountant, appraiser, or other expert shall not be required
in the case of any Released Property, if the fair value thereof as set forth in
the certificate or opinion required by this Subsection is less than $25,000 or
less than 1 percent of the Aggregate Current Principal Amount of the Bonds of
such Series.
(c) Deposit of Certificates as Basis for Withdrawal or Release of Portions
of Trust Estate. The Issuer shall furnish the Trustee, with respect to a Series
of Bonds, a certificate or opinion of an Accountant, appraiser or other expert
as to the fair value to the Issuer of any Certificates or other securities
(other than bonds and securities secured by a lien prior to the lien of the
Indenture upon the Trust Estate) (the "Deposited Securities"), the deposit of
which with the Trustee is to be made the basis for the authentication and
delivery of Bonds, the withdrawal of cash constituting a part of the Trust
Estate of any Series or the release of Certificates, securities or other
property constituting a part of the Trust Estate relating to such Series of
Bonds. If the fair value of the Deposited Securities so deposited since the
commencement of the calendar year in which such certificate or opinion is to be
given, as set forth in such certificate or opinion, is 10 percent or more of the
Aggregate Current Principal Amount of the Bonds of such Series at the time such
certificate or opinion is to be given, then such certificate or opinion shall be
made by an Independent Accountant, appraiser or other expert. However, such a
certificate of an Independent Accountant, appraiser or other expert shall not be
required with respect to Deposited Securities, if the fair value of such
Deposited Securities to the Issuer as set forth in the certificate or opinion
required by this Subsection is less than $25,000 or less than 1 percent of the
Aggregate Current Principal Amount of the Bonds of such Series.
(d) Deposit of Other Property as Basis for Withdrawal or Release of
Portions of Trust Estate. The Issuer shall furnish the Trustee, with respect to
a Series of Bonds, a certificate or opinion of an Accountant, appraiser, or
other expert as to the fair value to the Issuer of any property the subjection
of which to the lien of the Indenture is to be made the basis for the
authentication and delivery of Bonds, the withdrawal of cash constituting any
portion of the Trust Estate relating to such Series of Bonds, or the release of
property, Certificates or other securities subject to the lien of the Indenture
relating to such Series of Bonds. If (A) within six months prior to the date of
acquisition by the Issuer, such property has been used or operated, by a Person
other than the Issuer, in a business similar to that in which it has been or is
to be used or operated by the Issuer, and (B) the fair value of such property as
set forth in the certificate or opinion required by this Subsection is not less
than $25,000 and not less than 1 per centum of the Aggregate Current Principal
Amount of the Bonds of such Series, such certificate or opinion shall be made by
an Independent Accountant, appraiser or other expert and shall cover the fair
value to the Issuer of any property so used or operated which has been so
subjected to the lien of the Indenture since the commencement of the current
calendar year, and as to which a certificate or opinion of an Independent
Accountant, appraiser or other expert has not previously been furnished.
(e) The certificates or opinions required by Subsections (a), (b), (c), and
(d) above may be made by an officer or employee of the Issuer, except where the
certificates or opinions are required to be given by an Independent Person, in
which case such certificate or opinion shall be given by an Independent
Accountant, appraiser or other expert selected or approved by the Trustee in the
exercise of reasonable care.
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(f) Every certificate or opinion with respect to compliance with a
condition or covenant provided for in the Indenture (including one furnished
pursuant to specific requirements of the Indenture relating to a particular
application or request) shall include:
(i) a statement that each Person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such Person, such Person
has made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such Person,
such condition or covenant has been complied with.
SECTION 11.02 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only on document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of any Issuer or an Authorized
Officer of any Owner Trustee may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by counsel, unless
such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Issuer, or, if applicable, an Authorized Officer or Officers of the Owner
Trustee, or, if applicable, a Person with which the Issuer has contracted or
whose assistance has been obtained pursuant to Section 3.07, stating that the
information with respect to such factual matters is in the possession of the
Issuer or such Person, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under the Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in the Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is
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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
and to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Section 6.01(a)(2).
SECTION 11.03 Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by the 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 the agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Issuer. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Bondholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of the Indenture and (subject to Section 6.01) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
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
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 Trustee and Issuer.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Bondholders or other document provided or permitted by the Indenture to
be made upon, given or furnished to, or filed with
(a) the Trustee by any Bondholder or by the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
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(b) the Issuer by the Trustee or by any Bondholder shall be sufficient
for every purpose hereunder (except as provided in Section 5.01(d) and (e))
if made, given, furnished or filed in writing to or with Issuer.
SECTION 11.05 Notices to Bondholders; Waiver of Notices.
Where the 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 in writing
and 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 with respect
to other Bondholders, and any notice or report which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided.
Where the 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 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 the Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 11.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for any meeting of Bondholders which
rules may, at the Trustee's request, be set forth in the applicable Terms
Indenture. Any Agent may make reasonable rules and set reasonable requirements
for its functions.
SECTION 11.07 Conflict with Trust Indenture Act.
If any provision of the Indenture limits, qualifies or conflicts with
another provision of the Indenture which is required to be included in the
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.
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SECTION 11.09 Successors and Assigns.
All covenants and agreements in the Indenture by the Issuer shall bind its
successors and assigns, whether so expressed or not.
SECTION 11.10 Severability.
In case any provision in the Indenture or in the Bonds shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.11 Benefits of Standard Indenture Provisions.
Nothing in the Indenture or in the Bonds, expressed or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, any
separate trustee or co-trustee appointed under Section 6.14 and the Bondholders,
any benefit or any legal or equitable right, remedy or claim under the
Indenture.
SECTION 11.12 Legal Holidays.
In any case where the date of any Payment Date, Redemption Date, Special
Redemption Date, Special Payment Date or any other date on which principal of,
premium, if any, or interest on any Bond or Overdue Bond is proposed to be paid
shall not be a Business Day, then (notwithstanding any other provision of the
Bonds or the 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, Special Redemption
Date, Special Payment Date or other date for the payment of principal of,
premium, if any, or interest on any Bond or Overdue Bond as the case may be, and
no interest shall accrue for the period from and after any such nominal date or
for any corresponding period relating to any Interest Accrual Period or
Designated Interest Accrual Date.
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
THE 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, THE 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.
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SECTION 11.15 Recording of Indenture.
The Indenture is subject to recording in any appropriate public recording
offices, such recording to be effected by the Issuer and at its expense on
direction by the Trustee accompanied by an Opinion of Counsel (which may be
counsel to the Trustee or any other counsel reasonably acceptable to the
Trustee) or upon determination by the Issuer to the effect that such recording
is necessary either for the protection of the Bondholders or for the enforcement
of any right or remedy granted to the Trustee under the Indenture.
Notwithstanding the foregoing, but subject to Section 6.01, the Trustee shall
have no obligation or duty to determine whether such recording is necessary.
SECTION 11.16 Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Trustee, during the Issuer's normal business hours, to
examine all of the books of account, records, reports and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be audited
by Independent Accountants selected by the Trustee, and to discuss its affairs,
finances and accounts with its officers, employees and the Issuer's 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 Trustee of any right under this Section
11.16 shall be borne by the Issuer.
SECTION 11.17 Issuer Obligation.
Except as otherwise required by applicable law, no recourse may be taken,
directly or indirectly, against (a) any Bank; (b) any equity owner of any
Issuer, the Trustee or any Bank; (c) any partner, beneficiary, agent, employee,
incorporator, subscriber to the capital stock, stockholder, officer or director
of the Trustee or any Bank or of any equity owner of the Issuer, the Trustee or
any Bank or of any predecessor or successor of any such equity owner; with
respect to the Issuer's obligations with respect to the Bonds or the
responsibilities of the Issuer or the Trustee under the Indenture or any
certificate or other writing delivered in connection herewith or therewith.
SECTION 11.18 Limitation on Interest.
Anything herein or in any Terms Indenture or any Bond to the contrary
notwithstanding, the amount of interest payable or paid on any Bond under the
terms of the Indenture shall be limited to an amount which shall not exceed the
maximum non-usurious rate of interest allowed by the applicable laws of the
United States or the State of New York (whichever shall permit the higher rate),
which could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Bond exceeds the Highest
Lawful Rate, the Issuer stipulates that such excess amount will be deemed to
have been paid as a result of an error on the part of both the Trustee, acting
on behalf of the Holder of such Bond, and the Issuer, and the Holder receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Issuer or the Trustee, 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 Trustee for the benefit of Holders of Bonds for the
use, forbearance or detention of money shall, to the
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extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Bonds.
SECTION 11.19 REMIC Status.
The provisions of the Indenture shall be construed so as to carry out the
intention of the parties that the Trust Estate securing the Series or the Issuer
be treated as a REMIC, if an election has been made or will be made to treat the
Trust Estate securing the Series or the Issuer, as the case may be, as a REMIC,
at all times so long as any Bond is Outstanding (or would be treated as
Outstanding for purposes of a Non-Disqualification opinion).
SECTION 11.20 Designations of Regular and Residual Interests in a REMIC.
As to any Trust Estate securing any Series for which an election to be
treated as a REMIC is made or will be made, the designation of the regular
interests in such REMIC within the meaning of Section 860G(a)(1) of the Code and
the designation of the residual interest in such REMIC within the meaning of
Section 860G(a)(2) of the Code shall be set forth in the related Terms
Indenture. As to any Issuer for which an election to be treated as a REMIC is
made or will be made, the designation of the regular interests in such REMIC
within the meaning of Section 860G(a)(1) and the designation of the residual
interest in such REMIC within the meaning of Section 860G(a)(2) of the Code
shall be set forth in the related Terms Indenture or in the organizational
document of the Issuer.
SECTION 11.21 Prohibited Transactions Tax.
Except as otherwise provided in the related Terms Indenture,
notwithstanding any other provision of the Indenture, if an election has been
made or will be made to treat the Trust Estate securing the Series or the Issuer
as a REMIC, any tax on "prohibited transactions" as defined in Section 860F of
the Code that is payable from the Trust Estate and represents a claim against
the Trust Estate prior to the lien of the Indenture shall be borne by the
holders of the "residual interests" in the REMIC as specified in the related
Terms Indenture. Any such tax which represents a claim junior to the lien of the
Indenture shall be payable as an expense of the Trust Estate in accordance with
Section 8.02(d).
SECTION 11.22 Appointment of Tax Matters Partner.
Except as otherwise provided in the related Terms Indenture, if an election
has been made or will be made to treat the Trust Estate securing the Series or
the Issuer as a REMIC, the Residual Interest Holders, by virtue of their
ownership of the Residual Interest, agree to designate the manager as the tax
matters partner for the REMIC for all purposes of the Code and the Manager, as
such, will perform, or cause to be performed, such duties and take, or cause to
be taken, such actions as are required to be performed or taken by the tax
matters partner under the Code or, to the extent not required by the Code, as
the Manager, in its judgment, shall consider advisable and in the best interests
of the REMIC.
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<PAGE> 160
SECTION 11.23 Filing of REMIC Tax Returns.
Except as otherwise provided in the related Terms Indenture, if an election
has been made or will be made to treat the Trust Estate securing the Series as a
REMIC, (i) the Residual Interest Holders, by virtue of their ownership of the
Residual Interest, agree to take all actions necessary upon the request of the
Issuer to enable the Issuer or Manager to file the tax returns of the REMIC in a
timely manner; such actions including, but not limited to, the execution of a
power of attorney authorizing the Issuer or Manager to sign such tax returns and
to appear before the Internal Revenue Service to answer any questions arising
from such tax returns and (ii) the Issuer shall, for federal income tax
purposes, maintain books and records with respect to the REMIC on a calendar
year basis and on an accrual basis.
SECTION 11.24 Reductions of Reserve Funds.
Except as otherwise provided in the related Terms Indenture, if an election
has been made or will be made to treat the Trust Estate securing the Series or
the Issuer as a REMIC, the Issuer shall instruct the Trustee on the Business Day
prior to any Payment Date, by Issuer Order, of the amount by which, if any, a
Debt Service Reserve Fund or a Reserve Fund must be reduced pursuant to clause
(B) of Section 8.03(c)(ii) and clause (B) of Section 8.04(c)(ii), respectively,
and of the amount of any other reductions of Special Reserve Funds or the
Expense Fund as set forth in the applicable Terms Indenture.
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EXHIBIT 8.1
January 20, 2000
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower, World Financial Center
250 Vesey Street
New York, New York 10281
FUND AMERICA INVESTORS CORPORATION II
ASSET-BACKED NOTES, SERIES 2000-1
FAIC II ISSUER TRUST 2000-1
Ladies and Gentlemen:
We have acted as counsel to Fund America Investors Corporation II, a
Delaware corporation ("FAIC II"), in connection with the formation of FAIC II
Issuer Trust 2000-1, a Delaware statutory business trust (the "Trust" or the
"Issuer"). The Trust was organized pursuant to an Agreement of Trust (the "Trust
Agreement"), dated as of January 18, 2000, among FAIC II, as depositor (the
"Depositor"), Merrill Lynch, Pierce, Fenner & Smith Incorporated, as seller (the
"Seller), and Christiana Bank & Trust Company, as issuer trustee (the "Issuer
Trustee"), as amended by an Amended and Restated Agreement of Trust, dated as of
January 20, 2000, among the Depositor, the Issuer Trustee, and State Street Bank
and Trust Company, as issuer certificate agent. The Trust consists primarily of
seven securities issued and guaranteed by either the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation (the "Agency
Securities") that, pursuant to a Purchase Agreement dated as of January 20, 2000
(the "Purchase Agreement"), FAIC II purchased from the Seller and simultaneously
transferred to the Trust pursuant to a Deposit and Sale Agreement, dated as of
the same date (the "Deposit Agreement").
The Issuer and State Street Bank and Trust Company, as note trustee
(the "Note Trustee") have entered into a Terms Indenture, dated as of January
20, 2000 (together with the Standard Indenture Provisions incorporated therein
by reference, the "Indenture"), in connection with the issuance by the Issuer of
$1,986,400 initial principal amount of Class F Asset-Backed Notes and $764,000
initial principal amount of Class S Asset-Backed Notes (together the "Notes").
The Notes have been registered by means of a Registration Statement on Form S-3
(Registration No. 333-33823, as amended) (the "Registration Statement"),
pursuant to
<PAGE> 2
Merrill Lynch, Pierce, Fenner & Smith Incorporated
January 20, 2000
PAGE 2
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
proposed offering from time to time in one or more series of asset backed
securities, which Registration Statement includes the related Prospectus dated
January 19, 2000 (the "Base Prospectus"), and the Prospectus Supplement dated
January 19, 2000 (the "Prospectus Supplement" and, together with the Base
Prospectus, the "Prospectus"), which were filed by FAIC II with the Securities
and Exchange Commission (the "Commission") pursuant to Rule 424 under the
Securities Act.
This opinion is furnished to you in accordance with the requirements of
the Underwriting Agreement. Capitalized terms used herein but not defined herein
shall have the meanings assigned to them in the Trust Agreement or the
Indenture.
In rendering the opinion expressed below, we have examined the following
documents:
(a) the Registration Statement and the Prospectus, all relating to the
Notes;
(b) the Trust Agreement;
(c) the Indenture;
(d) the Purchase Agreement and the Deposit Agreement; and
(e) such other documents as we have deemed necessary or appropriate as a
basis for the opinion set forth below.
In such examination, we have assumed (i) the genuineness of all
signatures, (ii) the authenticity of all documents submitted to us a original,
(iii) the conformity to original documents of copies of documents supplied to
us, (iv) the legal capacity of natural persons, and (v) the due authorization,
execution, and delivery of documents by all parties and the validity and binding
effect thereof.
We do not purport to express an opinion on any laws other than the
federal law of the United States of America. No opinion has been sought and none
has been given concerning the tax treatment of the issuance and sale of the
Notes under the laws of any state.
Based on the foregoing and subject to the qualifications stated herein,
we are of the opinion that if (i) the Issuer, the Note Trustee, the Issuer
Trustee, and certain other parties to the issuance transaction comply (without
waiver) with all of the provisions of the Indenture and certain other documents
to be prepared and executed in connection with the issuance of the Notes and
(ii) the Issuer issues and sells the Notes as described in the Prospectus, the
Notes will be
<PAGE> 3
Merrill Lynch, Pierce, Fenner & Smith Incorporated
January 20, 2000
PAGE 3
treated for federal income tax purposes as evidences of indebtedness and not as
ownership interests in the collateral securing them or as equity interests in
the Issuer or in a separate association taxable as a corporation.
There are no existing regulations under section 385 of the Internal
Revenue Code of 1986, as amended (the "Code"), defining instruments as equity or
indebtedness for income tax purposes. Furthermore, there are no controlling
regulations, published rulings, or judicial decisions involving securities with
terms substantially the same as the Notes that discuss, for federal income tax
purposes, (i) whether the securities constitute equity or indebtedness or (ii)
whether the collateral relating to the securities has been pledged or sold to
the holders of the securities. Therefore, our opinion regarding the
characterization of the Notes as evidences of indebtedness is based upon rulings
and judicial decisions under the Code involving situations that we consider to
be analogous and an analysis of all of the facts and circumstances surrounding
the issuance and sale of the Notes.
You should be aware that this opinion represents conclusions as to the
application to the Notes of existing law, regulations, administrative rules and
practices, and legislative history, including, but not limited to, the official
explanation of the Tax Reform Act of 1986. There can be no assurance, however,
that existing law will not change or that contrary positions will not be taken
by the Internal Revenue Service.
We consent to your reliance on this opinion letter. Except as provided
in the preceding sentence, this opinion letter may not be relied upon by, nor
may copies be delivered to, any person without our prior written consent. We do
not undertake to advise you of any changes in the opinion expressed herein from
matters that might hereafter arise or be brought to our attention.
Very truly yours,
Hunton & Williams
<PAGE> 1
EXHIBIT 10.1
FAIC II ISSUER TRUST 2000-1
AMENDED AND RESTATED
AGREEMENT OF TRUST
among
FUND AMERICA INVESTORS CORPORATION II,
as Depositor
CHRISTIANA BANK & TRUST COMPANY,
as Issuer Trustee
and
STATE STREET BANK AND TRUST COMPANY,
as Issuer Certificate Agent
Dated as of January 20, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
FAIC II ISSUER TRUST 2000-1...................................................................................1
AMENDED AND RESTATED AGREEMENT OF TRUST...............................................................1
ARTICLE I: GENERAL............................................................................................1
Section 1.01. Amendment and Restatement of Prior Trust Agreement........................................1
Section 1.02. Appointment of Christiana Bank & Trust Company............................................1
Section 1.03. Governance of the Issuer..................................................................1
Section 1.04. Name, Principal Office, and Name and Address of Issuer Trustee as Agent for
Service of Process........................................................................2
Section 1.05. Purpose and Powers........................................................................2
Section 1.06. Claims Against the Issuer.................................................................3
Section 1.07. Beneficial Ownership......................................................................3
Section 1.08. Certain Covenants Relating to the Separateness of the Issuer..............................3
ARTICLE II: DEFINITIONS......................................................................................4
ARTICLE III: CONTRIBUTIONS; CONSENT TO EXECUTION OF CERTAIN AGREEMENTS........................................8
Section 3.01. Contributions on the Closing Date.........................................................8
Section 3.02. Consideration for Contribution of Contributed Assets......................................8
Section 3.03. Holding of the Issuer Estate..............................................................8
Section 3.04. Limitation on the Liability of the Issuer Trustee, the Issuer Certificate Agent,
the Depositor and Certificateholders......................................................8
Section 3.05. Direction of Issuer Trustee's Execution of and Performance Under the Deposit
Agreement and the Indenture...............................................................8
ARTICLE IV: THE CLASS R CERTIFICATES..........................................................................9
Section 4.01. Initial Ownership.........................................................................9
Section 4.02. Authorization of the Class R Certificates.................................................9
Section 4.03. Form of Class R Certificates; Denominations...............................................9
Section 4.04. Execution and Authentication of Class R Certificates......................................9
Section 4.05. Registration of Transfer and Exchange of Class R Certificates.............................9
Section 4.06. Mutilated, Destroyed, Lost or Stolen Certificates........................................11
Section 4.07. Persons Deemed Owners....................................................................12
Section 4.08. Access to List of Certificateholders' Names and Addresses................................12
Section 4.09. Maintenance of Office or Agency..........................................................12
Section 4.10. Class R Certificates Held by The Depositor...............................................12
Section 4.11. Appointment of the Certificate Paying Agent..............................................12
Section 4.12. Representations and Warranties of State Street Bank and Trust Company....................13
Section 4.13. Resignation, Removal and Replacement of the Issuer Certificate Agent.....................14
Section 4.14. Reporting................................................................................15
ARTICLE V: CERTIFICATE DISTRIBUTIONS.........................................................................15
Section 5.01. Payments From Issuer Estate..............................................................15
Section 5.02. Establishment of Trust Agreement Collection Account......................................15
Section 5.03. Certificate Distributions................................................................16
Section 5.04. Redemption of the Class R Certificates...................................................17
Section 5.05. Account Statements; Other Reports........................................................17
Section 5.06. Books and Records........................................................................19
</TABLE>
Agreement of Trust
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI: CERTIFICATE TERMINATION EVENTS...................................................................19
Section 6.01. Certificate Termination Events...........................................................19
Section 6.02. Consequences of a Certificate Termination Event..........................................20
Section 6.03. Issuer Certificate Agent Termination Events..............................................20
ARTICLE VII: RIGHTS, OBLIGATIONS, POWERS AND STATUS OF THE CERTIFICATEHOLDERS..............................21
Section 7.01. Management of the Issuer.................................................................21
Section 7.02. Bankruptcy, Dissolution or Termination of any Certificateholder..........................21
Section 7.03. Creditors of the Certificateholders......................................................21
Section 7.04. Certain Rights of the Majority Certificateholders........................................21
Section 7.05. Tax Status...............................................................................21
ARTICLE VIII: CONCERNING THE ISSUER TRUSTEE AND CHRISTIANA BANK & TRUST COMPANY............................22
Section 8.01. General..................................................................................22
Section 8.02. Acceptance of the Issuer.................................................................24
Section 8.03. Authority and Duties of the Issuer Trustee...............................................25
Section 8.04. Representations and Warranties of Christiana Bank & Trust Company........................26
Section 8.05. Resignation of the Issuer Trustee........................................................26
Section 8.06. Indemnification..........................................................................27
Section 8.07. Fees and Expenses........................................................................28
Section 8.08. Litigation, Action Outside Delaware......................................................28
ARTICLE IX: REDEMPTION OF NOTES............................................................................29
Section 9.01. Optional Redemption of the Notes.........................................................29
ARTICLE X: DISSOLUTION, BANKRUPTCY AND LIQUIDATION OF THE ISSUER...........................................29
Section 10.01. Dissolution of the Issuer...............................................................29
Section 10.02. Termination.............................................................................30
ARTICLE XI: NOTICES........................................................................................30
Section 11.01. Notices.................................................................................30
ARTICLE XII: MISCELLANEOUS PROVISIONS.....................................................................32
Section 12.01. Entire Agreement........................................................................32
Section 12.02. Governing Law; Submission to Jurisdiction...............................................32
Section 12.03. Effect..................................................................................32
Section 12.04. Pronouns and Number.....................................................................32
Section 12.05. Effect of Headings......................................................................32
Section 12.06. Severability of Provisions..............................................................32
Section 12.07. Amendment or Waiver; Effect on Issuer Trust Agreement...................................33
Section 12.08. Binding Upon Assigns....................................................................33
Section 12.09. Counterparts............................................................................33
</TABLE>
Agreement of Trust
ii
<PAGE> 4
Schedule I Agency Securities
Exhibit A Form of Class R Certificate
Exhibit B Form of Transferee Certificate
Exhibit C-1 Form of Transferee Affidavit (Freddie Mac)
Exhibit C-2 Form of Transferee Affidavit (Fannie Mae)
Agreement of Trust
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FAIC II ISSUER TRUST 2000-1
AMENDED AND RESTATED AGREEMENT OF TRUST
This AMENDED AND RESTATED AGREEMENT OF TRUST (this "Agreement") of FAIC
II Issuer Trust 2000-1, a Delaware statutory business trust (the "Issuer"), is
made and entered into as of January 20, 2000 by and among Fund America Investors
Corporation II (the "Depositor"), as the initial holder of all beneficial
ownership interest in the Issuer; Christiana Bank & Trust Company, a banking
corporation incorporated in the State of Delaware (in its individual capacity
solely where expressly set forth herein, "Christiana Bank"), otherwise acting
solely in its capacity as trustee of the Issuer hereunder (in such capacity, the
"Issuer Trustee"), and State Street Bank and Trust Company, a trust company
organized in the Commonwealth of Massachusetts (in its individual capacity,
"State Street"), as authenticating agent, certificate registrar and certificate
paying agent hereunder with respect to the Class R Certificates issued hereunder
(in such capacities, the "Issuer Certificate Agent"). Capitalized terms used
without definitions have the meanings assigned to such terms in Article II or,
if not defined therein, such terms have the meanings assigned to them in the
Indenture (as defined herein).
NOW, THEREFORE, the Issuer shall be governed under the following terms
and conditions providing for the conduct of the business and affairs of the
Issuer and the maintenance of the assets contributed to or otherwise owned or
held by or on behalf of the Issuer, together with the proceeds thereof:
ARTICLE I:
GENERAL
Section 1.01. Amendment and Restatement of Prior Trust Agreement.
This Agreement hereby amends and restates in its entirety the Agreement
of Trust, dated January 19, 2000 (the "Prior Agreement of Trust") and,
notwithstanding any provision therein to the contrary, no provision of such
Prior Agreement of Trust shall survive the execution of this Agreement. The
terms of this Agreement will be effective from the date on which the Certificate
of Trust was filed.
Section 1.02. Appointment of Christiana Bank & Trust Company.
The Depositor hereby appoints Christiana Bank & Trust Company as Issuer
Trustee effective as of the date hereof, to have all the rights, powers and
duties set forth herein and in the Act. The Issuer Trustee is hereby authorized
to file a Certificate of Trust with the Secretary of State pursuant to Section
3810 of the Act.
Section 1.03. Governance of the Issuer.
The Issuer was formed as a statutory business trust under and pursuant
to the Prior Agreement of Trust, the Act and such other provisions of applicable
law as shall pertain to statutory business trusts organized pursuant to and in
accordance with the Act. It is the intention of the parties hereto that, from
and after the date hereof, this Agreement constitute the sole governing
instrument of the Issuer. All Persons owning or otherwise holding interests of
beneficial ownership in the Issuer shall own or otherwise hold such interests of
beneficial ownership pursuant to the provisions of this Agreement.
Agreement of Trust
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Section 1.04. Name, Principal Office, and Name and Address of Issuer
Trustee as Agent for Service of Process.
The Issuer shall be conducted under the name "FAIC II Issuer Trust
2000-1," in which name the Issuer or the Issuer Trustee on behalf of the Issuer
shall enter into contracts and agreements with respect to the transactions
contemplated hereby. The principal place of business and office of the Issuer
shall be c/o Christiana Bank & Trust Company, Greenville Center, 3801 Kennett
Pike, Greenville, Delaware 19807, Attention: Corporate Trust Administration. The
Issuer Trustee, which is hereby designated to accept service of process, is
Christiana Bank & Trust Company, and its current office is located at the
address provided in the preceding sentence.
Section 1.05. Purpose and Powers
(a) The Issuer shall have the power and authority to engage,
and the purpose of the Issuer shall be limited to engaging, in the
following activities:
(i) to enter into the Deposit and Sale Agreement
dated as of January 20, 2000 (the "Deposit Agreement") between
the Depositor and the Issuer, pursuant to which the Issuer
shall receive from the Depositor (a) the Agency Securities and
(b) the rights of the Depositor under the Purchase Agreement
dated as of January 20, 2000 (the "Purchase Agreement")
between Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
the Seller (in such capacity, the "Seller") and the Depositor
(together, the "Contributed Assets");
(ii) to issue U.S. $1,986,400 of the FAIC II Issuer
Trust 2000-1, variable rate, Class F Notes, due December 1,
2029 (the "Class F Notes") and U.S. $764,000 of the FAIC II
Issuer Trust 2000-1, variable rate, Class S Notes, due
December 1, 2029 (the "Class S Notes," and, together with the
Class F Notes, the "Notes") pursuant to a Terms Indenture (the
"Terms Indenture"), dated as of January 20, 2000, together
with the Standard Indenture Provisions which are incorporated
therein by reference , the "Indenture"), between the Issuer
and State Street as trustee thereunder (in such capacity, the
"Note Trustee"), and to issue U.S. $465,600 Initial
Certificate Balance of FAIC II Issuer Trust 2000-1, Class R
Certificates, due December 1, 2029 (the "Class R
Certificates"), issued hereunder, and to sell the Notes and
the Class R Certificates;
(iii) to remit the proceeds of the sale of the Notes
and the Class R Certificates to the Depositor as consideration
for the Contributed Assets received from the Depositor;
(iv) to assign, grant, transfer, pledge, mortgage and
convey the Pledged Assets (defined herein) to the Note Trustee
for the benefit of the registered holders of the Notes and to
hold, manage and distribute to the Certificateholders any
portion of the Issuer Estate released from or not included in,
the Lien on the Pledged Assets created pursuant to the
Indenture and remitted by the Note Trustee to the Trust
Agreement Collection Account pursuant to the Indenture in
accordance with this Agreement;
(v) to enter into and perform its obligations under
the Indenture and any other Transaction Document to which it
is a party;
(vi) to engage in those activities that are necessary
to accomplish the foregoing or are incidental thereto; and
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(vii) subject to compliance with the Transaction
Documents, to engage in such other activities as may be
required in connection with conservation of the Issuer Estate
and making distributions to the Certificateholders.
(b) The Issuer is hereby authorized to engage in the foregoing
activities. The Issuer shall not engage in any activity other than as
required or expressly authorized by the terms of this Agreement or the
Transaction Documents or, subject to the terms of this Agreement and
the other Transaction Documents, as the Certificateholders may from
time to time direct.
(c) References herein to Sections of the Indenture shall mean
Sections of the Terms Indenture.
Section 1.06. Claims Against the Issuer.
All Persons extending credit to, contracting with or having any claim
against the Issuer shall look only to the Issuer for payment under such credit,
contract or claim. None of the Issuer Trustee (including in its individual
capacity), the Issuer Certificate Agent (including in its individual capacity),
the Depositor, the Certificateholders or any of the Issuer's officers, employees
or agents, whether past, present or future shall be personally liable therefor.
Section 1.07. Beneficial Ownership.
The undivided beneficial ownership interest in the Issuer will be
evidenced by the Class R Certificates issued in accordance with Article IV.
Section 1.08. Certain Covenants Relating to the Separateness of the
Issuer.
The Issuer shall maintain its separate existence and, specifically,
shall conduct its affairs in accordance with the following:
(a) The Issuer shall not commingle or pool its funds or other
assets with those of any other Person.
(b) The Issuer shall maintain its assets in such a manner that
it is not costly or difficult to segregate, ascertain or otherwise
identify its individual assets from those of any other Person.
(c) The Issuer shall maintain its own records and books of
account.
(d) The Issuer shall not incur any indebtedness, except
pursuant to the Transaction Documents.
(e) The Issuer shall not lend money to any Person and will not
become obligated to provide funds for the purpose of supporting the
obligations of any Person.
(f) The Issuer shall not (i) hold itself out or permit itself
to be held out as having agreed to pay, or as being liable for,
indebtedness of another Person; (ii) fail to correct any
misrepresentation, of which the Issuer Trustee has actual knowledge,
with respect to the foregoing; or (iii) operate or purport to operate
collectively as a single or consolidated business entity with respect
to any other Person.
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(g) The Issuer shall abide by all statutory Delaware business
trust formalities, and shall cause its financial statements to be
prepared in accordance with U.S. GAAP and in a manner that indicates
the separate existence of the Issuer and the Issuer's assets and
liabilities.
(h) The issuance of the beneficial ownership interest
evidenced by the Class R Certificates to the Certificateholders is
intended to be, and shall be accounted for on the books, records, and
financial statements of the Issuer and the Certificateholders as, the
issuance of equity capital and not as a loan by the Certificateholders
to the Issuer.
(i) Other than the Accounts maintained under the Indenture and
the Trust Agreement Collection Account, any bank account of the Issuer
shall be separate from the accounts of any other Person.
(j) The Issuer shall make no transfer of its assets except in
accordance with the Transaction Documents.
(k) The Issuer shall not sponsor at any time, or agree to
sponsor, maintain, contribute to, or assume an obligation to contribute
to, any Plan.
(1) The Issuer shall not merge, consolidate or convert with or
into any other Person without the consent of all of the
Certificateholders and the Note Trustee.
ARTICLE II:
DEFINITIONS
"Account Bank" means State Street Bank and Trust Company.
"Account Statement" has the meaning set forth in Section 5.05.
"Act" means the Delaware Business Trust Act, Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as in effect from time to
time.
"Agency Security" means each of the securities identified in Schedule I
hereto.
"Agreement" means this agreement of trust as it may from time to time
be amended, supplemented or otherwise modified in accordance with the terms
hereof.
"Authenticating Agent" has the meaning assigned to such term in Section
4.04.
"Available Funds" means, with respect to any Monthly Payment Date, the
aggregate amount on deposit in the Trust Agreement Collection Account on such
date.
"Bankruptcy Action" has the meaning assigned to such term in Section
10.01.
"Certificate Balance" means, with respect to each Class R Certificate,
the portion of the Outstanding Certificate Balance corresponding to such Class R
Certificate as specified on the face of such Class R Certificate on its date of
issuance.
"Certificate Placement Agreement" means the certificate placement
agreement, dated as of January 19, 2000, by and among the Issuer, the Depositor
and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
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<PAGE> 9
"Certificateholder" or "Holder" means, with respect to any date, the
Person or Persons in whose name Class R Certificates are registered in the
Certificate Register.
"Certificate of Trust" means the Certificate of Trust of FAIC II Issuer
Trust 2000-1 filed with the Secretary of State in order to form the Issuer under
the Act, as such Certificate of Trust may be amended or restated from time to
time.
"Certificate Paying Agent" has the meaning assigned to such term in
Section 4.11.
"Certificate Register" has the meaning assigned to such term in Section
4.05(a).
"Certificate Registrar" has the meaning assigned to such term in
Section 4.05(a).
"Class R Certificates" means any of the certificates of beneficial
ownership of the Issuer issued and authenticated hereunder, substantially in the
form of Exhibit A hereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Corporate Trust Office" means the principal corporate trust office of
the Issuer Certificate Agent, with current addresses at State Street Bank and
Trust Company, Global Investor Services Group - Corporate Trust, 2 Avenue de
Lafayette - 6th Floor, Boston, Massachusetts 02111 and State Street Bank and
Trust Company, Global Investor Services Group - Corporate Trust, P. O. Box 778,
Boston, Massachusetts, 02102-0778, or such other address within the United
States as the Issuer Certificate Agent may designate from time to time by notice
to the Issuer, or the principal corporate trust office of any successor Issuer
Certificate Agent.
"Cut-off Date" means January 26, 2000.
"Disqualified Organization" means the United States of America, any
state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing, any organization exempt from taxation under the Code (other than a
cooperative described in Code Section 521) unless such organization is subject
to the tax imposed by Code Section 511, and any organization described in Code
Section 1381 (a)(2)(C).
"ERISA" has the meaning assigned to such term in Section 4.05(g).
"Event of Default" has the meaning assigned to such term in the
Indenture.
"Expense Reserve Account" has the meaning assigned to such term in
Section 7.01 of the Indenture.
"Final Scheduled Monthly Payment Date" has the meaning assigned to such
term in Section 5.04(a).
"Initial Certificate Balance" means, with respect to the Class R
Certificates, U.S. $465,600.
"Institutional Accredited Investor" means an "accredited investor" as
defined in subsections (1), (2), (3) and (7) under Rule 501(a) promulgated under
the Securities Act.
"Issuer Assets" means (i) the Agency Securities; (ii) the amounts in
the Note Collection Account, the Interest Reserve Account, the Expense Reserve
Account and the Trust Agreement Collection Account,
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<PAGE> 10
including any Eligible Investments purchased with funds held in the Note
Collection Account, the Expense Reserve Account and the Interest Reserve
Account; (iii) the rights of the Issuer under the Deposit Agreement and this
Agreement; and (iv) all proceeds of the foregoing.
"Issuer Certificate Agent" means State Street Bank and Trust Company,
in its capacity as Certificate Paying Agent, and in its capacity as Certificate
Registrar and Authenticating Agent or any successor thereto in such capacity as
appointed pursuant to Section 4.13.
"Issuer Estate" means all right, title and interest of the Issuer in
and to the Issuer Assets, any Transaction Document to which the Issuer is a
party and any other property contributed to the Issuer or otherwise acquired by
the Issuer, together with all distributions, payments, revenues, issues, profits
or proceeds thereof and therefrom, and all appurtenances thereto.
"Issuer Trustee" means Christiana Bank & Trust Company, not in its
individual capacity but solely as Issuer Trustee hereunder, and any successor
Issuer Trustee appointed in accordance with Section 3807 of the Act and Section
8.05.
"Majority Certificateholders" means, at any time, Certificateholders
holding, collectively, Class R Certificates representing more than 50% of the
Outstanding Certificate Balance.
"Monthly Payment Date" means the first Business Day of each month
commencing on March 1, 2000.
"Optional Certificate Redemption Amount" has the meaning assigned to
such term in Section 5.04(b).
"Outstanding Certificate Balance" means, with respect to the Class R
Certificates, on any date, an amount equal to (i) the Initial Certificate
Balance thereof minus (ii) the aggregate amount of all distributions of
principal made to the Certificateholders. The Outstanding Certificate Balance
shall be calculated as of the close of business, in the case of any Monthly
Payment Date other than the initial Monthly Payment Date, on the immediately
preceding Monthly Payment Date after giving effect to all distributions of
principal to the applicable Holders on each preceding Monthly Payment Date
(including such immediately preceding Monthly Payment Date); provided that, on
the Closing Date, the Outstanding Certificate Balance thereof shall be equal to
the Initial Certificate Balance.
"Permitted Certificate Redemption Date" has the meaning assigned to
such term in Section 5.04(b).
"Plan" has the meaning assigned to such term in Section 4.05(g).
"Pledged Assets" means all of the Issuer Assets (except for (i) amounts
in the Trust Agreement Collection Account and the Expense Reserve Account
(including any Eligible Investments purchased with funds held in the Expense
Reserve Account) and (ii) until the Outstanding Certificate Balance of the Class
R Certificates has been reduced to zero, principal payments on the Series 2203
Freddie Mac Security).
"Prior Agreement of Trust" has the meaning assigned to such term in
Section 1.01.
"Record Date" means, with respect to any Monthly Payment Date, the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which such Monthly Payment Date falls.
"Residual Collections" has the meaning assigned to such term in Section
5.03(a).
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"Secretary of State" means the office of the Secretary of State of the
State of Delaware.
"Securities Act" means the Securities Act of 1933, as amended, and any
rules and regulations promulgated thereunder.
"Seller" means the party identified as such in Section 1.05(a)(i).
"Series 2203 Freddie Mac Security" has the meaning specified in the
Indenture.
"Tax Matters Partner" has the meaning assigned to such term in Section
7.05.
"Transferee Affidavit" has the meaning assigned to such term in Section
4.05(h).
"Transferee Certificate" has the meaning assigned to such term in
Section 4.05(b).
"Trust Agreement Collection Account" has the meaning assigned to such
term in Section 5.02.
"Transaction Documents" means this Agreement, the Class R Certificates,
the Indenture, the Notes, the Purchase Agreement, the Underwriting Agreement,
the Certificate Placement Agreement and the Deposit Agreement.
"Treasury Regulations" means the current, temporary, and proposed
income tax regulations under the Code.
"Underwriting Agreement" means the underwriting agreement, dated as of
January 19, 2000, by and among the Issuer, the Depositor and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as underwriter.
"U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in or under
the laws of the United States or any state (other than a partnership that is not
treated as a U.S. person under any applicable Treasury Regulations), (iii) an
estate whose income is subject to United States federal income tax regardless of
its source, or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial decisions of the
trust. Notwithstanding the preceding sentence, to the extent provided in
Treasury Regulations, certain trusts in existence on August 20, 1996 and treated
as U.S. Persons prior to such date, that elect to continue to be treated as U.S.
Persons, will be so treated.
Agreement of Trust
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ARTICLE III:
CONTRIBUTIONS; CONSENT TO EXECUTION OF CERTAIN AGREEMENTS
Section 3.01. Contributions on the Closing Date.
The Depositor hereby agrees to transfer the Contributed Assets,
pursuant to the terms of the Deposit Agreement, on the Closing Date, as a
capital contribution to the Issuer.
Section 3.02. Consideration for Contribution of Contributed Assets.
Proceeds received by the Issuer from the sale of the Class R
Certificates and from the sale of the Notes shall be paid by the Issuer to the
Depositor as consideration for the transfer by the Depositor of the Contributed
Assets to the Issuer.
Section 3.03. Holding of the Issuer Estate.
In order to establish the Issuer created hereby to be known as "FAIC II
Issuer Trust 2000-1," the Depositor appointed the Issuer Trustee to act as
Issuer Trustee hereunder, and the Issuer Trustee hereby declares and agrees that
it will hold all estate, right, title and interest in and to the Issuer Estate
until this Agreement terminates pursuant to the terms of this Agreement, in
trust under and subject to the conditions and agreements hereinafter set forth,
for the use and benefit of the Certificateholders from time to time (subject to
the pledge of the Pledged Assets to the Note Trustee for the benefit of the
Noteholders from time to time).
Section 3.04. Limitation on the Liability of the Issuer Trustee, the
Issuer Certificate Agent, the Depositor and Certificateholders.
None of the Depositor, the Issuer Trustee, the Issuer Certificate Agent
or any Certificateholder shall be liable for any debt, claim, demand, judgment
or obligation of any kind of, against or with respect to the Issuer by reason of
its being the Issuer Trustee, the Issuer Certificate Agent, the Depositor or a
Certificateholder, as the case may be. The Issuer Trustee, the Issuer
Certificate Agent, the Depositor or any Certificateholder, solely by reason of
its status as such, shall not be subject to any personal liability whatsoever,
in tort, contract or otherwise, to any Person in connection with the property,
liabilities or affairs of the Issuer, except as expressly provided herein or in
the other Transaction Documents.
Section 3.05. Direction of Issuer Trustee's Execution of and
Performance Under the Deposit Agreement and the Indenture.
By its execution hereof, the Depositor hereby directs the Issuer
Trustee to execute this Agreement and perform the Issuer Trustee's obligations
under this Agreement as well as to execute on behalf of the Issuer, and to
perform the Issuer Trustee's obligations under, the Deposit Agreement and the
Indenture.
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ARTICLE IV:
THE CLASS R CERTIFICATES
Section 4.01. Initial Ownership.
Upon the formation of the Issuer by the Depositor and until the
issuance of the Class R Certificates, the Depositor shall be the sole
beneficiary of the Issuer.
Section 4.02. Authorization of the Class R Certificates.
The Class R Certificates represent undivided, beneficial ownership
interests in the Issuer Estate. All outstanding Class R Certificates shall share
pari passu in the Issuer Estate and any distributions distributable to the
Certificateholders therefrom, subject to the Lien of the Indenture on the
Pledged Assets. The Depositor or its assignee, however, will retain the right to
cause the redemption of the Class R Certificates pursuant to Section 5.04. The
Outstanding Certificate Balance of all Class R Certificates on the Closing Date
to be executed and delivered by the Authenticating Agent under this Agreement
shall be equal to the Initial Certificate Balance, except for Class R
Certificates executed and delivered upon registration or transfer of, or in
exchange for, or in lieu of, other Class R Certificates pursuant to Sections
4.05 or Section 4.06.
Section 4.03. Form of Class R Certificates; Denominations.
The Class R Certificates issued hereunder shall be issued in definitive
fully registered form, without interest coupons, in substantially the form
attached as Exhibit A hereto, with such applicable legends as are provided for
in Exhibit A hereto. The Class R Certificates shall be issued in minimum
denominations of $200,000.
Section 4.04. Execution and Authentication of Class R Certificates.
The Issuer is hereby authorized to issue the Class R Certificates.
State Street Bank and Trust Company is hereby initially appointed
"Authenticating Agent" for the purpose of authenticating and delivering the
Class R Certificates. The Authenticating Agent is hereby authorized and
directed, subject to the terms and conditions hereof, to authenticate and
deliver the Class R Certificates on the Closing Date, subject to the terms of
the Transaction Documents. The Class R Certificates shall be executed on behalf
of the Issuer by manual or facsimile signature of any authorized signatory of
the Issuer Trustee having such authority. Class R Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Issuer Trustee
shall be validly issued and entitled to the benefits of this Agreement,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Class R
Certificates. No Class R Certificates shall be valid for any purpose unless duly
authenticated by manual signature of an authorized officer of the Authenticating
Agent. On the Closing Date, the Authenticating Agent shall cause Class R
Certificates in authorized denominations in an aggregate face amount equal to
the Initial Certificate Balance to be authenticated and delivered to or upon the
order of the Depositor. All Class R Certificates shall be dated the date of
their authentication.
Section 4.05. Registration of Transfer and Exchange of Class R
Certificates.
(a) State Street Bank and Trust Company is hereby initially
appointed "Certificate Registrar" for the purpose of registering Class
R Certificates and transfers and exchanges of Class R Certificates as
provided in this Agreement. The Certificate Registrar shall maintain,
or cause to
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be maintained, at the Corporate Trust Office of the Certificate
Registrar, a certificate register (the "Certificate Register") in
which, subject to such reasonable regulations as it may prescribe, the
Certificate Register shall provide for the registration of Class R
Certificates and of transfers and exchanges of Class R Certificates as
provided in this Agreement.
(b) Every Class R Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Certificate
Registrar duly executed by the Certificateholder or his attorney duly
authorized in writing. Each Class R Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently
disposed of by the Certificate Registrar in accordance with its
customary practice. At the direction of the Certificate Registrar, the
Issuer Trustee shall execute, in the case of a transfer, in the name of
the transferee or transferees, and the Authenticating Agent shall
authenticate and deliver, a new Class R Certificate or Class R
Certificates for the same aggregate Certificate Balance; provided that,
if such a transfer is to be made without registration under the
Securities Act and applicable state securities laws, the Certificate
Registrar shall not register such transfer unless and until the
prospective transferee provides the Certificate Registrar and the
Issuer Trustee with a Transferee Certificate substantially in the form
of Exhibit B hereto (each, a "Transferee Certificate").
(c) At the option of a Holder, the Class R Certificates may be
exchanged for other Class R Certificates in authorized denominations of
a like Certificate Balance upon surrender of the Class R Certificates
to be exchanged at the office or agency maintained pursuant to Section
4.09.
(d) No service charge shall be made for any registration of
transfer or exchange of Class R Certificates, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer
or exchange of Class R Certificates.
(e) Each Class R Certificate shall be subject to the
restrictions on transfer provided in the applicable legends required to
be set forth in the face of each Class R Certificate pursuant to
Exhibit A hereto.
(f) The Certificate Registrar also may require, in certain
circumstances, a certification from the Certificateholder desiring to
effect the transfer and such Certificateholder's prospective transferee
concerning the factual basis for the registration or qualification
exemption relied upon, and an Opinion of Counsel acceptable in form and
substance to the Certificate Registrar, to the effect that such
transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the Securities Act
and said state laws and is being made in accordance with the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which
Opinion of Counsel shall not be an expense of the Certificate
Registrar, the Issuer Trustee or the Issuer. Each Certificateholder
will be deemed by its acceptance and holding of its Class R Certificate
to agree that neither the Issuer nor the Certificate Registrar is under
an obligation to or intends to register the Class R Certificates under
the Securities Act or any other securities law.
(g) No transfer of a Class R Certificate shall be made unless
and until the prospective transferee provides the Certificate Registrar
with an affidavit, in the form of paragraph 7 of Exhibit B hereto, that
the prospective transferee is not an employee benefit plan that is
subject to all or a portion of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any retirement
plan or arrangement that is subject to Section 4975 of the Code, nor
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a person acting, directly or indirectly, on behalf of any such employee
benefit plan, plan or arrangement (including an insurance company using
funds in its general account that may constitute "plan assets") (each,
a "Plan") and is not a governmental plan subject to any laws or
regulations that are substantially similar to Section 406 of ERISA or
Section 4975 of the Code, or a person acting, directly or indirectly,
on behalf of any such government plan.
(h) A beneficial or record interest in a Class R Certificate
may not be sold or transferred to a Disqualified Organization. Any
attempted or purported transfer of an interest in a Class R Certificate
shall be absolutely null and void and shall vest no rights in the
purported transferee unless such transferee provides to the Certificate
Registrar, who shall be responsible for forwarding it to Fannie Mae or
Freddie Mac, as appropriate, (i) affidavits, in the forms provided as,
respectively, Exhibits C-1 and C-2 hereto (the "Transferee
Affidavits"), each to the effect that such prospective transferee is
(A) not a Disqualified Organization and is not purchasing such Class R
Certificate on behalf of a Disqualified Organization and (B) a U.S.
Person and (ii) if requested by the Certificate Registrar, an opinion
of counsel (in a form acceptable to the Certificate Registrar) that the
proposed transfer will not cause such interest to be held by or on
behalf of a Disqualified Organization. Such transferee shall also
provide a cover letter addressed to the Issuer Trustee, the
Authenticating Agent and the Certificate Registrar to the effect that
the addressees of such letter may rely on the certifications made by
such transferee in the Transferee Affidavits. In the event that the
Class R Certificates shall be optionally redeemed, the Seller, as the
assignee of the Depositor's right to cause the redemption of the Class
R Certificates and, after the redemption, the owner of 100% of the
beneficial ownership interest in the Issuer, shall be obligated to
provide the Transferee Affidavits, a Transferee Certificate and, if
requested by the Certificate Registrar, an opinion of counsel as
described in this paragraph, as if the Seller were the prospective
transferee for the purposes of this paragraph, to the Certificate
Registrar. The Certificate Registrar shall be responsible for
forwarding such documents to Fannie Mae or Freddie Mac, as appropriate.
(i) Notwithstanding anything contained herein to the contrary,
neither the Issuer Trustee nor the Certificate Registrar shall be
responsible for ascertaining whether any transfer complies with the
registration provisions or exemptions from the Securities Act, the
Exchange Act, applicable state securities law or the Investment Company
Act; provided, however, that if a certificate is specifically required
to be delivered to the Certificate Registrar by a purchaser or a
transferee of a Class R Certificate, the Certificate Registrar shall be
obligated to examine such certificate to determine whether it conforms
to the requirements of this Agreement.
Section 4.06. Mutilated, Destroyed, Lost or Stolen Certificates.
In case any Class R Certificate becomes mutilated or defaced or lost,
destroyed or stolen, then on the terms herein set forth, and not otherwise, the
Issuer Trustee, at the direction of the Authenticating Agent, shall execute and
the Authenticating Agent on behalf of the Issuer shall authenticate and deliver
to the registered Holder a new Class R Certificate of like tenor and date, and
bearing such identifying number or designation as the Authenticating Agent may
determine, in exchange and substitution for, and upon cancellation of, the
mutilated or defaced Class R Certificate, or in lieu of and in substitution for
the same if lost, destroyed or stolen. The applicant for a new Class R
Certificate pursuant to this Section 4.06 shall, in the case of any mutilated or
defaced Class R Certificate, surrender such certificate to the Authenticating
Agent and furnish to the Authenticating Agent, in the case of any lost,
destroyed or stolen Class R Certificate, evidence satisfactory to the
Authenticating Agent of such loss, destruction or theft and, in each case,
evidence satisfactory to the Authenticating Agent of the ownership and
authenticity of such Class R Certificate and shall pay all expenses and charges
of such substitution and furnish such security or indemnity as may be reasonably
required by the Issuer Trustee and the Authenticating Agent to indemnify
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and defend and save the Authenticating Agent and the Issuer Trustee harmless
(provided, that the unsecured agreement of indemnity of any Certificateholder
who is an Institutional Accredited Investor shall be deemed satisfactory, it
being understood, that the Authenticating Agent may reasonably request
information necessary to establish that any such holder is an Institutional
Accredited Investor). Any defaced or mutilated Class R Certificate shall be
destroyed by the Authenticating Agent, or retained in accordance with its
standard retention policy, upon delivery by it of a new Class R Certificate to
the Holder.
Section 4.07. Persons Deemed Owners.
Prior to due presentation of a Class R Certificate for registration of
transfer, the Issuer, and any agent of the Issuer may treat the Person in whose
name any Class R Certificate is registered as the owner of such Class R
Certificate for the purpose of receiving distributions pursuant to Section 5.03
and for all other purposes whatsoever, and neither the Issuer nor any agent of
the Issuer shall be affected by any notice to the contrary.
Section 4.08. Access to List of Certificateholders' Names and
Addresses.
The Certificate Registrar shall furnish or cause to be furnished to
each Certificateholder, within 15 days after receipt by the Certificate
Registrar of a written request therefor from such party, a list, in such form as
such party may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date for payment of
distributions to Certificateholders. Every Certificateholder, by receiving and
holding a Class R Certificate, agrees that neither the Certificate Registrar nor
any agent thereof, shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Certificateholders under
this Agreement, regardless of the source from which such information was
derived.
Section 4.09. Maintenance of Office or Agency.
The Issuer Certificate Agent shall maintain in New York City or Boston,
Massachusetts, an office or offices or agency or agencies where Class R
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Issuer in respect of the Class R
Certificates and the Transaction Documents may be served. The Issuer Certificate
Agent initially designates its office at Lafayette Corporate Center, 2 Avenue de
Lafayette, Boston, Massachusetts 02111. Alternatively, the Issuer Certificate
Agent may maintain an office at 61 Broadway, New York, New York 10006 as the
office or agency for such purposes. The Issuer Certificate Agent shall give
prompt written notice to the Certificateholders of any change in the location of
the Certificate Register or any such office of agency.
Section 4.10. Class R Certificates Held by The Depositor.
For the purposes of determining whether the Certificateholders of the
requisite percentage of the Outstanding Certificate Balance have taken any
action authorized by this Agreement or the Indenture with respect to the giving
of direction, instruction, consents or approvals or with respect to any other
matter, any Class R Certificates known by the Certificate Registrar to be
directly or indirectly owned by the Depositor or any of its Affiliates shall be
disregarded and deemed not to be outstanding, unless the Depositor is the sole
Certificateholder.
Section 4.11. Appointment of the Certificate Paying Agent
(a) State Street Bank and Trust Company is initially appointed
as paying agent for the Certificates (in such capacity, the
"Certificate Paying Agent"). The Certificate Paying Agent shall
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make distributions to the Certificateholders in accordance with Article
V. The Certificateholders shall cause any successor Certificate Paying
Agent or any additional Certificate Paying Agent appointed by the
Certificateholders to execute and deliver to the Issuer an instrument
in which the successor Certificate Paying Agent or additional
Certificate Paying Agent shall agree with the Issuer that, as
Certificate Paying Agent, the successor Certificate Paying Agent or
additional Certificate Paying Agent will hold any sums held by it for
payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled to them until those sums shall be paid to
the appropriate Certificateholders. Subject to applicable law, the
Certificate Paying Agent shall return to the Issuer all funds held for
any Class R Certificate that remain unclaimed for a period of three
years after such funds were set aside to be distributed to such
Certificateholder, and upon removal of a Certificate Paying Agent, such
Certificate Paying Agent shall also return all funds in its possession
to the Issuer. Any reference in this Agreement to the Certificate
Paying Agent shall include any co-Certificate Paying Agent unless the
context requires otherwise.
(b) As set forth herein, the Person who serves as the
Certificate Paying Agent shall also serve as the Authenticating Agent
and the Certificate Registrar with respect to the Class R Certificates.
(c) State Street Bank and Trust Company, as Issuer Certificate
Agent, Certificate Paying Agent, Authenticating Agent and Certificate
Registrar hereunder (and any successor thereto) (i) shall receive as
compensation for its services hereunder the fees specified in Section
6.02 of the Indenture, subject to the limitations set forth therein
(provided that the Issuer Certificate Agent will be separately
compensated by the Seller for its services under Section 4.14 subject
to a cap of $8,000.00) and (ii) shall have the same rights, protection,
immunities and indemnifications as are available to the Issuer Trustee
pursuant to Sections 8.06, 8.07 and 8.08 of this Agreement and to the
Note Trustee under Section 10.01(d) and (e), 10.02, 10.05 and 10.07 of
the Indenture.
Section 4.12. Representations and Warranties of State Street Bank and
Trust Company.
State Street Bank and Trust Company, in its individual capacity, hereby
represents and warrants to the Depositor and the Holders from time to time of
the Class R Certificates that:
(a) Corporate Existence and Power. State Street is a trust
company duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has all corporate powers
and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and as contemplated
by this Agreement.
(b) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by State Street
of this Agreement are within State Street's corporate powers, have been
duly authorized by all necessary corporate action, require no action by
or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any
provision of applicable law or regulation of the Commonwealth of
Massachusetts, or of the Certificate of Incorporation or the Bylaws of
State Street or of any agreement or other instrument binding upon State
Street or result in the creation or imposition of any Lien on any asset
of State Street.
(c) Binding Obligation. This Agreement has been duly
authorized, and when executed and delivered by State Street, assuming
the due authorization and delivery by each party thereto, shall
constitute the legal, valid, enforceable and binding obligation of
State Street, enforceable against it in accordance with its respective
terms, except as subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect, affecting
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the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(d) No Conflict. Neither the execution, delivery and
performance of this Agreement, nor the consummation of the transactions
contemplated by this Agreement, (i) is prohibited by, or requires State
Street to obtain any consent, authorization, approval or registration
under, any law, statute, rule, regulation, judgment, order, writ,
injunction or decree that is binding upon State Street or any of its
properties or assets, or (ii) will violate any provision of, result in
any default or acceleration of any obligations under, result in the
creation or imposition of any lien pursuant to, or require any consent
under, any agreement to which State Street is a party or by which it or
any of its property is bound.
(e) No Proceedings. There are no proceedings pending, or to
the best knowledge of State Street, threatened against State Street
before any Federal, provincial or other governmental agency, authority,
administrator or regulatory body, arbitrator, court or other tribunal
foreign or domestic, that could have a material adverse effect on the
Issuer Assets or any action taken or to be taken by State Street under
this Agreement.
Section 4.13. Resignation, Removal and Replacement of the Issuer
Certificate Agent.
(a) The Majority Certificateholders may remove the Issuer
Certificate Agent if such Certificateholders determine in their sole
discretion that the Issuer Certificate Agent has failed to perform its
obligations under this Agreement in any material respect. The Issuer
Certificate Agent may not resign and be discharged of the trust created
by this Agreement unless (i) the Issuer Certificate Agent shall provide
30 days' written notice to the Issuer Trustee and the
Certificateholders, (ii) the Issuer Certificate Agent shall locate a
successor Issuer Certificate Agent satisfying the eligibility
requirements for such successor Issuer Certificate Agent set forth in
this Section 4.13, (iii) the Issuer Certificate Agent shall have agreed
with such successor Issuer Certificate Agent as to fees and expenses to
be paid to such successor Issuer Certificate Agent for serving as
Issuer Certificate Agent with respect to the Class R Certificates so
long as any Class R Certificates are Outstanding and, if such
agreed-upon fees and expenses to be paid to the successor Issuer
Certificate Agent exceed the amounts remaining in the Expense Reserve
Account allocated to the Issuer Certificate Agent, the Issuer
Certificate Agent shall make provisions for such shortfall in a manner
satisfactory to such successor Issuer Certificate Agent and (iv) such
successor Issuer Certificate Agent shall agree to be assigned all of
the rights and powers, and to assume all of duties and obligations, of
the Issuer Certificate Agent set forth in this Agreement and the other
Transaction Documents. Any such removal or resignation shall take
effect upon receipt by the predecessor Issuer Certificate Agent of an
instrument of acceptance of appointment executed by a successor Issuer
Certificate Agent as herein provided; provided that such Person shall
be a bank or trust company incorporated and doing business within the
United States of America, whose business shall include the providing of
paying agent, registrar, and transfer agent services in asset
securitization transactions and who will have a combined capital and
surplus of at least $100,000,000, if there be such an institution
willing, able and legally qualified to perform the duties of the Issuer
Certificate Agent hereunder upon reasonable or customary terms. The
appointment of the successor Issuer Certificate Agent shall take effect
concurrently with (i) the removal or resignation of the former Issuer
Certificate Agent and (ii) the ratification of the Transaction
Documents by the successor Issuer Certificate Agent, and no removal or
resignation of an Issuer Certificate Agent shall be effective absent
the concurrent appointment of a successor Issuer Certificate Agent.
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(b) If a successor Issuer Certificate Agent shall not have
been appointed within 60 days after such notice of resignation, the
Issuer Certificate Agent or the Majority Certificateholders may apply
to any court of competent jurisdiction to appoint a successor Issuer
Certificate Agent to act until such time as a successor shall have been
appointed as above provided.
(c) Any corporation into which the Issuer Certificate Agent
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 Issuer Certificate Agent shall be a party, or any corporation
to which substantially all the corporate trust business of the Issuer
Certificate Agent may be transferred, shall, subject to such
corporation satisfying in all respects the requirements set forth in
Section 8.05(a), be the Issuer Certificate Agent hereunder without
further action.
Section 4.14. Reporting.
The Issuer Certificate Agent, on behalf of the Issuer, will file all
reports as required by the Securities and Exchange Commission ("SEC") pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Section 314(a) of the Trust Indenture Act of 1939, as
amended. Within 15 days of filing any such report, the Issuer Certificate Agent
will deliver a copy of the filed report to the Note Trustee. The Issuer
Certificate Agent's responsibilities hereunder shall be to file monthly reports
on Form 8-K attaching a copy of the current Account Statement and an Annual
Report on Form 10-K after the end of each fiscal year of the Issuer, within the
time frames required under the Exchange Act and the rules and regulations
promulgated thereunder. The Issuer Certificate Agent is hereby authorized and
directed to cause the suspension of the periodic reporting requirements with
respect to the Issuer and the Notes pursuant to Section 15(d) of the Exchange
Act, by filing a Form 15 with the SEC and taking all other action to cause such
suspension, as soon as the Notes are eligible to have such periodic reporting
requirements suspended pursuant to Section 15(d) of the Exchange Act.
ARTICLE V:
CERTIFICATE DISTRIBUTIONS
Section 5.01. Payments From Issuer Estate.
All payments to be made by the Issuer Certificate Agent on behalf of
the Issuer under this Agreement or any of the documents to which the Issuer is a
party shall be made only from the income and proceeds of the Issuer Estate and
only to the extent that the Issuer shall have received income or proceeds from
the Issuer Estate to make such payments in accordance with the terms hereof and
the Indenture.
Section 5.02. Establishment of Trust Agreement Collection Account
(a) The Issuer Certificate Agent will establish and maintain a special
purpose, non-interest bearing trust account at the Account Bank for the benefit
of the Certificateholders, subject to Section 5.03(a) (the "Trust Agreement
Collection Account"). The Trust Agreement Collection Account shall be under the
sole dominion and control of the Issuer Certificate Agent on behalf of the
Certificateholders, subject to Section 5.03(a). Only the Issuer Certificate
Agent shall be entitled to withdraw funds from the Trust Agreement Collection
Account and only the Issuer Certificate Agent shall be an authorized signatory
on the Trust Agreement Collection Account. The Issuer Certificate Agent shall
withdraw funds from the Trust Agreement Collection Account only pursuant to and
in accordance with this Agreement.
(b) All Available Funds on deposit from time to time in the Trust
Agreement Collection Account and in all proceeds thereof (including all income
thereon) shall constitute part of the Issuer Estate.
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Section 5.03. Certificate Distributions.
Subject to the provisions of Sections 5.04 and 6.02, the Issuer
Certificate Agent shall distribute all Available Funds pursuant to and in
accordance with this Section 5.03.
(a) Payments to Issuer Trustee and Note Trustee. In the event
the Issuer Trustee, the Issuer Certificate Agent, or the Note Trustee
has a valid claim for reimbursement of expenses or indemnification
pursuant to Sections 4.11(c), 8.06 or 8.07 of this Agreement or Section
10.07 of the Indenture, as applicable, all amounts in the Trust
Agreement Collection Account (other than amounts representing
collections of principal payments on the Series 2203 Freddie Mac
Security) ("Residual Collections") shall be allocated and distributed,
pari passu to the Issuer Trustee, the Issuer Certificate Agent and the
Note Trustee to the extent of their respective claims for such expense
reimbursement or indemnification.
(b) Distribution of Principal. On any Monthly Payment Date,
until the Outstanding Certificate Balance of the Class R Certificates
has been reduced to zero, all amounts in the Trust Agreement Collection
Account representing collections of principal payments on the Series
2203 Freddie Mac Security after the Cut-off Date and, following any
payment made pursuant to Section 5.03(a), any other amounts in the
Trust Agreement Collection Account shall be allocated and distributed
to the Certificateholders pro rata in reduction of the Outstanding
Certificate Balance of the Class R Certificates.
(c) Distributions of Investment Yield. The Class R
Certificates have no stated interest rate. After the Issuer has paid
all principal of and interest on the Notes in full and after the
Outstanding Certificate Balance of the Class R Certificates has been
reduced to zero by application of distributions on Monthly Payment
Dates as provided in Section 5.03(b) above, any remaining amounts
remitted to the Trust Agreement Collection Account and held therein on
a Monthly Payment Date shall be allocated and distributed to the
Certificateholders pro rata on such Monthly Payment Date as additional
investment yield.
(d) Excess Payments. Each Certificateholder shall be deemed to
agree, by its acceptance of a Class R Certificate, that it shall
promptly remit to the Issuer Certificate Agent for payment in
accordance with this Section 5.03 any excess payment it has received.
(e) All payments made to the Certificateholders on any Monthly
Payment Date shall be made to the Certificateholders of record as of
the Record Date.
(f) The Certificateholders shall be entitled to receive
distributions hereunder on any Monthly Payment Date by wire transfer to
the account specified in writing by the applicable Certificateholder to
the Issuer Certificate Agent. In each case, the account must be
specified in writing no later than the Record Date for the applicable
Monthly Payment Date on which wire transfers will commence.
(g) It is the parties' intent that the Class R Certificates be
a "fixed income security" as defined in clause (b)(2) of Rule 3a-7
promulgated under the Investment Company Act of 1940, as amended.
Substantially all of the payments to which the Class R Certificates are
entitled consist of the sum of (1) its stated principal amount of
$465,600, (2) an amount equal to the portion of the interest received
on the Agency Securities that is used to make payments of principal on
the Notes, less an amount equal to the principal balance of the Class R
Certificates at the time at which the Notes are paid in full, and (3)
100% of the interest accrued on the Agency Securities at any time after
the Notes are paid in full.
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Section 5.04. Redemption of the Class R Certificates
(a) Full Redemption on Final Scheduled Monthly Payment Date.
The Class R Certificates will be redeemed or paid in full on or before
December 1, 2029 (the "Final Scheduled Monthly Payment Date") to the
extent not redeemed or paid prior thereto.
(b) Optional Certificate Redemption. The Depositor or its
assignee may, by written demand to the Issuer Certificate Agent, cause
the Issuer to redeem on a Monthly Payment Date all but not less than
all of the Class R Certificates at a price equal to 105% of the
Outstanding Certificate Balance of the Class R Certificates on such
Monthly Payment Date (the "Optional Certificate Redemption Amount").
Such demand shall be delivered at least 10 calendar days but no more
than 25 calendar days prior to the Monthly Payment Date on which the
redemption is to occur. Prior to any redemption of the Class R
Certificates, the Optional Certificate Redemption Amount shall be
deposited into the Trust Agreement Collection Account by the Depositor
or its assignee no later than the 9th calendar day prior to such
Monthly Payment Date selected for redemption of the Class R
Certificates. Such redemption shall occur on the Monthly Payment Date
specified in the written notice, which date shall be on or after the
earlier of (A) March 1, 2005 and (B) the first Monthly Payment Date on
which the remaining balance of the Agency Securities shall be equal to
or less than 20% of the principal amount of the Agency Securities (at
original issuance), after giving effect to any principal payments on
such Monthly Payment Date (the "Permitted Certificate Redemption
Date"). Upon redemption of the Class R Certificates, the party that
effected the redemption by depositing the Optional Certificate
Redemption Amount shall own the entire beneficial ownership interest in
the Issuer until the Notes are redeemed or paid in full and the Issuer
is terminated, and such party shall have the right to direct redemption
of the Notes pursuant to the Indenture. Such party's ownership interest
in the Issuer shall be subject to the same ownership and transfer
restrictions as the Class R Certificates, which are set forth in
Section 4.05 hereof.
(c) Assignment of Optional Redemption Rights. Pursuant to the
Purchase Agreement, the Depositor has assigned all of its rights to
direct the Issuer to redeem the Class R Certificates pursuant to
Section 5.04(b) above to the Seller, and the Issuer Trustee and the
Issuer Certificate Agent hereby acknowledge such assignment and agree
to act in accordance with the directions of the Seller under this
Section 5.04. No further assignment of this right shall be effective
unless and until the Issuer Trustee and the Issuer Certificate Agent
have been notified of such assignment in writing by the Seller or the
entity whom the Issuer Trustee and the Issuer Certificate Agent most
recently have been notified by the Seller is the assignee of such
right.
Section 5.05. Account Statements; Other Reports
(a) Within five Business Days following each Monthly Payment
Date, the Issuer Certificate Agent shall furnish or make available to
the Issuer Trustee and each Certificateholder a statement (an "Account
Statement") setting forth the status of the Note Collection Account,
the Interest Reserve Account, the Expense Reserve Account and the Trust
Agreement Collection Account, showing, for the related Interest Accrual
Period, deposits in or withdrawals from the Note Collection Account,
the Interest Reserve Account, the Expense Reserve Account and the Trust
Agreement Collection Account and proceeds of investments of funds in
the Note Collection Account, the Interest Reserve Account and the
Expense Reserve Account. The Account Statement shall also set forth the
following information: (i) the Outstanding Principal Amounts of each
class of the Notes and the Outstanding Certificate Balance of the Class
R Certificates, respectively, as of the close of business on the first
day of the immediately preceding Interest Accrual Period; (ii) the
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amounts in the Note Collection Account, the Interest Reserve Account,
the Expense Reserve Account and the Trust Agreement Collection Account
as of the end of the immediately preceding Interest Accrual Period;
(iii) the amounts of such funds in the Note Collection Account (and, if
any, the Interest Reserve Account) applied toward the payment of any
Note Interest Amount on either Class of the Notes on the preceding
Monthly Payment Date; (iv) the amount, if any, of such amounts in the
Note Collection Account applied toward the reduction of the Outstanding
Principal Amount of each Class of the Notes on the preceding Monthly
Payment Date; (v) the amounts, if any, of such amounts in the Trust
Agreement Collection Account applied toward the reduction of the
Outstanding Certificate Balance of the Class R Certificates and to pay
investment yield on the Class R Certificates on the preceding Monthly
Payment Date; and (vi) the Outstanding Principal Amount of each Class
of the Notes and the Outstanding Certificate Balance of the Class R
Certificates, respectively, as of the close of business on the
preceding Monthly Payment Date after distributions are made on the
Notes and Certificates, as applicable, on such Monthly Payment Date.
Promptly following the receipt of any tax or information
reports that it receives relating to the Agency Securities, the Issuer
Certificate Agent (or, to the extent that any such reports are received
by the Issuer Trustee, the Issuer Trustee) shall forward to each
Certificateholder a copy of any tax or information reports that it
receives relating to the Agency Securities.
The Issuer Certificate Agent shall supply to the Note Trustee
any and all information requested by the Note Trustee to enable it to
prepare and furnish the reports it is required to furnish to
Noteholders pursuant to the Indenture.
(b) The Internal Revenue Service has proposed regulations
requiring certain reporting by trustees to holders of "widely held
fixed investment trusts." To avoid the expense of any such reporting,
by acquiring the Class R Certificates, whether on original issue or in
a secondary purchase, each Certificateholder agrees as follows:
(i) The Certificateholder shall hold such Class R
Certificates directly and not through a "middleman." For this
purpose, a "middleman" is any person who holds an interest on
behalf of, or for the account of, another person, or who
otherwise acts in a capacity as an intermediary for the
account of another person, including, without limitation, a
custodian, such as a bank, financial institution or brokerage
firm; a nominee, including the joint owner of an account,
except if the joint owners are husband and wife; or a broker
holding an interest for a customer in street name.
(ii) If Proposed Treasury Regulations Section
1.671-4(j) shall become final in a form which permits such
Certificateholder to request quarterly information, the
Certificateholder agrees that it shall request such
information only upon making provision for additional
compensation to the Issuer Certificate Agent for the expenses
of providing such information.
(iii) The Certificateholder agrees not to transfer
such Class R Certificates to any person unless such person
agrees to these provisions in writing for the benefit of the
Issuer.
(c) The Issuer Certificate Agent, on behalf of the Issuer,
shall supply to any prospective transferee of Class R Certificates
pursuant to Rule 144A of the Securities Act, upon request of the
transferor, the information required under Rule 144A(d)(4) promulgated
under the
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Securities Act of 1933, as amended. The Issuer Certificate Agent shall
only be responsible for furnishing information relating to the Agency
Securities, the Note Collection Account, the Interest Reserve Account,
the Expense Reserve Account, the Trust Agreement Collection Account,
the Notes and the Class R Certificates under this Section 5.05(c), and
the Issuer Certificate Agent shall have no responsibility for the
accuracy of any such information supplied to it by another person nor
for the sufficiency of the information so supplied by it to any
prospective transferee.
Section 5.06. Books and Records
The Issuer Certificate Agent shall be responsible for the keeping of
all appropriate books and records relating to the receipt and disbursement of
all moneys under this Agreement. The Issuer Certificate Agent will forward to
the Certificateholders copies of any bill or invoice requiring payment by the
Issuer for services rendered or other correspondence regarding amounts owed or
expenses incurred by the Issuer promptly upon receipt. To the extent that any
such bills or invoices are received by the Issuer Trustee, the Issuer Trustee
will forward such bills or invoices to the Issuer Certificate Agent promptly
upon receipt. The Certificateholders shall be responsible for causing to be
prepared and filed, at their respective expense, all income tax returns required
to be filed by the Certificateholders. The Certificateholders shall also be
responsible for causing to be prepared and filed, at their expense, all income
tax returns, if any, required to be filed for the trust created hereby and shall
execute and file such returns, with a copy sent to the Issuer Certificate Agent.
The Issuer Certificate Agent, upon request, will furnish the Certificateholders
with all such information in its possession as may be reasonably required from
the Issuer Certificate Agent in connection with the preparation of all income
and tax returns. Upon written request of the Certificateholders, the Issuer
Trustee shall execute and file such returns prepared by the Certificateholders.
ARTICLE VI:
CERTIFICATE TERMINATION EVENTS
Section 6.01. Certificate Termination Events.
A Certificate Termination Event (provided that none of the following
shall constitute a Certificate Termination Event until all of the Notes are paid
in full) shall occur if:
(a) failure by the Issuer to make (or cause to be made on its
behalf) a redemption in full on or before the Final Scheduled Monthly
Payment Date of the Class R Certificates;
(b) failure by the Issuer to make (or cause to be made on its
behalf) on any Monthly Payment Date a distribution to
Certificateholders of the Available Funds (as reduced by any payments
pursuant to Section 5.03(a) on such Monthly Payment Date) for such
Monthly Payment Date.
(c) failure by the Issuer duly to observe or to perform any
other covenant or agreement of the Issuer under this Agreement, the
Class R Certificates or any other Transaction Document (as defined in
this Agreement), as the case may be, which failure (i) materially
adversely affects the rights of the Certificateholders and (ii)
continues unremedied for a period of 30 days (or, with respect to any
covenant or agreement relating to the remittance of distributions and
other amounts by the Issuer, a period of 5 days) after the earlier of
(x) a responsible officer of the Issuer becoming aware of such default
and (y) the giving of written notice of such failure by the Issuer
Certificate Agent or by any Certificateholder;
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(d) any representation, warranty, certification or statement
made by the Issuer in this Agreement or in any Transaction Document,
financial statement or other document delivered pursuant to any
Transaction Document shall prove to have been incorrect in any material
respect when made (or deemed made);
(e) (i) the Issuer shall become insolvent or bankrupt; or
shall admit in writing its inability to pay its debts or honor its
obligations, or shall apply to any tribunal for the appointment of a
receiver, liquidator or trustee of or for itself or for all or any
substantial part of its property or assets; (ii) a receiver, liquidator
or trustee of or for the Issuer (or for all or any substantial part of
its property or assets) is appointed and not discharged within 60 days;
or (iii) any bankruptcy, insolvency, reorganization, arrangement or
liquidation proceedings (or similar proceedings analogous in purpose
and effect) shall be instituted by or against the Issuer, or any
supervisory authority having jurisdiction in the premises shall have
taken possession of the business or property of the Issuer with a view
to the liquidation of its affairs or the conservation of its assets,
and in either case, are consented to by the Issuer, or are not
dismissed within 60 days;
(f) the rendering of any final judgment, enforceable in any
competent court, against the Issuer, for the payment of money equal to
or in excess of U.S. $10,000, and such judgment shall not be discharged
or dismissed or execution thereon stayed pending appeal within 60 days
after entry; or
(g) the Certificate of Trust, this Agreement or other related
organizational documents of the Issuer shall be amended without the
written consent of the Majority Certificateholders and, where required
hereunder or the Indenture, the Noteholders.
Section 6.02. Consequences of a Certificate Termination Event.
If a Certificate Termination Event with respect to the Class R
Certificates occurs and is continuing, the Issuer Certificate Agent at the
direction of the Majority Certificateholders will cause the Issuer to be
dissolved and terminated, or, upon the occurrence of the Certificate Termination
Event described in Section 6.01(e), the Issuer Certificate Agent shall cause the
Issuer to be dissolved and terminated without any notice from
Certificateholders. Upon any such dissolution, all of the property of the Issuer
(other than amounts in the Expense Reserve Account) will be distributed by the
Issuer Certificate Agent pro rata to the Certificateholders, subject to the
payment provisions for liabilities as required by Section 3808 of the Act. The
Issuer Trustee shall comply with all directions given to it by the Issuer
Certificate Agent to the extent any action by the Issuer Trustee is required to
enable the Issuer Certificate Agent to perform its duties hereunder.
Section 6.03. Issuer Certificate Agent Termination Events.
Upon the occurrence of either of the events specified in clauses (a)
and (b) of Section 6.01 (each, an "Issuer Certificate Agent Termination Event"),
the Majority Certificateholders may, or the Issuer Trustee at the direction of
the Majority Certificateholders will, replace the Issuer Certificate Agent in
accordance with Section 4.13.
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ARTICLE VII:
RIGHTS, OBLIGATIONS, POWERS AND STATUS
OF THE CERTIFICATEHOLDERS
Section 7.01. Management of the Issuer.
It is the intention of the parties hereto, and the Certificateholders
by their acceptance of their Class R Certificate(s) shall be deemed to agree,
that the Issuer Trustee's duties are to be ministerial in nature only. The
Certificateholders shall have the exclusive right and obligation to determine
the matters herein referenced to be determined by the Certificateholders and to
direct the Issuer Trustee (and the Issuer Certificate Agent, as the case may be)
to carry out and accomplish such matters, and the Certificateholders, in that
capacity, subject to the provisions of the Act, the other provisions of this
Agreement and the Transaction Documents, shall direct the Issuer Trustee (and
the Issuer Certificate Agent, as the case may be) in the management of the
business and affairs of the Issuer in order best to carry out the Issuer's
purposes.
Section 7.02. Bankruptcy, Dissolution or Termination of any
Certificateholder.
The incapacity, dissolution, termination or bankruptcy of any
Certificateholder shall not result in the termination or dissolution of the
Issuer.
Section 7.03. Creditors of the Certificateholders.
As is provided in paragraph (b) of Section 3805 of the Act, no creditor
of a Certificateholder shall have any right to obtain possession of, or
otherwise exercise legal or equitable remedies with respect to, the Issuer
Estate.
Section 7.04. Certain Rights of the Majority Certificateholders.
The Majority Certificateholders shall have the right to direct the
following matters on behalf of all Certificateholders:
(a) directing the Issuer Trustee in accordance with Sections
7.01, 8.01(d) and 8.01(f);
(b) instructing the Issuer Trustee to amend the Certificate of
Trust in accordance with Section 8.03(a) or 12.07;
(c) appointing a replacement Issuer Trustee pursuant to
Section 8.05;
(d) instructing the Issuer Trustee to appear in, prosecute or
defend any action in accordance with Section 8.08(a); and
(e) instructing the Issuer Certificate Agent as to the
exercise, at such Majority Certificateholders expense, of the Issuer
Certificate Agent's authority under Section 8.02, taking any action
with regard to the Issuer Certificate Agent pursuant to Section 4.13,
or removing or appointing a replacement Issuer Certificate Agent
pursuant to Section 6.03 and Section 4.13.
Section 7.05. Tax Status.
(a) It is the intention of the parties hereto, and the
Certificateholders by their acceptance of their Class R Certificate(s)
shall be deemed to agree, that for Federal income tax purposes, the
Issuer and the ownership of the Class R Certificates shall be treated
as follows:
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(i) At such time as there is only one
Certificateholder, the Issuer shall be treated as a
disregarded entity and the Certificateholder shall be treated
as holding the assets of the Issuer directly and shall report
the income of the Issuer accordingly.
(ii) At such time as there is more than one
Certificateholder, the Issuer shall be treated as a
partnership and each Certificateholder shall be treated as a
partner of the partnership. The period for which there is more
than one Certificateholder shall be divided into accounting
periods, with a new accounting period beginning at the
beginning of each taxable year and at the time that the
identity of any Certificateholder changes. The Issuer's income
shall be divided among such accounting periods using any
reasonable convention. The income for any accounting period
shall be allocated to the Certificateholders who hold Class R
Certificates during such periods in proportion to the original
face amount of the Class R Certificates held by the
Certificateholders. The Certificateholder holding the largest
original face amount of Class R Certificates shall act as "Tax
Matters Partner" within the meaning of Code section 6231(a)(7)
of the deemed partnership and shall be responsible for the
preparation and filing of the partnership tax return. The Tax
Matters Partner may vary the allocation provided for herein to
the extent it deems it advisable to satisfy the requirements
of Code section 704(b) and the Treasury Regulations
promulgated thereunder.
If the Class R Certificates have been redeemed, the entity who
directed such redemption pursuant to Section 5.04, and who deposited
the Optional Certificate Redemption Amount, shall be considered the
sole Certificateholder for purposes of this Section 7.05 until the
Issuer is terminated.
(b) The Notes will be treated as indebtedness of the Issuer.
(c) To the extent that any of the parties hereto is required
to report any item of income, gain, loss, deduction or credit relating
to the Issuer for United States federal, state or local income tax
purposes, such party shall report such item in a manner consistent with
the characterization intended by this Section 7.05 and shall not take
any contrary position on any tax return or report relating to the
United States federal, state or local income taxes or take any other
action which is inconsistent with such characterization.
ARTICLE VIII:
CONCERNING THE ISSUER TRUSTEE AND CHRISTIANA BANK & TRUST COMPANY
Section 8.01. General
(a) In the exercise or administration of the Issuer hereunder,
the Issuer Trustee at the expense of the Issuer (to be paid as provided
in Section 8.07) (i) may act directly or through agents or attorneys
pursuant to agreements entered into with any of them, and the Issuer
Trustee shall not be liable for the default or misconduct of such
agents or attorneys if such agents or attorneys shall have been
selected by the Issuer Trustee with reasonable care; and (ii) may
consult with counsel, accountants and other skilled Persons to be
selected with reasonable care and employed by the Issuer Trustee, and
it shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled Persons.
(b) Except as expressly provided herein, (i) in accepting the
trust hereby created, Christiana Bank & Trust Company acts solely as
Issuer Trustee hereunder and not in its individual
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capacity, and (ii) all Persons having any claim against the Issuer or
the Issuer Trustee by reason of the transactions contemplated by this
Agreement shall look only to the Issuer Estate for payment or
satisfaction thereof.
(c) Except in accordance with the written instructions
furnished by the Majority Certificateholders and except as provided
herein, the Issuer Trustee shall have no duty to (i) see to any
recording or filing of any document, or (ii) see to the payment or
discharge of any tax, assessment or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or
levied against any part of the Issuer.
(d) The Issuer Trustee will manage the business and affairs of
the Issuer in accordance with the terms of the Act and the Transaction
Documents subject to Section 8.02(b); provided, however, that the
Issuer Trustee undertakes to perform only such duties as are
specifically set forth in this Agreement or as the Issuer Trustee may
be duly directed from time to time in writing by the Majority
Certificateholders in accordance with and subject to the Transaction
Documents and as the Issuer Trustee is required to in order to comply
with the Transaction Documents. The Issuer Trustee shall not have any
duty or obligation to manage, control, use, sell, dispose of or
otherwise deal with the Issuer or to otherwise take or refrain from
taking any action under this Agreement or the other Transaction
Documents except as expressly required by the terms hereof (or of the
other Transaction Documents) or as expressly provided in written
instructions from the Majority Certificateholders in accordance with
the Transaction Documents, and no implied duties or obligations shall
be read into this Agreement and the other Transaction Documents against
the Issuer Trustee. The Issuer Trustee shall not be required to take
any action under this Agreement and the other Transaction Documents if
the Issuer Trustee shall have reasonable grounds for believing that
repayment of such funds or indemnification, in manner and form
satisfactory to this Issuer Trustee, against any liability, cost or
expense (including reasonable counsel fees and disbursements) which may
be incurred in connection therewith, is not reasonably assured or
provided to it. Christiana Bank & Trust Company nevertheless agrees
that it will, at its own cost and expense (and not at the expense of
the Issuer), promptly take all action as may be necessary to discharge
any Liens on any part of the Issuer Estate which are attributable to
actions by or claims against Christiana Bank & Trust Company that are
not related to the ownership of any part of the Issuer Estate or the
administration of the Issuer Estate or the transactions contemplated by
this Agreement.
(e) The Issuer Trustee shall not be required to take any
action under this Agreement if the Issuer Trustee shall reasonably
determine or shall have been advised by counsel that such action is
contrary to the terms of this Agreement or is otherwise contrary to
law.
(f) Whenever the Issuer Trustee is unable to decide between
alternative courses of action permitted or required by the terms of
this Agreement, or is unsure as to the application, intent,
interpretation or meaning of any provision hereof, the Issuer Trustee
may give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting written
instructions as to the course of action to be adopted, and, to the
extent the Issuer Trustee acts in good faith in accordance with any
such appropriate written instruction received from the Majority
Certificateholders, the Issuer Trustee shall not be liable on account
of such action or inaction to any Person. If the Issuer Trustee shall
not have received appropriate written instructions within ten days of
providing such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under
the circumstances), it may, but shall be under no duty to, take or
refrain from taking such action which is consistent, in its
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view, with this Agreement and as it shall deem to be in the best
interests of the Certificateholders, and the Issuer Trustee shall have
no liability to any Person for any such action or inaction.
(g) In no event whatsoever shall the Issuer Trustee be liable
for any representation, warranty, covenant, agreement, indebtedness or
other obligation of the Issuer; provided, however, the foregoing shall,
in no event whatsoever, relieve the Issuer Trustee from any liability
resulting from the Issuer Trustee's bad faith, willful misconduct or
gross negligence.
(h) The Issuer Trustee may rely upon and shall incur no
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond
or other document or paper reasonably believed by it to be genuine and
reasonably believed by it to be signed by the proper party or parties.
The Issuer Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as
conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or
matter the manner of ascertainment of which is not specifically
prescribed herein, the Issuer Trustee may for all purposes hereof rely
on a certificate, signed by the president or any vice president or by
the treasurer or any assistant treasurer or the secretary or any
assistant secretary (or equivalent position) of the relevant party, as
to such fact or matter, and such certificate shall constitute full
protection to the Issuer Trustee for any action taken or omitted to be
taken by it in good faith reliance thereon.
(i) Except as expressly provided or warranted by the Issuer
Trustee herein, the recitals contained in this Agreement and in the
Class R Certificates shall be taken as statements of the Depositor, and
the Issuer Trustee assumes no responsibility for their correctness.
Except as expressly provided or warranted by the Issuer Trustee herein,
the Issuer Trustee makes no representations as to the validity or
sufficiency of this Agreement or the Class R Certificates or of any of
the assets of the Issuer or the documents relating to the assets of the
Issuer.
Section 8.02. Acceptance of the Issuer
(a) The Issuer Trustee declares that it accepts the trust
hereby created and agrees to perform its duties under this Agreement
and the Act but only upon the terms of this Agreement and as
contemplated by the Transaction Documents.
(b) It is understood and agreed that the duties and
responsibilities of the Issuer Trustee shall be limited to (i)
accepting legal process served on the Issuer in the State of Delaware,
(ii) the execution, delivery and filing of all documents, and the
maintenance of all records, necessary to form and maintain the
existence (or to terminate the existence of) of the Issuer under the
Act, (iii) monitoring changes to the Act insofar as such changes may
affect the existence of the Issuer under the Act and this Agreement,
and advising the Certificateholders when action is necessary to comply
with the Act and (iv) such other duties and responsibilities of the
Issuer Trustee as set forth herein and in the other Transaction
Documents. The Issuer Trustee shall have the duties, obligations and
responsibilities explicitly set forth herein and in the other
Transaction Documents only. Any other reference to the Issuer shall
mean that the Issuer Certificate Agent has the authority to take any
action or exercise any power on behalf of the Issuer in its capacity as
Issuer Certificate Agent and shall be the sole responsibility of State
Street. The Issuer Certificate Agent, on behalf of the Issuer Trustee,
will prepare, furnish and file any and all reports or notices as
required by the Terms Indenture. Without limiting the generality of the
foregoing, the Issuer Trustee agrees that the Issuer Certificate Agent
shall have the absolute power to act for the Issuer in all
circumstances in which it is provided herein that the Issuer
Certificate Agent shall perform certain action, including without
limitation, redemptions of the Class R Certificates or the Notes
pursuant to Sections 5.04
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and 9.01 hereof, and actions upon a Certificate Termination Event
pursuant to Section 6.02, and that such actions by the Issuer
Certificate Agent will constitute acts of the Issuer.
(c) Except as otherwise expressly required by Sections 8.01(g)
and 8.02(b) above, the Issuer Trustee shall not have any duty or
liability with respect to the Issuer.
(d) Except for the representations, warranties and covenants
set forth in Sections 8.04 and 8.01(d) hereof, in accepting and
performing the trust hereby created, the Issuer Trustee acts solely as
the trustee hereunder and not in its individual capacity, and all
persons having any claim against the Issuer Trustee by reason of the
transactions contemplated by this Agreement or any other Transaction
Document shall look only to the Issuer Estate for payment or
satisfaction thereof.
Section 8.03. Authority and Duties of the Issuer Trustee
(a) The Issuer Trustee is authorized and directed to execute
and deliver this Agreement, the Indenture, the Deposit Agreement, the
Underwriting Agreement and the Certificate Placement Agreement, and
each certificate or other document attached as an exhibit to or
contemplated by any such agreement. The execution and delivery of, and
performance of the terms of, the Indenture, the Underwriting Agreement,
the Certificate Placement Agreement, the Deposit Agreement and each
certificate or other document attached as an exhibit to or otherwise
expressly contemplated by any such agreement shall be deemed not to
conflict with or constitute a breach or default under this Agreement.
The Issuer Trustee shall have only such authority and duties as are
expressly set forth in this Agreement or the other Transaction
Documents. The Issuer Trustee shall, upon the written instruction of
the Majority Certificateholders, to the extent permitted by, and
subject to the conditions contained in, the Transaction Documents, (i)
amend the Certificate of Trust (provided that such amendment may only
be made with the prior written consent of the holders of at least
two-thirds of the Notes by Outstanding Principal Amount, and if the
Issuer Trustee was not instructed by the Majority Certificateholders to
make such amendment, the Issuer Trustee shall have received the prior
written consent of the Majority Certificateholders), (ii) (x) amend any
provision of the Indenture in accordance with the terms thereof and (y)
appoint or approve of a replacement Note Trustee in accordance with the
terms of the Indenture and (iii) execute, acknowledge, deliver, file or
record any document or instrument necessary or appropriate to carry out
the provisions of this Agreement, the Indenture or the Deposit
Agreement in such form as is provided to it; provided that such action
does not alter the rights, powers and duties of the Issuer Trustee as
set forth in this Article VIII.
(b) The Issuer Trustee shall have the power and authority to
execute, deliver, acknowledge and file all necessary documents and to
maintain all necessary records of the Issuer as required by the Act.
(c) The Issuer Trustee shall not have the right to make an
election with the Internal Revenue Service that would cause the Issuer
not to be disregarded as an entity for federal income tax purposes.
(d) It is expressly understood and agreed by the parties that
each of the representations, undertakings, covenants and agreements
made on the part of the Issuer herein is made and intended not as a
personal representation, undertaking, covenant or agreement by the
Issuer Trustee, but is made and intended for the purpose of binding the
Issuer. The Issuer Trustee shall not be under any liability to the
Issuer Certificate Agent, the Certificateholders, the Depositor or any
other Person for any action taken or for refraining from the taking of
any action in its
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capacity as Issuer Trustee pursuant to this Agreement; provided,
however, that this provision shall not protect the Issuer Trustee
against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and
duties hereunder. The Issuer Trustee may rely in good faith on any
document of any kind prima facie properly executed and submitted by any
other Person respecting any matters arising hereunder.
(e) The obligations of the Issuer under this Agreement and the
Class R Certificates are obligations solely of the Issuer. This
Agreement and the Class R Certificates do not represent an obligation
of, or an interest in, the Issuer Trustee or any of its affiliates and
no recourse may be had against the Issuer Trustee or its assets, except
as may be expressly set forth or contemplated herein or in the Class R
Certificates.
Section 8.04. Representations and Warranties of Christiana Bank & Trust
Company.
Christiana Bank & Trust Company, in its individual capacity, hereby
represents and warrants to the Depositor and the Holders from time to time of
the Class R Certificates that:
(a) Corporate Existence and Power. Christiana Bank is a
banking corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all corporate
powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and as
contemplated by this Agreement.
(b) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by Christiana
Bank of this Agreement are within Christiana Bank's corporate powers,
have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default
under, any provision of applicable law or regulation of the State of
Delaware or of the Certificate of Incorporation or the Bylaws of
Christiana Bank or of any agreement or other instrument binding upon
Christiana Bank or result in the creation or imposition of any Lien on
any asset of Christiana Bank.
(c) Binding Obligation. This Agreement has been duly
authorized, and when executed and delivered by Christiana Bank,
assuming the due authorization and delivery by each party hereto, shall
constitute the legal, valid, enforceable and binding obligation of
Christiana Bank, enforceable against it in accordance with its
respective terms, except as subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity).
(d) Compliance with Act. Christiana Bank complies with all the
requirements of the Act relating to the qualification of a trustee of a
Delaware statutory business trust.
Section 8.05. Resignation of the Issuer Trustee.
(a) The Issuer Trustee may not resign and be discharged of the
trust created by this Issuer Trust Agreement unless (i) the Issuer
Trustee shall provide 30 days' written notice to the
Certificateholders, (ii) the Issuer Trustee shall locate a successor
Issuer Trustee satisfying the eligibility requirements for such
successor Issuer Trustee set forth in this Section 8.05, (iii) the
Issuer Trustee shall have agreed with such successor Issuer Trustee as
to fees and expenses to be
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paid such successor Issuer Trustee for serving as Issuer Trustee with
respect to the Issuer so long as any Class R Certificates or Notes are
Outstanding and, if such agreed-upon fees and expenses to be paid the
successor Issuer Trustee exceed the amounts remaining in the Expense
Reserve Account allocated to the Issuer Trustee, the Issuer Trustee
shall make provisions for such shortfall in a manner satisfactory to
such successor Issuer Trustee and (iv) such successor Issuer Trustee
shall agree to be assigned all of the rights and powers, and to assume
all of duties and obligations, of the Issuer Trustee set forth in this
Agreement and the other Transaction Documents, and such resignation
shall take effect upon receipt by the predecessor Issuer Trustee of an
instrument of acceptance of appointment executed by a successor Issuer
Trustee as herein provided and consented to by at least two-thirds of
the Noteholders and the Majority Certificateholders (such consent to be
deemed consent to the certificate of amendment provided for in Section
8.05(d); provided that such Person shall in all respects satisfy the
requirements of Section 3807 of the Act, or any successor provision,
and shall be a bank or trust company incorporated, or a banking
association organized, and doing business within the United States of
America, whose business shall consist at least in part as serving as
Issuer Trustee in asset securitization transactions and having a
combined capital and surplus of at least $100,000,000, if there be such
an institution willing, able and legally qualified to perform the
duties of the Issuer Trustee hereunder upon reasonable or customary
terms. The appointment of the successor Issuer Trustee shall take
effect concurrently with the resignation of the former Issuer Trustee,
and no resignation of an Issuer Trustee shall be effective absent the
concurrent appointment of a successor Issuer Trustee.
(b) If a successor Issuer Trustee shall not have been
appointed within 60 days after such notice of resignation, the Issuer
Trustee or the Majority Certificateholders may apply to any court of
competent jurisdiction to appoint a successor Issuer Trustee to act
until such time as a successor shall have been appointed as above
provided.
(c) Any corporation or banking association into which the
Issuer Trustee may be merged or converted or with which it may be
consolidated, or any corporation or banking association resulting from
any merger, conversion or consolidation to which the Issuer Trustee
shall be a party, or any corporation to which substantially all the
corporate trust business of the Issuer Trustee may be transferred,
shall, subject to such corporation or banking association satisfying in
all respects the requirements set forth in Section 8.05(a), be the
Issuer Trustee hereunder without further action.
(d) Upon the substitution of the Person serving as Issuer
Trustee, the successor Issuer Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of
Delaware in accordance with the provisions of Section 3810 of the Act,
indicating the change in the Issuer Trustee and no other change.
Section 8.06. Indemnification.
(a) Each of the Issuer Trustee, its officers, directors,
employees, shareholders and agents (collectively the "Indemnified
Persons" or individually an "Indemnified Person") will be indemnified,
protected, and held harmless from and against any and all liabilities,
obligations, losses, damages, actions, judgments, suits, proceedings,
taxes, costs, expenses and disbursements of any kind or nature
whatsoever including, without limitation, all reasonable legal fees,
costs and expenses of defense, appeal and settlement of any and all
suits, actions, or proceedings instituted against such Indemnified
Person or the Issuer and all reasonable costs of investigation in
connection therewith that may be imposed on, incurred by, or asserted
against an Indemnified Person relating to or arising out of any action
or inaction on the part of the Issuer or an
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Indemnified Person in respect of the Issuer; provided, that a court of
competent jurisdiction has not found such liabilities to have resulted
primarily from such Indemnified Person's own bad faith, willful
misconduct or gross negligence. The Indemnified Persons' rights to
indemnification as provided herein shall survive the termination of
this Agreement.
(b) The Issuer Trustee shall not be personally responsible for
or in respect of the validity or sufficiency of this Agreement or the
other Transaction Documents, the validity, value or genuineness of any
Issuer asset or for the execution hereof or performance of the
obligations of any other party hereunder. The provisions of this
Agreement, to the extent that they restrict the duties and liabilities
of the Issuer Trustee otherwise existing at law or in equity, replace
such other duties or liabilities of the Issuer Trustee to the extent
permissible under law or in equity. Notwithstanding anything contained
herein to the contrary, the Issuer Trustee shall have no duty or
liability with respect to compliance by the Issuer, the
Certificateholders or any other Person with (A) the Securities Act, the
Investment Company Act of 1940, as amended, or any other applicable
Federal or state securities laws, rule or regulations, (B) ERISA or (C)
the Code. The Issuer Trustee shall not be personally liable for any
error of judgment made in good faith. The Issuer Trustee shall not be
required to take any action that (i) is inconsistent with the purposes
of the Issuer set forth herein or (ii) would, to the actual knowledge
of an officer of the Issuer Trustee, result in the Issuer becoming an
association taxable as a corporation for federal income tax purposes.
(c) The indemnity provided for by this Section 8.06 shall
supersede and replace any indemnity provided to the Issuer Trustee
under the Prior Agreement of Trust and the Issuer Trustee agrees to
look solely to the Trust Agreement Collection Account as provided for
in Section 5.03(a) of this Agreement for any indemnification obligation
owed to it hereunder or under the Prior Agreement of Trust.
Section 8.07. Fees and Expenses.
The Issuer Trustee shall receive as compensation for its services
hereunder the fee specified in Section 6.02 of the Indenture, subject to the
limitations set forth therein, which amount shall also cover the costs to the
Issuer Trustee of all ordinary expenses incurred in the performance of its
duties hereunder. The Issuer Trustee shall be compensated reasonably for any
extraordinary services rendered by it hereunder and for all reasonable
out-of-pocket expenses, disbursements and advances (other than those ordinary
expenses, disbursements and advances incurred in the normal administration of
its obligations hereunder which are internal costs covered by its fees) incurred
or made by the Issuer Trustee as provided in Section 5.03(a).
Section 8.08. Litigation, Action Outside Delaware.
(a) The Issuer Trustee shall not be under any obligation to
appear in, prosecute or defend any action which in its opinion may
require it to incur any out-of-pocket expense or any liability, unless
it shall be furnished with such reasonable security and indemnity
against such expense or liability as it may require, and any
out-of-pocket cost of the Issuer Trustee as a result of such actions
shall be paid by the Issuer.
(b) Notwithstanding anything contained herein to the contrary,
the Issuer Trustee shall not be required to take any action in any
jurisdiction other than in the State of Delaware if the taking of such
action will (i) require the consent or approval or authorization or
order of or the giving of notice to, or the registration with or the
taking of any other action in respect of, any state or other
governmental authority or agency of any jurisdiction other than the
State of Delaware; (ii) result in any fee, tax or other governmental
charge under the laws of any jurisdiction or any political subdivisions
thereof in existence on the date hereof other than the State of
Delaware
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becoming payable by the Issuer Trustee; or (iii) subject the Issuer
Trustee to personal jurisdiction in any jurisdiction other than the
State of Delaware for causes of action arising from acts unrelated to
the consummation of the transactions by the Issuer Trustee contemplated
hereby. The Issuer Trustee shall be entitled to obtain advice of
counsel (which advice shall be an expense of the Issuer) to determine
whether any action required to be taken pursuant to this Agreement
results in the consequences described in clauses (i), (ii) and (iii) of
the preceding sentence. In the event that said counsel advises the
Issuer Trustee that such action will result in such consequences, the
Issuer Trustee may resign pursuant to Section 8.05 hereof.
ARTICLE IX:
REDEMPTION OF NOTES
Section 9.01. Optional Redemption of the Notes.
The holders of all of the Class R Certificates may direct the Issuer to
redeem all but not less than all of the Notes at a price equal to 100% of the
Outstanding Principal Amount of the Notes (the "Optional Note Redemption
Amount") on any Monthly Payment Date on or after the earlier of (A) June 1, 2005
and (B) the first Monthly Payment Date on which the remaining balance of the
Agency Securities shall be equal to or less than 20% of the principal amount of
the Agency Securities (at original issuance), after giving effect to any
principal payments on such Monthly Payment Date (any such date, a "Permitted
Note Redemption Date"); provided that if the Seller, as assignee of the
Depositor, has caused the Issuer to redeem the Class R Certificates or has
delivered a written demand to the Issuer Certificate Agent for the optional
redemption of the Class R Certificates to occur on the upcoming Monthly Payment
Date then the Seller, and not the holders of the Class R Certificates, shall
have the right to cause the Notes to be redeemed. The Issuer Certificate Agent
shall deliver to the Note Trustee a written demand for such redemption no later
than one business day after receipt of written direction to cause such
redemption as described in the preceding sentence. In order for a redemption of
the Notes to occur on a particular Monthly Payment Date, (i) the Issuer
Certificate Agent shall have delivered to the Note Trustee a written demand for
such redemption at least 10 days but no greater than 25 days prior to the
Monthly Payment Date selected for such redemption, and (ii) the Optional Note
Redemption Amount shall have been deposited into the Note Collection Account no
later than the 9th calendar day prior to such Monthly Payment Date. Without
limiting the generality of the foregoing, the Issuer Trustee agrees that the
Issuer Certificate Agent shall perform certain actions, including without
limitation, redemptions of the Class R Certificates or the Notes pursuant to
Sections 5.04 and 9.01 hereof, and actions upon a Certificate Termination Event
pursuant to Section 6.02, and that such actions by the Issuer Certificate Agent
will constitute acts of the Issuer.
ARTICLE X:
DISSOLUTION, BANKRUPTCY AND LIQUIDATION OF THE ISSUER
Section 10.01. Dissolution of the Issuer.
(a) The Issuer shall be dissolved, wound up and terminated as
provided herein upon the Note Trustee's determination, in its sole
discretion after consultation with such counsel and other experts as it
deems necessary, that the Issuer is insolvent; provided that such
determination shall be made without regard to any fees or expenses
imposed on or otherwise owed by the Issuer to any of the Issuer
Trustee, the Note Trustee and the Issuer Certificate Agent. Upon any
such determination, the Note Trustee shall have the right, in its sole
discretion, to (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, examiner or liquidator
of the Issuer or of all or a substantial part of the Issuer Estate,
(ii) make a general
Agreement of Trust
29
<PAGE> 34
assignment for the benefit of the Issuer's creditors, (iii) file a
petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts,
(iv) take any corporate action for the purpose of effecting any of the
foregoing or (v) do the equivalent of any of the foregoing under the
laws of the United States (each action described in (i) through (v), a
"Bankruptcy Action"), each with respect to the Issuer upon 90 days'
prior written notice to the Certificateholders and the Depositor.
Neither the Depositor nor any Certificateholder shall have any right to
direct the taking of a Bankruptcy Action with respect to the Issuer;
provided, however, the Certificateholders shall have the right to
liquidate the assets of the Issuer on a date that is at least one year
and one day after receiving a certificate from the Note Trustee that
all of the obligations under the Indenture have been satisfied and
discharged in full. With respect to any determination of insolvency by
the Note Trustee under this Section 10.01(a), the Note Trustee shall
incur no personal liability to any Person for any determination (action
or inaction in connection therewith) made in good faith, and in acting
(or not in acting as the case may be) under this Section, the Note
Trustee shall owe no fiduciary duties to any Person other than the
Noteholders. In connection with the Note Trustee's determination that
the Issuer is insolvent, the Note Trustee shall not be obligated to
follow the instructions of the Certificateholders and shall have no
liability to the Issuer or any other Person for its failure to do so.
(b) Upon dissolution of the Issuer, the Issuer shall be wound
up in accordance with Section 3808 of the Act.
Section 10.02. Termination.
The Issuer shall terminate when all of the Issuer's assets shall have
been disposed of and distributed as provided herein. Upon the winding up of the
Issuer and its termination, the Issuer Trustee shall cause the Certificate of
Trust to be canceled by filing a certificate of cancellation with the Secretary
of State in accordance with the provisions of Section 3810 of the Act. Upon such
termination, all Class R Certificates shall be canceled.
ARTICLE XI:
NOTICES
Section 11.01. Notices.
Except as otherwise expressly provided herein in any particular case,
all notices, approvals, consents, requests and other communications hereunder
shall be in writing and shall, if addressed as provided in the following
sentence, be deemed to have been given, (i) when delivered by hand, (ii) one
Business Day after being sent by a private nationally or internationally
recognized overnight courier service, or (iii) when sent by telecopy, if
immediately after transmission the sender's facsimile machine records in writing
the correct answer back. Actual receipt at the address of an addressee,
regardless of whether in compliance with the foregoing is effective notice
hereunder. Until otherwise so notified by the respective parties, all notices,
approvals, consents, requests and other communications shall be addressed to the
following addressees:
If to the Depositor:
Fund America Investors Corporation II
c/o The Chotin Group
Agreement of Trust
30
<PAGE> 35
Plaza Tower One, Suite 1200
6400 South Fiddler's Green Circle
Englewood, Colorado 80111
Attention: Mr. Howard J. Glicksman
Telephone No.: 303-741-0100
Telecopy No.: 303-741-6944
If to the Issuer Trustee or the Issuer:
Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, Delaware 19807
Attention: Corporate Trust Administration
Telephone No.: 302-421-5800
Telecopy No.: 302-421-5815
If to the Issuer Certificate Agent:
If by courier:
State Street Bank and Trust Company
Global Investor Services Group - Corporate Trust
2 Avenue de Lafayette - 6th Floor
Boston, MA 02111
Attention: FAIC II Issuer Trust 2000-1
Telephone No.: 617-662-1311
Telecopy No.: 617-662-1435
or, if by U.S. mail:
State Street Bank and Trust Company
Global Investor Services Group - Corporate Trust
P.O. Box 778
Boston, MA 02102-0778
Attention: FAIC II Issuer Trust 2000-1
Telephone No.: 617-662-1311
Telecopy No.: 617-662-1435
If to the Certificateholders:
To the Certificateholders identified as such in the
Certificate Register.
Agreement of Trust
31
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ARTICLE XII:
MISCELLANEOUS PROVISIONS
Section 12.01. Entire Agreement.
Each of the parties hereto represents and warrants to the others that
this Agreement, when considered together with the other Transaction Documents,
constitutes the entire agreement among the parties hereto relating to the
transactions contemplated hereby.
Section 12.02. Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS OR CHOICE OF LAW
PRINCIPLES THEREOF. The parties hereto hereby submit to the non-exclusive
jurisdiction of the United States District Court for the Southern District of
New York and of the Supreme Court of the State of New York sitting in New York
County (including its Appellate Division), and of any other appellate court in
the State of New York, for the purposes of all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby. The
parties hereto hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection that they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
Section 12.03. Effect.
Except as otherwise specified herein, this Agreement shall be binding
upon and inure to the benefit of the parties and their respective legal
representatives, successors and permitted assigns.
Section 12.04. Pronouns and Number.
Wherever from the context it appears appropriate, each term stated in
either the singular or the plural shall include the singular and the plural, and
pronouns stated in either the masculine, feminine or neuter shall include the
masculine, feminine and neuter.
Section 12.05. Effect of Headings.
The Table of Contents and the headings of the Articles, Sections,
subsections, clauses and paragraphs hereof, and of Exhibits hereto, are for
convenience of reference only, and shall not affect the construction or
interpretation of this Agreement.
Section 12.06. Severability of Provisions.
If any provision hereof shall be held invalid or unenforceable by any
court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof. To the extent permitted by applicable
law, the parties hereto hereby agree that any provision hereof that renders any
other term or provision hereof invalid or unenforceable in any respect shall be
modified, but only to the extent necessary to avoid rendering such other term or
provision invalid or unenforceable, and such modification shall be accomplished
in the manner that most nearly preserves the benefit of all the parties' bargain
hereunder.
Agreement of Trust
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Section 12.07. Amendment or Waiver; Effect on Issuer Trust Agreement.
Any provision of this Agreement may be amended or waived by an
amendment or waiver which is in writing and signed by the Depositor and the
Issuer Certificate Agent; provided, that the Issuer Certificate Agent shall
consent to any amendment or waiver only upon written instruction by the Majority
Certificateholders (which shall constitute the Majority Certificateholders'
consent to the amendment); provided, further, that, to the extent that such
amendment materially affects the interests of the Issuer Trustee, such amendment
shall require the consent of the Issuer Trustee; provided, further, that without
the consent of 100% of the Holders at the time, no such amendment or waiver or
any amendment or waiver to any other Transaction Document to which the Issuer is
a party shall (1) alter or amend the right of the Holders to receive payments
thereon, or institute suit in respect thereof, (2) release any portion of the
Issuer Estate or any portion of the assets of the Issuer, or (3) reduce any
amount required to be collected or retained by the Issuer or the Issuer Trustee;
and provided, further, that no such amendment or waiver shall be executed if
otherwise prohibited by the Indenture or other Transaction Documents.
Promptly after the execution by all required parties of any such
amendment to, or waiver of, this Agreement, the Issuer Certificate Agent shall
furnish a copy of any such amendment or waiver to the Issuer Trustee, each
Certificateholder and the Depositor.
Section 12.08. Binding Upon Assigns.
Except as otherwise provided herein, the provisions of this Agreement
(including any amendments, modification and waivers hereof properly adopted)
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.
Section 12.09. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
Agreement of Trust
33
<PAGE> 38
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date above first written.
CHRISTIANA BANK & TRUST COMPANY, as Issuer
Trustee
By: /s/ Louis W. Geibel, Jr.
-------------------------
Name: Louis W. Geibel, Jr.
Title: Vice President
FUND AMERICA INVESTORS CORPORATION II,
as Depositor
By: /s/ Helen M. Dickens
-------------------------
Name: Helen M. Dickens
Title: Vice President
STATE STREET BANK AND TRUST COMPANY as
Issuer Certificate Agent
By: /s/ Craig D. Lange
-------------------------
Name: Craig D. Lange
Title: Assistant Vice President
Agreement of Trust
34
<PAGE> 39
SCHEDULE I
AGENCY SECURITIES
35
<PAGE> 40
EXHIBIT A
FORM OF CLASS R CERTIFICATE
THIS CLASS R CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR OTHERWISE
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER APPLICABLE STATE LAW OR IS RESOLD OR OTHERWISE
TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE LAW.
THIS CLASS R CERTIFICATE MAY ONLY BE RESOLD OR OTHERWISE TRANSFERRED
(A) TO A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER OR (B) TO
CERTAIN OTHER INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT), AND IN ACCORDANCE WITH
SECTION 4.05 OF THE ISSUER TRUST AGREEMENT (AS DEFINED HEREIN).
NO TRANSFER OF THIS CLASS R CERTIFICATE SHALL BE MADE UNLESS (I) THE
ISSUER CERTIFICATE AGENT SHALL HAVE RECEIVED FROM THE TRANSFEREE A TRANSFEREE
CERTIFICATE AND (II) SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. IN THE EVENT
THAT A TRANSFER OF A CLASS R CERTIFICATE IS TO BE MADE, THE ISSUER CERTIFICATE
AGENT MAY REQUIRE AN OPINION OF COUNSEL ACCEPTABLE TO AND 1N FORM AND SUBSTANCE
SATISFACTORY TO THE REQUESTING PARTY, TO THE EFFECT THAT SUCH TRANSFER MAY BE
MADE PURSUANT TO AN EXEMPTION, DESCRIBING THE APPLICABLE EXEMPTION AND THE BASIS
THEREFOR, FROM THE SECURITIES ACT AND IS BEING MADE IN ACCORDANCE WITH THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED, WHICH OPINION OF COUNSEL SHALL NOT
BE AN EXPENSE OF THE ISSUER CERTIFICATE AGENT OR THE ISSUER. THE
CERTIFICATEHOLDER SHALL BE DEEMED BY ITS ACCEPTANCE AND HOLDING OF THIS CLASS R
CERTIFICATE TO AGREE THAT NEITHER THE ISSUER NOR THE ISSUER CERTIFICATE AGENT IS
UNDER AN OBLIGATION TO OR INTENDS TO REGISTER THIS CLASS R CERTIFICATE UNDER THE
SECURITIES ACT OR ANY OTHER SECURITIES LAW.
No transfer of this Class R Certificate shall be made unless and until
the prospective transferee provides the Certificate Registrar (as defined in the
Issuer Trust Agreement described below) with an affidavit, in the form of
paragraph 7 of the Transferee Certificate (as defined in the Issuer Trust
Agreement described below), to the effect that such transferee is not an
employee benefit plan that is subject to all or a portion of Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
retirement plan or arrangement that is subject to Section 4975 of the Code, nor
a person acting, directly or indirectly, on behalf of any such employee benefit
plan, plan or arrangement (including an insurance company using funds in its
general account that may constitute "plan assets") (each, a "Plan") and is not a
governmental plan subject to any laws or regulations that are substantially
similar to Section 406 of ERISA or Section 4975 of the Code (as defined in the
Issuer Trust Agreement described below), or a person acting, directly or
indirectly, on behalf of any such government plan.
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<PAGE> 41
A beneficial or record interest in a Class R Certificate may not be
sold or transferred to a Disqualified Organization (as defined in the Issuer
Trust Agreement described below). Any attempted or purported transfer of an
interest in a Class R Certificate shall be absolutely null and void and shall
vest no rights in the purported transferee unless (a) such transferee provides
to the Certificate Registrar, who shall be responsible for forwarding it to
Fannie Mae and Freddie Mac, (i) affidavits, in the forms provided as,
respectively, Exhibits C-1 and C-2 to the Issuer Trust Agreement (the
"Transferee Affidavits"), each to the effect that such prospective transferee is
(i) not a "disqualified organization" as defined in such Underlying Documents
(as defined in the Issuer Trust Agreement described below) and is not purchasing
such Class R Certificate on behalf of a disqualified organization and (ii) a
U.S. Person and (iii) if requested by the Certificate Registrar, an opinion of
counsel (in a form acceptable to the Certificate Registrar) that the proposed
transfer will not cause such interest to be held by or on behalf of a
disqualified organization. Such transferee shall also provide a cover letter
addressed to the Issuer Trustee, the Authenticating Agent (as defined in the
Issuer Trust Agreement described below) and the Certificate Registrar to the
effect that the addressees of such letter may rely on the certifications made by
such transferee in the Transferee Affidavits. In the event that the Class R
Certificates shall be optionally redeemed, the Seller, as assignee of the
Depositor's right to cause the redemption of the Class R Certificates, and,
after such redemption the owner of 100% of the beneficial ownership interest in
the Issuer, shall be obligated to provide to the Certificate Registrar the
Transferee Affidavits, a Transferee Certificate in the form of Exhibit B to the
Issuer Trust Agreement, and if requested by the Certificate Registrar, an
opinion of counsel as described in this paragraph as if the Seller were the
prospective transferee for the purposes of this paragraph. The Certificate
Registrar shall be responsible for forwarding such documents to the Fannie Mae
or Freddie Mac.
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FAIC II ISSUER TRUST 2000-1
FAIC II ISSUER TRUST 2000-1, CLASS R CERTIFICATES
DUE DECEMBER 1, 2029
No. __
Cusip No. _____________ U.S.$_______
FAIC II ISSUER TRUST 2000-1, a statutory business trust formed under
the laws of the State of Delaware (the "Issuer"), for value received, hereby
promises to pay to _________________________, or registered assigns, upon
presentation and surrender of this Class R Certificate (except as otherwise
permitted by the Issuer Trust Agreement referred to below), the principal sum of
_______________ ______________________ United States Dollars (U.S. $______) due
on December 1, 2029 (the "Final Scheduled Monthly Payment Date"), all as
provided below and in the Issuer Trust Agreement referred to herein.
This Class R Certificate is issued pursuant to an Agreement of Trust,
dated as of January 20, 2000 (the "Issuer Trust Agreement"), among Fund America
Investors Corporation II, as depositor, Christiana Bank & Trust Company, as
issuer trustee, and State Street Bank and Trust Company, as issuer certificate
agent.
The obligations of the Issuer under this Class R Certificate and the
Issuer Trust Agreement are obligations solely of the Issuer. This Class R
Certificate does not represent an obligation of, or an interest in, the Issuer
Trustee or any of its affiliates and no recourse may be had against the Issuer
Trustee or its assets, except as may be expressly set forth or contemplated
herein or in the Issuer Trust Agreement. The Class R Certificates represent the
undivided beneficial interest in the assets of the Issuer, subject to the pledge
of the Pledged Assets (as defined in the Indenture) by the Issuer to the Note
Trustee pursuant to the Indenture for the benefit of the Noteholders.
Consequently, any rights of the Certificateholders to the Pledged Assets will be
subject to that pledge.
Distributions on the Class R Certificates will be payable on the first
Business Day of each month, commencing on March 1, 2000 (each, a "Monthly
Payment Date"), to holders of record of the Class R Certificates (the
"Certificateholders") as of the Record Date.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Issuer Trust Agreement.
On each Monthly Payment Date, the Class R Certificates are entitled to
receive all payments of principal collected on the Series 2203 Freddie Mac
Security during the preceding Interest Accrual Period until the Outstanding
Certificate Balance of the Class R Certificates has been reduced to zero. On and
after the Monthly Payment Date on which all principal of and interest on the
Notes has been paid in full, all Residual Collections shall be distributed on
the Class R Certificates, less any amounts owed to the Note Trustee, Issuer
Trustee or Issuer Certificate Agent as reimbursed expenses or indemnity. All
distributions on the Class R Certificates shall be allocated pro rata among the
Class R Certificates first to reduce the Outstanding Certificate Balance of the
Class R Certificates to zero, and thereafter to be distributed on the Class R
Certificates as additional investment yield.
The Class R Certificates have no stated interest rate.
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The Class R Certificates will be redeemed in full on December 1, 2029
(the "Final Scheduled Monthly Payment Date") to the extent not repaid or
redeemed prior thereto.
The Depositor or its assignee may, by written demand to the Issuer
Certificate Agent and the Issuer Trustee, cause the Issuer to redeem on a
Monthly Payment Date all but not less than all of the Class R Certificates at a
price equal to 105% of the Outstanding Certificate Balance of the Class R
Certificates on such Monthly Payment Date (the "Optional Certificate Redemption
Amount"). Such demand shall be delivered at least 10 calendar days but no more
than 25 calendar days prior to the Monthly Payment Date on which the redemption
is to occur. Prior to any redemption of the Class R Certificates, the Optional
Certificate Redemption Amount shall be deposited into the Trust Agreement
Collection Account no later than the 9th calendar day prior to such Monthly
Payment Date selected for redemption of the Class R Certificates. Such
redemption shall occur on a Monthly Payment Date specified in the written
notice, which date shall be on or after the earlier of (A) March 1, 2005 and (B)
the first Monthly Payment Date on which the remaining balance of the Agency
Securities shall be equal to or less than 20% of the principal amount of the
Agency Securities (at original issuance), after giving effect to any principal
payments on such Monthly Payment Date (the "Permitted Certificate Redemption
Date"). Upon redemption of the Class R Certificates, the party who effected the
redemption by depositing the Optional Certificate Redemption Amount shall own
the entire beneficial ownership interest in the Issuer until the Notes are
redeemed or paid in full and the Issuer is terminated, and such party shall have
the right to direct redemption of the Notes pursuant to the Indenture. Such
party's ownership interest in the Issuer shall be subject to the same ownership
and transfer restrictions as the Class R Certificates, which are set forth in
Section 4.05 of the Issuer Trust Agreement.
The holders of the Class R Certificates may direct the Issuer to redeem
all but not less than all of the Notes at a price equal to 100% of the
Outstanding Principal Amount of the Notes (the "Optional Note Redemption
Amount") on any Monthly Payment Date on or after the earlier of (A) June 1, 2005
and (B) the first Monthly Payment Date on which the remaining balance of the
Agency Securities shall be equal to or less than 20% of the principal amount of
the Agency Securities (at original issuance), after giving effect to any
principal payments on such Payment Date (any such date, a "Permitted Note
Redemption Date"); provided that if the Seller as assignee of the Depositor, has
caused the Issuer to redeem the Class R Certificates or has delivered a written
demand to the Issuer Certificate Agent for the optional redemption of the Class
R Certificates to occur on the upcoming Monthly Payment Date then the Seller,
and not the holders of the Class R Certificates, shall have the right to cause
the Notes to be redeemed. In order for a redemption of the Notes to occur on a
particular Monthly Payment Date, (i) the Issuer Trustee shall have delivered to
the Note Trustee a written demand for such redemption at least 10 days but no
greater than 25 days prior to the Monthly Payment Date selected for such
redemption, and (ii) the Optional Note Redemption Amount shall have been
deposited into the Note Collection Account no later than the 9th calendar day
prior to such Monthly Payment Date.
The Internal Revenue Service has proposed regulations requiring certain
reporting by trustees to holders of "widely held fixed investment trusts." To
avoid the expense of any reporting, by acquiring this Class R Certificate,
whether on original issue or in a secondary purchase, the registered holder of
this Certificate agrees as follows:
(i) The Certificateholder shall hold this Class R Certificate
directly and not through a "middleman." For this purpose, a "middleman"
is any person who holds an interest on behalf of, or for the account
of, another person, or who otherwise acts in a capacity as an
intermediary for the account of another person, including, without
limitation, a custodian, such as a bank, financial institution or
brokerage firm; a nominee, including the joint owner of an account,
except if the joint owners are husband and wife; or a broker holding an
interest for a customer in street name.
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<PAGE> 44
(ii) If Proposed Treasury Regulations Section 1.671-4(j) shall
become final in a form which permits this Certificateholder to request
quarterly information, the Certificateholder agrees that it shall
request such information only upon making provision of compensation to
the Issuer Certificate Agent for the expenses of providing such
information.
(iii) The Certificateholder agrees not to transfer this Class
R Certificate to any person unless such person agrees to these
provisions in writing for the benefit of the Issuer.
The Issuer Certificate Agent will send each payment on a Monthly
Payment Date to each Class R Certificateholder, together with a statement
setting forth, among other things, (i) the amount of such payment allocable to
principal and (ii) the amount of such payment allocable to investment yield.
Such amounts will be expressed as a dollar amount per U.S. $1,000 of the
original principal amount of the Class R Certificates.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent by the manual signature of one of its Authorized
Officers, this Class R Certificate shall not be entitled to any benefit under
the Issuer Trust Agreement or be valid or obligatory for any purpose.
If a Certificate Termination Event with respect to the Class R
Certificates occurs and is continuing, the Issuer Certificate Agent at the
direction of the Majority Certificateholders will cause the Issuer to be
dissolved and terminated, or, upon the occurrence of the Certificate Termination
Event described in Section 6.01(e) of the Issuer Trust Agreement, the Issuer
Certificate Agent shall cause the Issuer to be terminated without any notice
from Certificateholders. Upon any such termination, subject to the requirements
of Section 3808 of the Act, all of the property of the Issuer (other than
amounts in the Expense Reserve Account) will be distributed by the Issuer
Certificate Agent pro rata to the Certificateholders.
Title to this Class R Certificate shall pass by registration in the
Certificate Register kept at the Corporate Trust Office by the Certificate
Registrar.
No service charge shall be made for exchange or registration of
transfer of this Class R Certificate, but the Issuer may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The recitals contained herein shall be taken as statements of the
Depositor and the Issuer Trustee assumes no responsibility for the correctness
thereof. The Issuer Trustee makes no representations as to the validity or
sufficiency of this Class R Certificate or of any of the assets of the Issuer or
related documents.
THIS CLASS R CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF LAWS OR CHOICE OF LAW
PRINCIPLES THEREOF.
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<PAGE> 45
IN WITNESS WHEREOF, the Issuer has caused this Class R
Certificate to be duly executed.
Dated _____________
FAIC II ISSUER TRUST 2000-1
By: CHRISTIANA BANK & TRUST COMPANY, as
Issuer Trustee
By: ___________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the
within-mentioned Issuer Trust Agreement.
STATE STREET BANK AND TRUST COMPANY, as
Authenticating Agent
By:__________________________
Authorized Signatory
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<PAGE> 46
ASSIGNMENT FORM
For value received
hereby sell, assign and transfer unto
Please insert social security or other identifying number of assignee
Please print or type name and address, including zip code, of assignee:
____________________________ the within Class R Certificate and does hereby
irrevocably constitute and appoint ________________________ Attorney to transfer
the Class R Certificate on the books of the Company with full power of
substitution in the premises.
Date: _________ Your Signature:_____________________
(Sign exactly as your name appears on this Class R Certificate)
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<PAGE> 47
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
COUNTY OF )
: SS.:
STATE OF )
[Name], being first duly sworn, deposes and says:
1. That [s/he] is the [title] of [transferee entity] proposed
transferee of [one of the] U.S. $324,992.88 aggregate principal amount of FAIC
II Issuer Trust 2000-1 Class R Certificates Due December 1, 2029, representing
100% of the equity interest of the Issuer (the "Transferee"), a statutory
business trust duly organized and existing under the laws of the State of
Delaware, on behalf of which he has the authority to make this affidavit and
agreement. The Class R Certificates were issued pursuant to the Agreement of
Trust dated as of January 20, 2000 (the "Issuer Trust Agreement") among Fund
America Investors Corporation II, Christiana Bank & Trust Company, a banking
corporation incorporated in the State of Delaware (in its individual capacity
solely where expressly set forth in the Issuer Trust Agreement, "Christiana
Bank"), otherwise acting solely in its capacity as trustee of the Issuer
thereunder (in such capacity, the "Issuer Trustee"), and State Street Bank and
Trust Company (in its individual capacity, "State Street"), as agent thereunder
with respect to the Class R Certificates issued thereunder (in such capacity,
the "Issuer Certificate Agent"). Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to such terms in the Issuer
Trust Agreement.
2. That the Transferee has reviewed the restrictions set forth
on the face of the Class R Certificates and the provisions of Article IV of the
Issuer Trust Agreement under which the Class R Certificates were issued. The
Transferee expressly agrees to be bound by and to comply with such restrictions
and provisions.
3. That the Transferee is a "U.S. Person," or a U.S. citizen
or resident, a corporation, partnership, or other entity created or organized
in, or under the laws of, the United States or any political subdivision
thereof, an estate whose income is subject to United States federal income tax
regardless of its source, or a trust if a U.S. court is able to exercise primary
supervision over the administration of the trust and one or more U.S. Persons
have the authority to control all substantial decisions of the trust.
4. That this affidavit and agreement relates only to the Class
R Certificates to be held by the Transferee and not to any other Holder of the
Class R Certificates.
5. That the Transferee, by accepting the Class R Certificates,
acknowledges, represents and agrees as follows:
(a) The Class R Certificates have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or the
securities laws of any state of the United States and, until
registered, may not be offered, sold or otherwise transferred unless
exemptions from registration under the Securities Act and such
applicable state securities laws are available.
(b) The Transferee (a)(i) is a Qualified Institutional Buyer
and (ii) is acquiring the Class R Certificates for its own account or
for the account of a Qualified Institutional Buyer or (b)
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<PAGE> 48
is an institution which is an institutional accredited investor
(meaning an "accredited investor" as defined in Rule 501 (a)(1), (2),
(3) or (7) of Regulation D under the Securities Act) who is not a
Qualified Institutional Buyer.
(c) The Transferee understands that transfers of the Class R
Certificates offered and sold to a Qualified Institutional Buyer or to
an institutional Accredited Investor will be registered only if the
Class R Certificates are transferred in accordance with the transfer
restrictions referred to in paragraph (b) above and an appropriate
transfer letter (copies of which are available from the Issuer
Certificate Agent) is delivered to the Issuer Certificate Agent
appropriately completed.
(d) The Transferee understands that the Class R Certificates
offered and sold to Qualified Institutional Buyer or to an
institutional Accredited Investor shall bear a legend to the following
effect:
"THIS CLASS R CERTIFICATE HAS NOT BEEN AND WILL NOT
BE REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED
UNLESS IT IS REGISTERED PURSUANT TO THE SECURITIES ACT AND
REGISTERED OR QUALIFIED UNDER APPLICABLE STATE LAW OR IS
RESOLD OR OTHERWISE TRANSFERRED IN TRANSACTIONS WHICH ARE
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE LAW. THIS CERTIFICATE MAY ONLY BE RESOLD OR
OTHERWISE TRANSFERRED (A) TO A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A) PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER OR (B) TO
CERTAIN OTHER INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED
IN RULE 501 (A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT),
AND IN ACCORDANCE WITH SECTION 4.05 OF THE ISSUER TRUST
AGREEMENT (AS DEFINED HEREIN)."
6. That the Transferee is acquiring the Certificate for its
own account for investment and not with a view to or for sale or transfer in
connection with any distribution thereof, in whole or in part, in any manner
which would violate the Securities Act, or any applicable State securities laws.
7. That the Transferee is not an employee benefit plan that is
subject to all or a portion of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any retirement plan or
arrangement that is subject to Section 4975 of the Code, nor a person acting,
directly or indirectly, on behalf of any such employee benefit plan, plan or
arrangement(including an insurance company using funds in its general account
that may constitute "plan assets") (each, a "Plan") and is not a governmental
plan subject to any laws or regulations that are substantially similar to
Section 406 of ERISA or Section 4975 of the Code, or a person acting, directly
or indirectly, on behalf of any such government plan.
8. That the Transferee agrees as follows:
(a) Such Transferee shall hold such Class R Certificates
directly and not through a "middleman." For this purpose, a "middleman"
is any person who holds an interest on behalf of, or for the account
of, another person, or who otherwise acts in a capacity as an
intermediary for the account of another person, including, without
limitation, a custodian, such as a bank, financial
44
<PAGE> 49
institution or brokerage firm; a nominee, including the joint owner of
an account, except if the joint owners are husband and wife; or a
broker holding an interest for a customer in street name.
(b) If Proposed Treasury Regulations Section 1.671-4(j) shall
become final in a form which permits such Transferee to request
quarterly information, such Transferee agrees that it shall request
such information only upon making provision of compensation to the
Issuer Certificate Agent for the expenses of providing such
information.
(c) Such Transferee agrees not to transfer such Class R
Certificates to any person unless such person agrees to these
provisions in writing for the benefit of the Issuer.
9. That the Transferee (i) is not a "disqualified
organization" as defined in Section 860E(e)(5) of the Internal Revenue Code of
1986, as amended, and will not be a disqualified organization as of [date of
transfer], (ii) is not acquiring the Class R Certificate for the account of a
disqualified organization, (iii) consents to any amendment of the Issuer Trust
Agreement that shall be deemed necessary by the Issuer (upon advice of counsel)
to constitute a reasonable arrangement to ensure that the Class R Certificate
will not be owned directly or indirectly by a disqualified organization, (iv)
does not have as a purpose for acquiring the Class R Certificate to avoid or
impede the assessment or collection of tax, (v) understands that it may incur
tax liabilities in excess of any cash flows generated by the Class R
Certificate, (vi) intends to pay taxes associated with holding the Class R
Certificate as they become due; and (vii) will not transfer such Class R
Certificate unless (a) it has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same seven
representations and (b) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false.
45
<PAGE> 50
EXHIBIT C-1
FORM OF TRANSFEREE AFFIDAVIT (TO FREDDIE MAC)
Date of Transfer: [________ __, ____]
Federal Home Loan Mortgage Corporation
8200 Jones Branch Drive
McLean, Virginia 22102
Ladies and Gentlemen:
We propose to acquire the Residual Classes of the Series1 of
Freddie Mac's Multiclass REMIC Certificates listed on Schedule I hereto (the
"Residual Classes"). The Residual Classes are described in the related Offering
Circular Supplement.
1. We certify that (a) we are not a disqualified organization
and (b) we are not acquiring the Residual Classes on behalf of a disqualified
organization. For this purpose, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except for the Federal Home Loan Mortgage Corporation
("Freddie Mac") or any entity treated as other than an instrumentality of the
foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code of
1986 (the "Code")), any organization (other than a cooperative described in
Section 521 of the Code) that is exempt from taxation under the Code (unless
such organization is subject to tax on its unrelated business taxable income)
and any organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as
they become due, (b) we intend, and believe that we will be able, to continue to
pay our debts as they become due in the future, (c) we understand that as
beneficial owner of the Residual Classes, we may incur tax liabilities in excess
of any cash flows generated by such Classes, and (d) we intend to pay any taxes
associated with holding the Residual Classes as they become due.
3. We acknowledge that we will be the beneficial owner of the
Residual Classes shown on Schedule I hereto and the Residual Classes will be
either registered in our name or held in the name of our nominee (which is not a
disqualified organization), as indicated on Schedule I.
4. Unless Freddie Mac has consented to a transfer to a
transferee that is not a U.S. person by executing a consent in a form
satisfactory to Freddie Mac, we certify that we are a U.S. Person. For this
purpose, the term "U.S. Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any State (other than a partnership that
is not treated as a U.S. Person under any applicable Treasury regulations), an
estate whose income is subject to United States federal income tax regardless of
its source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more U.S.
Persons have the authority to control all substantial decisions of the trust. We
agree that any breach by us of this certification shall render the transfer of
any interest in the Residual Classes to us absolutely null and void and shall
cause no rights in such Residual Classes to vest in us.
- -----------------------
(1) A separate transferee affidavit will be executed for each Residual Class.
46
<PAGE> 51
5. We agree that in the event that at some future time we wish
to transfer an interest in a Residual Class, we will transfer such interest in a
Residual Class only (a) to a transferee that (i) is not a disqualified
organization and is not purchasing such interest in a Residual Class on behalf
of a disqualified organization, (ii) is a U.S. Person and (iii) has delivered to
Freddie Mac a letter in the form of this letter and, if requested by Freddie
Mac, an opinion of counsel (in form acceptable to Freddie Mac) that the proposed
transfer will not cause the interest in a Residual Class to be held by a
disqualified organization or a person who is not a U.S. Person or (b) with the
written consent of Freddie Mac.
6. We hereby designate Freddie Mac as our fiduciary to act as
the tax matters person for each REMIC Pool in which the Residual Classes
represent an interest.
Very truly yours,
[INSERT TRANSFEREE]
By:_________________________________________________________
Name:
Title:
Date:
Taxpayer Identification Number:[ ]
Address for Receipt of Tax
Information (Schedule Qs):
Name: [ ]
Attn: [ ]
Address:[ ]
[ ]
City: [ ]
State: [ ]
Zip: [ ]
47
<PAGE> 52
Under penalties of perjury, I declare that I am an authorized signatory
of the above Transferee and I am duly authorized to act on behalf of the
Transferee, and to the best of my knowledge and belief, the statements in
paragraphs 1, 2, 3 and 4 (excluding the last sentence thereof) of this
Transferee's Letter are true.
__________________________________________________By:
Name:
Title:
Date: [_________ __, ____]
48
<PAGE> 53
SCHEDULE I
(to Transferee's Letter dated _________ __, ____)
<TABLE>
<CAPTION>
Series Class Name and Capacity*
- ------ ----- -----------------
<S> <C> <C>
2114 R [C]
2137 R [C]
2149 R [C]
</TABLE>
- -----------------------
* Indicate whether the "name" in which the security is held is an
individual ("I"), corporation ("C"), fiduciary ("F"), partnership ("P"), exempt
organization("EO") or nominee/custodian ("N").
<PAGE> 54
EXHIBIT C-2
FORM OF TRANSFEREE AFFIDAVIT (TO FANNIE MAE)
Affidavit pursuant to (i)
Section 860E(e)(4) of the
Internal Revenue Code of
1986, as amended, and (ii)
certain provisions of the
Trust Agreement (or, if
applicable, the Issue
Supplement) relating to
Fannie Mae REMIC Trust
1999-[___](1)
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says
under penalties of perjury:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor") a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ___________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization"
as defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as
amended, and will not be a disqualified organization as of [date of transfer],
(ii) it is not acquiring the Class [__]-R REMIC Certificate for the account of a
disqualified organization, (iii) it consents to any amendment of the Trust
Agreement (or, if applicable, the Issue Supplement) that shall be deemed
necessary by Fannie Mae (upon advice of counsel) to constitute a reasonable
arrangement to ensure that the Class [__]-R REMIC Certificate will not be owned
directly or indirectly by a disqualified organization, (iv) no purpose of the
acquisition of the Class [__]-R REMIC Certificate is to avoid or impede the
assessment or collection of tax; (v) it understands that it may incur tax
liabilities in excess of any cash flows generated by the Class [__]-R REMIC
Certificate; (vi) it intends to pay taxes associated with holding the Class
[__]-R REMIC Certificate as they become due; and (vii) it will not transfer such
Class [__]-R REMIC Certificate unless (a) it has received from the transferee an
affidavit in substantially the same form as this affidavit containing these same
seven representations and (b) as of the time of the transfer, it does not have
actual knowledge that such affidavit is false.
(1) A separate transferee affidavit will be executed for each residual security.
<PAGE> 55
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of __________, [year].
[NAME OF INVESTOR]
By:
-----------------------
[Name of Officer]
[Title of Officer]
[Address of Investor for
receipt of distributions]
[Taxpayer I.D. number]
Address of Investor for receipt of
tax information:
----------------------------------
----------------------------------
[Corporate Seal]
Attest:
-----------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name
of Officer], known or proved to me to be the same person who executed the
foregoing instrument and to be the [Title of Officer] of the Investor, and
acknowledged to me that he executed the same as his free act and deed and the
free act and deed of the Investor.
Subscribed and sworn before me this ____ day of __________, [year].
-----------------------
Notary Public
COUNTY OF ________________________
STATE OF _________________________
My commission expires on the _____________________.
2
<PAGE> 1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
DEPOSIT AND SALE AGREEMENT
between
FUND AMERICA INVESTORS CORPORATION II, DEPOSITOR
and
FAIC II ISSUER TRUST 2000-1, ISSUER
dated as of January 20, 2000
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I DEFINITIONS............................................................................................2
Section 1.01. Definitions...............................................................................2
ARTICLE II SALE; CONSIDERATION...................................................................................4
Section 2.01. Sale......................................................................................4
Section 2.02. Consideration.............................................................................5
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS............................................................5
Section 3.01. Representations, Warranties and Covenants of the Depositor................................5
Section 3.02. Assignment of Representations and Warranties and Covenants of the
Depositor Regarding the Agency Securities............................................7
Section 3.03. Representations, Warranties and Covenants of the Issuer...................................8
ARTICLE
IV................................................................................................................9
Section 4.01. Optional Certificate Redemption...........................................................9
Section 4.02. Optional Note Redemption..................................................................9
ARTICLE V MISCELLANEOUS PROVISIONS..............................................................................10
Section 5.01. Amendment................................................................................10
Section 5.02. Governing Law; Submission to Jurisdiction................................................10
Section 5.03. Waiver of Jury Trial.....................................................................10
Section 5.04. Notices..................................................................................10
Section 5.05. Severability of Provisions...............................................................11
Section 5.06. Assignment...............................................................................11
Section 5.07. Further Assurances.......................................................................11
Section 5.08. No Waiver; Cumulative Remedies...........................................................11
Section 5.09. Counterparts.............................................................................12
Section 5.10. Binding Effect...........................................................................12
Section 5.11. Merger and Integration...................................................................12
Section 5.12. Headings.................................................................................12
SCHEDULE I: AGENCY SECURITIES
</TABLE>
i
<PAGE> 3
DEPOSIT AND SALE AGREEMENT (this "Agreement") dated as of
January 20, 2000, by and between FUND AMERICA INVESTORS CORPORATION II, a
Delaware corporation (the "Depositor"), and FAIC II ISSUER TRUST 2000-1, a
Delaware statutory business trust (the "Issuer").
W I T N E S S E T H
WHEREAS, pursuant to a Purchase Agreement dated as of January
20, 2000 (the "Purchase Agreement") between Merrill Lynch, Pierce, Fenner &
Smith Incorporated, a Delaware corporation (the "Seller") and the Depositor, the
Seller sold, assigned and transferred certain securities guaranteed by either
Fannie Mae or the Federal Home Loan Mortgage Corporation ("Freddie Mac") which
securities are identified on Schedule I attached hereto (the "Agency
Securities"), to the Depositor subject to the terms specified in the Purchase
Agreement;
WHEREAS, the Issuer was formed as a Delaware statutory
business trust on January 19, 2000 pursuant to an Agreement of Trust, dated as
of January 19, 2000, as amended and restated by an Amended and Restated
Agreement of Trust dated as of January 20, 2000 (the "Issuer Trust Agreement")
among the Depositor, Christiana Bank & Trust Company, not in its individual
capacity, but solely as trustee of the Issuer (in such capacity, the "Issuer
Trustee"), and State Street Bank and Trust Company, as the authenticating agent,
registrar and paying agent thereunder with respect to the Class R Certificates
issued thereunder (in such capacity, the "Issuer Certificate Agent");
WHEREAS, the Depositor desires to contribute and assign to the
Issuer (i) all of its right, title and interest to and under the Agency
Securities and (ii) all of its rights under the Purchase Agreement (together,
the "Contributed Assets") for the cash and other consideration, and upon the
terms and conditions, set forth herein (the "Sale");
WHEREAS, pursuant to the terms of the Indenture dated as of
January 20, 2000 (the "Indenture"), between the Issuer and State Street Bank and
Trust Company, as the trustee thereunder (in such capacity, the "Note Trustee"),
the Issuer will issue U.S. $1,986,400 aggregate principal balance of variable
rate FAIC II Issuer Trust 2000-1, Class F Notes, due December 1, 2029 (the
"Class F Notes"), and U.S. $764,000 aggregate principal balance of variable
rate, FAIC II Issuer Trust 2000-1, Class S Notes, due December 1, 2029 (the
"Class S Notes" and, together with the Class F Notes, the "Notes"), secured by a
pledge of certain assets of the Issuer, including the Contributed Assets;
WHEREAS, pursuant to the terms of the Issuer Trust Agreement,
the Issuer will issue U.S. $465,600 aggregate principal amount of FAIC II Issuer
Trust 2000-1, Class R Certificates, due December 1, 2029 (the "Class R
Certificates"), representing 100% of the equity interest of the Issuer;
<PAGE> 4
WHEREAS, the Issuer desires to grant to the Depositor the
right to direct the Issuer to redeem the Class R Certificates and in connection
therewith certain rights regarding redemption of the Notes; and
WHEREAS, the Depositor and the Issuer are entering into this
Agreement with the intention that the transactions contemplated hereby will be
executed;
NOW, THEREFORE, it is hereby agreed by and between the
Depositor and Issuer as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.00 DEFINITIONS. For all purposes of this
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, capitalized terms shall have the following meanings and such
meanings shall be equally applicable to the singular and plural forms of such
terms. Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Indenture or, if not defined therein, in the
Issuer Trust Agreement. All other capitalized terms used herein shall have the
meanings specified herein.
"Agency Security" means each of the securities specified in
Schedule I hereto.
"Agreement" means this Deposit and Sale Agreement as it may
from time to time be amended, supplemented or otherwise modified in accordance
with the terms hereof.
"Class F Notes" has the meaning assigned to it in the fourth
WHEREAS clause hereof.
"Class R Certificates" has the meaning assigned to it in the
fifth WHEREAS clause hereof.
"Class S Notes" has the meaning assigned to it in the fourth
WHEREAS clause hereof.
"Closing Date" means January 20, 2000.
"Contributed Assets" has the meaning assigned to such term in
the third WHEREAS clause hereto.
"Cut-off Date" means January 26, 2000.
"Depositor" means Fund America Investors Corporation II, a
corporation formed under the laws of the State of Delaware.
"Indenture" means the Indenture dated as of January 20, 2000
between the Issuer and State Street, as trustee thereunder.
2
<PAGE> 5
"Initial Certificate Balance" means, with respect to the Class
R Certificates, U.S. $465,600.
"Issuer" means FAIC II Issuer Trust 2000-1, a statutory
business trust formed under the laws of the State of Delaware.
"Issuer Certificate Agent" has the meaning assigned to such
term in the second WHEREAS clause hereto.
"Issuer Trust Agreement" has the meaning assigned to such term
in the second WHEREAS clause hereto.
"Issuer Trustee" has the meaning assigned to such term in the
second WHEREAS clause hereto.
"Lien" means, as applied to property or assets, real or
personal, tangible or intangible, any claim, pledge, mortgage, lien, charge,
security interest or encumbrance of any kind thereon (including, without
limitation, any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof or the interest
of the lessor under any capitalized lease and the filing of or agreement to give
any financing statement or similar document to perfect any security interest
under the Uniform Commercial Code of any jurisdiction or any other similar
filing to perfect any security interest).
"Monthly Payment Date" means the first business day of each
month, commencing March 1, 2000.
"Notes" has the meaning assigned to it in the fourth WHEREAS
clause hereof.
"Note Trustee" means State Street Bank and Trust Company, in
its capacity as trustee under the Indenture.
"Optional Certificate Redemption Amount" has the meaning
assigned to such term in Section 4.01 of this Agreement.
"Optional Note Redemption Amount" has the meaning assigned to
such term in Section 4.02 of this Agreement.
"Outstanding Certificate Balance" means, with respect to the
Class R Certificates, on any date, an amount equal to (i) the Initial
Certificate Balance thereof minus (ii) the aggregate amount of all distributions
of principal made to the Holders thereof. The Outstanding Certificate Balance
shall be calculated as of the close of business, in the case of any Monthly
Payment Date other than the initial Monthly Payment Date, on the preceding
Monthly Payment Date after giving effect to all distributions of principal to
the applicable Certificateholders on each preceding Monthly Payment Date
(including such preceding Monthly Payment Date); provided that on the Closing
Date the Outstanding Certificate Balance thereof shall be equal to the Initial
Certificate Balance thereof.
3
<PAGE> 6
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Purchase Agreement" means the Purchase Agreement dated as of
January 20, 2000, between the Seller and the Depositor.
"REMIC" means a real estate mortgage investment conduit, as
defined in Section 860D of the Internal Revenue Code of 1986, as amended.
"Sale" has the meaning assigned to such term in the third
WHEREAS clause hereto.
"Seller" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation.
"State Street" means State Street Bank and Trust Company, a
banking corporation incorporated in the Commonwealth of Massachusetts.
"Subsidiary" means with respect to any Person, any corporation
or other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other individuals
performing similar functions, are at the time directly or indirectly owned by
such Person.
"Transaction Documents" means the Indenture, the Notes, the
Issuer Trust Agreement, the Class R Certificates, this Deposit Agreement and the
Purchase Agreement.
"Underlying Issuing Documents" means the documents identified
in Schedule I hereto, which relate to the issuance of the Agency Securities.
ARTICLE II
SALE; CONSIDERATION
SECTION 2.01.00 SALE.
(a) Upon the terms and subject to the conditions set
forth herein, the Depositor hereby assigns, transfers and conveys to the Issuer
all of its right, title, interest in, to and under the Contributed Assets, and
all payments made thereon on and after the Cut-off Date, and the Issuer hereby
accepts and assumes from the Depositor, all of the Depositor's right, title and
interest in, to and under the Contributed Assets, free and clear of all Liens.
(b) It is the express intent of the Depositor and the
Issuer that the Sale be construed as an absolute conveyance, without recourse,
of the Contributed Assets by the Depositor to the Issuer. It is, further, not
the intention of the Depositor or the Issuer that the Sale be deemed a grant of
a security interest in the Contributed Assets by the Depositor to the Issuer to
secure a debt or other obligation of the Depositor. However, in the event that,
notwithstanding
4
<PAGE> 7
the intent of the parties, the Contributed Assets are held to
continue to be property of the Depositor, then the Sale provided for in this
Agreement shall be deemed to be and hereby is a grant by the Depositor to the
Issuer of a security interest in and to all of the Depositor's right, title and
interest in, to and under the Contributed Assets. The Depositor and the Issuer
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Contributed Assets, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
SECTION 2.02.00 CONSIDERATION. As consideration for the Sale,
the Issuer shall (i) remit to the Depositor all of the net proceeds of the sale
of the Notes and the Class R Certificates and (ii) grant to the Depositor the
right to direct the Issuer to redeem the Class R Certificates (and, under
certain circumstances specified in the Issuer Trust Agreement, the Notes), in
whole, in accordance with Article IV hereof and the Issuer Trust Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01.00 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE DEPOSITOR.
(a) The Depositor hereby represents, warrants and
covenants, as of the Closing Date, that:
(i) Binding Obligation. This Agreement has been duly
authorized, and when executed and delivered by the Depositor, assuming
the due authorization and delivery by each party hereto, shall
constitute the legal, valid, enforceable and binding obligation of the
Depositor, enforceable against it in accordance with its respective
terms, except as subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect, affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity).
(ii) Existence and Power. The Depositor is a
corporation duly formed, validly existing and in good standing under
the laws of the State of Delaware and has all powers and all
governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and as contemplated by this
Agreement.
(iii) No Consents. All consents, approvals,
authorizations or other orders of all regulatory authorities required
for or in connection with the execution, delivery and performance of
this Agreement have been obtained to the extent necessary and are in
full force and effect and not contingent upon the fulfillment of any
condition.
(iv) Governmental Authorization; No Contravention.
The execution, delivery and performance by the Depositor of this
Agreement are within the Depositor's
5
<PAGE> 8
powers, have been duly authorized by all necessary action, require no
action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default
under, any provision of applicable law or regulation of the State of
Delaware or the State of New York or of the Articles of Incorporation
or Bylaws of the Depositor or of any agreement or other instrument
binding upon the Depositor or result in the creation or imposition of
any Lien on any asset of the Depositor.
(v) Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Depositor
threatened against or affecting, the Depositor before any court or
arbitrator or any governmental body, agency or official.
(vi) Not an Investment Company. The Depositor is not,
and is not directly or indirectly controlled by or acting on behalf of
any Person which is, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(vii) Taxes Upon Execution of this Agreement. Neither
the execution and delivery of this Agreement, nor the enforcement
hereof, is subject to any tax, duty, fee or other charge, including,
without limitation, any registration or transfer tax, stamp duty,
mortgage recordation tax or similar levy, other than those that have
been paid on or prior to the Closing Date.
(viii) No Conflict. The consummation of any of the
transactions contemplated herein will not conflict with or result in
the breach of any material term or provision of any agreement to which
the Depositor is a party or any of the Underlying Issuing Documents,
and the Depositor is not in breach or violation of or in default (nor,
to the best of the Depositor's knowledge, has an event occurred which
with notice or lapse of time or both would constitute a default) under
the terms of (a) any agreement to which the Depositor is a party, (b)
any of the Underlying Issuing Documents or (c) any law, decree, order,
rule or regulation applicable to the Depositor of any court or
supervisory, regulatory, administrative or governmental agency, body or
authority, or arbitrator having jurisdiction over its properties, the
default in or the breach or violation of which would have a material
adverse effect on the Depositor or the ability of the Depositor to
perform its obligations under this Agreement.
(ix) Valid Business Reason. The Depositor has a valid
business reason for contributing or otherwise effecting an absolute
transfer of the Contributed Assets. The transfer of the Contributed
Assets constitutes a practical and reasonable course of action designed
to improve the Depositor's financial condition without impairing the
rights of the Depositor's creditors.
(x) Conduct of Business. The Depositor will conduct
its business in an independent manner so that its assets should not be
substantively consolidated with the assets, or deemed to be part of the
bankruptcy or receivership estate, of any other entity by a court
adjudicating the bankruptcy, receivership or insolvency of such other
entity.
6
<PAGE> 9
(xi) Absolute Transfer. Pursuant to the Sale, the
Depositor intends to relinquish all rights to possess, control and
monitor the Contributed Assets. The Depositor will not take any action
inconsistent with the Issuer's ownership of the Contributed Assets.
Upon the inquiry of a third party (including a potential purchaser of
the Contributed Assets), the Depositor will promptly state that it has
contributed or otherwise made an absolute transfer of the Contributed
Assets to the Issuer and will claim no ownership interest in the
Contributed Assets. Nothing in this Agreement shall affect the rights
of the Depositor or its assigns under Article IV hereof.
(xii) Sale Treatment. The Depositor will treat the
Sale as a sale for federal income tax and accounting purposes.
(b) Notice of Breach. The representations and warranties
set forth in this Section 3.01(a) shall survive the contribution and sale of the
Contributed Assets to the Issuer. Upon discovery by the Depositor or the Issuer
of a breach of any of such representations and warranties, the party discovering
such breach shall give prompt written notice thereof to the other.
SECTION 3.02.00 ASSIGNMENT OF REPRESENTATIONS AND WARRANTIES
AND COVENANTS OF THE DEPOSITOR REGARDING THE AGENCY SECURITIES.
(a) Representations and Warranties. The Depositor hereby
represents and warrants to the Issuer as of the date of the Sale that:
(i) Immediately before the Sale, the Depositor was
the legal and beneficial owner of all right, title and interest in, to
and under the Contributed Assets, with full right and authority to
assign or otherwise transfer the Contributed Assets free and clear of
any or all Liens encumbering the Contributed Assets;
(ii) Upon execution and delivery by the Depositor and
the Issuer of this Agreement, the Issuer shall acquire the Contributed
Assets free of any Lien;
(iii) The Agency Securities have been duly and
validly issued, are entitled to the benefits of the Underlying Issuing
Documents, and each Underlying Issuing Document has been duly and
validly authorized, executed and delivered, constitutes the valid,
legal and binding obligation of the parties thereto enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally
and by principles of equity (whether considered in a proceeding or
action in equity or at law), and no default has occurred and is
continuing in respect thereof;
(iv) The Agency Securities have been properly
assigned in the manner and form required to effect a transfer of
ownership of the Agency Securities (x) from the Seller to the Depositor
and (y) from the Depositor to the Issuer; and
(v) Each Agency Security has been issued by an entity
which has made an election to be treated as a REMIC, and such election
remains in effect.
7
<PAGE> 10
(b) Notice of Breach. The representations and warranties
set forth in this Section 3.02(a) shall survive the contribution and sale of
Contributed Assets to the Issuer. Upon discovery by the Depositor or the Issuer
of a breach of any of such representations and warranties, the party discovering
such breach shall give prompt written notice thereof to the other.
SECTION 3.03.00 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE ISSUER.
(a) The Issuer hereby represents, warrants and covenants,
as of the Closing Date:
(i) Binding Effect. This Agreement has been duly
authorized and, when executed and delivered by the Issuer, assuming the
due authorization and delivery by each party thereto, shall constitute
the legal, valid, enforceable and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms except as
subject to applicable bankruptcy, insolvency, reorganization and other
similar laws, now or hereinafter in effect, affecting the enforcement
of creditors' rights in general and except as such enforceability may
be limited by general principles in equity (whether considered in a
proceeding at law or equity).
(ii) Existence and Power. The Issuer is a statutory
business trust duly formed, validly existing and in good standing under
the laws of the State of Delaware and has all powers and all
governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and as contemplated by this
Agreement.
(iii) Special Purpose Status. The Issuer has not
engaged in any activities since its formation (other than those
incidental to its formation and other appropriate steps including the
authorization and the issuance of the Notes and the Class R
Certificates and the execution of the Underwriting Agreement, the
Certificate Placement Agreement and this Agreement), and the Issuer has
not made any distributions since its formation.
(iv) No Consents. All consents, approvals,
authorizations or other orders of all regulatory authorities required
for or in connection with the execution, delivery and performance of
this Agreement by the Issuer and the issuance and performance of the
Notes and the Class R Certificates and the offering of the Notes and
the Class R Certificates by the Issuer and the creation of the security
therefor have been obtained and are in full force and effect and not
contingent upon fulfillment of any condition.
(v) Governmental Authorization; No Contravention. The
execution, delivery and performance by the Issuer of this Agreement are
within the Issuer's powers, have been duly authorized by all necessary
action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or
regulation of the State of Delaware or
8
<PAGE> 11
of the Certificate of Trust of the Issuer or of any agreement or other
instrument binding upon the Issuer or result in the creation or
imposition of any Lien on any asset of the Issuer.
(vi) Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Issuer
threatened against or affecting, the Issuer before any court or
arbitrator or any governmental body, agency or official.
(vii) Not an Investment Company. The Issuer is not,
and is not directly or indirectly controlled by or acting on behalf of
any Person which is, an "investment company" within the meaning of the
Investment Company Act.
(viii) Taxes Upon Execution of This Agreement.
Neither the execution and delivery of this Agreement, nor the
enforcement hereof, is subject to any tax, duty, fee or other charge,
including, without limitation, any registration or transfer tax, stamp
duty, mortgage recordation tax or similar levy, other than those that
have been paid on or prior to the Closing Date.
(ix) No Conflict. The consummation of any of the
transactions contemplated herein will not conflict with or result in
the breach of any material term or provision of this Agreement or any
other agreement to which the Issuer is a party, and the Issuer is not
in breach or violation of or in default (nor, to the best of the
Issuer's knowledge, has an event occurred which with notice or lapse of
time or both would constitute a default) under the terms of (a) any
agreement to which the Issuer is a party or (b) any law, decree, order,
rule or regulation applicable to the Issuer of any court or
supervisory, regulatory, administrative or governmental agency, body or
authority, or arbitrator having jurisdiction over its properties, the
default in or the breach or violation of which would have a material
adverse effect on the Issuer or the ability of the Issuer to perform
its obligations under this Agreement.
(x) Sale Treatment. The Issuer shall treat the Sale
as a sale for federal income tax and accounting purposes.
(b) Notice of Breach. The representations and warranties
set forth in Section 3.03(a) shall survive the contribution and sale of the
Contributed Assets to the Issuer. Upon discovery by the Depositor or the Issuer
of a breach of any of such representations and warranties, the party discovering
such breach shall give prompt written notice thereof to the other.
ARTICLE IV
SECTION 4.01.00 OPTIONAL CERTIFICATE REDEMPTION. The
Certificates may be redeemed as provided in Section 5.04 of the Issuer Trust
Agreement.
SECTION 4.02.00 OPTIONAL NOTE REDEMPTION. In the event that
the Seller, as the assignee of the Depositor, has caused the Issuer to redeem
the Class R Certificates or has
9
<PAGE> 12
instructed the Issuer to redeem the Class R Certificates, in either case in
accordance with Section 5.04 of the Issuer Trust Agreement, the Seller, as the
assignee of the Depositor, may direct redemption of the Notes as provided in
Section 9.01 of the Issuer Trust Agreement.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.01.00 AMENDMENT. This Agreement and the rights and
obligations of the parties hereunder may not be amended, modified or waived
orally, but only by an instrument in writing signed by the Issuer and the
Depositor. No amendment to this Agreement shall affect the rights of the Seller
without the prior written consent of the Seller.
SECTION 5.02.00 GOVERNING LAW; SUBMISSION TO JURISDICTION.
This Agreement shall be construed in accordance with and governed by the
substantive laws of the State of New York applicable to agreements made and to
be performed in the State of New York, and the obligations, rights and remedies
of the parties hereto shall be determined in accordance with such laws and
without regard to the conflict of laws principles therein. The parties hereto
hereby submit to the exclusive jurisdiction of the United States District Court
for the Southern District of New York and of the Supreme Court of the State of
New York sitting in New York County (including its Appellate Division), and of
any other appellate court in the State of New York, for the purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The parties hereto hereby irrevocably waive,
to the fullest extent permitted by applicable law, any objection that they may
now or hereafter have to the laying of the venue of any such proceeding brought
in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
SECTION 5.03.00 WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 5.04.00 NOTICES. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered at or mailed by registered mail, return
receipt requested, to:
10
<PAGE> 13
(a) in the case of the Depositor,
Fund America Investors Corporation II
c/o The Chotin Group
6400 South Fiddlers
Green Circle, Suite 1200
Englewood, Colorado 80111
Attention: Mr. Howard Glicksman
Telephone: 303-741-0100
Telecopy: 303-741-6944
(b) in the case of the Issuer,
FAIC II Issuer Trust 2000-1
c/o Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, Delaware 19807
Attention: Corporate Trust Administration
Telephone: 302-421-5800
Telecopy: 302-421-5815
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
SECTION 5.05.00 SEVERABILITY OF PROVISIONS. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement.
SECTION 5.06.00 ASSIGNMENT. This Agreement may not be assigned
by the parties hereto except with the written consent of the non-assigning
party; provided, that the Depositor, by its execution of this Agreement,
consents to the assignment by the Issuer of its rights under this Agreement to
the Note Trustee, on behalf of the holders of the Notes, pursuant to the terms
of the Indenture, and provided, further, that the Issuer, by its execution of
this Agreement, consents to the assignment by the Depositor of all the
Depositor's rights under Article IV of this Agreement to the Seller pursuant to
the Purchase Agreement.
SECTION 5.07.00 FURTHER ASSURANCES. The Depositor and the
Issuer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
other party more fully to effect the purposes of this Agreement.
SECTION 5.08.00 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Depositor or the Issuer,
any right, remedy, power or
11
<PAGE> 14
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
SECTION 5.09.00 COUNTERPARTS. This Agreement may be executed
in two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
SECTION 5.10.00 BINDING EFFECT. This Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
SECTION 5.11.00 MERGER AND INTEGRATION. Except as specifically
stated otherwise herein, this Agreement and the other Transaction Documents set
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement and the other Transaction Documents. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 5.12.00 HEADINGS. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
12
<PAGE> 15
IN WITNESS WHEREOF, the Issuer and the Depositor each have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
FUND AMERICA INVESTORS
CORPORATION II,
a Delaware corporation
By: /s/Helen M. Dickens
-----------------------
Name: Helen M. Dickens
Title: Vice President
FAIC II ISSUER TRUST 2000-1
a Delaware statutory business trust
By: Christiana Bank & Trust Company,
solely in its capacity as trustee of the
Issuer
By: /s/Louis W. Geibel, Jr.
---------------------------
Name: Louis W. Geibel, Jr.
Title: Vice President
[Signature Page to Deposit Agreement]
13
<PAGE> 16
SCHEDULE I
AGENCY SECURITIES
[To Come]
<PAGE> 1
EXHIBIT 10.3
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT
between
MERRILL LYNCH PIERCE FENNER & SMITH
INCORPORATED, SELLER
and
FUND AMERICA INVESTORS CORPORATION II, DEPOSITOR
dated as of January 20, 2000
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS............................................................................................2
Section 1.01. Definitions...............................................................................2
ARTICLE II SALE; CONSIDERATION...................................................................................3
Section 2.01. Sale......................................................................................3
Section 2.02. Consideration.............................................................................4
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS............................................................4
Section 3.01. Representations, Warranties and Covenants of the Seller...................................4
Section 3.02. The Seller's Representations and Warranties Regarding the Agency Securities...............6
Section 3.03. Representations, Warranties and Covenants of the Depositor................................7
ARTICLE IV MISCELLANEOUS PROVISIONS..............................................................................9
Section 4.01. Amendment.................................................................................9
Section 4.02. Governing Law; Submission to Jurisdiction.................................................9
Section 4.03. Waiver of Jury Trial......................................................................9
Section 4.04. Notices...................................................................................9
Section 4.05. Severability of Provisions...............................................................10
Section 4.06. Assignment...............................................................................10
Section 4.07. Further Assurances.......................................................................10
Section 4.08. No Waiver; Cumulative Remedies...........................................................10
Section 4.09. Counterparts.............................................................................11
Section 4.10. Binding Effect...........................................................................11
Section 4.11. Merger and Integration...................................................................11
Section 4.12. Headings.................................................................................11
SCHEDULE I: AGENCY SECURITIES
</TABLE>
i
<PAGE> 3
PURCHASE AGREEMENT (this "Agreement") dated as of January 20,
2000, by and between MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, a
Delaware corporation (the "Seller"), and FUND AMERICA INVESTORS CORPORATION II,
a Delaware corporation (the "Depositor").
W I T N E S S E T H
WHEREAS, the Seller desires to sell and assign to the
Depositor all of its right, title and interest to and under certain securities
guaranteed by either Fannie Mae or the Federal Home Loan Mortgage Corporation
("Freddie Mac"), which securities are identified on Schedule I attached hereto
(the "Agency Securities"), in exchange for cash and other consideration, and
upon the terms and conditions, set forth herein (the "Sale");
WHEREAS, pursuant to the terms of a Deposit and Sale Agreement
dated as of January 20, 2000 (the "Deposit Agreement"), between the Depositor
and the Issuer (defined below), the Depositor will assign and transfer to the
Issuer (i) all of its right, title, interest in, to and under the Agency
Securities and (ii) all of its rights under this Agreement, in exchange for cash
and other consideration, and upon the terms and conditions, set forth therein;
WHEREAS, pursuant to the terms of the Indenture dated as of
January 20, 2000 (the "Indenture") between FAIC II Issuer Trust 2000-1, (the
"Issuer") and State Street Bank and Trust Company, as the trustee thereunder,
the Issuer will issue U.S. $1,986,400 aggregate principal balance of variable
rate, FAIC II Issuer Trust 2000-1, Class F Notes, due December 1, 2029 (the
"Class F Notes"), and U.S. $764,000 aggregate principal balance of variable
rate, FAIC II Issuer Trust 2000-1, Class S Notes, due December 1, 2029 (the
"Class S Notes," and, together with the Class F Notes, the "Notes"), secured by
certain assets pledged by the Issuer, including the Agency Securities and the
Depositor's rights under this Agreement;
WHEREAS, pursuant to the terms of an amended and restated
agreement of trust dated as of January 20, 2000 (the "Issuer Trust Agreement")
among the Depositor, Christiana Bank & Trust Company, as trustee of the Issuer
(in such capacity, the "Issuer Trustee"), and State Street Bank and Trust
Company, as agent with respect to the Class R Certificates issued thereunder (in
such capacity, the "Issuer Certificate Agent"), the Issuer will issue U.S.
$465,600 aggregate principal amount of FAIC II Issuer Trust 2000-1, Class R
Certificates, due December 1, 2029 (the "Class R Certificates"), representing
100% of the equity interest of the Issuer; and
WHEREAS, the Seller and the Depositor are entering into this
Agreement with the intention that the transactions contemplated hereby will be
executed;
NOW, THEREFORE, it is hereby agreed by and between the Seller
and Depositor as follows:
Purchase Agreement
<PAGE> 4
ARTICLE I
DEFINITIONS
SECTION 1.01.00 DEFINITIONS. For all purposes of this
Agreement, except as otherwise expressly provided herein or unless the context
otherwise requires, capitalized terms shall have the following meanings and such
meanings shall be equally applicable to the singular and plural forms of such
terms. Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Indenture or, if not defined therein, in the
Issuer Trust Agreement. All other capitalized terms used herein shall have the
meanings specified herein.
"Agency Security" means each of the securities specified in
Schedule I hereto.
"Agreement" means this Purchase Agreement as it may from time
to time be amended, supplemented or otherwise modified in accordance with the
terms hereof.
"Class F Notes" has the meaning assigned in the third WHEREAS
clause hereof.
"Class R Certificates" has the meaning assigned in the fourth
WHEREAS clause hereof.
"Class S Notes" has the meaning assigned in the third WHEREAS
clause hereof.
"Closing Date" means January 20, 2000.
"Cut-off Date" means January 26, 2000.
"Deposit Agreement" has the meaning assigned in the second
WHEREAS clause hereof.
"Depositor" means Fund America Investors Corporation II, a
corporation formed under the laws of the State of Delaware.
"Indenture" means the Indenture dated as of January 20, 2000
between the Issuer and State Street, as trustee thereunder.
"Issuer" means FAIC II Issuer Trust 2000-1, a statutory
business trust formed under the laws of the State of Delaware.
"Issuer Certificate Agent" has the meaning assigned to such
term in the fourth WHEREAS clause hereto.
"Issuer Trust Agreement" has the meaning assigned to such term
in the fourth WHEREAS clause hereto.
"Issuer Trustee" has the meaning assigned to such term in the
fourth WHEREAS clause hereto.
Purchase Agreement 2
<PAGE> 5
"Lien" means, as applied to property or assets, real or
personal, tangible or intangible, any claim, pledge, mortgage, lien, charge,
security interest or encumbrance of any kind thereon (including, without
limitation, any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof or the interest
of the lessor under any capitalized lease and the filing of or agreement to give
any financing statement or similar document to perfect any security interest
under the Uniform Commercial Code of any jurisdiction or any other similar
filing to perfect any security interest).
"Notes" has the meaning assigned in the third WHEREAS clause
hereof.
"Permitted Liens" means Liens arising under the Transaction
Documents.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"REMIC" means a real estate mortgage investment conduit, as
defined in Section 860D of the Internal Revenue Code of 1986, as amended.
"Sale" has the meaning assigned to such term in the first
WHEREAS clause hereto.
"Seller" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a Delaware corporation.
"State Street" means State Street Bank and Trust Company, a
banking corporation incorporated in the Commonwealth of Massachusetts.
"Subsidiary" means with respect to any Person, any corporation
or other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other individuals
performing similar functions, are at the time directly or indirectly owned by
such Person.
"Transaction Documents" means the Indenture, the Notes, the
Issuer Trust Agreement, the Class R Certificates, the Deposit Agreement and this
Purchase Agreement.
"Underlying Issuing Documents" means the documents identified
in Schedule I hereto, which relate to the issuance of the Agency Securities.
ARTICLE II
SALE; CONSIDERATION
SECTION 2.01.00 SALE.
(a) Upon the terms and subject to the conditions set forth
herein, the Seller hereby sells, assigns, transfers and conveys to the Depositor
all of its right, title, interest in, to and
Purchase Agreement 3
<PAGE> 6
under the Agency Securities, without recourse, and all payments on the Agency
Securities made on or after the Cut-off Date, and the Depositor hereby accepts
and assumes from the Seller, all of the Seller's right, title and interest in,
to and under the Agency Securities, free and clear of all Liens, encumbrances,
security agreements, claims, equities, charges and other restrictions.
(b) It is the express intent of the Seller and the Depositor
that the Sale be construed as an absolute conveyance, without recourse, of the
Agency Securities by the Seller to the Depositor. It is, further, not the
intention of the Seller or the Depositor that the Sale be deemed a grant of a
security interest in the Agency Securities by the Seller to the Depositor to
secure a debt or other obligation of the Seller. However, in the event that,
notwithstanding the intent of the parties, the Agency Securities are held to
continue to be property of the Seller, then the Sale provided for in this
Agreement shall be deemed to be and hereby is a grant by the Seller to the
Depositor of a security interest in and to all of the Seller's right, title and
interest in, to and under the Agency Securities. The Seller and the Depositor
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Agency Securities, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
SECTION 2.02.00 CONSIDERATION. As consideration for the Sale,
the Depositor shall (i) remit to the Seller (i) all amounts received by the
Depositor pursuant to the Deposit Agreement representing the proceeds of the
sale by the Issuer of the Notes and the Class R Certificates, and (ii) grant and
assign to the Seller the Depositor's right to direct the Issuer to redeem the
Class R Certificates (and, as provided in the Transaction Documents, the Notes).
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01.00 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE SELLER.
(a) The Seller hereby represents, warrants and covenants, as
of the Closing Date, that:
(i) Binding Obligation. This Agreement has been duly
authorized, and when executed and delivered by the Seller, assuming the
due authorization and delivery by each party thereto, shall constitute
the legal, valid and binding obligation of the Seller, enforceable
against it in accordance with its terms, except as subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect, affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity).
(ii) Corporate Existence and Power. The Seller is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and has all corporate powers
and all governmental licenses, authorizations,
Purchase Agreement 4
<PAGE> 7
consents and approvals required to carry on its business as now
conducted and as contemplated by this Agreement.
(iii) No Consents. All consents, approvals,
authorizations or other orders of all regulatory authorities required
for or in connection with the execution, delivery and performance of
this Agreement have been obtained to the extent necessary and are in
full force and effect and not contingent upon the fulfillment of any
condition.
(iv) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Seller of
this Agreement are within the Seller's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any
provision of applicable law or regulation of the State of Delaware or
the State of New York or of the Certificate of Incorporation or the
Bylaws of the Seller or of any agreement or other instrument binding
upon the Seller or result in the creation or imposition of any Lien on
any asset of the Seller.
(v) Litigation. There is no action, suit or
proceeding pending against, or, to the knowledge of the Seller,
threatened against or affecting, the Seller before any court or
arbitrator or any governmental body, agency or official that would
reasonably be expected to affect adversely the Sale or the execution,
enforceability, delivery and performance of this Agreement.
(vi) Taxes Upon Execution of this Agreement. Neither
the execution and delivery of this Agreement, nor the enforcement
hereof, is subject to any tax, duty, fee or other charge, including,
without limitation, any registration or transfer tax, stamp duty,
mortgage recordation tax or similar levy, other than those that have
been paid on or prior to the Closing Date.
(vii) No Conflict. The consummation of any of the
transactions contemplated herein will not conflict with or result in
the breach of any material term or provision of any agreement to which
the Seller is a party or any of the Underlying Issuing Documents, and
the Seller is not in breach or violation of or in default (nor, to the
best of the Seller's knowledge, has an event occurred which with notice
or lapse of time or both would constitute a default) under the terms of
(a) any agreement to which the Seller is a party, (b) any of the
Underlying Issuing Documents or (c) any law, decree, order, rule or
regulation applicable to the Seller of any court or supervisory,
regulatory, administrative or governmental agency, body or authority,
or arbitrator having jurisdiction over its properties, the default in
or the breach or violation of which would have a material adverse
effect on the Seller or the ability of the Seller to perform its
obligations under this Agreement.
(viii) Valid Business Reason. The Seller has a valid
business reason for selling the Agency Securities to the Depositor. The
sale of the Agency Securities
Purchase Agreement 5
<PAGE> 8
constitutes a practical and reasonable course of action designed to
improve the Seller's financial condition without impairing the rights
of the Seller's creditors.
(ix) Conduct of Business. The Seller will conduct its
business in an independent manner so that its assets should not be
substantively consolidated with the assets, or deemed to be part of the
bankruptcy or receivership estate, of the Depositor, the Issuer or any
affiliate thereof by a court adjudicating the bankruptcy, receivership
or insolvency of such other entity.
(x) Absolute Transfer. Pursuant to the Sale, the
Seller intends to relinquish all rights to possess, control and monitor
the Agency Securities. The Seller will not take any action inconsistent
with the Depositor's ownership or transfer of the Agency Securities.
Upon the inquiry of a third party (including a potential purchaser of
the Agency Securities), the Seller will promptly state that it has sold
or otherwise made an absolute transfer of the Agency Securities to the
Depositor and will claim no ownership interest in the Agency
Securities. Nothing in this Agreement shall affect the right of the
Seller to cause the Issuer to redeem the Class R Certificates in
accordance with the Transaction Documents.
(xi) Sale Treatment. The Seller will treat the Sale
as a sale for federal income tax and accounting purposes.
(xii) Agency Securities. The Seller shall deliver any
payments it may collect on the Agency Securities after the Cut-off Date
to the Note Trustee, as the Depositor's ultimate assignee. The Seller
shall assist the Note Trustee in its efforts to become the registered
holder of each Agency Security.
(b) Notice of Breach. The representations and warranties set
forth in this Section 3.01(a) shall survive the sale of the Agency Securities to
the Depositor. Upon discovery by the Seller or the Depositor of a breach of any
of such representations and warranties, the party discovering such breach shall
give prompt written notice thereof to the other.
SECTION 3.02.00 THE SELLER'S REPRESENTATIONS AND WARRANTIES
REGARDING THE AGENCY SECURITIES.
(a) Representations and Warranties. The Seller hereby
represents and warrants to the Depositor as of the date of the Sale that:
(i) Immediately before the Sale, the Seller was the
legal and beneficial owner of all right, title and interest in, to and
under the Agency Securities, with full right and authority to assign or
otherwise transfer the Agency Securities free and clear of any or all
Liens encumbering the Agency Securities;
(ii) Upon execution and delivery by the Seller and
the Depositor of this Agreement, the Depositor shall acquire the Agency
Securities free of any Liens;
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(iii) The Agency Securities have been duly and
validly issued and are entitled to the benefits of the Underlying
Issuing Documents, and each Underlying Issuing Document has been duly
and validly authorized, executed and delivered, constitutes the valid,
legal and binding obligation of the parties thereto enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally
and by principles of equity (whether considered in a proceeding or
action in equity or at law), and no default has occurred and is
continuing in respect thereof;
(iv) The Agency Securities have been properly
assigned in the manner and form required to effect a transfer of
ownership of the Agency Securities from the Seller to the Depositor or
an assignee of the Depositor; and
(v) Each Agency Security has been issued by an entity
which has made an election to be treated as a REMIC, and such election
remains in effect.
(b) Notice of Breach. The representations and warranties set
forth in this Section 3.02(a) shall survive the sale of Agency Securities to the
Depositor. Upon discovery by the Seller or the Depositor of a breach of any of
such representations and warranties, the party discovering such breach shall
give prompt written notice thereof to the other.
SECTION 3.03.00 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE DEPOSITOR.
(a) The Depositor hereby represents, warrants and covenants,
as of the Closing Date:
(i) Binding Effect. This Agreement has been duly
authorized and, when executed and delivered by the Depositor, assuming
the due authorization and delivery by each party thereto, shall
constitute the legal, valid, enforceable and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its
terms except as subject to applicable bankruptcy, insolvency,
reorganization and other similar laws, now or hereinafter in effect,
affecting the enforcement of creditors' rights in general and except as
such enforceability may be limited by general principles in equity
(whether considered in a proceeding at law or equity).
(ii) Existence and Power. The Depositor is a
corporation duly formed, validly existing and in good standing under
the laws of the State of Delaware and has all powers and all
governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and as contemplated by this
Agreement.
(iii) No Consents. All consents, approvals,
authorizations or other orders of all regulatory authorities required
for or in connection with the execution, delivery and performance of
this Agreement by the Depositor have been obtained and are in full
force and effect and not contingent upon fulfillment of any condition.
Purchase Agreement 7
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(iv) Governmental Authorization; No Contravention.
The execution, delivery and performance by the Depositor of this
Agreement are within the Depositor's powers, have been duly authorized
by all necessary action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable
law or regulation of the State of Delaware or of the Articles of
Incorporation or By-laws of the Depositor or of any agreement or other
instrument binding upon the Depositor or result in the creation or
imposition of any Lien on any asset of the Depositor.
(v) Litigation. There is no action, suit or
proceeding pending against, or, to the knowledge of the Depositor
threatened against or affecting, the Depositor before any court or
arbitrator or any governmental body, agency or official.
(vi) Claims. There is no tax, labor or other claim
pending against or, to the knowledge of the Depositor, threatened
against or affecting the Depositor.
(vii) Payment of Taxes. The Depositor has paid all
taxes which it is required to have paid.
(viii) Not an Investment Company. The Depositor is
not, and is not directly or indirectly controlled by or acting on
behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(ix) Taxes Upon Execution of This Agreement. Neither
the execution and delivery of this Agreement, nor the enforcement
hereof is subject to any tax, duty, fee or other charge, including,
without limitation, any registration or transfer tax, stamp duty,
mortgage recordation tax or similar levy, other than those that have
been paid on or prior to the Closing Date.
(x) Liens. There are no Liens of any kind (other than
Permitted Liens) affecting title to its assets or its rights under any
agreement.
(xi) No Conflict. The consummation of the
transactions contemplated herein will not conflict with or result in
the breach of any material term or provision of any agreement to which
the Depositor is a party, and the Depositor is not in breach or
violation of or in default (nor, to the best of the Depositor's
knowledge, has an event occurred which with notice or lapse of time or
both would constitute a default) under the terms of (a) this Agreement
or any other agreement to which the Depositor is a party or (b) any
law, decree, order, rule or regulation applicable to the Depositor of
any court or supervisory, regulatory, administrative or governmental
agency, body or authority, or arbitrator having jurisdiction over its
properties, the default in or the breach or violation of which would
have a material adverse effect on the Depositor or the ability of the
Depositor to perform its obligations under this Agreement.
Purchase Agreement 8
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(xii) Sale Treatment. The Depositor shall treat the
Sale as a sale for federal income tax and accounting purposes.
(b) Notice of Breach. The representations and warranties set
forth in Section 3.03(a) shall survive the sale of the Agency Securities to the
Depositor. Upon discovery by the Seller or the Depositor of a breach of any of
such representations and warranties, the party discovering such breach shall
give prompt written notice thereof to the other.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01.00 AMENDMENT. This Agreement and the rights and
obligations of the parties hereunder may not be amended, modified or waived
orally, but only by an instrument in writing signed by the Depositor and the
Seller.
SECTION 4.02.00 GOVERNING LAW; SUBMISSION TO JURISDICTION.
This Agreement shall be construed in accordance with and governed by the
substantive laws of the State of New York applicable to agreements made and to
be performed in the State of New York, and the obligations, rights and remedies
of the parties hereto shall be determined in accordance with such laws and
without regard to the conflict of laws principles therein. The parties hereto
hereby submit to the exclusive jurisdiction of the United States District Court
for the Southern District of New York and of the Supreme Court of the State of
New York sitting in New York County (including its Appellate Division), and of
any other appellate court in the State of New York, for the purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The parties hereto hereby irrevocably waive,
to the fullest extent permitted by applicable law, any objection that they may
now or hereafter have to the laying of the venue of any such proceeding brought
in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
SECTION 4.03.00 WAIVER OF JURY TRIAL. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 4.04.00 NOTICES. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered at or mailed by registered mail, return
receipt requested, to:
Purchase Agreement 9
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(a) in the case of the Seller,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center
250 Vesey Street, North Tower
New York, NY 10281-1310
Attention: Brodie Johnson or John Winchester
Telephone: 212-449-4979 or 212-449-5182
Telecopy: 212-449-1797 or 212-449-6710
(b) in the case of the Depositor,
Fund America Investors Corporation II
c/o The Chotin Group
6400 South Fiddlers
Green Circle, Suite 1200
Englewood, Colorado 80111
Attention: Mr. Howard Glicksman
Telephone: 303-741-0100
Telecopy: 303-741-6944
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
SECTION 4.05.00 SEVERABILITY OF PROVISIONS. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement.
SECTION 4.06.00 ASSIGNMENT. This Agreement may not be assigned
by the parties hereto except with the written consent of the non-assigning
party; provided, that the Seller, by its execution of this Agreement, consents
to the assignment by the Depositor of its rights under this Agreement to the
Issuer, and the pledge by the Issuer of such rights to the Note Trustee on
behalf of the holders of the Notes pursuant to the Indenture.
SECTION 4.07.00 FURTHER ASSURANCES. The Seller and the
Depositor agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
other party more fully to effect the purposes of this Agreement.
SECTION 4.08.00 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Seller or the Depositor,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and
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privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
SECTION 4.09.00 COUNTERPARTS. This Agreement may be executed
in two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
SECTION 4.10.00 BINDING EFFECT. This Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
SECTION 4.11.00 MERGER AND INTEGRATION. Except as specifically
stated otherwise herein, this Agreement and the other Transaction Documents set
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement and the other Transaction Documents. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 4.12.00 HEADINGS. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
[Signatures Follow]
Purchase Agreement 11
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IN WITNESS WHEREOF, the Depositor and the Seller each have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED,
a Delaware corporation
By: /s/ Brodie Johnson
-------------------
Name: Brodie Johnson
Title: Director
FUND AMERICA INVESTORS
CORPORATION II,
a Delaware corporation
By: /s/ Helen M. Dickens
---------------------
Name: Helen M. Dickens
Title: Vice President
[Signature Page to Purchase Agreement]
Purchase Agreement 12
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SCHEDULE I
AGENCY SECURITIES
[Copy from Prospectus Supplement when complete]
"Purchase Agreement"
