SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________ .
Commission File Number 33-82040
MAIN PLACE REAL ESTATE INVESTMENT TRUST
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 56-1996001
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 North Tryon Street, 23rd floor, Charlotte, NC 28255
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(704) 388-7436
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes _x_ No___
On May 13, 1997, there were 100,000 shares of the registrant's Class A Trust
shares outstanding and 110 shares of the registrant's Class B Trust shares
outstanding.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1) (a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
MAIN PLACE REAL ESTATE INVESTMENT TRUST
March 31, 1997 Form 10-Q
Index
Part I. Financial Information
Item 1. Financial Statements
Statement of Income for the Three Months Ended March 31, 1997 and 1996
Balance Sheet on March 31, 1997 and December 31, 1996
Statement of Cash Flows for the Three Months Ended March 31, 1997 and 1996
Statement of Changes in Shareholders' Equity for the Three Months
Ended March 31, 1997 and 1996
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature
Index to Exhibits
<TABLE>
Main Place Real Estate Investment Trust
Statement of Income
(Dollars in Thousands)
<CAPTION>
Three Months
Ended March 31
------------------------
1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Income
Interest and fees on loans................................... $ 268,488 $ 87,747
Interest on securities available for sale.................... 13,985 -
Interest on time deposits placed............................. 9,759 -
Gains on sales of available for sale securities.............. 50 -
------------------------
Total income.............................................. 292,282 87,747
------------------------
Expenses
Interest on securities sold under agreements to repurchase.... 9,584 -
Interest on long-term and subordinated debt................... 59,914 67,915
Other operating expenses...................................... 8,166 3,356
------------------------
Total expenses............................................. 77,664 71,271
------------------------
Income before income taxes....................................... 214,618 16,476
Income tax expense............................................... - 5,770
------------------------
Net income....................................................... $ 214,618 $ 10,706
========================
See accompanying notes to financial statements.
</TABLE>
<TABLE>
Main Place Real Estate Investment Trust
Balance Sheet
(Dollars in Thousands)
<CAPTION>
March 31 December 31
1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents........................................... $ 1,919 $ 253,578
Time deposits placed................................................ 1,808,161 -
Securities available for sale....................................... 734,579 836,938
Amount due from Trustee............................................. 158,426 101,325
Loans, net of unearned income....................................... 14,136,255 14,704,375
Allowance for credit losses......................................... (42,398) (42,396)
-----------------------------
Loans, net of unearned income and allowance for credit losses.. 14,093,857 14,661,979
Interest receivable................................................. 80,496 91,836
Accounts receivable from affiliates................................. 166,070 214,856
Other assets........................................................ 8,290 6,927
-----------------------------
$ 17,051,798 $ 16,167,439
=============================
Liabilities
Accrued expenses................................................... $ 27,625 $ 27,316
Securities sold under agreements to repurchase..................... 738,403 -
Mortgage-backed bonds.............................................. 3,999,594 2,999,544
Subordinated notes................................................. - 1,072,733
-----------------------------
4,765,622 4,099,593
-----------------------------
Shareholders' Equity
Class A Trust shares, $1 par value-authorized: 200,000 shares;
issued: 100,000 shares......................................... 100 100
Class B Trust shares, $10,000 par value-authorized: 200 shares;
issued: 110 shares............................................. 1,100 1,100
Additional paid-in capital........................................ 12,044,801 12,044,801
Retained earnings................................................. 227,933 13,315
Net unrealized gains on securities available for sale............. 12,242 8,530
-----------------------------
Total shareholders' equity...................................... 12,286,176 12,067,846
-----------------------------
$ 17,051,798 $ 16,167,439
=============================
See accompanying notes to financial statements.
</TABLE>
<TABLE>
Main Place Real Estate Investment Trust
Statement of Cash Flows
(Dollars in Thousands)
<CAPTION>
Three Months
Ended March 31
---------------------------
1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income................................................................. $ 214,618 $ 10,706
Reconciliation of net income to net cash provided by operating activities
Net decrease in accounts receivable from affiliates...................... 48,786 -
Net decrease (increase) in interest receivable .......................... 11,340 (25)
Net increase in accrued expenses......................................... 309 3,749
Other operating activities............................................... (512) 343
---------------------------
Net cash provided by operating activities.......................... 274,541 14,773
---------------------------
Investing Activities
Proceeds from sales and maturities of securities available for sale........ 105,272 -
Net increase in amount due from Trustee.................................... (57,101) (37,844)
Net increase in time deposits placed....................................... (1,808,161) -
Net reduction of mortgage loans outstanding................................ 568,120 307,890
---------------------------
Net cash (used in) provided by investing activities............... (1,191,870) 270,046
---------------------------
Financing Activities
Net increase in securities sold under agreements to repurchase............ 738,403 -
Issuances of long-term debt............................................... 1,000,000 -
Retirement of subordinated debt........................................... (1,072,733) (282,922)
---------------------------
Net cash provided by (used in) financing activities................. 665,670 (282,922)
---------------------------
Net (decrease)/increase in cash and cash equivalents.......................... (251,659) 1,897
Cash and cash equivalents at beginning of period.............................. 253,578 4,870
---------------------------
Cash and cash equivalents at end of period.................................... $ 1,919 $ 6,767
===========================
See accompanying notes to financial statements.
</TABLE>
<TABLE>
Main Place Real Estate Investment Trust
Statement of Changes in Shareholders' Equity
(Dollars in Thousands)
<CAPTION>
Class A Class B Total
Common Shares Trust Shares Trust Shares Additional Share-
-------------- -------------- -------------- Paid-In Retained holders'
Shares Amount Shares Amount Shares Amount Capital Earnings Other Equity
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance on December 31, 1995..... 100 $ - - $ - - $ - $ 299,648 $ 7,136 $ - $ 306,784
Net income.................. 10,706 10,706
Net assets contributed by
NationsBank Texas........ 502,486 502,486
---------------------------------------------------------------------------------------
Balance on March 31, 1996........ 100 $ - - $ - - $ - $ 802,134 $ 17,842 $ - $ 819,976
=======================================================================================
Balance on December 31, 1996..... - $ - 100,000 $ 100 110 $1,100 $12,044,801 $ 13,315 $ 8,530 $12,067,846
Net income.................. 214,618 214,618
Net change in unrealized
gain on securities
available for sale....... 3,712 3,712
---------------------------------------------------------------------------------------
Balance on March 31, 1997........ - $ - 100,000 $ 100 110 $1,100 $12,044,801 $227,933 $12,242 $12,286,176
=======================================================================================
See accompanying notes to financial statements.
</TABLE>
Main Place Real Estate Investment Trust
Notes to Financial Statements
Note 1 - Accounting Policies
Main Place Real Estate Investment Trust (MPREIT) is an indirect subsidiary of
NationsBank, N.A., which is a wholly owned indirect subsidiary of NationsBank
Corporation (the Corporation). MPREIT was established on October 29, 1996 as a
Maryland real estate investment trust to consolidate the acquisition, holding
and management of certain closed-end residential mortgage loans owned by certain
affiliates of the Corporation. As a result of the merger of Main Place Funding
Corporation (MPFC) with and into MPREIT on November 1, 1996, MPREIT issues and
sells mortgage-backed bonds and subordinated indebtedness and acquires, owns,
holds and pledges the related mortgage notes and other assets serving as
collateral in connection therewith. The merger between MPREIT and MPFC was
accounted for as a pooling of interests of entities under common control and,
accordingly, the accompanying financial statements include the results of
operations and financial condition of MPFC since inception.
The information contained in the consolidated financial statements is unaudited.
In the opinion of management, all normal recurring adjustments necessary for a
fair presentation of the interim period results have been made. Certain prior
period amounts have been reclassified to conform to current period
classifications. Accounting policies followed in the presentation of interim
financial results are presented on pages 11 and 12 of the Annual Report on Form
10-K for the year ended December 31, 1996, as updated by the following.
A real estate investment trust (REIT) is subject to a number of organizational
and operational requirements, including the requirement that it currently
distribute to beneficial holders at least 95 percent of its "real estate
investment trust taxable income." Prior to November 1, 1996, MPREIT did not
qualify as a REIT and its operating results were included in the consolidated
federal income tax return of the Corporation. For the periods subsequent to
November 1, 1996, including the three months ended March 31,1997, MPREIT was
taxed as a REIT and accordingly, no current or deferred tax expense was
provided.
Securities sold under agreements to repurchase are treated as collateralized
financing transactions and are recorded at the amounts at which the securities
are sold plus accrued interest.
Note 2 - Loans
The following table presents the composition of loans (dollars in thousands):
March 31 December 31
1997 1996
- -----------------------------------------------------------------------------
Residential mortgage.......................... $ 14,105,317 $ 14,671,836
Commercial real estate........................ 30,938 32,539
-----------------------------
Total loans, net of unearned income......... $ 14,136,255 $ 14,704,375
=============================
Mortgage loans collateralizing mortgage-backed bonds were comprised of the
following (dollars in thousands):
March 31 December 31
1997 1996
- -----------------------------------------------------------------------------
Fixed-rate................................... $ 1,420,857 $ 1,473,739
Adjustable-rate.............................. 5,344,658 2,955,181
-----------------------------
Total mortgage loans....................... $ 6,765,515 $ 4,428,920
=============================
Transactions in the allowance for credit losses were (dollars in thousands):
March 31 December 31
1997 1996
- -----------------------------------------------------------------------
Balance on January 1......................... $ 42,396 $ 17,805
Residential mortgage recoveries.............. 2 -
Allowance acquired with contributed loans.... - 1,344
-----------------------
Balance on March 31.......................... $ 42,398 $ 19,149
=======================
MPREIT had $42.2 million of nonperforming loans on March 31, 1997 compared to
$27.5 million on December 31, 1996. The increase is primarily due to the
seasoning of the loan portfolio. There was no other real estate owned on March
31, 1997 compared to $.5 million on December 31, 1996.
Note 3 - Affiliate Transactions
During the first quarter of 1997, MPREIT purchased $1.8 billion in time
deposits from NationsBank, N.A., NationsBank, N.A. (South) (NationsBank South)
and NationsBank of Texas, N.A. (NationsBank Texas) and obtained short-term
funding through the sale of $738.4 million of securities under agreements to
repurchase with NationsBank, N.A.
MPREIT has entered into agreements with NationsBanc Mortgage Corporation, a
subsidiary of NationsBank Texas, and with NationsBank N.A., for the servicing
and administration of its mortgage portfolio. Servicing fees paid to
NationsBanc Mortgage Corporation approximated $8.1 million and $3.3 million for
the three months ended March 31, 1997 and 1996, respectively.
MPREIT maintains its cash and cash equivalent accounts primarily with
NationsBank Texas. At March 31, 1997, MPREIT had $166.1 million of accounts
receivable from affiliates of the Corporation. These receivables are related to
mortgage payments in process and generally clear within 30 days.
Note 4 - Long-Term Debt
On July 18, 1995, MPREIT issued $1.5 billion of Mortgage-Backed Bonds, Series
1995-1, Due 1998 (Series 1995-1 Bonds), bearing interest at the one-month LIBOR
plus 21 basis points with a maximum interest rate of 12 percent. On October 31,
1995, MPREIT issued $1.5 billion of Mortgage-Backed Bonds, Series 1995-2, Due
2000 (Series 1995-2 Bonds), bearing interest at the three-month LIBOR plus 17
basis points. On March 18, 1997, MPREIT issued $1.0 billion of Mortgage-Backed
Bonds, Series 1997-1, Due 2000 (Series 1997-1 Bonds), bearing interest at the
three-month LIBOR plus 5 basis points. On March 31, 1997, all of the Series
1995-1, 1995-2 and 1997-1 Bonds were outstanding with interest rates of 5.835
percent, 5.733 percent and 5.648, respectively. On March 31, 1997, the Series
1995-1 Bonds were collateralized by mortgage loans with a book value of
approximately $2.4 billion, the Series 1995-2 Bonds were collateralized by
mortgage loans with a book value of approximately $2.4 billion and the Series
1997-1 Bonds were collateralized by mortgage loans with a book value of
approximately $2.0 billion. On April 7, 1997, the discounted value of the
eligible collateral for the Series 1995-1, 1995-2 and 1997-1 Bonds, as computed
by the Trustee, was approximately $1.8 billion, $1.9 billion and $1.6 billion,
respectively, and exceeded the amount required by the terms of the related
indentures by approximately $219 million, $274 million and $562 million,
respectively.
Interest expense on the Series 1995-1,1995-2 and 1997-1 Bonds for the three
months ended March 31, 1997 was $45.9 million and the interest expense was $44.3
million on the Series 1995-1 and 1995-2 Bonds for the three months ended March
31, 1996. Interest expense on the subordinated notes discussed below was $14.0
million during the first three months of 1997 and $23.6 million for the first
quarter of 1996.
On March 18, 1997, MPREIT repaid $629.5 million and $443.2 million of
subordinated notes from NationsBank South and NationsBank Texas, respectively.
On May 15, 1997, MPREIT had no additional capacity available for the issuance of
additional mortgage-backed bonds.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net income for the three months ended March 31, 1997 and 1996 was $214.6 million
and $10.7 million, respectively. The increase in net income reflects the impact
of several factors including the levels and average interest yields on the
mortgage loan portfolio, the issuance of Series 1997-1 Bonds, the effects of
securities market conditions, the volatility of interest rates and MPREIT's
election to be taxed as a REIT.
Interest income increased $204.5 million in the three months ended March 31,
1997 compared to the same period in 1996 due primarily to a $10 billion increase
in average loans outstanding and increases in time deposits and securities
available for sale. Interest expense increased $1.6 million during the first
three months of 1997 compared to the same period in 1996 due primarily to higher
interest expense associated with securities sold under agreements to repurchase.
This increase more than offset lower interest expense on subordinated debt,
primarily the result of lower interest rates during the first quarter of 1997.
Other operating expenses increased $4.8 million to $8.2 million in the first
three months of 1997 compared to the same period in 1996 due primarily to higher
mortgage servicing costs associated with the increase in average loans
outstanding during 1997. Due to MPREIT's election to be taxed as a REIT, there
was no income tax expense for the three months ended March 31, 1997. See Note 1
to the consolidated financial statements for additional information on MPREIT's
tax status.
The average yields on the mortgage loans for the three months ended March 31,
1997 and 1996 were 7.43 percent and 7.37 percent, respectively. Changes in the
average yield are primarily related to the mix between fixed- and adjustable-
rate loans, the repricing terms of adjustable rate loans, the impact of the
general level of interest rates, the levels of prepayments on mortgage loans and
scheduled amortization of the portfolio as a whole. The average yield on
securities available for sale was 7.03 percent for the three months ended March
31, 1997.
The average interest rates on the outstanding mortgage-backed bonds for the
three months ended March 31, 1997 and 1996 were 5.81 percent and 5.91 percent,
respectively, and average interest rates for subordinated debt were 6.21 percent
and 7.19 percent for the same periods in 1997 and 1996, respectively.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
1 (a) Underwriting Agreement dated March 12, 1997 among the
registrant, NationsBanc Capital Markets, Inc., Bear,
Stearns & Co. Inc., Lehman Brothers Inc. and UBS
Securities LLC.
4 (a) Indenture of Trust dated as of March 18, 1997 between
the registrant and First Trust National Association,
as trustee.
10 (a) Servicing Agreement dated as of March 18, 1997 between
the registrant and NationsBanc Mortgage Corporation.
12 Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
None.
SIGNATURE
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.
Main Place Real Estate Investment Trust
----------------------------------------
Date: May 15, 1997 /s/ Karin Hirtler-Garvey
----------------------------------------
Karin Hirtler-Garvey
Senior Vice President/
Principal Accounting Officer
(Principal Accounting and Duly
Authorized Officer)
Main Place Real Estate Investment Trust
Form 10-Q
Index to Exhibits
Exhibit Description
- ------- -----------
1 (a) Underwriting Agreement dated March 12, 1997 among the registrant,
NationsBanc Capital Markets, Inc., Bear, Stearns & Co. Inc.,
Lehman Brothers Inc. and UBS Securities LLC.
4 (a) Indenture of Trust dated as of March 18, 1997 between the
registrant and First Trust National Association, as trustee.
10 (a) Servicing Agreement dated as of March 18, 1997 between the
registrant and NationsBanc Mortgage Corporation.
12 Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
Exhibit 1(a)
MAIN PLACE REAL ESTATE INVESTMENT TRUST
UNDERWRITING AGREEMENT
New York, New York
March 12, 1997
To the Representatives
named in Schedule I
hereto of the Underwriters
named in Schedule II hereto
Dear Sirs:
Main Place Real Estate Investment Trust, a Maryland business trust (the
"Company"), proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its securities identified in
Schedule I hereto (the "Securities"), to be issued under an indenture (the
"Indenture") dated as of March 18, 1997 between the Company and First Trust
National Association, as trustee (the "Trustee"). If the firm or firms listed
in Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives", as used herein,
each shall be deemed to refer to such firm or firms.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement on such Form (the file number of which is set forth in Schedule I
hereto), which has become effective, for the registration under the Act of
the Securities. Such registration statement, as amended to the date of
this Agreement, meets the requirements set forth in Rule 415(a)(1) under
the Act and complies in all other material respects with said Rule. The
Company proposes to file with the Commission pursuant to Rule 424 under the
Act a supplement to the form of prospectus included in such registration
statement relating to the Securities and the plan of distribution thereof
and has previously advised the Representatives of all further information
(financial and other) with respect to the Company to be set forth therein.
Such registration statement, including the exhibits thereto, as amended to
the date of this Agreement, is hereinafter called the "Registration
Statement"; such prospectus in the form in which it appears in the
Registration Statement is hereinafter called the "Basic Prospectus"; and
such supplemented form of prospectus, in the form in which it shall be
filed with the Commission pursuant to Rule 424 (including the Basic
Prospectus as so supplemented) is hereinafter called the "Final
Prospectus." Any preliminary form of the Final Prospectus which has
heretofore been filed pursuant to Rule 424 hereinafter is called the
"Preliminary Final Prospectus." Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the date of this Agreement, or the issue date
of the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be; and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the date of this Agreement, or the
issue date of the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, as the case may be, and deemed to be incorporated therein
by reference.
(b) As of the date hereof, when the Final Prospectus is first filed
pursuant to Rule 424 under the Act, when, prior to the Closing Date (as
hereinafter defined), any amendment to the Registration Statement becomes
effective (including the filing of any document incorporated by reference
in the Registration Statement), when any supplement to the Final Prospectus
is filed with the Commission and at the Closing Date (as hereinafter
defined), (i) the Registration Statement, as amended as of any such time,
and the Final Prospectus, as amended or supplemented as of any such time,
and the Indenture will comply in all material respects with the applicable
requirements of the Act, the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act") and the Exchange Act and the respective rules
thereunder, (ii) the Registration Statement, as amended as of any such
time, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading, and (iii) the Final
Prospectus, as amended or supplemented as of any such time, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to (A) that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification of the Trustee (Form T-1) under the Trust Indenture Act of
the Trustee, (B) the information contained in or omitted from the
Registration Statement or the Final Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter
through the Representatives specifically for use in connection with the
preparation of the Registration Statement and the Final Prospectus or (C)
the Current Report (as defined in Section 5(b) below), or in any amendment
thereof or supplement thereto, incorporated by reference in the
Registration Statement or the Final Prospectus (or any amendment thereof or
supplement thereto).
(c) The Company has been duly organized and is validly existing as a
business trust under the laws of the State of Maryland and has trust and
other power and authority to own its properties and conduct its business,
as now conducted by it, and to enter into and perform its obligations under
this Agreement and the Indenture.
(d) The Company is not aware of (i) any request by the Commission for
any further amendment of the Registration Statement or the Basic Prospectus
or for any additional information or (ii) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement.
(e) This Agreement has been duly authorized, executed and delivered
by the Company, and the Indenture, when delivered by the Company, will have
been duly authorized, executed and delivered by the Company, and will
constitute a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium, receivership and similar laws affecting
creditors' rights generally and to general principles of equity (regardless
of whether the enforcement of such remedies is considered in a proceeding
in equity or at law).
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto, the principal amount of the Securities set forth opposite
such Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the Securities
shall be made at the office, on the date and at the time specified in Schedule I
hereto, which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof in the manner set forth in Schedule I hereto. If Schedule I
indicates that the Securities are to be issued in book-entry form, delivery of
the Securities shall be made through the facilities of the depository or
depositories set forth on Schedule I. Alternatively, certificates for the
Securities shall be registered in such names and in such denominations as the
Representatives may request not less than three full business days in advance of
the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Representatives in New York, New York, not later
than 1:00 p.m., New York City time, on the business day prior to the Closing
Date.
4. Representations and Warranties of the Underwriters. Each Underwriter
represents and agrees that (i) it has not offered or sold and will not offer or
sell any Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 or the Financial Services Act 1986 (the
"Services Act") and (ii) it has only issued or passed on, and will only issue or
pass on, in the United Kingdom any document received by it in connection with
the issue of the Securities, other than any document which consists of or any
part of listing particulars, supplementary listing particulars or any other
document required or permitted to be published by listing rules under Part IV of
the Services Act, to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995
or is a person to whom the document may otherwise lawfully be issued or passed
on. Each Underwriters further represents and agrees that each purchaser will be
required to agree that it will not offer or sell any Securities, directly or
indirectly, in Japan or to, or for the benefit of, any resident of Japan (which
term as used herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan) except pursuant
to an exemption from the registration requirements of, and otherwise in
compliance with, the Securities and Exchange Law of Japan and any relevant laws
or regulations of Japan.
5. Agreements. The Company agrees with the several Underwriters that:
(a) Prior to the termination of the offering of the Securities, the
Company will not file any amendment of the Registration Statement or
supplement (including the Final Prospectus) to the Basic Prospectus unless
the Company has furnished the Representatives a copy for their review prior
to filing and will not file any such proposed amendment or supplement to
which the Representatives reasonably object. Subject to the foregoing
sentence, the Company will cause the Final Prospectus to be mailed to the
Commission for filing pursuant to Rule 424 by first class certified or
registered mail and will cause the Final Prospectus to be filed with the
Commission pursuant to said Rule. The Company will advise the
Representatives promptly (i) when the Final Prospectus shall have been
mailed to the Commission for filing pursuant to Rule 424, (ii) when any
amendment to the Registration Statement relating to the Securities shall
have become effective, (iii) of any request by the Commission for any
amendment of the Registration Statement or amendment of or supplement to
the Final Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as
soon as possible the withdrawal thereof.
(b) The Company will cause any Computational Materials (as defined in
Section 10 below) with respect to the Securities which are delivered by the
Underwriters to the Company pursuant to Section 10 to be filed with the
Commission on a Current Report on Form 8-K (the "Current Report") pursuant
to Rule 13a-11 under the Exchange Act not later than the business day
immediately following the earlier of (i) the day on which such
Computational Materials are delivered to counsel for the Company by the
Underwriters prior to 10:30 a.m., New York City time, and (ii) the date
hereof, and will promptly advise the Underwriters when such Current Report
has been so filed. Such Current Report shall be incorporated by reference
in the Final Prospectus and the Registration Statement. Notwithstanding
the two preceding sentences, the Company shall have no obligation to file
materials provided by the Underwriters pursuant to Section 10 which, in the
reasonable determination of the Company after making reasonable efforts to
consult with the Underwriters, are not required to be filed pursuant to the
Kidder Letters (as defined in Section 10 below), or which contain erroneous
information or contain any untrue statement of a material fact or, which,
when read in conjunction with the Final Prospectus, omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; it being understood, however, that the
Company shall have no obligation to review or pass upon the accuracy or
adequacy of, or to correct, any Computational Materials provided by the
Underwriters to the Company pursuant to Section 10 hereof.
(c) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then amended or supplemented would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it shall be necessary to
amend or supplement the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, the Company promptly will
prepare and file with the Commission, subject to the first sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance and will use its best efforts to cause any required post-
effective amendment to the Registration Statement containing such amendment
to be made effective as soon as possible; provided, however, that the
Company will not be required to file any such amendment or supplement with
respect to any Computational Materials incorporated by reference in the
Final Prospectus other than any amendments or supplements of such
Computational Materials that are furnished to the Company pursuant to
Section 10(d) hereof which the Company determines to file in accordance
therewith.
(d) The Company will make generally available to its security holders
and to the Representatives as soon as practicable, but not later than 60
days after the close of the period covered thereby, an earnings statement
(in form complying with the provisions of Rule 158 of the regulations under
the Act) covering a twelve month period beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
(e) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, executed copies of the Registration
Statement (including exhibits thereto) and each amendment thereto which
shall become effective on or prior to the Closing Date and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by the
Act, as many copies of any Preliminary Final Prospectus and the Final
Prospectus and any amendments thereof and supplements thereto (other than
exhibits to the related Current Report) as the Representatives may
reasonably request. The Company will pay the expenses of printing all
documents relating to the initial offering, provided that any additional
expenses incurred in connection with the requirement of delivery of a
market-making prospectus will be borne by NationsBanc Capital Markets, Inc.
(f) The Company will arrange for the qualification of the Securities
for sale under the laws of such jurisdictions as the Representatives may
reasonably designate, will maintain such qualifications in effect so long
as required for the distribution of the Securities and will arrange for the
determination of the legality of the Securities for purchase by
institutional investors; provided, however, that the Company shall not be
required to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction where it is not now so
subject.
(g) The Company agrees to cooperate with the Representatives with
respect to the application for the Securities to be listed on the stock
exchange, if any, set forth on Schedule I hereto and to use its best
efforts to obtain all necessary government approvals and follow all
governmental regulations in connection therewith. The Company further
agrees, subject to the following sentence, to use its best efforts to
maintain such listing as is obtained for as long as the Securities are
outstanding and to pay all fees and supply all further documents,
information and undertakings as may be necessary or advisable to maintain
such listing. However, if listing becomes unduly burdensome or impossible,
in either case in the view of the Company, the Company will no longer be
obligated to maintain such listing. The Company agrees to consult with the
Representatives at such time as to an alternative listing for the
Securities but shall have no obligation to list the Securities on an
alternative exchange.
6. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Securities shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the date hereof, as of the date of the effectiveness of any amendment to
the Registration Statement filed prior to the Closing Date (including the filing
of any document incorporated by reference therein) and as of the Closing Date,
to the accuracy of the statements of the Company made in any certificates
delivered pursuant to the provisions hereof, to the performance by the Company
of its obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or threatened; and
the Final Prospectus shall have been filed or mailed for filing with the
Commission within the time period prescribed by the Commission.
(b) The Company shall have furnished to the Representatives the
opinion of Stroock & Stroock & Lavan LLP, counsel for the Company and the
Underwriters, dated the Closing Date, to the effect of paragraphs (iii),
(iv), (vi), (vii), (ix) and (x) below, and the opinion of Jennifer E.
Bennett, counsel to the Company, dated the Closing Date, to the effect of
paragraphs (i), (ii), (v) and (viii) below (or to the extent covered by
Maryland law, by an opinion of Miles & Stockbridge, dated the Closing
Date):
(i) the Company is a duly organized and validly existing
business trust in good standing under the laws of the State of
Maryland, has the trust power and authority to own its properties and
conduct its business as described in the Final Prospectus;
(ii) the Company has no subsidiaries and is not required to
be qualified or licensed to do business as a foreign corporation in
any jurisdiction;
(iii) the Securities conform in all material respects to the
description thereof contained in the Final Prospectus;
(iv) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding instrument enforceable against
the Company in accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance or other similar laws affecting the
rights of creditors now or hereafter in effect, and to equitable
principles that may limit the right to specific enforcement of
remedies, and further subject to 12 U.S.C. 1818(b)(6)(D) and similar
bank regulatory powers and to the application of principles of public
policy) and provided that no opinion is expressed herein with respect
to consolidation of the Company with NationsBank, N.A. ("NationsBank,
N.A."), its indirect parent, in the event that NationsBank, N.A. is
placed into a conservatorship or receivership pursuant to the Federal
Deposit Insurance Act, as amended, or the consequences flowing
therefrom; and the Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters pursuant
to this Agreement will constitute legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture (subject, as
to enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or other similar laws
affecting the rights of creditors now or hereafter in effect, and to
equitable principles that may limit the right to specific enforcement
of remedies, and further subject to 12 U.S.C. 1818(b)(6)(D) and
similar bank regulatory powers and to the application of principles of
public policy) and provided that no opinion is expressed with respect
to consolidation of the Company with NationsBank, N.A., its indirect
parent, in the event that NationsBank, N.A. is placed into a
conservatorship or receivership pursuant to the Federal Deposit
Insurance Act, as amended, or the consequences flowing therefrom;
(v) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Final Prospectus,
and there is no franchise, contract or other document of a character
required to be described in the Registration Statement or Final
Prospectus, or to be filed as an exhibit, which is not described or
filed as required;
(vi) the Registration Statement has become effective under
the Act; to the best knowledge of such counsel no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
threatened; the Registration Statement, the Final Prospectus and each
amendment thereof or supplement thereto (other than the financial
statements and other financial and statistical information contained
therein or incorporated by reference therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the Exchange Act and
the respective rules thereunder; and such counsel has no reason to
believe that the Registration Statement or any amendment thereof at
the time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Final Prospectus, as amended or supplemented,
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with its
terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance or other similar laws affecting the rights of creditors now
or hereafter in effect, and to equitable principles that may limit the
right to specific enforcement of remedies, and except insofar as the
enforceability of the indemnity and contribution provisions contained
in this Agreement may be limited by federal and state securities laws,
and further subject to 12 U.S.C. 1818(b)(6)(D) and similar bank
regulatory powers and to the application of principles of public
policy) and provided that no opinion is expressed with respect to
consolidation of the Company with NationsBank, N.A., its indirect
parent, in the event that NationsBank, N.A. is placed into a
conservatorship or receivership pursuant to the Federal Deposit
Insurance Act, as amended, or the consequences flowing therefrom;
(viii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been obtained;
(ix) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach of, or constitute a default under the declaration of trust or
by-laws of the Company or, to the best knowledge of such counsel, the
terms of any indenture or other agreement or instrument known to such
counsel and to which the Company is a party or bound, or any order or
regulation known to such counsel to be applicable to the Company of
any court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over the Company; and
(x) the statements in the Final Prospectus under the
heading "United States Federal Income Tax Consequences," to the extent
that they constitute matters of law or legal conclusions, have been
prepared or reviewed by such counsel and provide a fair summary of
such law or conclusions.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of New York or the United States, to the extent deemed proper and specified
in such opinion, upon the opinion of other counsel of good standing
believed to be reliable and who are satisfactory to counsel for the
Underwriters; and (B) as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of the Company or NationsBank, N.A.
and public officials.
(c) The Representatives shall have received copies, addressed to them
or on which they are entitled to rely, of opinions of counsel furnished to
the Trustee under the Indenture or to the rating agencies rating the
Securities as set forth on Schedule I hereto addressing (i) the pledge by
the Company to the Trustee of its right, title and interest in and to the
initial collateral for the Securities or alternatively, an opinion with
respect to such matters may be included in the opinion provided under
Section 6(b), and (ii) the non-consolidation of the Company and
NationsBank, N.A. in the event of a conservatorship or receivership of
NationsBank, N.A..
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or
President and Chief Executive Officer or an Executive Vice President or
Treasurer and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement (excluding any Current
Reports and any other documents incorporated by reference therein), the
Final Prospectus and this Agreement and that to the best of their
knowledge:
(i) the representations and warranties of the Company in
this Agreement are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and no proceedings
for that purpose have been instituted or threatened; and
(iii) since the respective dates as of which information is
given in the Final Prospectus, there has been no material adverse
change in the condition (financial or other), earnings, business or
properties of the Company, whether or not arising from transactions in
the ordinary course of business, except as set forth in or
contemplated in the Final Prospectus.
(e)(i) On the date hereof, Price Waterhouse LLP and/or any other firm
of certified independent public accountants acceptable to the
Representatives shall have furnished to the Representatives a letter, dated
the date hereof, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the
Act and the Exchange Act and the respective applicable published rules and
regulations thereunder, and stating in effect that using the assumptions
and methodology used by the Company, all of which shall be described in
such letter, they have recalculated such numbers and percentages set forth
in the Final Prospectus as the Representatives may reasonably request and
as are agreed to by Price Waterhouse LLP, compared the results of their
calculations to the corresponding items in the Final Prospectus, and found
each such number and percentage set forth in the Final Prospectus to be in
agreement with the results of such calculations. To the extent historical
financial information with respect to the Company and/or historical
financial, delinquency or related information with respect to one or more
servicers is included in the Final Prospectus, such letter or letters shall
also relate to such information.
(e)(ii) On the Closing Date, Price Waterhouse LLP and/or any other
firm of certified independent public accountants acceptable to the
Representatives shall have furnished to the Representatives a letter, in
form and substance satisfactory to the Representatives and as are agreed to
by Price Waterhouse LLP, relating, to the extent such information is not
covered in the letter or letters provided pursuant to clause (e)(i), to a
portion of the information set forth on the Mortgage Note Schedule attached
to the Indenture and to the calculation of the Discounted Value of the
Initial Collateral (as defined in the Indenture) or if a letter relating to
the same information is provided to the Trustee, indicating that the
Underwriters are entitled to rely upon their letter to the Trustee.
(f) The Securities shall have received the rating or ratings from the
rating agency or rating agencies set forth in Schedule I hereto.
(g) The stock exchange, if any, set forth on Schedule I hereto shall
have agreed in principle on or prior to the Closing Date to list the
Securities.
(h) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as
the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and their counsel, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Securities as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission (in the case of any Computational Materials in
respect of which the Company agrees to indemnify any Underwriter, as set forth
below, when such are read in conjunction with the Final Prospectus) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that (i) the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein (A) in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for use in connection with
the preparation thereof or (B) in any Current Report or any amendment or
supplement thereof, except to the extent that any untrue statement or alleged
untrue statement therein results (or is alleged to have resulted) directly from
an error (an "Initial Collateral Error") in the information concerning the
Eligible Mortgage Notes constituting the Initial Collateral furnished by the
Company to any Underwriter in writing or by electronic transmission that was
used in the preparation of either (x) any Computational Materials (or amendments
or supplements thereof) included in such Current Report (or amendment or
supplement thereof) or (y) any written or electronic materials furnished to
prospective investors on which the Computational Materials (or amendments or
supplements) were based, (ii) such indemnity with respect to the Basic
Prospectus or any Preliminary Final Prospectus shall not inure to the benefit of
any Underwriter (or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof if such person did not receive a copy
of the Final Prospectus (or the Final Prospectus as amended or supplemented)
excluding documents incorporated therein by reference at or prior to the
confirmation of the sale of such Securities to such person in any case where
such delivery is required by the Act and the untrue statement or omission of a
material fact contained in the Basic Prospectus or any Preliminary Final
Prospectus was corrected in the Final Prospectus (or the Final Prospectus as
amended or supplemented), and (iii) such indemnity with respect to any Initial
Collateral Error shall not inure to the benefit of any Underwriter (or any
person controlling any Underwriter) from whom the person asserting any loss,
claim, damage or liability received any Computational Materials (or any written
or electronic materials on which the Computational Materials are based) that
were prepared on the basis of such Initial Collateral Error, if, prior to the
time of confirmation of the sale of the Securities to such person, the Company
notified such Underwriter in writing of the Initial Collateral Error or provided
in written or electronic form information superseding or correcting such Initial
Collateral Error (in any such case, a "Corrected Initial Collateral Error"), and
such Underwriter failed to notify such person thereof or to deliver such person
corrected Computational Materials (or underlying written or electronic
materials). This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each Underwriter, but only with reference to (A) written
information relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter through the Representatives specifically for use in
the preparation of the documents referred to in the foregoing indemnity, or (B)
any Computational Materials (or amendments or supplements thereof) furnished to
the Company by any Underwriter pursuant to Section 10 and incorporated by
reference in the Registration Statement or the Final Prospectus (except that no
such indemnity shall be available for any losses, claims, damages or
liabilities, or actions in respect thereof resulting from any Initial Collateral
Error, other than a Corrected Initial Collateral Error). This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have. The Company acknowledges that the statements set forth in the
last paragraph of the cover page, the legend regarding the Underwriter's
stabilization activities and under the heading "Underwriting" or "Plan of
Distribution" in any Preliminary Final Prospectus or the Final Prospectus
constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in the documents referred to in the foregoing
indemnity (other than any Computational Materials (or amendments or supplements
thereof) furnished to the Company by any Underwriter), and you, as the
Representatives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and, to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of subparagraph
(a), representing the indemnified parties under subparagraph (a) who are parties
to such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that if clause (i) or
(iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) To provide for just and equitable contribution in circumstances in
which the indemnification provided for in paragraph (a) or (b) of this Section 8
is due in accordance with its terms but is for any reason held by a court to be
unavailable from the Company or the Underwriters on the grounds of policy or
otherwise, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Company and one or more of the Underwriters may be subject, as follows:
(i) in the case of any losses, claims, damages and liabilities (or
actions in respect thereof) which do not arise out of or are not based upon
any untrue statement or omission of a material fact in any Computational
Materials (or any amendments or supplements thereof), in such proportion so
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount bears to the sum of such discount
and the purchase price of the Securities specified in Schedule I hereto and
the Company is responsible for the balance; provided, however, that in no
case shall any Underwriter (except as may be provided in any agreement
among underwriters relating to the offering of the Securities) be
responsible under this subparagraph (i) for any amount in excess of the
underwriting discount applicable to the Securities purchased by such
Underwriter hereunder; and
(ii) in the case of any losses, claims, damages and liabilities (or
actions in respect thereof) which arise out of or are based upon any untrue
statement or omission of a material fact in any Computational Materials (or
any amendments or supplements thereof), in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
in such Computational Materials (or any amendments or supplements thereof)
results from information prepared by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
Notwithstanding anything to the contrary in this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
shall have the same rights to contribution as such Underwriter, and each person
who controls the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the preceding sentence of
this paragraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this paragraph (d), notify such party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule II hereto bear to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule II hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement and the Final Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Company and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
10. Computational Materials. (a) Not later than 10:30 a.m., New York City
time, on the date hereof, the Underwriters shall deliver to the Company five
complete copies of all materials provided by the Underwriters to prospective
investors in the Securities which constitute "Computational Materials" within
the meaning of the no-action letter dated May 20, 1994 issued by the Division of
Corporation Finance of the Commission to Kidder, Peabody Acceptance Corporation
I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset Corporation
and the no-action letter dated May 27, 1994 issued by the Division of
Corporation Finance of the Commission to the Public Securities Association
(together, the "Kidder Letters") and the filing of such material is a condition
of the relief granted in such letter (such materials being the "Computational
Materials"). Each delivery of Computational Materials to the Company pursuant
to this paragraph (a) shall be effected by delivering four copies of such
materials to counsel for the Company on behalf of the Company at the address
specified in Section 13 hereof and one copy of such materials to the Company.
(b) The Underwriters represent and warrant to and agree with the
Company, as of the date hereof and as of the Closing Date, that:
(i) the Computational Materials furnished to the Company
pursuant to Section 10(a) constitute (either in original, aggregated
or consolidated form) all of the materials furnished to prospective
investors by the Underwriters prior to the time of delivery thereof to
the Company with respect to the Securities in accordance with the
Kidder Letters, and such Computational Materials comply with the
requirements of the Kidder Letters;
(ii) on the date any such Computational Materials with respect to
the Securities (or any written or electronic materials furnished to
prospective investors on which the Computational Materials are based)
were last furnished to each prospective investor and on the date of
delivery thereof to the Company pursuant to Section 10(a) and on the
Closing Date, such Computational Materials (or materials) did not and
will not include any untrue statement of a material fact, or, when
read in conjunction with the Final Prospectus, omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(iii) at the time any Computational Materials (or any written
or electronic materials furnished to prospective investors on which
the Computational Materials are based) with respect to the Securities
were furnished to a prospective investor and on the date hereof, the
Underwriters possessed, and on the date of delivery of such materials
to the Company pursuant to this Section 10 and on the Closing Date,
the Underwriters will possess, the capability, knowledge, expertise,
resources and systems of internal control necessary to ensure that
such Computational Materials conform to the representations and
warranties of the Underwriters contained in subparagraphs (i) and (ii)
above of this paragraph (b); and
(iv) all Computational Materials (or underlying materials
distributed to prospective investors on which the Computational
Materials were based) contained and will contain a legend, prominently
displayed on the first page thereof, to the effect that the Company
has not prepared, reviewed or participated in the preparation of such
Computational Materials, is not responsible for the accuracy thereof
and has not authorized the dissemination thereof.
Notwithstanding the foregoing, the Underwriters make no representation or
warranty as to whether any Computational Materials (or any written or electronic
materials on which the Computational Materials are based) included or will
include any untrue statement resulting directly from any Initial Collateral
Error (except any Corrected Initial Collateral Error, with respect to materials
prepared after the receipt by the Underwriters from the Company of notice of
such Corrected Initial Collateral Error or materials superseding or correcting
such Corrected Initial Collateral Error).
(c) The Underwriters acknowledge and agree that the Company has not
authorized and will not authorize the distribution of any Computational
Materials to any prospective investor, and agree that any Computational
Materials with respect to the Securities furnished to prospective investors
shall include a disclaimer in the form set forth in paragraph (b)(iv) above.
The Underwriters agree that they will not represent to investors that any
Computational Materials were prepared or disseminated on behalf of the Company.
(d) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, it shall be necessary to amend or
supplement the Final Prospectus as a result of an untrue statement of a material
fact contained in any Computational Materials provided by the Underwriters
pursuant to this Section 10 or the omission to state therein a material fact
required, when considered in conjunction with the Final Prospectus, to be stated
therein or necessary to make the statements therein, when read in conjunction
with the Final Prospectus, not misleading, or if it shall be necessary to amend
or supplement any Current Report to comply with the Act or the rules thereunder,
the Underwriters, at their expense, promptly will prepare and furnish to the
Company for filing with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. The Underwriters represent and warrant to the Company, as of the
date of delivery of such amendment or supplement to the Company, that such
amendment or supplement will not include any untrue statement of a material fact
or, when read in conjunction with the Final Prospectus, omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Company shall have no obligation to file such amendment or
supplement if the Company determines that (i) such amendment or supplement
contains any untrue statement of a material fact or, when read in conjunction
with the Final Prospectus, omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; it being
understood, however, that the Company shall have no obligation to review or pass
upon the accuracy or adequacy of, or to correct, any such amendment or
supplement provided by the Underwriters to the Company pursuant to this
paragraph (d) or (ii) such filing is not required under the Act.
(e) The Underwriters (at their own expense) further agree to provide
to the Company any accountants' letters obtained relating to the Computational
Materials, which accountants' letters shall be addressed to the Company or shall
state that the Company may rely thereon; provided that the Underwriters shall
have no obligation to procure such letter.
11. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in securities generally on the New York Stock Exchange shall have been suspended
or limited or minimum prices shall have been established on such Exchange, (ii)
a banking moratorium shall have been declared either by Federal or New York
State authorities or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representatives, impracticable to market the Securities.
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Section 7 and 8 hereof and this Section 12 shall survive the termination or
cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, at the address specified in
Schedule I hereto, with a copy to: Stroock & Stroock & Lavan LLP, 180 Maiden
Lane, New York, New York 10038, Attn: Lois L. Weinroth, Esq.; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at 100
North Tryon Street, 23rd Floor, Charlotte, North Carolina 28255, Attn:
President, with a copy to: Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York 10038, Attn: Lois L. Weinroth, Esq.
14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
15. Applicable Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to principles of conflict of laws.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
MAIN PLACE REAL ESTATE INVESTMENT TRUST
By: /s/ John E. Mack
-----------------------------------
The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
NATIONSBANC CAPITAL MARKETS, INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
UBS SECURITIES LLC
By: NATIONSBANC CAPITAL MARKETS, INC.
By:/s/ James H. Sherrill
----------------------------
For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
SCHEDULE I
Underwriting Agreement dated March 12, 1997
Registration Statement No. 33-82040
Representatives: NationsBanc Capital Markets, Inc.
Bear, Stearns & Co. Inc.
Lehman Brothers Inc.
UBS Securities LLC
Title, Purchase Price and Description of Securities:
Title: Mortgage-Backed Bonds, Series 1997-1 due 2000
Principal amount: $1,000,000,000
Interest Rate: Three-month LIBOR plus 0.05% per annum
Purchase price (include type of funds and accrued interest or amortization,
if applicable): 99.775% Federal (same day) funds.
Bond Ratings: "AAA" by Fitch Investors Service, L.P., and "Aaa" by Moody's
Investors Service, Inc.
Form of Securities: Book-entry
Depository: The Depository Trust Company
Stock Exchange listing: Luxembourg Stock Exchange
Other provisions: None.
Closing Date, Time and Location: March 18, 1997, 9:30 a.m., New York City time,
office of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038
SCHEDULE II
Principal Amount
of Securities to
Underwriters be Purchased
NationsBanc Capital Markets, Inc. $250,000,000
Bear, Stearns & Co. Inc. 250,000,000
Lehman Brothers Inc. 250,000,000
UBS Securities LLC 250,000,000
Total $1,000,000,000
Exhibit 4(a)
MAIN PLACE REAL ESTATE INVESTMENT TRUST
Issuer
and
FIRST TRUST NATIONAL ASSOCIATION
Trustee
____________
INDENTURE OF TRUST
dated as of March 18, 1997
______________
$1,000,000,000
Mortgage-Backed Bonds, Series 1997-1 Due 2000
TABLE OF CONTENTS
GRANTING CLAUSES
CLAUSE FIRST
CLAUSE SECOND
CLAUSE THIRD
CLAUSE FOURTH
CLAUSE FIFTH
CLAUSE SIXTH
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. DEFINITIONS
ACCOUNTANT
ACCOUNTANTS' LETTER
ACT
ADJUSTABLE-RATE MORTGAGE NOTE
AFFILIATE
APPROVED LUXEMBOURG NEWSPAPER
APPROVED SERVICER
AUTHENTICATING AGENT
AVAILABLE AMOUNT
BASIC MAINTENANCE AMOUNT
BENEFICIAL OWNER
BOARD OF DIRECTORS
BOARD RESOLUTION
BUSINESS DAY
CASH
CLEARING AGENCY
CLEARING AGENCY PARTICIPANT
CLOSING DATE
COLLATERAL
COLLATERAL REPORT
COLLECTION ACCOUNT
COLLECTION PERIOD
COMMISSION
CONDOMINIUM NOTE
CONFORMING 5/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE NOTES
CONFORMING 3/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE NOTES
CONVENTIONAL MORTGAGE NOTE
CORPORATE TRUST OFFICE OF THE TRUSTEE
CORPORATION
CURE DATE
CURE VALUATION DATE
CUSTODIAN
DEFAULTED INTEREST
DEFINITIVE CERTIFICATE
DELINQUENT MORTGAGE NOTE
DELIVERY
DEPOSIT SECURITY
DETERMINATION DATE
DISCOUNTED VALUE
DISCOUNT FACTORS
DISTRIBUTION ACCOUNT
ELIGIBLE ACCOUNT
ELIGIBLE ADJUSTABLE-RATE MORTGAGE NOTES
ELIGIBLE COLLATERAL
ELIGIBLE CONVENTIONAL FIXED-RATE MORTGAGE NOTES
ELIGIBLE FIXED-RATE MORTGAGE NOTES
ELIGIBLE INVESTMENTS
ELIGIBLE MORTGAGE NOTES
ELIGIBLE MORTGAGES
EVENT OF DEFAULT
EXCHANGE ACT
FDIC
FHA
FHA INSURED
FHLMC
FHLMC CERTIFICATES
FITCH
FIXED-RATE MORTGAGE NOTE
FNMA
FNMA CERTIFICATES
GNMA
GNMA CERTIFICATES
GOVERNMENT SECURITIES
HIGH BALANCE NOTE
HOLDER\ OR \SECURITYHOLDER
HUD
INDENTURE
INDEPENDENT
INITIAL COLLATERAL
INTEREST PAYMENT DATE
INTEREST PERIOD
ISSUE DATE
ISSUER
JUMBO 15-YEAR ELIGIBLE FIXED-RATE MORTGAGE NOTES
JUMBO 5/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE NOTES
JUMBO NOTE
JUMBO 10/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE NOTES
JUMBO 3/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE NOTES
JUMBO 30-YEAR ELIGIBLE FIXED RATE MORTGAGE NOTES
LATE PAYMENT
LATEST COLLATERAL REPORT
LIBOR
LIBOR BUSINESS DAY
LIBOR DETERMINATION DATE
LIEN OF THIS INDENTURE\ OR \LIEN HEREOF
LIQUIDITY DATE\
LISTING AGENT
LOAN-TO-VALUE RATIO
MARKET VALUE
MARKET VALUE RATE
MATERIAL DEFECT
MAXIMUM INTEREST RATE
MOODY'S
MORTGAGE COLLATERAL
MORTGAGE DOCUMENTATION
MORTGAGE NOTES
MORTGAGED PROPERTY
MORTGAGES
NATIONSBANC MORTGAGE
NATIONSBANK N.A
NCMI
NEW ELIGIBLE COLLATERAL
THE NEW YORK TIMES
NON-MORTGAGE COLLATERAL
OFFICERS CERTIFICATE
OPINION OF COUNSEL
ORDER
OUTSTANDING
OVER 80% NOTE
PAYING AGENT
PERMITTED INDEX
PERSON
PLEDGED PROPERTY
PREDECESSOR SECURITY
PRIOR VALUATION DATE
PRIVATE MORTGAGE INSURANCE
RATING AGENCY
REDEMPTION DATE
REDEMPTION PRICE
REFERENCE BANKS
REGULAR RECORD DATE
REGULAR VALUATION DATE
REQUEST
REQUIRED INTEREST PAYMENT AMOUNT
RESERVE FUND
RESIDENTIAL REAL ESTATE
RESPONSIBLE OFFICER
REUTERS PAGE LIBO"
SECURITIES
SECURITY REGISTER
SELECTED AMOUNT
SERVICER
SERVICER REMITTANCE DATE
SERVICING AGREEMENT
SPECIAL RECORD DATE
STATE
STATED MATURITY
SUBSIDIARY
TELERATE PAGE 3750
TIA
TRUSTEE
UCC
VA
VA GUARANTEED
VICE PRESIDENT
THE WALL STREET JOURNAL
SECTION 1.02. COMPLIANCE CERTIFICATES AND OPINIONS
SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE
SECTION 1.04. ACTS OF HOLDERS OF SECURITIES
SECTION 1.05. NOTICES, ETC., TO TRUSTEE AND THE ISSUER
SECTION 1.06. NOTICES TO HOLDERS OF SECURITIES; WAIVER
SECTION 1.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS
SECTION 1.08. SUCCESSORS AND ASSIGNS
SECTION 1.09. SEPARABILITY CLAUSE
SECTION 1.10. BENEFITS OF INDENTURE
SECTION 1.11. GOVERNING LAW
SECTION 1.12. LEGAL HOLIDAYS
SECTION 1.13. EXECUTION IN COUNTERPARTS
SECTION 1.14. THE ISSUER'S OBLIGATIONS
SECTION 1.15. CONFLICT WITH TRUST INDENTURE ACT
ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM, TITLE AND TERMS OF THE SECURITIES
SECTION 2.02. DENOMINATIONS OF SECURITIES
SECTION 2.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING
SECTION 2.04. BOOK-ENTRY REQUIREMENTS
SECTION 2.05. DEFINITIVE CERTIFICATES
SECTION 2.06. NOTICES TO CLEARING AGENCY
SECTION 2.07. TEMPORARY SECURITIES
SECTION 2.08. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE
SECTION 2.09. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES.
SECTION 2.10. INTEREST PAYMENTS; INTEREST RIGHTS PRESERVED.
SECTION 2.11. PERSONS DEEMED OWNERS
SECTION 2.12. CANCELLATION
ARTICLE THREE
\ADMINISTRATION OF ACCOUNTS AND PAYMENTS TO SECURITYHOLDERS
SECTION 3.01.ESTABLISHMENT AND ADMINISTRATION OF DISTRIBUTION ACCOUNT
AND RESERVE FUND.
SECTION 3.02. COLLECTIONS AND ALLOCATIONS
SECTION 3.03. PAYMENTS TO SECURITYHOLDERS
SECTION 3.04. [RESERVED]
SECTION 3.05. [RESERVED]
SECTION 3.06. DETERMINATION OF LIBOR
ARTICLE FOUR
PROVISIONS AS TO COLLATERAL
SECTION 4.01. PLEDGING OF COLLATERAL
SECTION 4.02. DISPOSITION OF PAYMENTS ON PLEDGED PROPERTY
SECTION 4.03. CONSENTS, WAIVERS AND MODIFICATIONS.
SECTION 4.04. RIGHTS OF TRUSTEE AND THE ISSUER AFTER EVENT OF DEFAULT
SECTION 4.05. DELIVERY OF INITIAL COLLATERAL AND REPORTING R
EQUIREMENTS ON ISSUANCE OF SECURITIES.
SECTION 4.06. COLLATERAL REPORTS
SECTION 4.07. MAINTENANCE OF ELIGIBLE COLLATERAL.
SECTION 4.08. WITHDRAWAL OF COLLATERAL SUBJECT TO MAINTENANCE
REQUIREMENTS.
SECTION 4.09. ADDITIONS TO ELIGIBLE COLLATERAL
SECTION 4.10. SALES OF SECURITIES REACQUIRED BY THE ISSUER AND
AFFILIATES
SECTION 4.11. INVESTMENT COMPANY ACT LIMITATION
SECTION 4.12. NEW ELIGIBLE COLLATERAL
SECTION 4.13 SERVICING OF MORTGAGE NOTES
ARTICLE FIVE
REMEDIES UPON DEFAULT
SECTION 5.01. EVENTS OF DEFAULT
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT
SECTION 5.03. TRUSTEE'S POWER IN REGARD TO PLEDGED PROPERTY
SECTION 5.04. INCIDENTS OF SALE OF PLEDGED PROPERTY
SECTION 5.05. JUDICIAL PROCEEDINGS
SECTION 5.06. CONTROL BY HOLDERS OF SECURITIES
SECTION 5.07. WAIVER OF PAST DEFAULTS
SECTION 5.08. LIMITATIONS ON SUITS BY HOLDERS
SECTION 5.09. UNDERTAKING TO PAY COURT COSTS
SECTION 5.10. APPLICATION OF MONEYS COLLECTED BY TRUSTEE
SECTION 5.11. RIGHT TO RECEIVE PAYMENT NOT TO BE IMPAIRED.
SECTION 5.12. NOTICE OF DEFAULTS TO HOLDERS OF SECURITIES.
SECTION 5.13.SECURITIES HELD BY THE ISSUER OR AFFILIATE NOT TO SHARE
IN DISTRIBUTION.
SECTION 5.14.WAIVER OF APPRAISEMENT, VALUATION, STAY AND RIGHT TO
MARSHALLING.
SECTION 5.15.REMEDIES CUMULATIVE; DELAY OR OMISSION NOT A WAIVER
ARTICLE SIX
THE TRUSTEE
SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES
SECTION 6.02. CERTAIN RIGHTS OF TRUSTEE
SECTION 6.03. NOT RESPONSIBLE FOR RECITALS
SECTION 6.04. MAY HOLD SECURITIES
SECTION 6.05. MONEY HELD IN TRUST
SECTION 6.06. COMPENSATION AND REIMBURSEMENT
SECTION 6.07. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY
SECTION 6.08. APPOINTMENT OF CUSTODIAN
SECTION 6.09.RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
SECTION 6.10.ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TO TRUSTEE
SECTION 6.11.MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS
SECTION 6.12. APPOINTMENT OF CO-TRUSTEES
SECTION 6.13. AUTHENTICATING AGENT
SECTION 6.14. MANNER IN WHICH CERTAIN COLLATERAL HELD
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER, LEASE OR ASSUMPTION
SECTION 7.01.THE ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
SECTION 7.02. SUCCESSOR ENTITY SUBSTITUTED
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.01.SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS OF
SECURITIES
SECTION 8.02.SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS OF
SECURITIES
SECTION 8.03. EXECUTION OF SUPPLEMENTAL INDENTURES
SECTION 8.04. EFFECT OF SUPPLEMENTAL INDENTURES
SECTION 8.05.REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURE
SECTION 8.06. NOTICE OF SUPPLEMENTAL INDENTURE
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.01. PURPOSES FOR WHICH MEETINGS MAY BE CALLED
SECTION 9.02. CALL, NOTICE AND PLACE OF MEETINGS
SECTION 9.03. PERSONS ENTITLED TO VOTE AT MEETINGS
SECTION 9.04. QUORUM; ACTION
SECTION 9.05.DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS
SECTION 9.06.COUNTING VOTES AND RECORDING ACTION OF MEETINGS
ARTICLE TEN
COVENANTS
SECTION 10.01.PAYMENT OF PRINCIPAL AND INTEREST; MAINTENANCE OF
OFFICES OR AGENCIES
SECTION 10.02. PAYING AGENT
SECTION 10.03.MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST
SECTION 10.04. WARRANTY OF TITLE AND AUTHORITY TO PLEDGE
SECTION 10.05. PROTECTION OF LIEN
SECTION 10.06. FILING; OPINION OF COUNSEL
SECTION 10.07. FURTHER ASSURANCES
SECTION 10.08. ADVANCES BY TRUSTEE
SECTION 10.09.RESTRICTION ON AMENDMENT OF CERTAIN INSTRUMENTS
SECTION 10.10.MAINTENANCE OF BOOKS OF RECORD AND ACCOUNT; FINANCIAL
STATEMENTS OF THE ISSUER
SECTION 10.11.STATEMENT AS TO COMPLIANCE AND AUDIT OF COLLATERAL
SECTION 10.12. TITLE INSURANCE
SECTION 10.13. FIRE AND EXTENDED COVERAGE INSURANCE
SECTION 10.14. SELECTION OF ELIGIBLE MORTGAGE NOTES
SECTION 10.15. NOTICE TO TRUSTEE OF CHANGE IN REGULATIONS
SECTION 10.16.NOTICES AND COPIES OF SUPPLEMENTAL INDENTURES,
COLLATERAL REPORTS AND ACCOUNTANTS' LETTERS TO RATING
AGENCIES
SECTION 10.17. COVENANTS REGARDING ISSUER'S BUSINESS
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.01.MANDATORY REDEMPTION DUE TO FAILURE TO MEET BASIC
MAINTENANCE AMOUNT
SECTION 11.02. SELECTION OF SECURITIES TO BE REDEEMED
SECTION 11.03. NOTICE OF REDEMPTION
SECTION 11.04. SECURITIES PAYABLE ON REDEMPTION DATE
SECTION 11.05.LIQUIDATION OF COLLATERAL IN RESPECT OF REDEMPTION
ARTICLE TWELVE
SECURITYHOLDERS' LISTS AND REPORTING REQUIREMENTS
SECTION 12.01.ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
SECURITYHOLDERS
SECTION 12.02.PRESERVATION OF INFORMATION; COMMUNICATIONS TO
SECURITYHOLDERS
SECTION 12.03. REPORTS BY TRUSTEE
SECTION 12.04. REPORTS BY ISSUER
SECTION 12.05. PROVISIONS OF THIS ARTICLE SUPERSEDED
SECTION 12.06. LUXEMBOURG REPORTS AND NOTICES
ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE
SECTION 13.01. SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 13.02. APPLICATION OF TRUST
SECTION 13.03. TERMINATION OF LIEN
SECTION 13.04. REPAYMENT OF MONEYS HELD BY PAYING AGENT
EXHIBITS
EXHIBIT A INITIAL COLLATERAL
EXHIBIT B COLLATERAL REPORT
EXHIBIT C FORM OF OPINION OF COUNSEL
EXHIBIT D OFFICERS' CERTIFICATE REQUESTING
WITHDRAWAL OR SUBSTITUTION
EXHIBIT E FORM OF SERVICING AGREEMENT
EXHIBIT F FORM OF CUSTODIAL AGREEMENT
EXHIBIT G OFFICERS' CERTIFICATE REGARDING DEPOSIT
SECURITIES (FOR STATED MATURITY)
EXHIBIT H FORM OF SECURITY
EXHIBIT I FORM OF ACCOUNTANTS' LETTER
INDENTURE OF TRUST (the "Indenture"), dated as of the 18th day of
March, 1997 between Main Place Real Estate Investment Trust, a Maryland business
trust (the "Issuer"), and First Trust National Association (the "Trustee"):
WITNESSETH:
WHEREAS, the Issuer has duly authorized the issue of a series of its
Mortgage-Backed Bonds, Series 1997-1 Due 2000 (the "Securities") in the
aggregate principal amount of $1,000,000,000; and
WHEREAS, the Issuer will pledge certain property (as described in this
Indenture) to secure all payments of principal of and interest on the Securities
and to secure the performance of the covenants herein contained; and
WHEREAS, to provide the terms and conditions upon which the Securities
are to be issued and delivered, the Issuer has duly authorized the execution of
this Indenture; and
WHEREAS, the Issuer represents that all acts and things necessary to
make the Securities, when executed by the Issuer and authenticated by the
Trustee or the Authenticating Agent, valid, binding and legal obligations of the
Issuer and to constitute this Indenture a valid indenture in accordance with its
terms, have been done and performed; and the Issuer, in the exercise of the
legal right and power in it vested, is executing this Indenture and proposes to
execute, issue and deliver the Securities.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of the respective Holders from time to time of
the Securities, as follows:
GRANTING CLAUSES
To secure the payment of the principal of and interest on the
Securities and the performance of the covenants contained therein and in this
Indenture, and in consideration of the premises and of the purchase of the
Securities, the Issuer does hereby grant, bargain, sell, release, convey,
assign, pledge, transfer, mortgage and confirm unto the Trustee, and grant to
the Trustee a security interest in, all and singular of the following; provided,
however, that the failure of the Issuer to deliver to the Trustee (or, if the
Trustee has appointed a Custodian pursuant to Section 6.08, the Custodian) any
of the documents listed in clauses (a) through (d) of the first paragraph of
Clause Second below, or any defect in any such document so delivered, shall not
impair or in any way affect the Lien of this Indenture, or limit the security
interest granted in this Indenture by the Issuer to the Trustee, or render such
security interest unperfected if such security interest is perfected under
applicable law:
CLAUSE FIRST
All Government Securities and Cash (including without limitation the
Cash further described in Clause Fourth of these Granting Clauses), each as
defined in Section 1.01, as shall be now or hereafter assigned and delivered to
the Trustee pursuant to the terms of this Indenture, including the provisions of
the definition of the term "delivery" in Section 1.01 (such Government
Securities and Cash, together with all the property referred to in the last
paragraph of this Clause First and in Clauses Second, Third, Fourth, Fifth and
Sixth of these Granting Clauses, are herein collectively referred to as the
"Pledged Property").
All Government Securities made subject to the Lien of this Indenture
shall be accompanied by an Officers' Certificate stating that such Government
Securities are "Government Securities" within the meaning of this Indenture.
In addition, any other payments with respect to, or proceeds of, such
Government Securities, to the extent provided in this Indenture.
CLAUSE SECOND
All Mortgage Notes and Mortgages, including those included in the
Initial Collateral, each as defined in Section 1.01, as shall be now or
hereafter actually assigned and delivered to the Trustee (or the Custodian)
pursuant to the terms of this Indenture. All Mortgage Notes made subject to the
Lien of this Indenture shall be delivered in accordance with the definition of
"delivery" in Section 1.01 and shall be accompanied by (a) (i) an assignment of
the related Mortgage, in blank in recordable form, showing a complete line of
title from the originator to the Trustee, except that in lieu of delivering an
assignment of each related Mortgage, the Issuer may instead deliver a blanket
assignment by county in recordable form and (ii) the documentation whereby the
indebtedness evidenced by such Mortgage Notes has been assumed by any Person
other than the maker thereof; (b) with respect to each Mortgage Note for which
the related Mortgaged Property is located in the State of California or Oregon,
the original recorded Mortgage (or a copy thereof certified by the applicable
recording office in those jurisdictions where the original is retained by the
filing office) securing such Mortgage Note; (c) in the case of FHA Insured or VA
Guaranteed Mortgage Notes, evidence that such Mortgage Notes are FHA Insured or
VA Guaranteed; and (d) an Officers' Certificate or other evidence stating that
such Mortgage Notes are Eligible Fixed-Rate Mortgage Notes or Eligible
Adjustable-Rate Mortgage Notes, as applicable, and, in the aggregate, are
Eligible Mortgage Notes.
In addition, the benefits and proceeds of all related title, casualty
and flood insurance policies, the benefits and proceeds of any related Private
Mortgage Insurance, any related FHA insurance or VA guarantees, and any other
payments with respect to, or proceeds of, such Mortgage Notes, to the extent
provided in this Indenture.
In addition, any other payments with respect to, or proceeds of, such
Mortgage Notes, to the extent provided in this Indenture.
CLAUSE THIRD
All such Deposit Securities, as defined in Section 1.01, as shall be
now or hereafter assigned and delivered to the Trustee pursuant to Section 10.03
and the provisions of the definition of the term "delivery" in Section 1.01.
In addition, any payments with respect to, or proceeds of, such
Deposit Securities, to the extent provided in this Indenture.
CLAUSE FOURTH
(a) All Cash held in the Collection Account from time to time
representing scheduled interest and principal payments, principal prepayments
and various other amounts with respect to the Eligible Mortgage Notes, (b) all
Cash held in the Reserve Fund and (c) all Cash held in the Distribution Account.
In addition, any proceeds of such Cash, to the extent provided in this
Indenture.
CLAUSE FIFTH
All of Issuer's right, title and interest in, to and under the
Servicing Agreement.
CLAUSE SIXTH
Together with all other property at any time made subject to the Lien
of this Indenture pursuant to the provisions hereof; and the Trustee is hereby
authorized to receive the same as security hereunder.
TO HAVE AND TO HOLD the Pledged Property, unto the Trustee and its
successors and assigns;
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit
and security of the Holders of the Securities;
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED, by and between the
parties hereto, that all property referred to in the above Granting Clauses is
to be held and applied subject to the further covenants, conditions, uses and
trusts hereinafter set forth; and the Issuer, for itself and its successors,
hereby covenants and agrees to and with the Trustee and its successors in such
trust, for the benefit of the Holders of the Securities as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires, (a) the terms defined in
this Article One have the meanings assigned to them in this Article One and
include both the plural and the singular, (b) all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles, (c) all references in this instrument to
designated "Articles," "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this instrument, and (d) the words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision"
"Accountant" means a Person qualified to pass upon accounting
questions, whether or not (unless herein required to be Independent) such Person
shall be an officer or employee of the Issuer or of an Affiliate of the Issuer.
"Accountants' Letter" means a letter executed by the Independent
Accountants of the Issuer substantially in the form set forth in Exhibit I and
completed in the manner required by the applicable provisions of this Indenture.
"Act" when used with respect to any Holder of a Security has the
meaning set forth in Section 1.04.
"Adjustable-Rate Mortgage Note" means a Mortgage Note which provides
for the periodic adjustment of the rate of interest thereon.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect 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.
"Approved Luxembourg Newspaper" means with respect to any notice or
other information required hereunder to be published in Luxembourg, the
Luxemburger Wort or another daily publication of comparable circulation in
Luxembourg that meets the requirements of the Luxembourg Stock Exchange for the
publication of such notice or other information.
"Approved Servicer" means an approved GNMA, FNMA or FHLMC
seller-servicer of Mortgage Notes which meets similar servicing standards to the
standards met by the Issuer or NationsBank, N.A.
"Authenticating Agent" means the agent of the Trustee which at the
time shall have been appointed and acting pursuant to Section 6.13 and may be
the Trustee or an Affiliate of the Trustee.
"Available Amount" means, with respect to a Servicer Remittance Date,
all amounts on deposit in the Collection Account that were received during the
preceding Collection Period (net of charges against or withdrawals from the
Collection Account pursuant to Section 2.11(i) through (iv) and (viii) of the
Servicing Agreement).
"Basic Maintenance Amount" of the Securities means, subject to Section
4.12, as of any date of valuation, the sum of (a) the aggregate principal amount
of the Securities Outstanding on such date of valuation, plus (b) 90 days'
accrued interest at a rate of 22% per annum on the then Outstanding Securities.
"Beneficial Owner" means, with respect to any Security until a
Definitive Certificate is issued therefor pursuant to Section 2.05, the Person
who is the beneficial owner of such Security, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency), as the case may be.
"Board of Directors" means either the board of directors of the Issuer
or any duly authorized committee of that board.
"Board Resolution" means 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, as required under this Indenture.
"Business Day" means any day other than (i) a Saturday, (ii) a Sunday
or (iii) a day that is either a legal holiday or a day on which banking
institutions are authorized or obligated by law or regulation to close in the
States of Kentucky or North Carolina or the State in which the Corporate Trust
Office of the Trustee is located (or, for purposes of remittances by the
Servicer, any state in which functions relating to the Collection Account are
performed).
"Cash" means such coin or currency of the United States of America as
at the time shall be legal tender for payment of public and private debts.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" has the meaning specified in Section 4.05.
"Collateral" means Pledged Property.
"Collateral Report" means a report valuing the Collateral,
substantially in the form of Exhibit B hereto.
"Collection Account" means the account established and designated as
such pursuant to Section 2.10 of the Servicing Agreement.
"Collection Period" means, with respect to a Servicer Remittance Date,
the calendar month preceding the month in which such Servicer Remittance Date
occurs.
"Commission" means the Securities and Exchange Commission.
"Condominium Note" means a Mortgage Note secured by a condominium unit
located in a building having no more than four stories.
"Conforming 5/1 Eligible Adjustable-Rate Mortgage Notes" means
Eligible Adjustable-Rate Mortgage Notes having an original term to maturity of
not more than 30 years, a fixed rate of interest for an initial period of
approximately five years and an original principal amount less than or equal to
the maximum amount of a mortgage note permitted to be purchased by FNMA and
FHLMC, currently $214,600.
"Conforming 3/1 Eligible Adjustable-Rate Mortgage Notes" means
Eligible Adjustable-Rate Mortgage Notes having an original term to maturity of
not more than 30 years, a fixed rate of interest for an initial period of
approximately three years and an original principal amount less than or equal to
the maximum amount of a mortgage note permitted to be purchased by FNMA and
FHLMC, currently $214,600.
"Conventional Mortgage Note" means a Mortgage Note which is neither
FHA Insured nor VA Guaranteed, nor otherwise guaranteed or insured by the United
States of America or any State or any agency or instrumentality of either of
them.
"Corporate Trust Office of the Trustee" means the principal office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the original execution of this
Indenture is located at 180 East Fifth Street, St. Paul, Minnesota 55101.
"Corporation" means any corporation, association, joint stock company,
financial institution, company, business trust or similar organization.
"Cure Date" means, with respect to any Regular Valuation Date on which
the Basic Maintenance Amount was not met, the date which is 10 calendar days
after the receipt by the Issuer of the Collateral Report prepared by the Trustee
following such Regular Valuation Date.
"Cure Valuation Date" has the meaning specified in Section 4.07.
"Custodian" means, at any time, the Person then duly appointed and
acting as custodian pursuant to Section 6.08.
"Defaulted Interest" has the meaning specified in Section 2.10.
"Definitive Certificate" has the meaning specified in Section 2.04.
"Delinquent Mortgage Note" means an Eligible Mortgage Note on which
any scheduled payment of principal or interest is delinquent past the end of the
month in which such payment was due.
"delivery," when used with respect to Collateral, means:
(a) with respect to Mortgage Notes, subject to the provisions of
the last paragraph of Section 4.01(a), physical delivery thereof to the
Trustee (or, if the Trustee has appointed a Custodian pursuant to Section
6.08, the Custodian), together with the documents referred to in Granting
Clause Second, and that such Mortgage Notes have been endorsed in blank,
without recourse, to the Trustee and accompanied by proper instruments of
assignment in recordable form of the related Mortgages (which may be
blanket assignments by county in recordable form) and, with respect to each
Mortgage Note for which the related Mortgaged Property is located in the
State of California or Oregon, the original recorded Mortgage (or a copy
thereof certified by the applicable recording office in those jurisdictions
where the original is retained by the filing office), all without recourse,
to the Trustee, duly executed by the Issuer or any holder of such Mortgage
Notes or Mortgages;
(b) with respect to Government Securities that are not
book-entry securities and that are susceptible of physical delivery,
physical delivery thereof to the Trustee, together with the documents
referred to in Granting Clause First, and that such Government Securities
have been endorsed to the Trustee without recourse or are accompanied by
appropriate bond powers or assignments made out to the Trustee, and duly
executed by the Issuer or any holder thereof, with instructions to the
Trustee to cause the instrument to be registered in the name of the
Trustee, in order that all payments in respect of such instruments be made
to the Trustee;
(c) with respect to Government Securities that are book-entry
securities, proper notification or instructions for the pledge of such
instruments in the name of the Trustee, or in the name of another appro
priate custodial bank, other than the Issuer or any Affiliate of the
Issuer, for the account of the Trustee, in accordance with applicable law,
including applicable federal regulations and the UCC, in order that all
payments in respect of such instruments be made to the Trustee, together
with delivery to the Trustee of the documents referred to in Granting
Clause First; and
(d) with respect to Cash, physical delivery thereof to the
Trustee, together with delivery to the Trustee of the documents referred to
in Granting Clause First;
and with respect to all such instruments, accompanied by evidence that
appropriate financing statements have been filed in each jurisdiction where
financing statements are required to be filed.
Any pledge, assignment, or transfer to, or registration in the name
of, the Trustee, of any Collateral shall be made (and shall be stated to be
made) to the Trustee in its capacity as such pursuant to this Indenture for the
benefit of the Holders of the Securities.
The terms "delivered" and "deliver" have meanings correlative to the
foregoing definition of "delivery."
"Deposit Security" means (a) Cash, and (b) Government Securities
(other than GNMA, FNMA or FHLMC Certificates), provided that such instruments
must have a remaining term to maturity of 30 days or less on the date they are
delivered to the Trustee and must actually mature on or before the date in
respect of which they were delivered to the Trustee.
"Determination Date" means a date not more than three Business Days
prior to the relevant date of valuation.
"Discounted Value" as of any date means:
(a) with respect to the Eligible Collateral as a whole (i) if
such date is a date on which Eligible Collateral is being added to the
Pledged Property, the lower of (A) the sum of the Market Values of each of
the classes of Eligible Collateral included in the Pledged Property,
including any Eligible Collateral being added to the Lien of this Indenture
and excluding any Eligible Collateral being withdrawn from the Lien of this
Indenture, as of such date, multiplied by the applicable Discount Factors
appearing in Schedule A of the definition of "Discount Factors" and (B) the
sum of the Market Values of each of the classes of Eligible Collateral
included in the Pledged Property, including any Eligible Collateral being
added to the Lien of this Indenture and excluding any Eligible Collateral
being withdrawn from the Lien of this Indenture, as of such date,
multiplied by the applicable Discount Factors appearing in Schedule B of
the definition of "Discount Factors," and (ii) if such date is a date on
which Eligible Collateral is not being added to the Pledged Property, the
lower of (A) the sum of the Market Values of each of the classes of
Eligible Collateral included in the Pledged Property, excluding any
Eligible Collateral being withdrawn from the Lien of this Indenture, as of
such date, multiplied by the applicable Discount Factors appearing in
Schedule A of the definition of "Discount Factors," and (B) the sum of the
Market Values of each of the classes of Eligible Collateral included in the
Pledged Property, excluding any Eligible Collateral being withdrawn from
the Lien of this Indenture, as of such date, multiplied by the applicable
Discount Factors appearing in Schedule B of the definition of "Discount
Factors"; and
(b) with respect to any portion of the Eligible Collateral, the
Market Value or Values of the class or classes of Eligible Collateral
included in such portion of Eligible Collateral, as set forth in the Latest
Collateral Report (which term shall include, for purposes of this
definition only, any Collateral Report being prepared on such date which
values such class or classes of Eligible Collateral), multiplied by the
applicable Discount Factor for each such class of Eligible Collateral set
forth in whichever of Schedules A and B to the definition of "Discount
Factors" was used in the Latest Collateral Report to determine the
Discounted Value of the Eligible Collateral as a whole, pursuant to
subsection (a) of this definition.
"Discount Factors" means, subject to Section 4.12, for each type of
Eligible Collateral described below, the factor set forth in Schedules A and B
opposite such type of Eligible Collateral below:
Schedule Schedule
A B
Cash 1.000000 1.000000
Direct obligations of the United States
government
Maturity of 180 days or less 0.952381 0.965000
Maturity more than 180 days but less than one
year 0.952381 0.935000
Maturity of one year 0.934580 0.935000
Maturity more than one year but less than or
equal to two years 0.934580 0.900000
Maturity more than two years but less than or
equal to three years 0.934580 0.880000
Maturity more than three years but less than
or equal to four years 0.934580 0.870000
Maturity more than four years but less than
or equal to five years 0.934580 0.860000
Maturity more than five years but less than
or equal to six years 0.952381 0.850000
Maturity more than six years but less than or
equal to seven years 0.917431 0.840000
Maturity more than seven years but less than
or equal to ten years 0.917431 0.835000
Maturity more than ten years but less than or
equal to fifteen years 0.892857 0.805000
Maturity more than fifteen years but less than
or equal to twenty years 0.869565 0.805000
Maturity more than twenty years but less than
or equal to thirty years 0.869565 0.805000
Eligible Fixed-Rate Mortgage Notes
15-Year Eligible Fixed-Rate Mortgage Notes 0.781250 0.780000
30-Year Eligible Fixed-Rate Mortgage Notes 0.769231 0.760000
Eligible Adjustable-Rate Mortgage Notes
Conforming 3/1 Eligible Adjustable-Rate
Mortgage Notes 0.892857 0.860000
Conforming 5/1 Eligible Adjustable-Rate
Mortgage Notes 0.877193 0.830000
Jumbo 1 Year Eligible Adjustable-Rate Mortgage
Notes 0.877193 0.890000
Jumbo 3/1 Eligible Adjustable-Rate Mortgage
Notes 0.862069 0.860000
Jumbo 5/1 Eligible Adjustable-Rate Mortgage
Notes 0.847458 0.830000
Jumbo 7/1 Eligible Adjustable-Rate Mortgage
Notes 0.840336 0.810000
Jumbo 10/1 Eligible Adjustable-Rate Mortgage
Notes 0.833333 0.800000
GNMA Certificates 0.909091 0.805000
FHLMC Certificates or FNMA Certificates 0.900901 0.805000
If additional types of Eligible Fixed-Rate Mortgage Notes or Eligible
Adjustable-Rate Mortgage Notes are pledged under this Indenture, the Discount
Factors to be added to Schedule A or Schedule B shall be those provided to the
Trustee in writing by Fitch and Moody's.
"Distribution Account" means the account established and designated as
such pursuant to Section 3.01.
"Eligible Account" means (a) one or more accounts that are maintained
with a depository institution, which may be the Trustee in all cases and which
may be an Affiliate of the Issuer in the case of the Collection Account only,
(i) whose long-term debt obligations (or, in the case of a depository
institution which is part of a holding company structure, the long-term debt
obligations of which holding company) at the time of deposit therein are rated
at least A (or the equivalent) by each of the Rating Agencies and (ii) the
deposits in which are fully insured by the FDIC through either the Bank
Insurance Fund or the Savings Association Insurance Fund (to the limit
established by the FDIC) and the uninsured deposits in which are otherwise
secured such that, as evidenced by an Opinion of Counsel delivered to the
Trustee, the Trustee, on behalf of the Securityholders has a claim with respect
to the funds in such accounts or a perfected first security interest against any
collateral securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such accounts
are maintained, (b) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution or trust
company (including the Trustee) acting in its fiduciary capacity or (c) such
other account reviewed by the Rating Agencies, each of which shall have
furnished with respect to such account a written statement that such account
will not adversely affect the rating given by such Rating Agency to the
Securities.
"Eligible Adjustable-Rate Mortgage Notes" means, subject to Section
4.12, Adjustable-Rate Mortgage Notes evidencing whole loans, serviced by an
Affiliate of the Issuer, or by an Approved Servicer, which are Conventional
Mortgage Notes, are fully amortizing, and have an original term to maturity of
not more than 30 years and which, as of the date such Mortgage Notes are
pledged:
(i) bear a rate of interest, adjustable
periodically, but no more frequently than annually, of a
specified gross margin of between 1% and 5% above a
Permitted Index;
(ii) have a remaining term to maturity of at least
one year;
(iii) have an unpaid principal balance of at least
$1,000 and not more than $1,000,000;
(iv) have a Loan-to-Value Ratio not greater than
95%, except that any Over 80% Note must be insured by
Private Mortgage Insurance from an insurer which has been
rated in one of the two highest rating categories by at
least one Rating Agency as to that portion of the principal
amount thereof exceeding the amounts specified under FNMA
and FHLMC guidelines (unless, by the terms of the applicable
Private Mortgage Insurance policy and Mortgage Note, such
policy has been discharged due to principal amortization);
(v) are secured by Eligible Mortgages;
(vi) are accompanied by appropriate Mortgage
Documentation;
(vii) are not Mortgage Notes as to which there is
currently a Late Payment;
(viii) may be convertible into Fixed-Rate Mortgage
Notes; provided, however, that any Adjustable-Rate Mortgage
Notes which are so converted may not be included in the
Eligible Collateral unless they are recharacterized as
Eligible Fixed-Rate Mortgage Notes pursuant to Section
4.01(d);
(ix) are not secured by a Mortgage on a mobile home;
and
(x) comply with the aggregate limitations contained
in the definition of "Eligible Mortgage Note" in this
Indenture.
"Eligible Collateral" means, as of any date, Eligible Mortgage Notes,
Government Securities or Cash included in Pledged Property or any New Eligible
Collateral at the time permitted to be included in Pledged Property pursuant to
Section 4.12, or any combination of the foregoing; provided that no Eligible
Fixed-Rate Mortgage Notes or Eligible Adjustable-Rate Mortgage Notes may be
included in the Eligible Collateral unless at least 100 Eligible Mortgage Notes
are so included.
"Eligible Conventional Fixed-Rate Mortgage Notes" means Eligible
Fixed-Rate Mortgage Notes that are Conventional Mortgage Notes.
"Eligible Fixed-Rate Mortgage Notes" means, subject to Section 4.12,
Fixed-Rate Mortgage Notes evidencing whole loans, serviced by an Affiliate of
the Issuer, or by an Approved Servicer, including Conventional Mortgage Notes
and FHA Insured and VA Guaranteed Mortgage Notes, which are fully amortizing,
provide for monthly payments of principal and interest in substantially equal
installments for the contractual term of the Mortgage Notes, have an original
term to maturity of not more than 30 years and which, as of the date such
Mortgage Notes are pledged:
(i) have a remaining term to maturity of at least
one year;
(ii) have an unpaid principal balance of at least
$1,000 but not more than $1,000,000;
(iii) have a Loan-to-Value Ratio not greater than
95%, except that any Over 80% Note must be insured by
Private Mortgage Insurance from an insurer rated in one of
the two highest rating categories by at least one Rating
Agency as to that portion of the principal amount thereof
exceeding the amounts specified under FNMA and FHLMC
guidelines (unless, by the terms of the applicable Private
Mortgage Insurance Policy and Mortgage Note, such policy has
been discharged due to principal amortization);
(iv) are secured by Eligible Mortgages;
(v) are accompanied by appropriate Mortgage
Documentation;
(vi) are not Mortgage Notes as to which there is
currently a Late Payment;
(vii) as to FHA Insured or VA Guaranteed Mortgage
Notes, are secured by a Mortgage on a one- to four-family
dwelling;
(viii) are not secured by a Mortgage on a mobile home;
and
(ix) comply with the aggregate limitations contained
in the definition of "Eligible Mortgage Note" in this
Indenture.
"Eligible Investments" means any one or more of the following
obligations or securities, regardless of whether issued by the Trustee, the
Custodian or any of their respective Affiliates and having at the time of
purchase, or at such other time as may be specified, the required ratings, if
any, provided for in this definition:
(i) direct obligations of, or guaranteed as to
timely payment of principal and interest by, the United
States of America or any agency or instrumentality thereof,
provided that such obligations are backed by the full faith
and credit of the United States of America;
(ii) direct senior obligations of, or guaranteed as
to timely payment of principal and interest by, FHLMC, FNMA
or the Federal Farm Credit System, FHLMC Certificates and
FNMA Certificates, provided that any such obligation or
Certificate shall not include a "stripped" security; or
(iii) general obligations of or obligations
guaranteed by any state of the United States of America or
the District of Columbia receiving the highest long-term
debt rating available for such securities by each Rating
Agency, or such lower rating as will not result in the
downgrading or withdrawal of the rating then assigned to the
Securities by such Rating Agency; or
(iv) investments in money market funds/funds rated
Aaam;
provided, however, that if such obligation or security is, at the time of such
investment, not rated by Fitch, such obligation or security need only be rated
by Moody's.
"Eligible Mortgage Notes" means Eligible Adjustable-Rate Mortgage
Notes and Eligible Fixed-Rate Mortgage Notes that conform to the following
additional limitations:
(i) not more than 25% of the aggregate unpaid
principal balance of all Eligible Mortgage Notes included in
the Eligible Collateral may be Over 80% Notes and not more
than 10% of the aggregate unpaid principal balance of all
Eligible Mortgage Notes included in the Eligible Collateral
may be composed of Eligible Mortgage Notes with original
Loan-to-Value Ratios in excess of 90%;
(ii) not more than 15% of the aggregate unpaid
principal balance of all Eligible Mortgage Notes included in
the Eligible Collateral may be High Balance Notes;
(iii) not more than 10% of the aggregate unpaid
principal balance of all Eligible Mortgage Notes included in
the Eligible Collateral may be Condominium Notes;
(iv) the aggregate unpaid principal balance of
Eligible Mortgage Notes that are (1) High Balance Notes, (2)
Over 80% Notes or (3) Condominium Notes may not exceed 35%
of the aggregate unpaid principal balance of all Eligible
Mortgage Notes included in the Eligible Collateral;
(v) no Eligible Mortgage Note is described by more
than one of subclauses (1), (2) and (3) in the preceding
clause (iv);
provided, however, that no investigation of compliance with clauses (i) through
(v) above shall be required except (i) on the Closing Date with respect to the
Initial Collateral and (ii) at the time a Mortgage Note is added to or withdrawn
from the Pledged Property (provided, that with respect to Mortgage Notes
substituted into the Pledged Property pursuant to the first sentence of Section
4.08(a) or added to the Pledged Property pursuant to Section 4.09, such
investigation shall not be made at the time of such addition or substitution,
but instead such Mortgage Notes shall be included in the next Collateral Report
valuing the Eligible Collateral).
"Eligible Mortgages" means, subject to Section 4.12, Mortgages which
secure Eligible Mortgage Notes, and which: (a) create a valid first lien (except
for tax liens for taxes which are not delinquent at the time the Mortgage
becomes part of the Pledged Property, other matters to which like properties are
commonly subject which neither individually nor in the aggregate materially
interfere with the benefits of the security intended to be provided by such
Mortgages, and standard exceptions and exclusions in title insurance policies)
on Residential Real Estate; (b) are duly recorded in the office of the proper
recording officer in the State in which the real property described in such
Mortgages is located to reflect of record that the Issuer (or one of its
Affiliates) is the mortgagee or the beneficiary of the deed of trust; and (c)
are covered by (i) title insurance policies insuring (A) that the title to the
premises described in each such Mortgage is vested in the mortgagor or grantor
therein named, (B) against unmarketability of such title, and (C) that such
Mortgage is a first lien on said premises (except for the lien of general and
special taxes and assessments on the property in question which were not
delinquent at the date of the title insurance policy, other matters to which
like properties are commonly subject which neither individually nor in the
aggregate materially interfere with the benefits of the security intended to be
provided by such Mortgage, and the standard exceptions and exclusions in such
policies), and the amount payable to the mortgagee or the assignee of the
mortgagee under each such policy is at least as great as the outstanding
principal amount payable under the Mortgage Note secured by such Mortgage, or
(ii) an Opinion of Counsel stating that such Mortgage constitutes a first lien
on the premises described in such Mortgage, which Opinion of Counsel may be
subject to the exceptions set forth in clause (i)(C) above.
"Event of Default" has the meaning set forth in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means Federal Deposit Insurance Corporation, and includes any
successor thereto.
"FHA" means the Federal Housing Administration of HUD. The term "FHA"
shall also include such department or agency of the United States government as
shall succeed to the FHA in insuring notes secured by mortgages and deeds of
trust on residential real estate.
"FHA Insured" means, with respect to a Mortgage Note, the Mortgage
Note has been insured by the FHA or a written commitment to insure the Mortgage
Note has been given by the FHA.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and includes
any successor thereto.
"FHLMC Certificates" means single-class certificates issued by FHLMC
which represent undivided interests in specified pools of fully amortizing
Mortgage Notes, or participation interests in Mortgage Notes purchased by FHLMC,
substantially all of which Mortgage Notes are secured by first liens on
Residential Real Estate and which are guaranteed by FHLMC as to the timely
payment of scheduled interest (at the applicable pass-through rate) and the
ultimate collection by a holder of such certificates of all principal on the
underlying mortgage loans, to the extent of such holder's pro rata share
thereof, and in the case of certain FHLMC Certificates, the timely payment of
scheduled principal.
"Fitch" means Fitch Investors Service, L.P., and includes any
successor thereto.
"Fixed-Rate Mortgage Note" means a Mortgage Note bearing a fixed rate
of interest.
"FNMA" means the Federal National Mortgage Association, a
government-sponsored private corporation established and existing as such
pursuant to Title VIII of the Housing and Urban Development Act of 1968, and
includes any successor thereto.
"FNMA Certificates" means single-class mortgage pass-through
certificates issued by FNMA which represent fractional undivided interests in
specified pools of fully amortizing (i.e., not balloon payment) Mortgage Notes
secured by first liens on Residential Real Estate, and which are guaranteed by
FNMA as to the timely payment of scheduled interest (at the applicable
pass-through rate) and principal.
"GNMA" means the Government National Mortgage Association administered
by HUD, and includes any successor thereto.
"GNMA Certificates" means single-class certificates representing
fractional undivided interests in specified pools of fully amortizing (i.e., not
balloon payment) Mortgage Notes secured by first liens on Residential Real
Estate, such certificates being fully guaranteed as to principal and interest by
GNMA and, as such, backed by the full faith and credit of the United States of
America.
"Government Securities" means (a) direct obligations of the United
States of America, provided that such direct obligations are entitled to the
full faith and credit of the United States of America, (b) GNMA Certificates,
(c) FHLMC Certificates, and (d) FNMA Certificates; provided, however, that no
Government Security may, by its terms, be a non-interest bearing security unless
it matures in less than one year.
"High Balance Note" means a Mortgage Note with an outstanding
principal balance in excess of $600,000.00.
"Holder" or "Securityholder," when used with respect to any Security,
means the Person in whose name the Security is registered in the Security
Register.
"HUD" means the United States Department of Housing and Urban
Development or such department or agency of the United States government as
shall succeed to the United States Department of Housing and Urban Development
in the administration of GNMA or the regulation of FNMA or FHLMC.
"Indenture" means this instrument as originally executed, as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered pursuant to the applicable terms hereof.
"Independent," when used with respect to any specified person other
than an Accountant, means such a Person who (i) is in fact independent, (ii)
does not have any direct financial interest or any material indirect financial
interest in the Issuer or in any Affiliate of the Issuer, and (iii) is not
connected with the Issuer or any Affiliate of the Issuer as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions. "Independent" when used with respect to any Accountant means
such an Accountant, who may also be the accountant who audits the books of the
Issuer, who is independent with respect to the Issuer within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Trustee, such Person shall be
acceptable to the Trustee and such opinion or certificate shall state that the
signer has read this definition and that the signer is Independent within the
meaning hereof.
"Initial Collateral" means the Eligible Collateral initially made
subject to the Lien of this Indenture.
"Interest Payment Date" means the 25th day of each March, June,
September and December (or, if any such day is not a Business Day, the next
succeeding Business Day) while the Securities are Outstanding, commencing June
25, 1997.
"Interest Period" means, with respect to any Interest Payment Date,
the period from and including the preceding Interest Payment Date (or, in the
case of the initial Interest Payment Date, from and including the Closing Date)
and ending on and including the day prior to such Interest Payment Date.
"Issue Date" means the date of original issue of the Securities.
"Issuer" means the Person named as the "Issuer" in the first paragraph
of this Indenture, until a successor entity shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter the "Issuer" shall
mean such successor entity.
"Jumbo 15-Year Eligible Fixed-Rate Mortgage Notes" means Eligible
Fixed-Rate Mortgage Notes having an original term of 15 years and an original
principal amount of more than the maximum amount of a mortgage note permitted to
be purchased by FNMA and FHLMC, currently $214,600.
"Jumbo 5/1 Eligible Adjustable-Rate Mortgage Notes" means Eligible
Adjustable-Rate Mortgage Notes having an original term to maturity of not more
than 30 years, a fixed rate of interest for an initial period of approximately
five years and an original principal amount of more than the maximum amount of a
mortgage note permitted to be purchased by FNMA and FHLMC, currently $214,600.
"Jumbo Note" means a Conventional Mortgage Note secured by a Mortgage
on a one- to four-family dwelling which has an original principal balance in
excess of the then applicable maximum amount established by FHLMC and FNMA for
mortgage loan purchases.
"Jumbo 10/1 Eligible Adjustable-Rate Mortgage Notes" means Eligible
Adjustable-Rate Mortgage Notes having an original term to maturity of not more
than 30 years, a fixed rate of interest for an initial period of approximately
ten years and an original principal amount of more than the maximum amount of a
mortgage note permitted to be purchased by FNMA and FHLMC, currently $214,600.
"Jumbo 3/1 Eligible Adjustable-Rate Mortgage Notes" means Eligible
Adjustable-Rate Mortgage Notes having an original term to maturity of not more
than 30 years, a fixed rate of interest for an initial period of approximately
three years and an original principal amount of more than the maximum amount of
a mortgage not permitted to be purchased by FNMA and FHLMC, currently $214,600.
"Jumbo 30-Year Eligible Fixed Rate Mortgage Notes" means Eligible
Fixed-Rate Mortgage Notes having an original term of 30 years and an original
principal amount of more than the maximum amount of a mortgage note permitted to
be purchased by FNMA and FHLMC, currently $214,600.
"Late Payment" means any scheduled payment of principal or interest on
a Mortgage Note which is delinquent past the end of the month in which such
payment was due, which payment for purposes of this Indenture is deemed to be
one installment delinquent.
"Latest Collateral Report" means, as of any date, the then most recent
Collateral Report prepared by the Trustee and delivered to the Issuer pursuant
to Section 4.05(a), Section 4.06, Section 4.07(b), Section 4.07(d), Section
4.08(a) or Section 4.10(a).
"LIBOR" means, for any Interest Payment Date and Interest Period, the
London interbank offered rate for three-month United States dollar deposits
determined by the Trustee in accordance with Section 3.06.
"LIBOR Business Day" means a day that is not a Saturday, a Sunday or
other day on which banking institutions in London, New York City or the state in
which the Corporate Trust Office of the Trustee is located are authorized or
required by law, regulation or executive order to be closed.
"LIBOR Determination Date," with respect to any Interest Period
subsequent to the initial Interest Period, means the second LIBOR Business Day
immediately preceding the first day of such Interest Period.
"Lien of this Indenture" or "lien hereof" means the security interest
granted by these presents, or by any concurrent or subsequent conveyance to the
Trustee (whether made by the Issuer or any other Person), or otherwise granted
or created.
"Liquidity Date" means the date which is 15 days prior to the Stated
Maturity.
"Listing Agent" means Kredietbank S.A. Luxembourgeoise, and includes
any successor thereto.
"Loan-to-Value Ratio," with respect to any Eligible Mortgage Note,
means the fraction, expressed as a percentage the numerator of which is the
original principal balance of such Eligible Mortgage Note, and the denominator
of which is the lesser of (a) the appraised value of the related Mortgaged
Property at the time of origination of such Eligible Mortgage Note or (b) the
sales price of the related Mortgaged Property; provided, however, that in the
case of an Eligible Mortgage Note resulting from a refinancing, the denominator
shall be the appraised value of the related Mortgaged Property at the time of
such refinancing.
"Market Value," for any Collateral Report valuing the Eligible
Collateral, means the amount determined with respect to specific Eligible
Collateral in the manner set forth below as of a Determination Date; provided,
however, that the Market Value of any security or instrument may not exceed the
unpaid principal amount of such security or instrument:
(a) as to Cash, the face value thereof;
(b) as to FHLMC Certificates, FNMA Certificates, GNMA
Certificates and as to other Government Securities (other than those
Government Securities having a remaining term to maturity of 90 days or
less), the aggregate principal amount of the mortgage loans evidenced by
each FHLMC, FNMA or GNMA Certificate (as shown by the most recent report
related to each such certificate received by the Trustee prior to the
applicable Determination Date) or the aggregate principal amount of such
other Government Securities multiplied by the dollar value of the lower bid
price per dollar of outstanding principal amount for the same kind of
certificate or security, having as nearly as practicable the same interest
rate and maturity, as quoted to the Trustee by two nationally recognized
securities dealers selected by the Trustee and making a market in such
certificates or Securities as of an applicable Determination Date, with at
least one such quotation in writing (which writing may be a printout of
such quotation received by the Trustee from any such dealer via Dow Jones
Telerate, Inc., Bloomberg Financial Markets or another nationally
recognized on-line computer service in accordance with standard industry
practice), or, if only one such bid price is available, such aggregate
principal amount multiplied by such bid price, which shall be in writing,
or if no such bid price is available, such aggregate principal amount
multiplied by the bid price per dollar of outstanding principal amount that
would result in the yield for the same type of certificate or security
having as nearly as practicable the same interest rate and maturity, as
published on an applicable Determination Date in The Wall Street Journal or
The New York Times (if such yield is so published);
(c) as to Government Securities (other than FNMA, FHLMC or GNMA
Certificates) having a remaining term to maturity of 90 days or less, the
face amount thereof multiplied by the dollar value of the lower of the bid
prices per dollar of outstanding principal amount obtained therefor by the
Trustee as of the close of business on an applicable Determination Date
from two nationally recognized securities dealers making a market therein,
with at least one such quotation in writing (which writing may be a
printout of such quotation received by the Trustee from any such dealer via
Dow Jones Telerate, Inc., Bloomberg Financial Markets or another nationally
recognized on-line computer service in accordance with standard industry
practice); and
(d) as to Eligible Mortgage Notes (all Eligible Fixed-Rate
Mortgage Notes to constitute one group for purposes of this definition and
all Eligible Adjustable-Rate Mortgage Notes to constitute another group for
purposes of this definition and, within each such group, such Eligible
Mortgage Notes to be subgrouped based on the criteria set forth in the
Servicing Agreement), the lower of the market quotations for such Eligible
Mortgage Notes obtained from any two nationally recognized dealers in
mortgage instruments selected by the Trustee (which dealers shall have been
provided by the Trustee with the information necessary to make such
quotations, including the weighted average interest rate and weighted
average maturity of the Eligible Mortgage Notes of the groups established
by the Trustee), determined as of the applicable Determination Date based
upon unpaid principal balances shown in the most recent report prepared by
or for the Trustee (which report shall contain information as of a date no
more than 30 days prior to such Determination Date) or, if only one such
quotation is available, then such quotation, which shall be in writing
(which writing may be a printout of such quotation received by the Trustee
from any such dealer via Dow Jones Telerate, Inc., Bloomberg Financial
Markets or another nationally recognized on-line computer service in
accordance with standard industry practice); provided, however, that, if no
such market quotation is available, the Market Value of Eligible Mortgage
Notes shall be determined by discounting, at the Market Value Rate, the
remaining scheduled payments of principal of and interest on such Eligible
Mortgage Notes shown in the most recent report prepared by or for the
Issuer (which report shall contain information as of a date no more than 30
days prior to the applicable Determination Date) in the manner set forth in
Annex A-1 to Schedule 1 to Exhibit B; provided, further, that the Market
Value of any Eligible Mortgage Note on which any scheduled payment of
principal or interest is delinquent shall be deemed for the purposes of
this Indenture to be (i) 15% lower than the Market Value determined above
if such payment is delinquent past the end of the month in which such
payment was due, (ii) 50% lower than the Market Value determined above if
such payment is delinquent past the end of month following the month in
which such payment was due, (iii) 75% lower than the Market Value
determined above if the Late Payment is delinquent past the end of the
second month following the month in which such payment was due and (iv)
zero if the Late Payment is delinquent past the end of the third month
following the month in which such payment was due.
The methodology for determining the Market Value of any item of Eligible
Collateral may be changed by the Issuer and the Trustee without the consent of
any Holders of Securities pursuant to an indenture supplemental hereto making
appropriate provision for such change in methodology with the written
confirmation of Fitch and Moody's to the effect that such change in methodology
will not impair, or cause the Securities to fail to retain, the ratings then
assigned to the Securities by Fitch and Moody's, respectively.
"Market Value Rate" means:
(a) (i) as to Conventional Mortgage Notes (other than Jumbo
Notes), a rate (rounded to the nearest one-hundredth of one percent)
equivalent to the yields at which either FNMA or FHLMC, at the election of
the Trustee, committed itself to purchase Conventional Mortgage Notes of
such type for the shortest available delivery period determined as of the
applicable Determination Date; and
(ii) as to FHA Insured or VA Guaranteed Mortgage Notes, a
rate (rounded to the nearest one-hundredth of one percent) equivalent to
the yields at which FNMA committed itself to purchase FHA Insured and VA
Guaranteed Mortgage Notes, as the case may be (or either if commitments for
both were not made), for the shortest available delivery period determined
as of the applicable Determination Date;
in the cases of (i) or (ii) above, as such FHLMC or FNMA yields are
reported by The Wall Street Journal, The New York Times or directly by FNMA
or FHLMC, and in each case less any servicing fee then allowed sellers and
included in gross yield quotations; or,
(b) in the event that such rates are not available as of the
applicable Determination Date, or with respect to Conventional Mortgage
Notes (including Jumbo Notes), in the event that, as of such date, FNMA or
FHLMC have ceased to conduct auctions or post rates with respect to such
Mortgage Notes and with respect to FHA Insured or VA Guaranteed Mortgage
Notes, in the event that, as of such date, FNMA has ceased to post FHA-VA
commitment rates, then a rate 0.50% greater than the yield as of the
applicable Determination Date (as quoted directly by FNMA) for a FNMA
Certificate with the same (or, if there are none with the same then the
next higher) coupon interest rate as the weighted average coupon interest
rate of the Eligible Mortgage Notes included in the Pledged Property.
"Material Defect" has the meaning set forth in Section 4.01(a).
"Maximum Interest Rate" means 22% per annum.
"Moody's" means Moody's Investors Service, Inc. and any successor
thereto.
"Mortgage Collateral" means Eligible Mortgage Notes.
"Mortgage Documentation," with respect to any Mortgage Note, means (a)
the promissory note or other evidence of indebtedness evidencing such Mortgage
Note endorsed in blank; (b) (i) an assignment, in blank and in recordable form,
of all mortgages or deeds of trust securing such promissory note or other
evidence of indebtedness and, where applicable, assignments thereof showing a
complete line of title from the originator to the Trustee, except that in lieu
of delivering an assignment for each such mortgage or deed of trust, the Issuer
may instead deliver a blanket assignment by county in recordable form and (ii)
the documentation whereby the Mortgage Note has been assumed by any Person other
than the maker thereof; (c) with respect to each Mortgage Note for which the
related Mortgaged Property is located in the State of California or Oregon only,
the original recorded Mortgage (or a copy thereof certified by the applicable
recording office in those jurisdictions where the original is retained by the
filing office) securing such promissory note or other evidence of indebtedness;
and (d) in the case of an FHA Insured or VA Guaranteed Mortgage Note, evidence
that such Mortgage Note is FHA Insured or VA Guaranteed.
"Mortgage Notes" means notes or other evidences of indebtedness
secured by Mortgages and also means those instruments which were at any given
time, but thereafter ceased to be, Eligible Mortgage Notes, whether by reason of
default thereunder or under the Mortgages securing them or otherwise.
"Mortgaged Property" means the property subject to a Mortgage, which
may include (i) one- to four- family detached residences, (ii) townhouses, (iii)
condominium units and (iv) units within planned unit developments.
"Mortgages" means mortgages, deeds of trust, deeds to secure debt or
similar security instruments encumbering real property and related documentation
and also means those instruments and related documentation which were at any
given time, but thereafter ceased to be, Eligible Mortgages.
"NationsBanc Mortgage" means NationsBanc Mortgage Corporation, an
Affiliate of the Issuer.
"NationsBank, N.A." means NationsBank, N.A., the indirect parent
corporation of the Issuer, or any successor thereto.
"NCMI" means NationsBanc Capital Markets, Inc., an Affiliate of the
Issuer.
"New Eligible Collateral" has the meaning set forth in Section 4.12.
"The New York Times" means the newspaper of general circulation
published under that name in the Borough of Manhattan, City of New York, State
of New York.
"Non-Mortgage Collateral" means any Eligible Collateral other than
Mortgage Collateral.
"Officers' Certificate" means a certificate signed by any member of
the Board of Trustees of the Issuer and by the Trust's President or Secretary
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Issuer, unless otherwise specified herein and who shall be
acceptable to the Trustee, and shall be delivered to the Trustee.
"Order" has the same meaning as "Request" herein.
"Outstanding," when used with respect to Securities, as of the date of
determination, means all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation or, pursuant to Section 2.12, delivered to
another person which has delivered such Securities to the Trustee for
cancellation;
(b) securities for whose payment or redemption either Deposit
Securities in the necessary amount have been delivered to the Trustee or
any Paying Agent in trust for the Holders of such Securities or
arrangements acceptable to each Rating Agency have been made, in either
case pursuant to Section 10.03; provided, however, that if such Securities
are to be redeemed on a Redemption Date, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made; and
(c) securities which have been paid pursuant to Section 2.09 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Issuer;
provided, however, that in determining whether the Holders of the requisite
principal amount of Securities Outstanding are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (i) Securities
referred to in clause (b) above shall be deemed to be Outstanding, and (ii)
Securities owned by the Issuer or any Affiliate of the Issuer (other than NCMI)
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
determination as to the presence of a quorum or upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities 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 Securities and that the pledgee is not the Issuer or
any Affiliate of the Issuer (other than NCMI). In addition to the foregoing,
Securities owned by the Issuer or an Affiliate of the Issuer (other than NCMI)
shall be disregarded and deemed not to be Outstanding for purposes of
determining the Basic Maintenance Amount, except that, in determining whether
the Trustee shall be protected in relying upon any such determination of Basic
Maintenance Amount, only Securities which the Trustee knows to be so owned shall
be disregarded.
"Over 80% Note" means a Mortgage Note with a Loan-to-Value Ratio in
excess of 80%.
"Paying Agent" means any agency maintained pursuant to Section 10.02,
whether original or successor.
"Permitted Index" means each of the following:
(a) the average yields (as published by the Federal Reserve
Board) for U.S. Treasury Securities adjusted to a constant maturity of one
year;
(b) the "cost of funds" index published by the Eleventh District
Federal Home Loan Bank;
(c) the London interbank offered rates for Eurodollar deposits
of various maturities;
(d) the prime lending rate of NationsBank, N.A.; and
(e) any other index acceptable to the Rating Agencies.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
incorporated organization or government or any agency or political subdivision
thereof.
"Pledged Property" has the meaning set forth in the Granting Clauses.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same indebtedness as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.09 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same indebtedness as the mutilated, destroyed, lost or stolen
security.
"Prior Valuation Date" has the meaning set forth in Section 4.07.
"Private Mortgage Insurance" means a policy of mortgage guaranty
insurance issued by an insurer authorized to write such insurance in the State
in which the property secured by the mortgage or deed of trust is located,
securing the mortgage lender against default by the borrower under a note
secured by the mortgage or deed of trust.
"Rating Agency" means each of Fitch and Moody's. If such agencies or
successors thereto are no longer in existence, "Rating Agency" will be such
nationally recognized statistical rating agency or other comparable Person
designated by the Issuer, notice of which designation will be given to the
Trustee. References herein to the fourth highest rating category of a Rating
Agency will mean BBB or better in the case of Fitch and Baa2 or better in the
case of Moody's. References herein to the third highest rating category will
mean A or better in the case of Fitch and A2 or better in the case of Moody's.
Reference herein to the second highest rating category of a Rating Agency will
mean AA or better in the case of Fitch and Aa2 or better in the case of Moody's.
In the case of any other Rating Agency, such rating categories will mean such
fourth, third or second highest rating category or better without regard to any
plus or minus or any numerical or other qualifier. For all purposes of this
Indenture, if any obligation or security is, at the time of such investment not
rated by Fitch, such obligation or security need only be rated by Moody's.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security or portion
thereof to be redeemed, means 100% of the principal amount of such Security (or
portion thereof) to be redeemed plus interest accrued at the applicable rate on
such principal amount (or portion thereof) to the Redemption Date.
"Reference Banks" means four banks in the London interbank market
selected by the Trustee. Each Reference Bank shall be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
with an established place of business in London, which does not control, is not
controlled by or is not under common control with the Issuer and which has been
designated as a Reference Bank by the Trustee and is able and willing to provide
such quotations to the Trustee on each LIBOR Determination Date. If any
Reference Bank designated by the Trustee fails to meet the qualifications of a
Reference Bank, the Trustee will use its best efforts to designate an
alternative Reference Bank.
"Regular Record Date" means the close of business on the third
Business Day immediately prior to the date any payment of interest on or
principal or redemption price of any Security is due.
"Regular Valuation Date" means, subject to Section 8.01(7), the fifth
and the twentieth calendar day of each month (or if any such calendar day is not
a Business Day, the next succeeding Business Day) for so long as any Security is
Outstanding, commencing April 7, 1997.
"Request" or "Order" means a written request or order signed by the
Chairman of the Board, the Chief Executive Officer, the President, a Vice
President or the Controller and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Issuer and delivered to the Trustee,
as required under this Indenture.
"Required Interest Payment Amount" has the meaning specified in
Section 3.03(a).
"Reserve Fund" means the account established and designated as such
pursuant to Section 3.01.
"Residential Real Estate" means residential real property located in
any State and improvements thereon (other than mobile homes) consisting of one-
to four-family dwelling units (including attached, town or row houses and
condominiums).
"Responsible Officer," when used with respect to the Trustee or the
Custodian, means any officer in the Corporate Trust Office of the Trustee or the
corporate trust office of the Custodian, including any vice president whether or
not designated by a number or words added before the title "vice president,"
senior trust officer, trust officer, or any other officer of the Trustee or the
Custodian customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of or familiarity
with the particular subject.
"Reuters Page LIBO" means the display page designated as "Reuters
Monitor Money Rates Page LIBO" on the Reuters Monitor.
"Securities" has the meaning specified in the second paragraph of
this Indenture
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 2.08.
"Selected Amount" means, (a) as of the Liquidity Date, an amount equal
to the aggregate principal amount of the Securities, and the accrued interest
thereon, which would be due at the Stated Maturity if the Securities Outstanding
on such Liquidity Date were Outstanding at the Stated Maturity; provided,
however, that (b) if, on or prior to such Liquidity Date, Deposit Securities
have been delivered to the Trustee in respect of a redemption of the Securities
on a Redemption Date on or subsequent to such Liquidity Date but no later than
the Stated Maturity, then the amount described in clause (a) shall not include
any accrued interest or any principal which would be owed on any Securities (or
portion thereof) which are to be redeemed on such Redemption Date.
"Servicer" means the Person designated as such in a Servicing
Agreement entered into pursuant to Section 4.13.
"Servicer Remittance Date" means the 23rd day of any month (or, if
such day is not a Business Day, the first Business Day immediately preceding
such 23rd day), commencing in the month following the month in which the Closing
Date occurs.
"Servicing Agreement" means an agreement entered into pursuant to
Section 4.13 and dated as of the Closing Date between the Issuer and a Servicer,
substantially in the form of Exhibit E hereto.
"Special Record Date" has the meaning set forth in Section 2.10.
"State" means any State of the United States, the District of Columbia
and the Commonwealth of Puerto Rico.
"Stated Maturity," when used with respect to any Security, means March
25, 2000.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly by the Issuer or by one
or more Subsidiaries of the Issuer, or by the Issuer and by one or more
Subsidiaries of the Issuer. For the purposes of this definition, "voting stock"
means stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
"Telerate Page 3750" means the display page designated "3750" on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trustee" means the Person named as the Trustee in the first paragraph
of this Indenture unless a successor trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York.
"VA" means the Department of Veterans Affairs of the United States of
America. The term "VA" shall also include such department or agency of the
United States government as shall succeed to the VA in its present function of
issuing guarantees with respect to mortgages and deeds of trust on residential
real estate.
"VA Guaranteed" means guaranteed in part by the VA.
"Vice President" means any vice president, whether or not designated
by a number or a word or words added before or after the title "vice president."
"The Wall Street Journal" means the newspaper of general circulation
published under that name in the Borough of Manhattan, City of New York, State
of New York, or a successor thereto.
SECTION 1.02. Compliance Certificates and Opinions.
(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such
certificate or opinion has read or has caused to be read
such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(3) a statement that, in the opinion of each such
individual, he had made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of
each such individual, such condition or covenant has been
complied with.
(b) Subject to Section 1.02(c) below:
(1) prior to the deposit of any property or
securities with the Trustee which is to be made the basis
for (A) the authentication and delivery of Securities, (B)
the withdrawal of cash constituting a part of the Pledged
Property or (C) the release of any property or securities
subject to the Lien of this Indenture, the Issuer shall, in
addition to any obligation imposed in Section 4.01(a) hereof
or elsewhere in this Indenture, furnish to the Trustee an
Officers' Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value
(within 90 days of such deposit) to the Issuer of the
property or securities to be so deposited;
(2) whenever any property or securities are to be
released from the Lien of this Indenture, the Issuer shall
also furnish to the Trustee an Officers' Certificate
certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be
released and stating that in the opinion of such person the
proposed release will not impair the security under this
Indenture in contravention of the provisions hereof;
(3) whenever the Issuer is required to furnish to
the Trustee an Officers' Certificate certifying or stating
the opinion of any signer thereof as to the matters
described in clause (1) above, the Issuer shall also deliver
to the Trustee a certificate from an Independent appraiser
or other expert (which may be an Independent Accountant) as
to the same matters, if the fair value to the Issuer of the
property or securities to be so deposited and of all other
such property or securities made the basis of any such
authentication and delivery, withdrawal or release since the
commencement of the then current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to
clause (1) above and this clause (3), is ten percent or more
of the aggregate principal amount of the Securities at the
time Outstanding, and in the case of authentication and
delivery of Securities, such certificate shall cover the
fair value to the Issuer of all other such property or
securities so deposited since the commencement of the
current fiscal year as to which a certificate from an
Independent Accountant has not previously been furnished;
but such a certificate need not be furnished with respect to
any property or securities so deposited, if the fair value
thereof to the Issuer as set forth in the related Officers'
Certificate is less than $25,000 or less than one percent of
the Securities at the time Outstanding; and
(4) whenever the Issuer is required to furnish to
the Trustee an Officers' Certificate certifying or stating
the opinion of any signer thereof as to the matters
described in clause (2) above, the Issuer shall also furnish
to the Trustee a certificate from an Independent appraiser
or other expert (which may be an Independent Accountant) as
to the same matters if the fair value of the property or
securities and of all other property or securities released
from the Lien of this Indenture since the commencement of
the then current calendar year, as set forth in the
certificates required by clause (2) above and this clause
(4), equals ten percent or more of the aggregate principal
amount of the Securities at the time Outstanding, but such
certificate need not be furnished in the case of any release
of property or securities if the fair value thereof as set
forth in the related Officers' Certificate is less than
$25,000 or less than one percent of the aggregate principal
amount of the Securities at the time Outstanding.
(c) The provisions of Section 1.02(b) are all intended to facilitate
compliance with the requirements of the TIA as in effect on the date hereof, and
shall be deemed superseded by any modifications or changes to such requirements
(to expand such requirements, to eliminate such requirements or otherwise)
effected by amendment to the TIA, by regulation, by rule or by judicial or
administrative decision. The provisions of Section 1.02(b) shall not at any
time impose upon any Person obligated under this Section any greater reporting
obligations with respect to the matters covered by Section 1.02(b) than the
reporting obligation with respect to such matters imposed upon such Person by
the TIA as in effect with respect to such time.
SECTION 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents. Any
certificate or opinion of an officer of the Issuer may be based, insofar as it
relates to legal matters upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his or her certificate or opinion is based are erroneous.
Any such Opinion of Counsel may be based upon certificates of public
officials and insofar as it relates to factual matters, certificates or opinions
of, or representations by an officer or officers of the Issuer. Any Opinion of
Counsel may be stated to be based on the opinion of other counsel, in which
event it shall be accompanied by a copy of such other opinion. Where any Person
is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 1.04. Acts of Holders of Securities.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of Securities may be embodied in and evidenced by (i) one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent or proxy duly appointed in writing, (ii) resolutions duly adopted by
Holders of Securities voting in favor thereof, either in person or by proxies
duly appointed in writing, at any meeting of Holders of Securities duly called
and held in accordance with the provisions of Article Nine as indicated by the
record of such meeting, or (iii) a combination of such instrument or instruments
and any such resolutions. Except as herein otherwise expressly provided, such
action shall become effective when such instruments and, if appropriate, a
signed and verified record of such meeting as provided in Section 9.06, are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instruments and resolutions (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
of Securities signing such instruments or voting in favor of such resolutions.
Proof of execution of any such instrument or of a writing appointing any such
agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01
hereof) conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer authorized by law to take acknowledgments of deeds and similar
instruments, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or other such officer. Such
certificate or affidavit shall also constitute sufficient proof of the authority
of the Person executing any such instrument or writing; provided, however, that
the Person executing such certificate or affidavit may not be the same Person as
the Person executing such instrument or writing.
(c) The principal amount and serial numbers of securities held by any
Person, and the date of such Holder's holding of the same, shall be proved by
the Security Register.
(d) The Trustee may accept such other proof (including, without
limitation, a signature guarantee) or require such additional proof of any
matter referred to in this Section 1.04 as it shall deem necessary.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security 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 Security.
(f) The record of any meeting of Holders of Securities shall be
proved in the manner provided in Section 9.06.
SECTION 1.05. Notices, Etc., to Trustee and the
Issuer.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders of Securities or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder of Securities or by the Issuer
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing to or
with, the Trustee at the Corporate Trust Office of the Trustee; or
(2) the Issuer by the Trustee or by any Holder of Securities
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class, and addressed to
the Issuer, at 100 North Tryon Street, 23rd Floor, Charlotte, North
Carolina 28255, Attention: Secretary, or at any other address previously
furnished in writing to the Trustee by the Issuer.
Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under this Indenture shall be in the English language.
SECTION 1.06. Notices to Holders of Securities;
Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders of the Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Security affected by such
event, at the address of such Holder as it appears in the Security Register, not
earlier than the earliest date and not later than the latest date prescribed for
the giving of such notice, and shall be deemed to have been given on the date of
such mailing.
Neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Security shall affect the sufficiency
of such notice with respect to other Holders of Securities. Any notice to a
Holder of a Security given as provided above shall be conclusively deemed to
have been received by such Holder whether or not actually received by such
Holder. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification to Holders of Securities as shall be made with the
approval of the Trustee shall constitute a sufficient notification to such
Holders for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the 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 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.
SECTION 1.07. Effect of Headings and Table of
Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.08. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not.
SECTION 1.09. Separability Clause.
In case any provisions in this Indenture or the Securities 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 1.10. Benefits of Indenture.
Nothing in this Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders of the Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 1.11. Governing Law.
This Indenture and each of the Securities shall be construed in
accordance with and governed by the laws of the State of New York, without
giving effect to principles of conflicts of law.
SECTION 1.12. Legal Holidays.
In any case where any Interest Payment Date, any Redemption Date or
the Stated Maturity shall not be a Business Day, payment of principal or
interest on the Securities need not be made on such date but may be made on the
next succeeding Business Day, with the same force and effect as if made on the
date such payment was due, and no interest shall accrue for the period after
such date.
In any case where any Liquidity Date is not a Business Day, any
delivery of Deposit Securities required to be made on such Liquidity Date need
not be made on such Liquidity Date but may be made on the next succeeding
Business Day.
SECTION 1.13. Execution in Counterparts.
This Indenture may be executed by the parties hereto in any number of
counterparts, and by each of the parties hereto in separate counterparts, and
when so executed and delivered, each of such counterparts shall be deemed to be
an original, but all such counterparts shall together constitute one and the
same instrument.
SECTION 1.14. The Issuer's Obligations.
No recourse may be taken, directly or indirectly, against any
shareholder, officer, member of the Board of Trustees or employee of the Issuer
(or of any predecessor or successor of the Issuer) with respect to the Issuer's
obligations under this Indenture or any Officers' Certificate or other
certificate or other writing delivered in connection herewith.
SECTION 1.15. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required or deemed to be included in this Indenture by
any of the provisions of the TIA, such required or deemed to be included
provision shall control. Without limiting the foregoing, the provisions of
Section 1.02(b) and Article Twelve shall not at any time impose upon any Person
obligated thereunder any greater reporting obligation with respect to the
matters covered thereby than the reporting obligation with respect to such
matters imposed upon such Person by the TIA as in effect at such time.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form, Title and Terms of the Securities.
The Securities shall be in substantially the form set forth in Exhibit
H, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any laws,
regulations, rules or requirements of any securities exchange on which the
Securities are listed or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by such execution. Any portion
of the text of any Security may be set forth on the reverse thereof to the
extent permitted by applicable law and applicable exchange regulations.
The Trustee's certificate of authentication shall be in substantially
the form set forth in Exhibit H.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $1,000,000,000;
except for Securities authenticated and delivered upon registration of, transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Sections
2.07, 2.08, 2.09, 8.05 or 11.04.
The Securities shall be known and designated as the "Mortgage-Backed
Bonds, Series 1997-1 Due 2000" of the Issuer. The Stated Maturity of the
Securities shall be March 25, 2000, and they shall bear interest as set forth in
the following paragraph from the later of the Closing Date or the most recent
Interest Payment Date to which interest has been paid, payable in arrears on the
25th day of each March, June, September and December (or, if any such day is not
a Business Day, on the next Business Day, commencing June 25, 1997 until the
principal thereof is paid or made available for payment.
Interest shall accrue on the Securities during the initial Interest
Period at the rate of 5.64766% per annum. Interest shall accrue on the
Securities during each Interest Period subsequent to the initial Interest Period
at an adjustable rate equal to LIBOR (determined for each Interest Period as set
forth in Section 3.06) plus 0.05% per annum. Interest on the Securities shall
be computed on the basis of the actual number of days in each Interest Period
and a 360-day year.
Interest on the Securities shall be paid at the Corporate Trust Office
of the Trustee or at such other office or agency of the Issuer as the Issuer may
designate, 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, except
that interest may, at the option of the Issuer, be paid by check mailed to such
Person at such Person's address appearing in the Security Register or, upon
written instructions from any such Person holding not less than $5,000,000
aggregate principal amount of Securities received by the Trustee not later than
the Regular Record Date or Special Record Date to which such payment of interest
relates, by wire transfer to a United States dollar account maintained by the
payee at a depository institution in the United States; provided, however, that
such depository institution shall have facilities therefor. Payment of
principal of each Security at the Stated Maturity shall be made upon surrender
of such Security at the Corporate Trust Office of the Trustee or at such other
office or agency as the Issuer may designate, 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.
To the extent the Issuer shall designate an office or agency other
than the Corporate Trust Office of the Trustee for the payment of principal or
interest, each Rating Agency shall have confirmed in writing to the Issuer that
such designation will not impair, or cause the Securities to fail to retain, the
ratings then assigned to the Securities by such Rating Agency.
The Securities are subject to mandatory redemption in part, prior to
their Stated Maturity as provided in Article Eleven.
SECTION 2.02. Denominations of Securities.
The Securities shall be issuable in book-entry form in accordance with
Section 2.04, in denominations of $100,000 and integral multiples of $1,000 in
excess thereof.
SECTION 2.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Issuer by any of the
members of the Board of Trustees of the Issuer. Any such signature may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of any member of
the Board of Trustees of the Issuer shall bind the Issuer, notwithstanding that
any such Person has ceased to be a member of such Board of Trustees prior to the
authentication and delivery of such securities or was not such a member of such
Board of Trustees at the date as of which such Securities were dated.
At any time after the execution and delivery of this Indenture, the
Issuer may deliver Securities executed by the Issuer to the Trustee or the
Authenticating Agent for authentication, together with an Order for the
authentication and delivery of such Securities, and the Trustee or the
Authenticating Agent in accordance with such Order shall authenticate and
deliver such securities as is provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture, or
be valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for in Exhibit
H hereto executed by the Trustee or the Authenticating Agent by manual signature
and such certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 2.04. Book-Entry Requirements.
(a) Until such time as definitive, fully registered certificates
("Definitive Certificates") are issued pursuant to Section 2.05, each Security
shall bear the following legend or such other legend as is required by the
applicable Clearing Agency:
"Unless this Security is presented by an authorized representative of
[Name of Clearing Agency] to the Trustee or its agent for registration of
transfer, exchange or payment, and any Security issued is registered in the name
of [Name of Clearing Agency] or such other name as requested by an authorized
representative of [Name of Clearing Agency] and any payment is made to [Name of
Clearing Agency], any transfer, pledge or other use hereof for value or
otherwise by or to any person is wrongful since the registered owner hereof,
[Name of Clearing Agency], has an interest herein."
(b) Upon original issuance, the Securities shall be issued in the form
of one or more typewritten certificates, to be delivered to The Depository Trust
Company (or retained by the Trustee as agent for The Depository Trust Company),
the initial Clearing Agency, by, or on behalf of, the Issuer. Such Securities
shall initially be registered on the Security Register in the name of the
nominee of the initial Clearing Agency, and no Beneficial Owner will receive a
definitive certificate representing such Beneficial Owner's interest in the
Securities, except as provided in Section 2.05. Unless and until Definitive
Certificates have been issued to Beneficial Owners pursuant to Section 2.05:
(i) the provisions of this Section 2.04(b) shall be in full
force and effect;
(ii) the Issuer, the Servicer, the Security Registrar and the
Trustee may deal with the Clearing Agency for all purposes (including
the making of distributions on the Securities and the taking of
actions by the Securityholders) as the authorized representative of
the Beneficial Owners;
(iii) to the extent that the provisions of this Section 2.04(b)
conflict with any other provisions of this Agreement, the provisions
of this Section 2.04(b) shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law, the rules, regulations and procedures of the Clearing Agency
and agreements between such Beneficial Owners and the Clearing Agency
and/or the Clearing Agency Participants, and all references in this
Agreement to actions by Securityholders shall, with respect to the
Securities, refer to actions taken by the Clearing Agency upon
instructions from the Clearing Agency Participants, and all references
in this Agreement to distributions, notices, reports and statements to
Securityholders shall, with respect to the Securities, refer to
distributions, notices, reports and statements to the Clearing Agency
or its nominee, as registered holder of the Book-Entry Certificates,
as the case may be, for distribution to Beneficial Owners in
accordance with the procedures of the Clearing Agency; and
(v) the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Securities to
the Clearing Agency Participants, for distribution by such Clearing
Agency Participants to the Beneficial Owners or their nominees.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Securities evidencing specified voting interests, such direction or consent
shall be given by Beneficial Owners having the requisite voting interests,
acting through the Clearing Agency.
Unless and until Definitive Certificates have been issued to
Beneficial Owners pursuant to Section 2.05, copies of the reports or statements
referred to in Section 12.03 and 12.04 shall be available to Beneficial Owners
upon written request to the Trustee at the Corporate Trust Office of the Trustee
and, for as long as the Securities are listed on the Luxemborg Stock Exchange,
the reports or statement shall be available at the office of the Listing Agent
in Luxembourg.
SECTION 2.05. Definitive Certificates.
(a) If (i) the Issuer advises the Trustee in writing that the
Clearing Agency is no longer willing or able properly to discharge its
responsibilities as depository with respect to the Book-Entry Certificates or
(ii) the Issuer, at its option, advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency, then the Trustee
shall notify the Beneficial Owners, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Certificates
to Beneficial Owners requesting the same. Upon surrender to the Trustee by the
Clearing Agency of the Securities held of record by its nominee, accompanied by
re-registration instructions and directions to execute and authenticate new
Securities from the Issuer, the Trustee shall execute and authenticate
Definitive Certificates for delivery at the Corporate Trust Office of the
Trustee. The Servicer shall arrange for, and will bear all costs of, the
printing and issuance of such Definitive Certificates. Neither the Issuer nor
the Trustee shall be liable for any delay in delivery of such instructions by
the Clearing Agency and may conclusively rely on, and shall be protected in
relying on, such instructions.
(b) In the event Definitive Certificates are issued pursuant to this
Section 2.05, the Issuer shall appoint a paying and transfer agent in Luxembourg
at whose offices such Definitive Certificates may be presented for payment
and/or transfer for so long as they are Outstanding. Such paying and transfer
agent shall be appointed in accordance with Section 10.02 and shall be
maintained for so long as the Securities remain listed on the Luxembourg Stock
Exchange. The Issuer shall give written notice to the Trustee of the location,
and of any change in the location, of such agent. In the event that the Issuer
shall fail to appoint and maintain such paying and transfer agent in Luxembourg,
the Trustee shall appoint such paying and transfer agent.
SECTION 2.06. Notices to Clearing Agency.
Whenever notice or other communication to the Holders of Securities is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Beneficial Owners pursuant to Section 2.05, the Trustee
shall give all such notices and communications specified herein to be given to
Holders of Securities to the Clearing Agency.
SECTION 2.07. Temporary Securities.
Pending the preparation of Definitive Certificates in accordance with
Section 2.05, the Issuer may execute, and upon the Issuer's Order the Trustee or
other Authenticating Agent shall authenticate and deliver, temporary Securities
which are printed, lithographed or typewritten, in any denomination,
substantially of the tenor of the Definitive Certificates in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Issuer will cause Definitive
Certificates to be prepared without unreasonable delay. After the preparation
of Definitive Certificates, the temporary Securities shall be exchangeable for
Definitive Certificates upon surrender of the temporary Securities at the
Corporate Trust Office of the Trustee or at the office of the Authenticating
Agent, if other than the Trustee, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities, the Issuer shall
execute and the Trustee or the Authenticating Agent shall authenticate and
deliver in exchange therefor a like aggregate principal amount of Definitive
Certificates of authorized denominations. Until so exchanged such temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Definitive Certificates.
SECTION 2.08. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the
registration both of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering both
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
Corporate Trust Office of the Trustee or at the office of any Authenticating
Agent, the Issuer shall execute, and the Trustee or the Authenticating Agent
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations and of a
like aggregate principal amount, all as requested by the transferor.
At the option of the Holder, a Security may be exchanged into one or
more Securities of any authorized denomination and of a like aggregate principal
amount, upon surrender of the Security to be exchanged at the Corporate Trust
Office of the Trustee or at the office of any Authenticating Agent. Whenever
any Securities are so surrendered for exchange, the Issuer shall execute, and
the Trustee or the Authenticating Agent shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange. The registration by
the Security Registrar of the transfer of a Security shall be deemed to be the
written acknowledgment by the Issuer of such transfer.
Every Security presented or surrendered for registration or transfer
shall (if so required by the Issuer or the Security Registrar) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Issuer and the Security 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 Securities, but the Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 2.07, 8.05 or 11.04 not involving any registration
of transfer.
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Issuer
shall execute, and the Trustee shall authenticate and deliver in exchange
therefor, a new Security of like tenor and principal amount and bearing a number
not contemporaneously Outstanding.
If there be delivered to the Issuer and the Trustee
(1) evidence to their satisfaction of the
destruction, loss or theft of any Security, and
(2) such security or indemnity as may be
required by them to save each of them and any agent of each
of them harmless,
then, in the absence of notice to the Issuer or the Trustee that such Security
has been acquired by a bona fide purchaser, the Issuer shall execute, and upon
its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount bearing a number not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Issuer in its discretion may,
instead of issuing a new Security, direct the Trustee or Paying Agent to pay
such Security on its due date.
Upon the issuance of any new Security under this Section 2.09, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto.
Every new Security issued pursuant to this Section 2.09 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Issuer whether or not the destroyed, lost or
stolen Security, if any, shall be at any time enforceable by anyone, and such
new Security shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 2.09 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 Securities.
SECTION 2.10. Interest Payments; Interest Rights
Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Issuer, at its election in each case, as
provided in clause (1) or (2) below:
(1) the Issuer may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Issuer shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Issuer shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money when so deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon
the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Issuer of such Special
Record Date and, in the name and at the expense of the
Issuer, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder of
Securities at the address of such Holder as it appears in
the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (2).
(2) the Issuer may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the
Securities 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 clause, such manner of payment shall be deemed
practicable by the Trustee.
Notwithstanding the foregoing provisions of this Section 2.10, no
payment of Defaulted Interest pursuant to this Section 2.10 shall affect the
status of the failure to pay interest when such interest becomes due and payable
as an Event of Default under Section 5.01 hereof.
Subject to the foregoing provisions of this Section 2.10, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.11. Persons Deemed Owners.
Prior to due presentment for registration of transfer, the Issuer, the
Trustee and any agent of the Issuer or the Trustee (including the Authenticating
Agent) may treat the Person in whose name such Security is registered as the
owner of such Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Issuer, the Trustee nor any such agent
of the Issuer or the Trustee shall be affected by notice to the contrary.
SECTION 2.12. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any person other than the Trustee,
be delivered to the Trustee. All Securities so delivered shall be canceled by
the Trustee and may not thereafter be reissued. The Trustee shall destroy such
cancelled Securities in accordance with its then current procedures.
ARTICLE THREE
ADMINISTRATION OF ACCOUNTS AND
PAYMENTS TO SECURITYHOLDERS
SECTION 3.01. Establishment and Administration of
Distribution Account and Reserve Fund.
(a) On or before the Closing Date, the Trustee, for the benefit of
Securityholders, shall establish and maintain, or cause to be established and
maintained, two separate accounts (the "Distribution Account" and the "Reserve
Fund"). Each of the Distribution Account and the Reserve Fund shall be an
Eligible Account in the name of the Trustee bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit of
Securityholders.
(b) Funds on deposit in the Distribution Account and the Reserve Fund
shall at all times be invested in Eligible Investments at the written direction
of the Issuer; provided, however, that to the extent necessary to make required
payments on any Interest Payment Date and/or at Stated Maturity, any such
investment shall mature or become due and such funds shall be made available for
withdrawal on or prior to the related Interest Payment Date or Stated Maturity,
as the case may be.
(c) Amounts held in the Distribution Account and the Reserve Fund
from time to time will constitute a portion of the Pledged Property securing the
Securities and Eligible Collateral for purposes of satisfying the Basic
Maintenance Amount. Subject to the requirements and limitations imposed by
Section 4.08, the Trustee shall release funds on deposit in the Reserve Fund to
the Issuer upon request.
(d) Any funds remaining on deposit in the Distribution Account or the
Reserve Fund following the satisfaction and discharge of this Indenture pursuant
to Article Thirteen hereof shall be remitted promptly to the Issuer.
(e) The Trustee shall have the right to withdraw from any account
funds deposited therein in error.
SECTION 3.02. Collections and Allocations.
(a) All amounts received by the Trustee in respect of interest or any
other earnings on or proceeds of the portion of the Pledged Property other than
Eligible Mortgage Notes, shall be deposited upon receipt into the Distribution
Account.
(b) On each Servicer Remittance Date, upon receipt of the Available
Amount from the Servicer in accordance with the Servicing Agreement, the Trustee
will apply such funds in the following order of priority:
(i) first, for deposit into the Distribution Account, an amount
(first from the interest portion of the Available Amount and then from the
principal portion of the Available Amount) equal to the amount of interest
accrued or to accrue on the Securities from and including the immediately prior
Interest Payment Date (or from and including the Closing Date in the case of the
first Servicer Remittance Date) to and including the day prior to the next
succeeding Interest Payment Date less in each month other than March, June,
September and December any amounts deposited in the Distribution Account since
the immediately preceding Servicer Remittance Date and available for payment on
the Bonds, and in the case of Servicer Remittance Dates occurring in March,
June, September and December, the amount payable on the next Interest Payment
Date, less any amounts then on deposit in the Distribution Account and available
for payments on the Securities; and
(ii) second, for deposit into the Reserve Fund, the remaining
portion of the Available Amount.
SECTION 3.03. Payments to Securityholders.
(a) Until an Event of Default occurs, at which time the provisions of
Section 5.10 shall apply:
(i) On each Interest Payment Date, the Trustee shall (A)
withdraw from the Distribution Account, up to the full balance of funds on
deposit in the Distribution Account (which shall include any amounts required to
be transferred from the Reserve Fund pursuant to Section 3.03(b) below), an
amount equal to the amount of all interest accrued during the related Interest
Period on the Securities Outstanding with respect to such Interest Payment Date
plus any Defaulted Interest (the "Required Interest Payment Amount") and (B) pay
to Securityholders (or transfer to the Paying Agent for payment to
Securityholders, if the Trustee shall not then be the Paying Agent) such amount
in accordance with Section 2.10.
(ii) In addition, on any Redemption Date and at the Stated
Maturity, the Trustee shall withdraw sufficient amounts from the Distribution
Account (which shall include any amounts required to be transferred from the
Reserve Fund pursuant to Section 3.03(b) below) to make required interest and
principal payments on such date pursuant to Article Eleven or Article Thirteen
hereof, as applicable, and distribute such amounts to Securityholders as of the
immediately preceding Regular Record Date.
(b) (i) If, on any Interest Payment Date, the amount on deposit in
the Distribution Account prior to giving effect to the withdrawal and payment
required by Section 3.03(a)(i) above is less than the Required Interest Payment
Amount, the Trustee shall withdraw from the Reserve Fund and transfer to the
Distribution Account, up to the full balance of funds on deposit in the Reserve
Fund, an amount equal to the difference between the Required Interest Payment
Amount and the amount then on deposit in the Distribution Account.
(ii) In addition, if, on any Redemption Date or at the Stated
Maturity, the amount on deposit in the Distribution Account prior to giving
effect to the withdrawal and payment required by Section 3.03(a)(ii) above is
less than the amount required to be paid in respect of interest and principal on
such date, the Trustee shall immediately withdraw from the Reserve Fund and
transfer to the Distribution Account, up to the full balance of funds on deposit
in the Reserve Fund, an amount equal to the difference between such required
amount and the amount on deposit in the Distribution Account.
SECTION 3.04. [RESERVED]
SECTION 3.05. [RESERVED]
SECTION 3.06. Determination of LIBOR. (a) LIBOR for the initial
Interest Period shall be 5.59766% per annum. On each LIBOR Determination Date,
the Trustee shall determine LIBOR for a period equal to the related Interest
Period (commencing on the first day of such period) as of 11:00 a.m. (London
time) on such LIBOR Determination Date as such quotation appears on Telerate
Page 3750.
(b) If on any LIBOR Determination Date, such rate does not appear on
Telerate Page 3750, the Trustee shall determine LIBOR for a period equal to the
related Interest Period (commencing on the first day of such period) as of 11:00
a.m. (London Time) on such LIBOR Determination Date as such quotation appears on
Reuters Monitor Money Rates Page LIBO ("Reuters Page LIBO").
(c) If on any LIBOR Determination Date, such rate does not appear on
Reuters Page LIBO, the Trustee shall determine LIBOR on the basis of quotations
provided by the Reference Banks as of 11:00 a.m. (London time) on such LIBOR
Determination Date to prime banks in the London interbank market for a period
equal to the related Interest Period (commencing on the first day of such
period). LIBOR as determined by the Trustee shall be the arithmetic mean of
such quotations (rounded upwards, if necessary, to the nearest whole multiple of
1/16%).
(d) If on any LIBOR Determination Date at least two of the Reference
Banks provide quotations, LIBOR shall be determined in accordance with (c) above
on the basis of the offered quotations of those Reference Banks providing such
quotations.
(e) If on the LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR shall be:
(i) the rate per annum (rounded upwards, if necessary, to
the nearest whole multiple of 1/16%) that the Trustee determines to be
the arithmetic mean of the offered quotations that four leading banks
in New York City selected by the Trustee are quoting at or about 11:00
a.m. (Eastern Time) on such LIBOR Determination Date for loans in U.S.
dollars to the Reference Banks for a period equal to the related
Interest Period (commencing on the first day of such Interest Period)
or those of them (being at least two in number) to which such offered
quotations are, in the opinion of the Trustee, being so quoted; or
(ii) if the banks selected as aforesaid by the Trustee are
not quoting as described in the preceding clause (i), LIBOR for such
Interest Period shall be LIBOR as determined on the previous LIBOR
Determination Date or, with respect to the first LIBOR Determination
Date, 5.59766% per annum.
(f) On each LIBOR Determination Date prior to 12:00 noon (Eastern
Time), the Trustee shall send to the Issuer by facsimile, notification of LIBOR
and the interest rate for the Securities for the following Interest Period.
(g) The establishment of LIBOR on each LIBOR Determination Date for
each Interest Period and the Trustee's calculation of the rate of interest
applicable to the Securities for the related Interest Period shall (in the
absence of manifest error) be final and binding.
ARTICLE FOUR
PROVISIONS AS TO COLLATERAL
SECTION 4.01. Pledging of Collateral.
(a) The Issuer may at any time and from time to time pledge
Collateral with the Trustee by delivering the same to the Trustee (or, if
applicable, to the Custodian, in the case of Eligible Mortgage Notes) in the
manner described in Section 4.01(b) as to Pledged Property other than Deposit
Securities and Section 10.03 as to Deposit Securities delivered pursuant to such
Section. The following documents shall be delivered to the Trustee or the
Custodian, as applicable, in connection with any such pledge and delivery of
Collateral:
(i) a list identifying the Collateral;
(ii) a designation of whether the Collateral is Deposit
Securities delivered pursuant to Section 10.03 or Eligible
Collateral;
(iii) the documents required by the Granting
Clauses of this Indenture;
(iv) such certificate as to the fair value of such
Collateral as may then be required by Section 1.02(b) of
this Indenture and Section 314(d) (and any other applicable
provision) of the TIA; and
(v) an Opinion of Counsel in the form of Exhibit C.
At the time of any delivery of Collateral to the Trustee or the
Custodian, the Trustee or the Custodian shall certify that all Collateral
specified on the accompanying list identifying the Collateral provided by the
Issuer has been received by the Trustee or the Custodian, as the case may be,
and that, subject to the provisions of the next succeeding paragraph of this
Section 4.01(a) with respect to Eligible Mortgage Notes, such Collateral is
accompanied by the documents required by the Granting Clauses. In addition, the
Trustee shall certify to the Issuer that it has received a certificate as to the
fair value of such Collateral (if then required by the TIA) and an Opinion of
Counsel in the form of Exhibit C.
With respect to Eligible Mortgage Notes, the Trustee agrees to cause
the Custodian to review the Mortgage Documentation delivered to the Custodian no
later than 90 days after the Closing Date or, if received by the Custodian after
the initial 90-day period, promptly after its delivery to the Custodian. The
Custodian will ascertain whether all required documents have been executed,
received and accompanied by evidence of recordation, and whether those documents
relate (determined, in the case of Mortgage Notes, on the basis of the mortgagor
name and loan number) to the Mortgage Notes it has received, as identified in
Exhibit A to this Indenture. In performing any such review, the Custodian may
conclusively rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon. If at any
time during such review or thereafter the Custodian finds a document or
documents to be missing or defective in any material respect (a "Material
Defect"), the Custodian shall promptly notify the Issuer of such Material
Defect, whereupon the Issuer shall have a period of 180 days within which time
to correct or cure any such defect; provided, however, that (i) if such defect
relates solely to the inability of the Issuer to deliver the original Mortgage
or intervening assignments thereof because the originals of such documents have
not been returned by the applicable jurisdiction, the Issuer shall have a period
of two years within which to correct or cure such defect, but the Issuer shall
nonetheless deliver such original documents to the Custodian promptly upon
receipt if received within such period, and (ii) if the applicable jurisdiction
retains the original recorded Mortgage, assignment of Mortgage or intervening
assignments of Mortgage (as evidenced by a certification from the Issuer to such
effect), or if the original is not otherwise available, the Issuer shall be
permitted to deliver a photocopy of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where the Mortgage was recorded. During the applicable period
within which the Issuer is permitted to correct or cure any Material Defect as
set forth above, the related Mortgage Note shall continue to constitute an
Eligible Mortgage Note for all purposes of this Indenture. If such period shall
expire without the Issuer having corrected or cured such defect, then the
related Mortgage Note shall no longer be an Eligible Mortgage Note hereunder.
(b) (i) All Mortgage Notes pledged with the Trustee
(and, in the case of Mortgage Notes for which the related
Mortgaged Property is located in the State of California or
Oregon, the related Mortgages or certified copies thereof)
shall be delivered to the Trustee (or, if the Trustee has
appointed a Custodian pursuant to Section 6.08, the
Custodian) in accordance with the definition of "delivery"
in Section 1.01 hereof.
All Mortgage Notes included in the Pledged
Property shall be accompanied by a certification (which may
be in the form of a Collateral Report of the Issuer) that
such Mortgage Notes reflect the characteristics listed in
the definition of Eligible Fixed-Rate Mortgage Notes, if
they are Fixed-Rate Mortgage Notes, or the definition of
Eligible Adjustable-Rate Mortgage Notes, if they are
Adjustable-Rate Mortgage Notes and constitute, in the
aggregate (together with any other Eligible Mortgage Notes
then subject to the Lien of this Indenture), Eligible
Mortgage Notes.
(ii) In the event that the Trustee shall receive
notice from the Issuer or any Securityholder that the rating
by Fitch or Moody's of NationsBank, N.A.'s long-term
deposits has fallen below BBB or Baa2 or of its short-term
deposits has fallen below F-2 or P-2, as the case may be,
the Trustee shall promptly, or, if the Trustee has appointed
a Custodian pursuant to Section 6.08, promptly direct the
Custodian in writing to, record or cause to be recorded
assignments of the Mortgages securing the Eligible Mortgage
Notes pledged to the Trustee. The Issuer hereby constitutes
and appoints the Trustee and any such Custodian as its
attorney-in-fact, with full power of substitution, to make
or cause to be made such recordings and to take, in the name
and on behalf of the Issuer, all actions necessary or
advisable in the Trustee's or, if applicable, the
Custodian's sole discretion to effectuate such recordings,
at the expense of the Issuer, including without limitation
to execute or cause to be executed such documents in the
name of the Issuer as shall be necessary or advisable in the
Trustee's or, if applicable, the Custodian's sole discretion
to effectuate such recordings.
(iii) All Government Securities and other
securities and instruments delivered to the Trustee as
Pledged Property pursuant to any provision of this Indenture
shall be delivered in accordance with the definition of
"delivery" in Section 1.01 hereof. The Issuer agrees that
it will, promptly following a request therefor by the
Trustee, execute and deliver to the Trustee any
documentation reasonably requested to effect registration of
Government Securities and other securities in the name of
the Trustee, or to establish evidence of the security
interest of the Trustee therein.
(iv) The Issuer shall deliver promptly to the
Trustee such other documents, certificates and opinions as
the Trustee may reasonably request in connection with the
subjection of any Pledged Property (and payments with
respect thereto to the extent provided in this Indenture) to
the Lien of this Indenture.
(c) The fact that any Pledged Property is reassigned without recourse
shall not alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of and interest on the Securities.
(d) If, as of any date, any Eligible Adjustable-Rate Mortgage Notes
which were included in the Discounted Value of the Eligible Collateral as of the
Latest Collateral Report shall be converted into Fixed-Rate Mortgage Notes, the
Issuer shall, on the next Regular Valuation Date, recharacterize such Mortgage
Notes as Fixed-Rate Mortgage Notes and the Collateral Report delivered to the
Trustee pursuant to Section 4.06 with respect to such Regular Valuation Date
shall be prepared treating such Mortgage Notes as Fixed-Rate Mortgage Notes.
SECTION 4.02. Disposition of Payments on Pledged
Property.
The Trustee shall be entitled to receive all payments on or in respect
of any Pledged Property, other than payments received with respect to Eligible
Mortgage Notes which shall be received by the Issuer or the Servicer pursuant to
the Servicing Agreement; provided, however, that if an Event of Default shall
have occurred and be continuing, the Trustee shall be entitled to receive all
payments. If the Issuer shall receive any payments (including prepayments and
payments as a result of default) on or in respect of Pledged Property, it shall
segregate such payments (net of any expenses of collection, sale or foreclosure)
from the other property of the Issuer, and shall promptly after receipt of such
payments deliver them in the form received to the Servicer, in the case of any
such payments related to Eligible Mortgage Notes prior to an Event of Default,
or to the Trustee, in the case of any other such payments relating to any
Pledged Property other than Eligible Mortgage Notes or such payments related to
Eligible Mortgage Notes after an Event of Default.
SECTION 4.03. Consents, Waivers and
Modifications.
(a) Unless and until an Event of Default shall have occurred and be
continuing, the Issuer shall have, without the consent of any Holder or the
Trustee, the exclusive right to service and administer (directly or through
agents selected by the Issuer (including the Servicer), in its sole discretion)
the Mortgage Notes and Mortgages included from time to time in Pledged Property,
and except for the power to cause the transfer, assignment, disposition or
delivery thereof other than as provided for herein, shall have full power and
authority in respect of the Pledged Property, including, without limitation, the
right to give consents or waivers upon and to make modifications in respect of
all Mortgage Notes, Mortgages, Government Securities and other securities
included in such Pledged Property, and from time to time upon the Issuer's
Request the Trustee forthwith shall make and deliver, or shall cause to be made
and delivered to the Issuer or to its nominees, powers of attorney to give
consents or waivers in respect of any such Mortgage Notes, Mortgages, Government
Securities or other securities which have been transferred into the name of or
delivered to the Trustee or its nominees. Without limiting the generality of
the foregoing provisions of this Section 4.03, unless and until any such Event
of Default shall have occurred and be continuing, the Issuer shall have the
right to consent to the sale or other transfer of any property of the obligor,
maker, mortgagor or grantor (or any person who has assumed the duties and
obligations of such obligor, maker, mortgagor or grantor) under any such
Mortgage, to authorize any assumption of a Mortgage Note by any transferee of
property securing such Mortgage Note, to execute any release of such property,
or discharge of such obligor, mortgagor or grantor (and any person who has
assumed the duties and obligations of such obligor, mortgagor or grantor), to
effect appropriate recordation and, in its sole discretion, to determine whether
and what, if any, action should be taken in the event of a default under such
Mortgage Note, Mortgage, Government Security or other security, and the Trustee
shall execute any release, consent or other documentation requested by the
Issuer's Request to confirm any action taken by the Issuer pursuant to this
Section 4.03 or enable such action to be taken by the Issuer; provided, however,
that the Issuer shall not transfer Mortgage Notes or the related Mortgages to a
bona fide purchaser for value without notice prior to notification to the
borrowers of the existence of the assignments to the Trustee of the Mortgage
Notes or due recordation of assignments to the Trustee of such Mortgages, and
provided, further, that the Issuer shall not discharge Mortgage Notes or the
related Mortgages prior to such notification or recordation, without, in each
case, having obtained the consent of the Trustee, which consent shall not be
unreasonably withheld. Any Request by the Issuer under this Section 4.03 shall
be accompanied by an Officers' Certificate stating that the action taken or
requested is authorized by this Indenture, that the execution of such release or
consent is appropriate to confirm such action, that no Event of Default has
occurred and is continuing, and that following such action the Discounted Value
of the Eligible Collateral will equal or exceed the Basic Maintenance Amount.
Except as otherwise specifically provided in this Indenture, so long as no Event
of Default shall have occurred and be continuing, the Trustee shall have no
duties or responsibilities with regard to any such Mortgage, Mortgage Note,
Government Security, or other security or instrument included in the Pledged
Property assigned to them or the value of the property subject thereto.
(b) The Issuer covenants that it will give consents, and waivers,
make modifications and supplements, and take other action with respect to any
Mortgage Note, Mortgage, Government Security, or other security included in
Pledged Property only (i) except as otherwise permitted by the Servicing
Agreement, on a case by case basis in the ordinary course of its business and in
a manner consistent with the treatment of securities and loans of the same type
in the investment and loan portfolios of NationsBank, N.A. (including the
servicing, adjustment and refinancing of Mortgage Notes and Mortgages), or (ii)
except as otherwise permitted by the Servicing Agreement, in a manner consistent
with NationsBank, N.A.'s treatment of all loans and securities of the same type
in its loan and securities portfolios generally if such consent, waiver,
modification, supplement or other action is to be other than on a case by case
basis, and (iii) in a manner consistent with the provisions and purposes of this
Indenture.
SECTION 4.04. Rights of Trustee and the Issuer after
Event of Default.
Whenever in this Article Four it is provided that any right in respect
of the Securities or of obligations or indebtedness forming part of the Pledged
Property may be exercised by the Issuer only until an Event of Default shall
have occurred and be continuing, such right may, nevertheless, be exercised by
the Issuer in case an Event of Default shall have occurred and be continuing if
and to the extent that the Trustee shall in writing consent to such exercise in
the specific instance, or more generally, in all instances, or otherwise on such
conditions as the Trustee may impose.
SECTION 4.05. Delivery of Initial Collateral and
Reporting Requirements on Issuance of Securities.
On or before the date of the closing of the sale of the Securities,
which shall be March 18, 1997 (the "Closing Date") the Issuer shall deliver and
pledge to the Trustee, in accordance with the provisions of Section 4.01, the
Initial Collateral and shall deliver to the Trustee the following:
(a) a Collateral Report dated and containing information as of a date
not more than three Business Days prior to the date of such delivery (except
that such Collateral Report need not certify an amount of Securities Outstanding
but shall state that such amount is assumed to be $1,000,000,000);
(b) the Opinion of Counsel required pursuant to subsection (a) of
Section 4.01 which shall be dated such date of issuance and shall also state
that:
(i) the Securities have been duly authorized,
executed, authenticated, issued and delivered and constitute
the valid and legally binding obligations of the Issuer and
when duly authenticated by or on behalf of the Trustee, will
be entitled to the benefits provided by this Indenture,
subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance or other similar laws affecting the
rights of creditors now or hereafter in effect and to
equitable principles that may limit the right to specific
enforcement or remedies, and further subject to 12 U.S.C.
1818(b)(6)(D) and similar bank regulatory powers and to the
application of principles of public policy;
(ii) the issuance and sale of the Securities by
the Issuer, the compliance by the Issuer with all of the
provisions of the Securities and this Indenture and the
consummation of the transactions herein contemplated will
not, to the best of such counsel's knowledge, conflict with
or result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument
known to such counsel to which the Issuer is a party or by
which the Issuer is bound or to which any of the property or
assets of the Issuer is subject, which conflict, breach or
default would be materially adverse to the Issuer, nor will
such action result in any violation of the provisions of the
declaration of trust or by-laws of the Issuer, or to the
best of such counsel's knowledge, any statute or any order,
rule or regulation of any court or governmental agency or
body having jurisdiction over the Issuer or any of its
properties;
(iii) except for consents, permits and similar
authorizations required under the blue sky or state
securities laws of various jurisdictions, as to which no
opinion is expressed, and except also for such consents,
permits and similar authorizations as have been obtained, no
consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or
body of the United States of America or any political
subdivision of the Federal government of the United States
of America is required for the issuance and sale of the
Securities or the consummation of the other transactions
contemplated by this Indenture; and
(iv) in the opinion of the Person giving such
opinion that the conditions precedent to the authentication
and delivery of the Securities as set forth in this
Indenture have been complied with;
(c) an Officers' Certificate stating that the conditions precedent to
the authentication and delivery of the Securities as set forth in this Indenture
have been complied with; and
(d) an Accountants' Letter verifying the Collateral Report delivered
pursuant to Section 4.05(a).
SECTION 4.06. Collateral Reports.
On or before the second Business Day after each Regular Valuation
Date, the Trustee shall deliver to the Issuer a Collateral Report, dated and
containing information as of the Determination Date relating to the Regular
Valuation Date to which such Collateral Report relates. In preparing any
Collateral Report, the Trustee shall be entitled to rely on information received
from the Servicer without any independent investigation. Commencing with the
Collateral Report delivered by the Trustee in connection with the April 7, 1997
Regular Valuation Date and on a quarterly basis thereafter, a firm of
Independent Accountants selected by the Issuer shall select at random one of the
Collateral Reports delivered by the Trustee during the three-month period ended
on the last day of the preceding month and deliver an Accountants' Letter to the
Trustee and the Issuer with respect to such Collateral Report and the most
recent Collateral Report prepared by the Trustee. If any letter of an
Accountant delivered to the Trustee pursuant to this Section 4.06 shows that an
error was made in the related Collateral Report, the calculation or
determination made by such Accountant shall be final and conclusive and shall be
binding on the Issuer and the Trustee.
A copy of each Collateral Report and Accountants' Letter delivered
pursuant to this Section 4.06 shall be delivered concurrently by the Trustee to
Fitch and to Moody's, but without any liability or responsibility of the Trustee
for any failure to do so.
SECTION 4.07. Maintenance of Eligible Collateral.
(a) In the event that any Collateral Report delivered to the Issuer
pursuant to Section 4.06 shows that, as of the date reported upon in such
Collateral Report, the Discounted Value of Eligible Collateral is less than the
Basic Maintenance Amount, then, subject to Section 4.07(c), the Issuer, by the
Cure Date,
(i) shall deliver to the Trustee sufficient additional Eligible
Collateral, and/or
(ii) shall substitute sufficient Eligible Collateral, and/or
(iii) shall repurchase and deliver to the Trustee for cancellation
sufficient Outstanding Securities,
so that, immediately after such delivery of additional Eligible Collateral
and/or such substitution of Eligible Collateral and/or such repurchase and
cancellation of Outstanding Securities, the Discounted Value of Eligible
Collateral included in the Pledged Property (determined, at the option of the
Issuer, either as of the Regular Valuation Date on which the Basic Maintenance
Amount was not met (the "Prior Valuation Date") or as of a later date of
valuation, but no later than the Cure Date (any such date, the "Cure Valuation
Date")) shall be at least equal to the Basic Maintenance Amount as of the date
on which such calculation is being made (as adjusted to give effect to the
addition or substitution of Eligible Collateral and/or the repurchase of
Securities by the Issuer or an Affiliate).
(b) Compliance with Section 4.07(a) shall be evidenced by delivery of
a Collateral Report to the Issuer which shall be dated as of a date no later
than the Cure Date and shall contain information as of the date provided in
Section 4.07(a) and an Accountants' Letter verifying such Collateral Report.
(c) In the event that the Issuer is unable by the Cure Date to cause
the Discounted Value of Eligible Collateral to be at least equal to the Basic
Maintenance Amount by taking the actions provided in Section 4.07(a), the Issuer
shall, no later than 30 days after the Cure Date, redeem Outstanding Securities,
subject to and in accordance with Article Eleven of this Indenture, so that
immediately after the Redemption Date for such redemption, the Discounted Value
of Eligible Collateral included in the Pledged Property (determined as of the
Regular Valuation Date or Cure Valuation Date (whichever is later) immediately
preceding the date on which the Trustee gives written notice of redemption to
the Holders) shall be at least equal to the Basic Maintenance Amount as of the
date on which such calculation is being made (as adjusted to give effect to any
addition of Eligible Collateral and/or substitution of Eligible Collateral or
repurchase of Outstanding Securities and such redemption).
(d) Compliance with Section 4.07(c) shall be evidenced by delivery to
the Issuer of the Collateral Report described in Section 11.01(b).
(e) The Issuer shall not be required to comply with the provisions of
Section 4.08 in order to add or substitute Eligible Collateral pursuant to
Section 4.07(a) or Section 4.07(c) if the addition or substitution is concurrent
with the delivery of evidence of compliance with Section 4.07(a) or with Section
4.07(c), as the case may be, and, in the case of substitution, the Issuer
delivers to the Trustee a list identifying the Collateral to be released from
the Lien of this Indenture. Upon delivery of the Collateral Report referred to
in Section 4.07(b) evidencing compliance with Section 4.07(a) or delivery of the
Collateral Report referred to in Section 4.07(d) evidencing compliance with
Section 4.07(c) and the list identifying the Collateral to be released, the
Trustee shall deliver to the Issuer the Collateral to be released in a manner
similar to the manner in which such Collateral was delivered to the Trustee.
(f) The Issuer shall be required to comply with the provisions of
Section 4.01 to add or substitute Eligible Collateral pursuant to this Section
4.07.
SECTION 4.08. Withdrawal of Collateral Subject to
Maintenance Requirements.
(a) The Trustee shall promptly release, reassign and deliver to the
Issuer the Eligible Collateral referred to in clause (ii) of this sentence in
a manner similar to the manner in which the Issuer delivered such Eligible
Collateral to the Trustee upon receipt of (i) an Officers' Certificate
substantially in the form set forth in Part A of Exhibit D, (ii) a detailed list
of the Eligible Collateral to be withdrawn and (iii) a detailed list of the
additional Eligible Collateral, if any, to be substituted for the Eligible
Collateral to be withdrawn. If, however, the certification in Part A of Exhibit
D cannot be made because (A) the Discounted Value of Eligible Collateral
included in the Pledged Property held by the Trustee shown in the Latest
Collateral Report plus the sum of (B) the Discounted Value of the additional
Eligible Collateral, if any, delivered for substitution (determined as of the
date of the Collateral Report) and (C) the Discounted Value of Eligible
Collateral added pursuant to this Section 4.08(a) subsequent to the date of the
Latest Collateral Report (determined as of the date of the Latest Collateral
Report) reduced by an amount equal to the sum of (x) the Discounted Value of the
Eligible Collateral requested to be withdrawn (determined as of the date of the
Latest Collateral Report), and (y) the Discounted Value of Eligible Collateral
withdrawn pursuant to this Section 4.08(a), subsequent to the date of the Latest
Collateral Report (determined as of the date of the Latest Collateral Report),
is less than the Basic Maintenance Amount as of the date of the Latest
Collateral Report, then no such release, reassignment, delivery or transfer
shall be made unless:
(i) the Issuer shall deliver to the Trustee
additional Eligible Collateral, if, and to the extent,
required to permit (A) the delivery by the Issuer of the
Officers' Certificate referred to in clause (ii) below and
(B) the delivery by the Trustee of the Collateral Report
referred to in clause (iii) below;
(ii) the Issuer shall deliver to the Trustee an
Officers' Certificate in the form of Part B to Exhibit D to
this Indenture, dated and containing information as of the
date of delivery thereof;
(iii) the Trustee shall deliver to the Issuer a
Collateral Report, which Collateral Report shall exclude
such Eligible Collateral proposed to be withdrawn, and
include any Eligible Collateral to be substituted therefor,
and shall show that the Discounted Value of Eligible
Collateral included in the Pledged Property on the date of
such Collateral Report (determined as of a date of valuation
no more than three Business Days prior to the date of such
Collateral Report) is at least equal to the Basic
Maintenance Amount as calculated in Part A of such
Collateral Report.
(b) The additional Eligible Collateral pledged pursuant to Section
4.08(a) shall be pledged in accordance with the provisions of Section 4.01. If
the additional Eligible Collateral to be substituted for Eligible Collateral
which is being withdrawn pursuant to Section 4.08(a) is (i) Mortgage Notes,
unless such Mortgage Notes are being substituted for Mortgage Notes having an
identical Discounted Value, or (ii) Eligible Collateral of a type which has not
been valued in the Latest Collateral Report, such substitution may be made only
upon presentation of a Collateral Report, as described in Section 4.08(a)(i)(B).
(c) Upon receipt of (i) a Request from the Issuer in the form of an
Officers' Certificate substantially in the form of Part C of Exhibit D
requesting withdrawal of Pledged Property which did not constitute Eligible
Collateral and was not included in the computation of Discounted Value of
Eligible Collateral set forth in the Latest Collateral Report, (ii) a list
identifying such Pledged Property to be withdrawn pursuant to this Section
4.08(c) and (iii) a certification in such Officers' Certificate that (A) the
Discounted Value of Eligible Collateral included in Pledged Property held by the
Trustee as of the date of the Latest Collateral Report was equal to or exceeded
the Basic Maintenance Amount, (B) the Discounted Value of the Eligible
Collateral, after giving effect to any withdrawals from and additions to
Eligible Collateral during the period from the date of the Latest Collateral
Report to the date of the requested withdrawal equals or exceeds the Basic
Maintenance Amount and (C) no Event of Default has occurred which is continuing,
the Trustee shall promptly release, reassign and redeliver such Pledged Property
(and any Mortgages serving as security therefor and the instruments,
documentation and other related property referred to in the Granting Clauses)
specified in said Officers' Certificate to the Issuer.
(d) Upon any withdrawal permitted pursuant to this Section 4.08, the
Trustee shall execute and deliver such instruments of transfer or assignment as
the Issuer shall reasonably request to vest in it any Pledged Property withdrawn
pursuant hereto in a manner similar to the manner in which the Issuer delivered
such Pledged Property to the Trustee.
(e) Any withdrawal of Pledged Property pursuant to this Section 4.08
shall be made in compliance with the TIA, including without limitation the
provision of a certificate of fair value in connection with such withdrawal in
accordance with Section 314(d) of the TIA.
(f) Notwithstanding anything in this Section 4.08 to the contrary,
(i) no Cash shall be released from the Collection Account except pursuant to the
Servicing Agreement and (ii) while an Event of Default shall have occurred and
be continuing, the Issuer may not make any withdrawal or substitution of any
Pledged Property.
SECTION 4.09. Additions to Eligible Collateral.
The Issuer may from time to time deliver to the Trustee additional
Eligible Collateral for inclusion in the Collateral, by pledging such Collateral
with the Trustee pursuant to the provisions of Section 4.01 hereof. The Issuer
shall not be required to deliver to the Trustee a Collateral Report upon such
delivery; but any such additional Eligible Collateral must be accompanied by a
list thereof and a designation of such property as Eligible Collateral and an
Opinion of Counsel in the form of Exhibit C, and shall be included in the next
Collateral Report delivered by the Trustee which values the Eligible Collateral.
SECTION 4.10. Sales of Securities Reacquired by the Issuer and
Affiliates.
(a) Prior to the sale or pledge by the Issuer or any Affiliate
thereof (other than NCMI) of any Security owned by the Issuer or such Affiliate
and the registration of transfer thereof by the Trustee pursuant to Section
2.08:
(i) the Issuer shall deliver to the Trustee
additional Eligible Collateral which shall be pledged in
accordance with Section 4.01, if, and to the extent,
required to permit the delivery of the Collateral Report
referred to in clause (ii) below; and/or
(ii) the Trustee shall deliver to the Issuer a
Collateral Report dated and containing information as of a
date no more than five days prior to the date of such
proposed sale or pledge, which Collateral Report shall show
that if the Securities being sold were deemed to be
Outstanding as of the date of such Collateral Report, the
Discounted Value of Eligible Collateral, including any
additional Eligible Collateral referred to in clause (i) of
this Section 4.10(a), (determined, at the option of the
Issuer, using Market Values as set forth in the Latest
Collateral Report, or as of any date subsequent to the date
thereof, and on or prior to the date of such Collateral
Report) included in the Pledged Property as of such date
would nevertheless be at least equal to the Basic
Maintenance Amount as calculated in Part A of such
Collateral Report.
(b) In the event that a sale or pledge of any Security owned by the
Issuer or any Affiliate thereof (other than NCMI) is to be effected between the
date on which Deposit Securities are required to be deposited pursuant to
Section 10.03 and the related due date of principal of or interest on the
Securities, the Issuer shall deposit with the Trustee Deposit Securities
sufficient to meet the Issuer's obligations pursuant to Section 10.03 with
respect to the Securities being sold, such deposit to be accompanied by an
Officers' Certificate Regarding Deposit Securities substantially in the form of
Exhibit G-1 and an Opinion of Counsel in the form of Exhibit C.
(c) Notwithstanding anything in this Section 4.10 to the contrary,
while an Event of Default shall have occurred and be continuing, the Issuer
shall not sell any Security.
SECTION 4.11. Investment Company Act Limitation.
Notwithstanding any other provision of this Indenture, in no event
will the Issuer acquire or hold assets, conduct its business, or pledge, add to,
withdraw from or substitute Pledged Property, in a manner so as to require
registration under the Investment Company Act of 1940, as amended.
SECTION 4.12. New Eligible Collateral.
(a) The characteristics of, and the percentage or other limitations
on the permissible amounts of, Mortgage Notes and Mortgages required in order to
make such Mortgage Notes and Mortgages Eligible Mortgage Notes and Eligible
Mortgages, the characteristics of certificates issued by FHLMC, FNMA or GNMA
required in order to make such certificates FHLMC Certificates, FNMA
Certificates and GNMA Certificates (other than the single-class nature thereof),
and the characteristics of securities issued by the United States government
required in order to make such securities Government Securities, the Discount
Factors applicable to such securities or instruments, and the definition of
"Basic Maintenance Amount" have been determined by reference to the collateral
characteristics and percentage or other limitations and Discount Factors and the
definition of "Basic Maintenance Amount" which, among other considerations, are
necessary to obtain with respect to the Securities at the time of their initial
issuance the highest available rating from Fitch and Moody's. It is expressly
hereby agreed by the Issuer and the Trustee that the definitions of Eligible
Mortgage Notes and Eligible Mortgages shall be, and shall be deemed to be,
amended to include within such respective definitions, Mortgage Notes and
Mortgages with different characteristics and the definitions of FHLMC
Certificate, FNMA Certificate and GNMA Certificate shall be, and shall be deemed
to be, amended to include within such respective definitions certificates with
different characteristics, and the definition of Government Securities shall be,
and shall be deemed to be, amended to include within such definition securities
issued by the United States government with different characteristics (referred
to in this Indenture as "New Eligible Collateral"), and all such definitions
shall be deemed to be amended so as to increase any such percentage limitations,
or to change any such other limitations, and the definition of Discount Factors
shall be and shall be deemed to be, amended to include within such definition
reduced Discount Factors, and the definition of "Basic Maintenance Amount" shall
be, and shall be deemed to be, amended, if at the time of any such amendment the
inclusion in the Eligible Collateral of New Eligible Collateral, or of Eligible
Collateral having such amended percentage or other limitations or reduced
Discount Factors, or the use of such amended definition:
(i) is permitted by then applicable law and
regulations; and
(ii) (A) is approved by and (B) will not impair, or
cause the Securities to fail to retain, the ratings assigned
to the Securities by Fitch and Moody's.
(b) Prior to the inclusion of any such New Eligible Collateral in the
Eligible Collateral or the increase or change of any such percentage or other
limitation, or the decrease of any such Discount Factor, or any such amendment
of the definition of "Basic Maintenance Amount," the Issuer and the Trustee
shall enter into an indenture supplemental hereto making appropriate provision
for the inclusion and valuation of such New Eligible Collateral or for such
increase or change in a percentage or other limitation, or such decrease of any
Discount Factor, or such amendment and the Issuer shall deliver to the Trustee:
(i) an Opinion of Counsel to the effect that such
New Eligible Collateral is permitted to be included in the
Eligible Collateral, or that such increase or change in a
percentage or other limitation, or such reduction of a
Discount Factor or such amendment is permitted by then
applicable law and regulation;
(ii) an Officers' Certificate stating that the
inclusion of such New Eligible Collateral in the Eligible
Collateral or such increase or change in a percentage or
other limitation or such reduction of a Discount Factor or
such amendment will be effected in compliance with
subsection (a)(ii) of this Section 4.12;
(iii) written confirmation from Fitch and Moody's as
to the matters with respect to such New Eligible Collateral
or such increase or change in a percentage or other
limitation or such reduced Discount Factor or such amendment
set forth in subsection (a)(ii) of this Section 4.12; and
(iv) such additional confirmation, if any, as the
Trustee may require to determine that such New Eligible
Collateral or such increase or change, or such reduction, or
such amendment will be in compliance with this Section 4.12.
(c) If any New Eligible Collateral shall be included in the Eligible
Collateral, or any such percentage or other limitation shall be so increased or
changed, or any Discount Factor shall be reduced, or the definition of "Basic
Maintenance Amount" shall be amended, the forms of Collateral Report and
Accountants' Letter as set forth in Exhibits B and I hereof, respectively, shall
be expanded and modified by the Issuer in the manner and detail required to
enable the Accountants and the Trustee, subject to Section 6.01, to determine
compliance with the provisions of this Indenture.
SECTION 4.13 Servicing of Mortgage Notes
(a) On or before the Closing Date, an agreement relating to the
servicing of the portion of the Pledged Property consisting of Mortgage Notes
shall be entered into between the Issuer and any Person, which may be an
Affiliate of the Issuer (the "Servicer"), which agreement shall be substantially
in the form of Exhibit E hereto; provided, however, that no Person shall become
Servicer hereunder unless such Person is an Approved Servicer of Mortgage Notes.
(b) For so long as any Securities are Outstanding, the Issuer
covenants and agrees that it shall not permit the amendment or other
modification of the Servicing Agreement without the consent of the Holders of
not less than 51% in principal amount of the Securities Outstanding; provided,
however, that the Servicing Agreement may be amended from time to time by the
Servicer and the Trustee without the consent of any of the Securityholders, (i)
to cure any ambiguity or mistake, (ii) to correct or supplement any provisions
therein which may be inconsistent with any other provisions herein or therein,
(iii) to modify, eliminate or add to any of its provisions to such extent as
shall be necessary or helpful to comply or maintain compliance with applicable
law, (iv) to conform to evolving industry standards regarding the servicing of
residential mortgage loans generally, (v) to change the timing and/or nature of
deposits into the Collection Account, the Distribution Account or the Reserve
Fund, provided that (a) such change shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Securityholder and (b) such change shall not adversely affect the then-current
rating of the Securities as evidenced by written confirmation from each Rating
Agency to such effect and (vi) to make any other provisions with respect to
matters or questions arising under the Servicing Agreement which shall not be
materially inconsistent with the provisions of this Agreement, provided that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Securityholder.
(c) For so long as any Securities are Outstanding, each of the Issuer
and the Trustee covenant and agree to enforce the Servicing Agreement for the
benefit of Securityholders.
ARTICLE FIVE
REMEDIES UPON DEFAULT
SECTION 5.01. Events of Default.
"Event of Default" means each one of the events specified below (in
each case irrespective of the reasons for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law, or
pursuant to 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 deliver Deposit Securities to the
Trustee or to make other arrangements that will not impair, or cause the
Securities to fail to retain, the ratings assigned to the Securities by each
Rating Agency to provide for the payment of the principal of the Securities,
when such principal becomes due and payable at Stated Maturity, in the manner
required by Section 10.03;
(b) default in the payment of any interest on the Securities by the
Issuer when such interest becomes due and payable, whether on any Interest
Payment Date, the Stated Maturity, or any Redemption Date, or upon acceleration
of the principal of the Securities, or otherwise, and continuation of such
default for a period of five days;
(c) default in the payment of the principal of the Securities by the
Issuer when such principal becomes due and payable, whether at Stated Maturity,
on any Redemption Date, by declaration of acceleration or otherwise;
(d) material breach or inaccuracy of any representation or warranty
of the Issuer hereunder or in any Officers' Certificate and continuance of such
default for a period of 30 days after notice thereof, which notice shall state
that it is a notice of default hereunder, to the Issuer by the Trustee or to the
Issuer and the Trustee by the Holders of at least 10% in principal amount of the
Securities Outstanding;
(e) material default in the performance or observance by the Issuer
of any other covenant or condition to be performed or observed by the Issuer in
this Indenture and continuance of such default for a period of 30 days after
notice thereof, which notice shall state that it is a notice of default
hereunder, to the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 10% in principal amount of the Securities Outstanding;
(f) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Issuer a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Issuer under any bankruptcy, insolvency or
other applicable law, or appointing a receiver, liquidator, assignee, trustee,
conservator, sequestrator (or other similar official) of the Issuer or of any
substantial part of the Issuer's property, or ordering the winding up or
liquidation of the Issuer's affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(g) the institution by the Issuer of proceedings to be adjudicated a
bankrupt or insolvent, or the Issuer's consent to the institution of bankruptcy
or insolvency proceedings against it, or the filing by the Issuer of a petition
or answer or consent seeking reorganization or relief under any bankruptcy,
insolvency or other applicable law, or the consent by the Issuer to the filing
of any such petition or to the appointment of a receiver, liquidator, assignee,
trustee, conservator, sequestrator (or other similar official) of the Issuer or
of any substantial part of the Issuer's property, or the making by the Issuer of
an assignment for the benefit of creditors, or the admission by the Issuer in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Issuer in furtherance of any such action.
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default described in clause (a), (b) or (c) of Section
5.01 occurs, the entire principal amount of the Securities shall automatically
become due and payable immediately and the Trustee shall demand payment thereof
within two Business Days after it has knowledge of such Event of Default
pursuant to Section 6.01(e). If an Event of Default described in clause (d),
(e), (f) or (g) of Section 5.01 occurs and is continuing, then and in every such
case, unless the principal of the Securities shall have already become due and
payable, the Trustee or the Holders of not less than 25% in principal amount of
the Securities Outstanding may declare the entire principal amount of the
Securities to be due and payable immediately, by a notice in writing to the
Issuer (and to the Trustee if given by the Holders), and upon any such
declaration such principal shall become immediately due and payable.
At any time after acceleration and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article Five provided, such acceleration and its consequences may be rescinded
and annulled (i) by written notice to the Issuer and the Trustee given by the
Holders of 66-2/3% (notwithstanding and excluding any provision of the TIA
permitting a lesser percentage) in principal amount of the Securities
Outstanding, or (ii) by written notice to the Issuer given by the Trustee, if
declaration of such acceleration has not been made by the Holders of Securities,
if in either of the foregoing cases:
(1) The Issuer has paid or deposited with
the Trustee a sum sufficient to pay
(A) all overdue interest (through the
date of payment thereof) on all Securities Outstanding,
(B) the principal of any Securities
Outstanding which have become due otherwise than by such
acceleration and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest at the
rate borne by the Securities from the date such overdue
interest was due to the date of payment thereof, and
(D) all sums paid or advanced by the
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and
counsel; and
(2) all Events of Default, other than the
non-payment of the principal of and interest on Securities
which have become due solely by reason of such acceleration,
shall have been cured or waived as provided in this
Indenture.
No such rescission or annulment shall affect any subsequent default or impair
any right consequent thereon.
SECTION 5.03. Trustee's Power in Regard to Pledged Property.
(a) If an Event of Default shall have occurred, then, subject to the
provisions of subsection (b) of this Section and Sections 5.07 and 6.01, the
Trustee, by such officer or agent as it may appoint, may, subject to the
provisions of applicable law, take one or more of the following actions:
(i) sell, to the extent permitted by law, without
recourse, for cash or credit, or for other property, for
immediate or future delivery, and for such price or prices
and on such terms as the Trustee in its discretion may
determine, the Pledged Property;
(ii) proceed by one or more suits, actions or
proceedings at law or in equity or otherwise, or by any
other appropriate remedy, to enjoin any sale or disposition
of Collateral by the Issuer or any Person claiming under or
by assignment from the Issuer or otherwise, or to enforce
payment of the Securities or the Collateral or to realize on
any collateral security for such Collateral, or to foreclose
under this Indenture or to sell the Collateral under a
judgment or decree of a court or courts of competent
jurisdiction, or by the enforcement of any such other
appropriate legal or equitable remedy as the Trustee, being
advised by counsel, shall deem effectual to protect and
enforce any of its rights or powers or any of the rights or
powers of the Holders of the Securities;
(iii) register in the name of the Trustee, in
accordance with applicable regulations of the United States
government, rules of GNMA, FNMA and FHLMC and other
applicable laws or procedures, or file or record in the name
of the Trustee any assignments to the Trustee of, any GNMA
Certificates, FNMA Certificates, FHLMC Certificates,
Government Securities and Mortgage Notes included in the
Collateral and not previously so registered or recorded;
file or record in the name of the Trustee any assignments of
the Mortgages securing the Eligible Mortgage Notes included
in the Pledged Property not previously recorded (and in such
event file all required notices thereof with the FHA and
VA), notify the mortgagors or trustors under such Mortgages,
and the servicing companies servicing such Mortgages, if
any, of the Trustee's interest, and direct all such persons
to make payments directly to the Trustee under the Mortgage
Notes secured by such Mortgages, transfer into its name
all other Collateral pledged to the Trustee, require all
payments on and proceeds of the Collateral to be paid
directly to it and accept all payments on and other proceeds
of the Collateral, take collections and otherwise take all
actions necessary and appropriate in the name and stead of
the Issuer in regard to the Collateral including, without
limitation, arranging for the delivery of title insurance or
opinions of counsel as to title and any fire and extended
coverage insurance on the properties subject to Eligible
Mortgages included therein (it being understood that the
Trustee, in the absence of an Event of Default, shall have
no obligation to take any such action, and no liability for
failure to take any such action); all such filings,
recordings, and notifications shall be deemed to have been
made solely to facilitate the taking of control of any
proceeds of the Collateral and shall not constitute a
foreclosure by the Trustee or the election of any remedy
limiting the right to recover unpaid indebtedness on the
Securities after any sale of the Collateral; and for that
purpose and if an Event of Default occurs, the Trustee is
hereby irrevocably appointed the true and lawful attorney of
the Issuer having in particular and without limitation the
authority to endorse its name on all checks and other
instruments representing proceeds of such Collateral, and
the Issuer hereby ratifies and confirms all that its said
attorney, or its substitute or substitutes, shall lawfully
do by virtue hereof; or
(iv) otherwise exercise, in general, all rights and
remedies of a secured party under the Uniform Commercial
Code as enacted in the State or States where the Pledged
Property is located.
(b) Notwithstanding the otherwise optional nature of Section 5.03(a),
if an Event of Default shall have occurred, subject to the provisions of
Sections 5.07 and 6.01, the Trustee shall take such action as may be necessary
to (in accordance with applicable laws and regulations) register, file or
record in the name of the Trustee the assignments of the Mortgages securing the
Eligible Mortgage Notes included in the Collateral if such assignments have not
previously been so recorded.
(c) If an Event of Default shall have occurred and the payment of
principal of the Securities shall have been accelerated pursuant to Section
5.02, subject to the provisions of Section 5.03(a) and Sections 5.07 and 6.01,
the Trustee, by such officer or agent as it may appoint, shall exercise such of
its rights, powers and remedies under this Indenture as it may in its discretion
deem most effectual to enter into contractual commitments to sell or complete
the sale of the Pledged Property by such means as the Trustee in its discretion
deems most effective, and to pay to the Holders, out of the Pledged Property and
any net proceeds thereof, all amounts due in respect of the Securities within 15
days (or, if Mortgage Collateral is included in the Eligible Collateral, within
30 days) after the date on which payment of principal of the Securities shall
have been accelerated in consequence of an Event of Default having occurred.
Notwithstanding the foregoing, any action taken by the Trustee shall not, in the
judgment of the Trustee, be adverse to the best interests of the Holders, and
also the various time periods set forth in this Section 5.03(c) may be exceeded
in the event that (A) trading in securities generally on the American Stock
Exchange or the New York Stock Exchange shall have been suspended or minimum
prices shall have been established on either such exchange, or (B) a banking
moratorium shall have been declared either by Federal or New York authorities,
or (C) there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States of America is such as to make it, in the judgment
of the Trustee, impracticable to sell or otherwise dispose of all or any portion
of the Pledged Property.
SECTION 5.04. Incidents of Sale of Pledged Property.
Upon any sale of all or any part of the Pledged Property made either
under the power of sale given under this Indenture or under judgment or decree
in any judicial proceedings for foreclosure or otherwise for the enforcement of
this Indenture, the following shall be applicable:
(1) the Trustee is hereby irrevocably appointed
the true and lawful attorney of the Issuer, in its name and
stead, to make all necessary deeds, bills of sale and
instruments of assignment, transfer or conveyance of the
Pledged Property thus sold; and for that purpose the Trustee
may execute all such documents and instruments and may
substitute one or more Persons with like power; and the
Issuer hereby ratifies and confirms all that its said
attorney, or such substitute or substitutes, shall lawfully
do by virtue hereof;
(2) if so requested by the Trustee or by any
purchaser, the Issuer shall ratify and confirm any such sale
or transfer, without recourse, by executing and delivering
to the Trustee or to such purchaser or purchasers all proper
deeds, bills of sale, instruments of assignment, conveyances
or transfers and releases as may be designated in any such
request;
(3) the Trustee or the Holder of any Security may
bid for and purchase any of the Pledged Property and, upon
compliance with the terms of sale, may hold, retain, possess
and dispose of such Pledged Property in his or her or its
own absolute right without further accountability;
(4) the receipt of the Trustee or of the officer
making such sale under judicial proceedings shall be a
sufficient discharge to any purchaser for his or her
purchase money, and, after paying such purchase money and
receiving such receipt, such purchaser or his or her
personal representatives or assigns shall not be obliged to
see to the application of such purchase money, or be in any
way answerable for any loss, misapplication or
non-application thereof;
(5) any such sale shall operate to divest the
Issuer of all right, title, interest, claim and demand
whatsoever, either at law or in equity or otherwise, in and
to the Pledged Property so sold and shall be a perpetual bar
both at law and in equity or otherwise against the Issuer,
and its successors and assigns, and any and all persons
claiming or who may claim the Pledged Property sold or any
part thereof from, through or under the Issuer, and its
successors and assigns;
(6) the principal of and accrued interest on the
Securities, if not previously due, shall immediately become
and be due and payable; and
(7) any moneys collected by the Trustee upon any
sale made either under the power of sale given by this
Indenture or under judgment or decree in any judicial pro
ceedings for foreclosure or otherwise for the enforcement of
this Indenture shall be applied as provided in Section 5.10.
SECTION 5.05. Judicial Proceedings.
(a) If an Event of Default shall have occurred, the Trustee in its
own name, and as trustee of an express trust, shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or otherwise to
recover judgment against the Issuer on the Securities for the whole amount due
and paid, and may prosecute any such claim or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Issuer and
collect the moneys adjudged or decreed to be payable in any manner provided by
law, whether before or after or during the pendency of any proceedings for the
enforcement of the Lien of this Indenture, of any of the Trustee's rights under
this Indenture, or of any of the rights of the Holders of the Securities under
this Indenture, and such power of the Trustee shall not be affected by any sale
hereunder or by the exercise of any other right, power or remedy for the
enforcement of the provisions of this Indenture or for the foreclosure of the
lien hereof.
(b) In the case of a sale of Pledged Property and of the application
of the proceeds of such sale to the payment of the principal of and/or interest
on the Securities, the Trustee in its own name, and as trustee of an express
trust, shall be entitled and empowered, by any appropriate means, legal,
equitable or otherwise, to enforce payment of, and to receive all amounts then
remaining due and unpaid upon, the Securities, for the benefit of the Trustee
and the Holders of the Securities.
(c) Except as required by applicable law or the terms of such
judgment or final decree, no recovery of any judgment or final decree by the
Trustee or the Holder of any Security, and no levy of any execution under any
such judgment upon any of the Pledged Property, or upon any other property,
shall in any manner or to any extent affect the Lien of this Indenture upon any
of the Pledged Property, or any rights, powers or remedies of the Trustee, or
any liens, rights, powers or remedies of the Holders of the Securities, but all
such liens, rights, powers and remedies shall continue unimpaired as before.
(d) The Trustee in its own name, or as trustee of an express trust,
or as attorney-in-fact for the Holders of the Securities, or in any one or more
of such capacities (irrespective of whether the principal of the Securities
shall then be due and payable as expressed in the Securities or by acceleration
thereof or otherwise and irrespective of whether the Trustee shall have made any
demand on the Issuer for the payment of overdue principal or interest), shall be
entitled and empowered, by intervention or otherwise, to file and prove a claim
for the whole amount of principal and interest owing in respect of the
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and of the Holders of the
Securities (whether such claims be based upon the provisions of the Securities
or of this Indenture) allowed in any equity receivership, insolvency,
bankruptcy, liquidation, readjustment, reorganization or any other judicial
proceedings relative to the Issuer, the creditors of the Issuer, the Pledged
Property, or any other property of the Issuer and any receiver, assignee,
trustee, liquidator or sequestrator (or other similar official) in any such
judicial proceeding is hereby authorized to make such payments to the Trustee,
and 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;
provided, however, that nothing contained in this Indenture shall be deemed to
give to the Trustee any right to accept or consent to any plan of reorganization
or otherwise by action of any character in any such proceeding to waive or
change in any way any rights of the Trustee or any Holder of a Security. Any
moneys collected by the Trustee under this Section 5.05 shall be applied as
provided in Section 5.10.
(e) All rights of action and claims under this Indenture or the
Securities may be enforced by the Trustee without possession of the Securities
or the production thereof at the trial or other proceedings relative 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, after
provision for the payment of the reasonable expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable benefit of the
Trustee and the Holders of the Securities.
(f) In case the Trustee or the Holder of any Security shall have
proceeded to enforce any right or remedy under this Indenture by suit,
foreclosure or otherwise and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the Trustee
or any such Holder, then, in every such case, the Issuer, the Trustee and the
Holders of Securities shall be restored without further act to their respective
former positions and rights hereunder and thereunder, and all rights, remedies
and powers of the Trustee and such Holders shall continue as though no such
proceedings had been taken.
SECTION 5.06. Control by Holders of Securities.
The Holders of a majority in principal amount of the Securities
Outstanding (or such lesser amount as shall have acted at a meeting pursuant to
Article Nine) shall have the right to direct the Trustee as to the time, method
and place of conducting proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, provided
that:
(1) such direction shall not be in conflict with
any rule of law or with this Indenture;
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction;
(3) such direction is not unduly prejudicial to
the rights of other Holders; and
(4) such direction would not involve the Trustee
in any personal liability.
SECTION 5.07. Waiver of Past Defaults.
The Holders of not less than 66-2/3% (notwithstanding and excluding
any provision of the TIA permitting a lesser percentage) in principal amount of
the Outstanding Securities (or such lesser amount as shall have acted at a
meeting pursuant to the provisions of this Indenture) may on behalf of the
Holders of all Outstanding Securities waive any past default hereunder and its
consequences, except a default: (1) which constitutes an Event of Default under
Section 5.01(a), 5.01(b) or 5.01(c); or (2) in respect of a covenant or
provision hereof which under Article Eight cannot be modified or amended without
consent of the Holder of each Security thereby affected. Upon any such waiver,
such default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon. In addition, the Trustee shall take such action as the
Trustee shall determine to be reasonably necessary to restore the Issuer and the
Trustee to their respective positions prior to the taking by the Trustee of any
action pursuant to this Article Five in respect of such default.
SECTION 5.08. Limitations on Suits by Holders.
(a) Subject to Section 5.11 hereof, a Holder of a Security shall not
have the right to institute any suit, action or proceeding at law or in equity
or otherwise with respect to this Indenture, for the appointment of a receiver
or for the enforcement of any other remedy under or upon this Indenture, unless:
(i) such Holder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% in principal
amount of the Securities Outstanding shall have requested
the Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Trustee indemnity
as provided in Section 6.02(e);
(iii) the Trustee shall have refused or neglected to
institute any such action, suit or proceeding for 60 days
immediately following receipt of such notice, request and
offer of indemnity; and
(iv) no direction inconsistent with such written
request shall have been given to the Trustee during such
60-day period by the Holders of a majority in principal
amount of the Securities Outstanding (or such lesser amount
as shall have acted at a meeting pursuant to Article Nine).
(b) It is understood and intended that no one or more of the Holders
of Securities shall have any right in any manner whatever hereunder or under the
Securities to (i) obtain or seek to obtain priority over or preference to any
other such Holder, (ii) enforce any right under this Indenture unless the right
of enforcement is specifically provided herein, or (iii) surrender, impair,
waive, affect, disturb or prejudice the Lien of this Indenture on any property
subject thereto or the rights of the Trustee and of the Holders of the
Securities thereunder in each case except in the manner in this Indenture
provided.
SECTION 5.09. Undertaking to Pay Court Costs.
All parties to this Indenture agree, and each Holder of a Security by
his or her acceptance thereof, shall be deemed to have agreed, that any court
may in its discretion require, in any suit, action or proceeding for the
enforcement of any right or remedy under this Indenture, or in any suit, action
or proceeding against the Trustee for any action taken or omitted by it in its
capacity hereunder, the filing by any party litigant in such suit, action or
proceeding of an undertaking to pay the costs of such suit, action or
proceeding, and that such court may, in its discretion, assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
action or proceeding, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; provided, however, that the
provisions of this Section 5.09 shall not apply to (a) any suit, action or
proceeding instituted by the Trustee, (b) any suit, action or proceeding
instituted by any Holder of Securities or group of Holders of Securities holding
in the aggregate more than 10% in aggregate principal amount of securities
Outstanding or (c) any suit, action or proceeding instituted by any Holder of a
Security for the enforcement of the payment of the principal of or interest on
any Security on or after the due date expressed therein (or, in the case of
redemption, on or after the date fixed for redemption).
SECTION 5.10. Application of Moneys Collected by Trustee.
Any moneys collected or to be applied by the Trustee pursuant to this
Article Five, including, without limitation, moneys collected pursuant to
Section 5.03(c), shall be deposited in the Distribution Account and applied in
the following order from time to time on the date or dates fixed by the Trustee
which, in the event the principal of the Securities shall not have become due,
shall be on each Interest Payment Date in the manner provided in Section 3.03
and, in case of the distribution of such moneys on account of principal, upon
notice to the Securityholders of the time and place to present Securities and
presentation of the several Securities and the notation thereon of the payment,
if only partially paid, and upon surrender thereof, if fully paid:
FIRST: to the payment of costs and expenses of the
sale of or other realization upon (including reasonable compensation
for servicing of Eligible Mortgage Notes, provided, however, that the
monthly amount of such servicing fees, not including any initial
set-up or organizational expenses, shall not exceed the greater of the
monthly servicing fees then allowed sellers by FNMA or FHLMC) the
Pledged Property and the costs and expenses of the enforcement of any
remedies hereunder, and all expenses, liabilities and advances
incurred or made by the Trustee in connection with any such sale,
other realization or enforcement of remedies arising out of an Event
of Default hereunder, including reasonable compensation to the Trustee
for extraordinary time spent by its officers, employees, agents or
attorneys directly in connection with any such sale, other realization
or enforcement of remedies arising out of an Event of Default
hereunder;
SECOND: in case the principal of the Securities shall
not have become due, to the payment of interest on the Securities at
the applicable rate or rates calculated as set forth in Section 2.01,
in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by
the Trustee and to the extent that payment of such interest shall be
legally enforceable) upon the overdue installments of interest from
the date due to the date of payment thereof, at the same rate or rates
as the rate of interest specified in the Securities for the applicable
Interest Period, such payments to be made ratably to the Persons
entitled thereto without discrimination or preference;
THIRD: in case the principal of the Securities shall
have become due, by acceleration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Securities for principal
and interest (at the applicable rate or rates calculated as set forth
in Section 2.01) with interest upon the overdue principal and (to the
extent that such interest has been collected by the Trustee and to the
extent that payment of such interest shall be legally enforceable)
upon overdue installments of interest from the date due to the date of
payment thereof at the same rate or rates as the rate of interest
specified in the Securities for the applicable Interest Period; and in
case such moneys shall be insufficient to pay in full the whole amount
so due and unpaid upon the Securities, then to the payment of such
principal and interest, without preference or priority of principal
over interest, or interest over principal, or of any installment of
interest over any other installment of interest, or of any Security
over any other Security, ratably to the aggregate of such principal
and accrued and unpaid interest;
FOURTH: to the payment of the regular reasonable
compensation of the Trustee for its services hereunder, including
reasonable compensation for the fees and expenses of its agents,
attorneys and counsel; and
FIFTH: any surplus then remaining shall be paid to
the Issuer, its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same, or as a court of competent
jurisdiction may direct.
SECTION 5.11. Right to Receive Payment Not to Be
Impaired.
Anything in this Indenture to the contrary notwithstanding, the right
(which shall be absolute and unconditional) of any Holder of a Security to
receive payment of the principal of and interest on the Security held by such
Holder, on or after the respective due dates expressed in such Security or, in
case of redemption on or after the date fixed for redemption or to institute
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 5.12. Notice of Defaults to Holders of
Securities.
The Trustee shall, within 30 days after the occurrence of any default
becomes known to it, give the Holders of Securities notice of all defaults known
to the Trustee in accordance with Section 1.06, unless all such defaults known
to the Trustee shall have been cured before the giving of such notice. The
Trustee shall give the Servicer and each Rating Agency notice of any such
default at the same time as the Holders of the Securities are given such notice,
provided, however, that there shall be no liability of the Trustee for failure
to do so. This Section 5.12 is intended to supersede and exclude the optional
provisions contemplated by Section 315(b) of the TIA.
SECTION 5.13. Securities Held by the Issuer or
Affiliate Not to Share in Distribution.
Any Securities owned or held by, or for the account or benefit of, the
Issuer or any Affiliate of the Issuer (other than NCMI) shall not be entitled to
share in any payment or distribution provided for in this Article Five until
after all other Securities and all expenses have been paid in full.
SECTION 5.14. Waiver of Appraisement, Valuation, Stay
and Right to Marshalling.
To the extent it may lawfully do so, the Issuer for itself and for any
Person who may claim through or under it hereby:
(1) agrees that neither it nor any such Person
will set up, plead, claim or in any manner whatsoever take
advantage of or benefit from, any appraisement, valuation,
stay, extension or redemption laws, now or hereafter in
force in any jurisdiction, which may delay, prevent or
otherwise hinder (i) the performance or enforcement of, or
foreclosure under, this Indenture, (ii) the sale of any of
the Pledged Property or (iii) the putting of the purchaser
or purchasers thereof into possession of such property
immediately after the sale thereof;
(2) waives and releases all rights to have the
Pledged Property marshalled upon any foreclosure, sale or
other enforcement of this Indenture; and
(3) consents and agrees that, subject to the
terms of this Indenture, the Pledged Property may at any
such sale be sold by the Trustee, either in whole or in
part.
SECTION 5.15. Remedies Cumulative; Delay or Omission
Not a Waiver.
To the extent permitted by law, every right, power or remedy given
hereunder to the Trustee or to the Holders of Securities shall not be exclusive
of any other remedy or remedies, and every such right, power or remedy shall be
cumulative and in addition to every other right, power or remedy given hereunder
or now or hereafter given by statute, law, equity or otherwise. No course of
dealing between the Issuer and the Trustee, or any delay or omission of the
Trustee or of the Holder of any Security to exercise any right, remedy or power
accruing upon any Event of Default shall impair any right, remedy or power or
shall be construed to be a waiver of any such Event of Default or of any right,
power or remedy of the Trustee or of the Holder of any Security, or acquiescence
therein, and every right, remedy and power given by this Article Five to the
Trustee or to the Holder of any Security may be exercised from time to time and
as often as may be deemed expedient by the Trustee or by any such Holder.
ARTICLE SIX
THE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default known to the
Trustee:
(i) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture for it and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) 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 it and
conforming to the requirements of this Indenture; provided,
that, 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
substantially conform to the requirements of this Indenture,
as to form and conclusion, but not as to substance and
content.
(b) In case an Event of Default known to the Trustee has occurred and
is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own bad faith or negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(i) this Section 6.01(c) shall not be construed to
limit the effect of Section 6.01(a);
(ii) 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;
(iii) 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 a
majority in principal amount of the Securities Outstanding
(or such lesser amount as shall have acted at a meeting
pursuant to Article Nine) 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 this Indenture; and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.
(e) For all purposes of this Indenture, the Trustee shall not be held
liable or otherwise responsible for the exercise of any rights or remedies
available to it or required of it relating to an Event of Default unless the
Trustee knows that an Event of Default has occurred, and the Trustee shall not
be deemed to have knowledge of any Event of Default other than an Event of
Default described in clause (a), (b), (c) or (d) of Section 5.01, unless a
Responsible Officer in the Corporate Trust Office of the Trustee who is aware
that it is Trustee hereunder has actual knowledge thereof.
SECTION 6.02. Certain Rights of Trustee.
Except as otherwise provided in Section 6.01:
(a) 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, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by a Request or Order and any resolution of the Board of
Directors of the Issuer may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee may (unless other
evidence be herein specifically prescribed) in the absence of bad faith on its
part, request 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 not be under any obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of the Holders of Securities pursuant to this Indenture, unless such Holders are
authorized or permitted by this Indenture to make such request and shall have
offered reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by the Trustee 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, debenture or
other paper document, but the Trustee, in its individual discretion, may make
such further inquiry or investigation into such facts or matters as it may see
fit, and, if it 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 during the Issuer's normal business hours,
upon reasonable notice to the Issuer, in such a manner that the business
operations of the Issuer are not unduly disrupted; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any of its duties hereunder either directly or by or through agents or
attorneys, and the Trustee will not be responsible for any negligence or
misconduct on the part of any agent or attorney appointed by it hereunder,
provided that the Trustee exercised due care in selecting such agent or
attorney.
SECTION 6.03. Not Responsible for Recitals.
The recitals of the Issuer contained herein and in the Securities
shall be taken as the statements of the Issuer and the Trustee assumes no
responsibility for their correctness or for the accuracy or completeness of any
of the information herein or therein contained. The Trustee makes no
representations as to the validity or sufficiency of this Indenture (including
the efficacy of the liens created hereunder), the Securities or the Collateral.
The Trustee shall not be responsible for the use or application by the Issuer of
the proceeds of the Securities.
SECTION 6.04. May Hold Securities.
The Trustee, the Custodian, any Paying Agent, and any Security
Registrar, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Issuer with the same
rights it would have if it were not Trustee, Custodian, Paying Agent or Security
Registrar.
SECTION 6.05. Money Held in Trust.
Any money held by the Trustee in trust hereunder need not be
segregated from other trust funds held by it except to the extent required by
law, but shall be separately identified on the records of account maintained by
the Trustee and the Trustee shall not be under any liability for interest on any
money received by it hereunder; provided that this Section 6.05 shall not affect
the Trustee's responsibility to reinvest payments on Pledged Property pursuant
to Section 3.01.
SECTION 6.06. Compensation and Reimbursement.
(a) The Issuer agrees:
(1) to pay to the Trustee from time to time
reasonable compensation (taking into account the services
performed by any separate or co-trustee appointed pursuant
to Section 6.12) for all services rendered by it hereunder
(which compensation shall be set forth in a separate letter
agreement between the Issuer and the Trustee and shall not
be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided
herein, to reimburse the Trustee upon request for all
reasonable expenses, disbursements and advances incurred or
made by it in accordance with any provision of this
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, bad faith or willful
misconduct; and
(3) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on its
part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and
expenses of defending against any claim or liability in
connection with the exercise or performance of any of its
powers or duties hereunder.
(b) As security for the performance of the obligations of the Issuer
under this Section 6.06, the Trustee shall have a lien upon all property and
funds held or collected by the Trustee as such; provided, however, that such
lien of the Trustee shall be subordinate to the Lien of this Indenture in favor
of the Holders, except for the principal amount of any funds advanced by the
Trustee pursuant to Section 10.08 or any expenses, liabilities or advances
incurred by the Trustee relating to, or reasonable compensation to the Trustee
for extraordinary time spent by its officers, employees, agents or attorneys
directly in connection with, the sale of or other realization upon the Pledged
Property in connection with the occurrence of an Event of Default hereunder,
including reasonable compensation for any servicing of Mortgage Notes pursuant
to Section 5.03(a)(iii), with respect to which such lien of the Trustee shall be
senior to the Lien of this Indenture in favor of the Holders.
(c) In the event that the Issuer has not paid or caused to be paid
when due to the Trustee any amount owed to the Trustee pursuant to this Section
6.06, then, if such nonpayment shall continue for ten days after written notice
thereof has been given to the Issuer by the Trustee, the Trustee may withdraw
such amount from the Reserve Fund; provided, however, that the right of the
Trustee to make such withdrawal pursuant to this Section 6.06(c) shall be
subject in all respects to the prior application of amounts on deposit in the
Reserve Fund pursuant to Section 3.03 on any Interest Payment Date, Redemption
Date or at Stated Maturity.
SECTION 6.07. Corporate Trustee Required; Eligibility.
(a) There shall at all times be a Trustee hereunder which shall be a
bank or a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, or shall be a member of a bank holding
system, the aggregate combined capital and surplus of which is at least
$50,000,000, provided that the Trustee's separate capital and surplus shall at
all times be at least the amount specified in Section 310(a)(2) of the TIA, and
subject to supervision or examination by Federal or State authority. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section 6.07, the combined capital and surplus of such entity
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 6.07, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article Six.
(b) All Mortgage Notes, Mortgages and related documentation shall be
delivered to and held by the Trustee (directly or on behalf of the Trustee by
the Custodian).
(c) The Trustee (or a subsidiary thereof able to act in the premises)
shall be eligible to act as a "Servicer" for mortgages sold to FNMA and GNMA, as
set forth in the FNMA Home Mortgage Servicing Contract Supplement, and as a
"Servicer" for mortgages sold to FHLMC, as set forth in the FHLMC Servicers'
Guide. In addition, if the Pledged Property includes FHA Insured Mortgage Notes
and if the FHA requires that a mortgagee under a FHA Insured Mortgage Note be an
"Approved Mortgagee" as currently defined in regulations promulgated by it or as
such definition may be hereafter amended or meet such other qualifications to
hold and be entitled to the benefits of FHA insurance of a Mortgage Note, then
the Trustee shall be such an "Approved Mortgagee" or meet such other
qualifications or in the event of any subsequent change in the requirements to
be an "Approved Mortgagee" or in such other qualifications then the Trustee
shall meet such requirements or so qualify on or before the date by which the
Trustee is required to meet such requirements or so qualify. Should the Trustee
fail at any time to meet any of such requirements, it shall immediately notify
the Issuer of such failure, and the Trustee shall deliver the Mortgage Notes, if
any, held by it to a successor Trustee appointed pursuant to this Section 6.09
or to a co-trustee meeting such requirements and appointed pursuant to Section
6.12.
SECTION 6.08. Appointment of Custodian.
The Trustee may at any time appoint a Person as custodian (the
"Custodian") to hold the Mortgage Collateral pledged hereunder by entering into
an agreement substantially in the form of Exhibit F hereto with such Person;
provided, however, that no Person other than an Affiliate of the Trustee shall
be appointed as Custodian hereunder without the prior written consent of the
Issuer, which consent shall not be unreasonably withheld; and provided, further,
that the Issuer hereby consents to the appointment of First Chicago National
Processing Corporation as Custodian. In addition, no other Person shall be
appointed Custodian unless the Trustee shall have received written confirmation
from each Rating Agency that such appointment will not impair, or cause the
Securities to fail to retain, the rating then assigned to the Securities by such
Rating Agency.
SECTION 6.09. 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 Six shall become effective except in
accordance with Section 6.10.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuer; provided, however, that such resignation or removal shall
not become effective until a successor Trustee shall have been appointed and
accepted such appointment in accordance with this Article Six. If an instrument
of acceptance by a successor Trustee shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Securities Outstanding (or such lesser
amount as shall have acted at a meeting pursuant to Article Nine) delivered to
the Trustee and the Issuer.
(d) If at any time:
(i) the Trustee shall cease to be eligible under
Section 6.07 (unless, in the case described in Section
6.07(c), a co-trustee is appointed meeting the requirements
of such section) and shall fail to resign after written
request therefor by the Issuer or by the Holders of a
majority in principal amount of the Securities then
Outstanding, or
(ii) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any case, (A) the Issuer may remove the Trustee or (B) subject to
Section 5.09, the Holders of a majority in principal amount of the Securities
then Outstanding may, on behalf of themselves and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor thereto.
(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 shall promptly appoint a successor thereto. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, the Issuer has not appointed a successor Trustee, then a successor
Trustee shall be appointed by Act of the Holders of a majority in principal
amount of the Securities Outstanding (or such lesser amount as shall have acted
at a meeting pursuant to Article Nine) delivered to the Issuer, the Trustee and
the retiring Trustee, and the successor Trustee so appointed by the Holders
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 the Holders of
Securities and shall have accepted appointment in the manner provided in Section
6.10, any Holder of a Security who has been a bona fide Holder of a security for
at least six months may, subject to Section 5.09, 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
Securities Outstanding in the manner provided in Section 1.06. Each notice shall
include the name of the successor Trustee and the address of its corporate trust
office.
SECTION 6.10. Acceptance of Appointment by Successor
to Trustee.
(a) Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer and the retiring Trustee an instrument
accepting such appointment. Upon such acceptance of its appointment hereunder by
the successor Trustee, the retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all properties and money held by such retiring
Trustee hereunder, subject nevertheless to its lien, if any, provided in Section
6.06, and thereupon the resignation or removal of the retiring Trustee shall
become effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers and trusts of the
retiring Trustee hereunder, but, on request of the Issuer or the successor
Trustee, the retiring Trustee shall, upon payment of its charges in connection
therewith and of all amounts owing to it under Section 6.06, execute and deliver
an instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee hereunder. Upon request of any such successor
Trustee, the Issuer shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
(b) No successor Trustee shall be permitted to accept its appointment
unless, at the time of such acceptance, such successor Trustee shall be eligible
under this Article Six.
SECTION 6.11. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation or other entity into which the Trustee may be merged
or converted or with which it may be consolidated, or any entity resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any entity succeeding to all or substantially all of the corporate trust
business of the Trustee shall be the successor of the Trustee hereunder,
provided that such entity shall be eligible under this Article Six, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall 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 Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 6.12. Appointment of Co-Trustees.
(a) It is the intent of this Indenture that there shall be no
violation of any law of any State denying or restricting the right of banking
corporations or associations to transact business as trustee in such State. It
is recognized that in case of litigation under this Indenture, and in particular
in case of enforcement upon the occurrence of an Event of Default, or in the
case of the circumstances described in the last sentence of Section 6.07(c) or
in case the Trustee deems that by reason of any present or future law of any
State it may not exercise any of the powers, rights or remedies herein granted
to it or hold title to the properties, in trust, as herein granted, or take any
other action which may be desirable or necessary in connection therewith, it may
be necessary that the Issuer or the Trustee appoint an individual or institution
as a separate or co-trustee for such purpose. The following provisions of this
Section 6.12 are adopted to these ends.
(b) The Trustee may not appoint an individual or institution as
co-trustee or as a separate trustee, unless it receives the written consent of
the Issuer to such appointment, which consent shall not be withheld
unreasonably. No co-trustee or separate trustee may be an Affiliate of the
Issuer or of any of the Issuer's Affiliates. No co-trustee may act as a paying
agent for the Securities, nor may any co-trustee make withdrawals from the
Distribution Account or the Reserve Fund unless each Rating Agency shall have
confirmed to the Trustee in writing that such actions by such co-trustee will
not impair, or cause the Securities to fail to retain, the rating then assigned
to the Securities by such Rating Agency.
(c) In the event that the Issuer or the Trustee appoints an
additional individual or institution as such separate or co-trustee (i) each and
every remedy, power, right, claim, demand, of action, immunity, estate, title,
interest and lien expressed or intended by this Indenture to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be exercisable
by and vest in such separate or co-trustee, but only to the extent necessary to
enable such separate or co-trustee to exercise such powers, rights and remedies
and (ii) every covenant and obligation necessary to the exercise of such rights,
powers and remedies by such separate or co-trustee shall run to and be
enforceable by either of them, and such separate or co-trustee shall have the
same rights to reasonable compensation for the services rendered by it, to
indemnification, and as to reliance, as would be available under this Indenture
under similar circumstances to the Trustee; provided, however, that such rights
shall in each case be subject to the same limitations thereon as would be
applicable to the corresponding rights of the Trustee under similar
circumstances. The Issuer or the Trustee shall have the right to terminate the
appointment of any such additional co-trustee hereunder.
(d) In case any such separate trustee or additional co-trustee, or a
successor to either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers, trusts, duties and
obligations of such separate trustee or additional co-trustee that would
otherwise be vested in or be the obligation of the Trustee, so far as permitted
by law, shall vest in and be exercised by the Trustee until the appointment of a
new trustee or successor to such separate trustee or co-trustee.
(e) Promptly after the appointment of a co-trustee, the Issuer shall
give notice of such appointment to the Holders of Securities in the manner
provided in Section 1.06. Such notice shall include the name of the co-trustee
and the address of its corporate trust office.
SECTION 6.13. Authenticating Agent.
The Trustee may appoint, with the consent of the Issuer, an
Authenticating Agent for the Securities to act as its agent on its behalf and
subject to its direction in connection with the authentication of the Securities
as set forth in Article Three. Such Authenticating Agent shall at all times be a
bank or a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia authorized
under such laws to act as Authenticating Agent and perform the functions
contemplated hereby, being subject to supervision or examination by federal or
state authority. Any Authenticating Agent, other than the Authenticating Agent
initially appointed in the next succeeding paragraph shall have a combined
capital and surplus of at least $50,000,000. If such successor Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section 6.13, the combined capital and surplus of such
successor Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. Upon
any such appointment of an Authenticating Agent, the Trustee shall give notice
thereof to the Holders of the Securities as provided in Section 1.06.
The Trustee hereby initially appoints the Trustee as Authenticating
Agent for the Securities, and the Issuer hereby consents to such appointment.
Any corporation or other entity into which any Authenticating Agent
may be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which any
Authenticating Agent shall be party, or any entity succeeding to the corporate
agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to 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 to the Issuer. Upon receiving
such a notice of resignation or upon such termination, or if at any time any
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.13, the Trustee promptly shall appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Issuer and shall give notice to all Holders of Securities in accordance with
Section 1.06. No resignation or removal of the Authenticating Agent and no
appointment of a successor Authenticating Agent shall become effective until the
acceptance of appointment by the successor Authenticating Agent. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers, duties and responsibilities of its prede
cessor hereunder, with the like effect as if originally named as Authenticating
Agent herein. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section 6.13.
The Trustee agrees to pay to the Authenticating Agent, from time to
time reasonable compensation for its services, and the Trustee shall be entitled
to be reimbursed for such payments subject to the provisions of Section 6.06.
The Authenticating Agent shall have no responsibility or liability for any
action taken by it as such at the direction of the Trustee except for
negligence, bad faith or willful misconduct on its part.
SECTION 6.14. Manner in which Certain Collateral Held.
All book-entry securities assigned and delivered under this Indenture
shall be maintained in an appropriate book-entry account at the Federal Reserve
Bank of Minneapolis. All such securities registered in the name of the Trustee
or its nominee or deposited for the Trustee's account at the Federal Reserve
Bank of Minneapolis shall be identified on the books and records of the Trustee
as trust property held for the benefit of the Holders under this Indenture.
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER, LEASE
OR ASSUMPTION
SECTION 7.01. The Issuer May Consolidate, Etc., Only
on Certain Terms.
The Issuer shall not consolidate with or merge into any other entity
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) the entity formed by such consolidation or
into which the Issuer is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties
and assets of the Issuer substantially as an entirety shall
be a Person organized and existing under the laws of the
United States of America, any State thereof or the District
of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee
in form satisfactory to it, the obligations of the Issuer in
respect of the Securities and the Collateral and every
covenant of this Indenture on the part of the Issuer to be
performed or observed;
(2) the successor entity shall, by such
supplemental indenture, confirm that the Collateral shall
secure its obligations under the Securities and this
Indenture;
(3) immediately after giving effect to such
transaction no Event of Default, and no event which after
notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing;
(4) the Issuer shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture comply with this Article Seven and
that all conditions precedent herein provided for relating
to such transaction have been complied with; and
(5) the Trustee shall have notified the Rating
Agencies and obtained written confirmation from each Rating
Agency that such merger, conveyance, transfer, lease or
assumption will not impair, or cause the Securities to fail
to retain, the rating then assigned to the Securities by
such Rating Agency.
SECTION 7.02. Successor Entity Substituted.
Upon any consolidation or merger, or any conveyance, transfer or lease
of the properties and assets of the Issuer substantially as an entirety, in
accordance with Section 7.01, the successor entity formed by such consolidation
or into which the Issuer is merged or to which such conveyance, transfer or
lease is made shall succeed to, be substituted for and may exercise every right
and power of the Issuer under this Indenture with the same effect as if such
successor entity had been named as the Issuer herein, and thereafter the
predecessor entity shall be relieved of all obligations and covenants under this
Indenture and under the Securities.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.01. Supplemental Indentures Without Consent
of Holders of Securities.
Without the consent of any Holders of Securities, the Issuer and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another entity
to the Issuer and the assumption by any such successor of
the covenants of the Issuer herein and in the Securities;
(2) to add to the covenants of the Issuer for the
benefit of the Holders of Securities, or to surrender any
right or power herein conferred upon the Issuer;
(3) to secure the Securities in any manner which
is in addition to the manner in which the Securities are
secured by this Indenture and the Collateral;
(4) to cure any ambiguity, to correct or
supplement any provision herein which may be defective or
inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions
arising under this Indenture; provided, however, that such
action pursuant to this clause (4) shall not adversely
affect the interests of the Holders of Securities in any
material respect;
(5) to make appropriate provision for (i) in
accordance with Section 4.12, for any New Eligible
Collateral permitted to be included in Pledged Property,
(ii) any change in the characteristics of, or percentage
limitations set forth herein on, Mortgage Notes and
Mortgages, (iii) any reduction in the Discount Factors or
(iv) change in the definition of Basic Maintenance Amount
permitted to be made, pursuant to such Section 4.12;
(6) to modify, eliminate or add to provisions of
this Indenture to such extent as shall be necessary to
continue to qualify this Indenture (including any
supplemental 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
permitted by the TIA, excluding, however, the provisions
referred to in Section 316(a)(2) of the TIA as in effect at
the date as of which this Indenture was executed or any
corresponding provision in any similar federal statute
hereafter enacted;
(7) to increase the frequency of the Regular
Valuation Dates; or
(8) to change the methodology used in calculating
the Market Value of Eligible Collateral;
provided, however, that no supplemental indenture pursuant to this Section 8.01
shall be effective unless and until the Trustee shall have provided 30 days
prior written notice to the Rating Agencies of such supplemental indenture, and
provided further, that no supplemental indenture pursuant to clause (7) or (8)
of this Section 8.01 shall be effective unless such supplemental indenture will
not impair, or cause the Securities to fail to retain, the ratings then assigned
to the Securities by Fitch and Moody's, as confirmed in writing by Fitch and
Moody's.
SECTION 8.02. Supplemental Indentures With Consent of
Holders of Securities.
With the consent of the Holders of at least 66-2/3% in principal
amount of the Outstanding Securities (or such lesser amount as shall have acted
at a meeting pursuant to the provisions of Article Nine), by Act of said Holders
delivered to the Issuer and the Trustee, the Issuer and the Trustee may enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of modifying in any manner the rights of the Holders of the
Securities under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the time of payment of the principal
of any Security from the time when such principal is due,
whether at Stated Maturity, on any Redemption Date, by
acceleration, or otherwise, or change the time of payment of
any installment of interest on any Security from the time
when such interest is due, whether at Stated Maturity, upon
any Interest Payment Date, on any Redemption Date, upon
acceleration of the principal of the Securities, or
otherwise, or reduce the principal amount thereof or the
interest thereon, or change the coin or currency in which
any Security or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such
payment on or after the due date thereof;
(2) reduce the requirements of Section 9.04 for
quorum or voting;
(3) change the obligation of the Issuer to
maintain an office or agency in the city in which the
Corporate Trust Office of the Trustee is located pursuant to
Section 10.02;
(4) reduce the percentage in principal amount of
the Securities Outstanding the consent of whose Holders is
required for any such supplemental indenture or otherwise
modify any of the provisions of this Section 8.02, except to
provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby, or
reduce the percentage of Securities the Holders of which are
required to take any other action authorized to be taken by
or on behalf of the Holders of any specified aggregate
principal amount of Securities under any provision hereof,
including, without limitation, Section 5.07, or under
applicable law; or
(5) permit the creation of any lien other than
the Lien of this Indenture with respect to any of the
Collateral or terminate the Lien of this Indenture on any
Collateral (except as permitted by, and pursuant to, the
provisions of this Indenture) or deprive the Securities of
the security afforded by the Lien of this Indenture and the
Collateral.
It shall not be necessary for any Act of Holders of Securities under
this Section 8.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 8.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indentures permitted by this Article Eight or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and, subject to Section 6.01, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects its own rights, duties or immunities under this Indenture or otherwise.
SECTION 8.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article
Eight, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter executed and delivered
hereunder shall be bound thereby.
SECTION 8.05. Reference in Securities to Supplemental
Indenture.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article Eight may bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental
indenture. New Securities so modified as to conform, in a form satisfactory to
the Trustee, to any such supplemental indenture may be prepared and executed by
the Issuer and delivered in exchange for Outstanding Securities.
SECTION 8.06. Notice of Supplemental Indenture.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.02, the Issuer
shall provide notice to the Holders of Securities and each Rating Agency,
setting forth in general terms the substance of such supplemental indenture, in
the manner provided in Section 1.06. Any failure of the Issuer to provide such
notice, or any defect therein, shall not in any way impair or affect the
validity of any such supplemental indenture.
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.01. Purposes for Which Meetings May Be
Called.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article Nine to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities.
SECTION 9.02. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of
Securities for any purpose specified in Section 9.01, to be held on a Business
Day at such time and at such place in the city in which the Corporate Trust
Office of the Trustee is located or in such other place as the Trustee shall
determine. Notice of every meeting of Holders of Securities, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given, in the manner provided in Section
1.06, not less than 10 nor more than 60 days prior to the date fixed for the
meeting. The Trustee may fix, in advance, a date as the record date for
determining the Holders entitled to notice of and the Holders entitled to vote
at any such meeting not less than 20 nor more than 70 days prior to the date
fixed for such meeting.
(b) In case at any time the Issuer or the Holders of at least 10% in
principal amount of the Securities Outstanding shall have requested the Trustee
to call a meeting of the Holders of Securities for any purpose specified in
Section 9.01, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting and the proposed date of such meeting (which
shall be a Business Day not less than 20 nor more than 65 days from the date
such request is delivered to the Trustee), and the Trustee shall not have given
notice of such meeting within 10 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then the
Issuer or the Holders of Securities Outstanding in the amount above specified,
as the case may be, may determine the time and the place in the city in which
the Corporate Trust Office of the Trustee is located, or in such other place,
for such meeting and may call such meeting for such purposes by giving notice
thereof as provided in Section 9.02(a).
SECTION 9.03. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (1) a Holder of one or more Securities Outstanding on the record
date, or (2) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one or more Securities Outstanding by such Holder or
Holders on the record date. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders shall be the Persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Issuer and its counsel.
SECTION 9.04. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Securities Outstanding shall constitute a quorum for the taking of any action at
a meeting of Holders of Securities. In the absence of any quorum within 30
minutes of the time appointed for any such meeting, the meeting shall, if
convened at the request of the Holders of Securities, be dissolved. In any
other case, the meeting may be adjourned for a period of not less than 10 days
as determined by the chairman of the meeting, who is to be elected pursuant to
Section 9.05 hereof, prior to the adjournment of such meeting. In the absence
of a quorum at the reconvening of any such adjourned meeting, such reconvened
meeting may be further adjourned for a period of not less than 10 days as
determined by the chairman of the meeting, who is to be elected pursuant to
Section 9.05 hereof, prior to the adjournment of such reconvened meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided in
Section 9.02(a), except that such notice shall be given not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage of
the principal amount of the Securities Outstanding which shall constitute a
quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned
for a lack of a quorum the Persons entitled to vote 25% in principal amount of
the Securities Outstanding at the time shall constitute a quorum for the taking
of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except a matter
as to which the vote or Act of the Holders of a greater percent of the principal
amount of Securities Outstanding is required by this Indenture including,
without limitation, Section 8.02 hereof) shall be effectively passed and decided
if passed or decided by the Persons entitled to vote 66-2/3% in principal amount
of Securities Outstanding represented and voting at such meeting.
Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section 9.04 shall be binding on
all the Holders of Securities, whether or not present or represented at the
meeting.
SECTION 9.05. Determination of Voting Rights; Conduct
and Adjournment of Meetings.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 1.04 and the appointment of any
proxy shall be proved in the manner specified in Section 1.04 or by having the
signature of the person executing the proxy witnessed or guaranteed by any trust
company, bank or banker. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 1.04 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Issuer or the Holders of Securities as provided in Section 9.02(b), in which
case the Issuer or the Holders of Securities calling the meeting, as the case
may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by vote of the Persons
entitled to vote a majority in principal amount of the Securities Outstanding
represented at the meeting.
(c) At any meeting each Person entitled to vote at such meeting shall
be entitled to one vote for each $1,000 principal amount of Securities held or
represented by such Person; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not Outstanding
and ruled by the chairman of the meeting to be not Outstanding. The chairman of
the meeting shall have no right to vote, except as a Holder of a Security or
proxy.
(d) Any meeting of Holders of Securities duly called pursuant to
Section 9.02 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Securities
Outstanding represented at the meeting; and the meeting may be held as so
adjourned without further notice.
SECTION 9.06. Counting Votes and Recording Action of
Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts and identifying numbers of the Securities Outstanding held
or represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of Holders of
Securities shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 9.02 and, if
applicable, Section 9.04. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Issuer and another to the Trustee to be preserved
by the Trustee, the last to have attached thereto the ballots voted at the
meeting. Any records so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE TEN
COVENANTS
SECTION 10.01. Payment of Principal and Interest;
Maintenance of Offices or Agencies.
The Issuer will duly and punctually pay the principal of and interest
on the Securities at the rate or rates, at the respective times and in the
manner provided in the Securities and in this Indenture, and will make provision
for such payments in accordance with Section 10.03. The final payment of
principal on any Security shall be payable only upon presentation and surrender
of such Security.
The Issuer will maintain an office or agency in the city in which the
Corporate Trust Office of the Trustee is located where Securities may be
presented or surrendered for payment of interest or principal, transfer or
exchange and where notices and demands to or upon the Issuer in respect of the
Securities and this 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 each such office or agency. If at any time the Issuer shall fail
to maintain any such office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Issuer
hereby appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
The Issuer hereby appoints the Corporate Trust Office of the Trustee
as the office where notices and demands to or upon the Issuer in respect of the
Securities and this Indenture shall be served and the Trustee as the initial
Paying Agent.
SECTION 10.02. Paying Agent.
The Trustee hereby accepts appointment as Paying Agent. The Trustee
may appoint one or more other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of this Indenture, that such Paying Agent
will:
(1) allocate all sums received for payments to the Holders
of Securities for which it is acting as Paying Agent on each
Payment Date among such Holders in the proportion specified by
the Trustee; and
(2) hold all sums held by it for the payment of amounts due
with respect to the Securities in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such
Holders or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee, such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no successor,
to the Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Holders of Securities in accordance with
Section 1.06.
SECTION 10.03. Money for Security Payments to Be Held
in Trust.
(a) Not later than the Liquidity Date, the Issuer shall either (i)
deliver to the Trustee an aggregate principal amount of Deposit Securities such
that after such delivery, principal and interest payable on or before the Stated
Maturity in respect of such Deposit Securities, plus the amount of Cash that
will otherwise be available in the Distribution Account and the Reserve Fund on
such date, shall at least equal the Selected Amount on such Liquidity Date,
together with an Officers' Certificate Regarding Deposit Securities in the form
of Exhibit G-1 and an Opinion of Counsel in the form of Exhibit C or (ii) make
other arrangements acceptable to each Rating Agency (as evidenced by written
confirmation from each Rating Agency) to deposit on the Business Day preceding
the Stated Maturity an amount of Cash, together with the amount of Cash that
will otherwise be available in the Distribution Account and the Reserve Fund on
the Stated Maturity, at least equal to the Selected Amount and notify the
Trustee of such arrangements. Notwithstanding the foregoing, if, as of the 45th
day preceding the Stated Maturity, the rating by Fitch or Moody's of the long-
term unsecured debt of NationsBank Corporation has fallen below BBB or Baa2, as
the case may be, then no later than 30 days before the Stated Maturity, the
Issuer must deliver Deposit Securities to the Trustee as described in clause (i)
of the preceding sentence. If the Issuer shall fail to take any of the actions
described in either of the preceding two sentences, whichever is applicable,
within the prescribed period, the Trustee shall liquidate Collateral, as
promptly as possible, to the extent necessary to enable the Issuer to pay an
amount equal to the Selected Amount at the Stated Maturity.
(b) Any delivery of Deposit Securities made pursuant to this Section
10.03 shall be held in the Distribution Account for the benefit of the Persons
entitled to such principal or interest and shall be irrevocable once made until
the principal or interest becoming due has been duly and punctually paid or
otherwise provided for. In the event that the amount of funds made available for
the payment of principal and interest the Stated Maturity by the prior delivery
of Deposit Securities pursuant to this Section 10.03 shall exceed the amount of
principal and interest which is payable on the Stated Maturity, the difference
between such amounts shall be paid to the Issuer by the Trustee within three
Business Days after the Stated Maturity. In the event that the amount of funds
thus made available is insufficient for such purpose for any reason, the Issuer
shall nevertheless be obligated to make or otherwise provide for the payment of
principal and interest on the Stated Maturity in full.
(c) In the event that any Paying Agent other than the Trustee has
been appointed by the Issuer, the Issuer shall deliver the Deposit Securities as
and when required by Section 10.03(a) to such Paying Agent. The Issuer will
cause any 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,
subject to the provisions of this Section 10.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of the
principal of or redemption price of or interest on
Securities 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;
(ii) give the Trustee notice of any default by the
Issuer in the making of any payment of principal or interest
or of the failure of the Issuer to deliver Deposit
Securities on the Liquidity Date or such other date as may
be required by Section 10.03(a)(ii); and
(iii) at any time during the continuance of an Event
of Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by
such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, direct
any such 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 such sums were held by such Paying Agent; and, upon such payment by
any such Paying Agent to the Trustee, such Paying Agent shall be released from
all further liability with respect to such money.
(d) Any Cash delivered by the Issuer to the Trustee pursuant to
Section 10.03(a) shall be invested by the Trustee as directed by an Issuer's
Request in other Deposit Securities having a maturity date at least one Business
Day prior to the date on which the applicable payment in respect of the
Securities is due and payable. All of the interest and principal payable on
Deposit Securities shall be paid directly to the Trustee, and all Deposit
Securities shall have a maturity date at least one Business Day prior to the
date on which the relevant payment in respect of the Securities is due and
payable.
(e) If any payment of the principal of or interest on any Security
remains unclaimed for two years after such principal or interest has become due
and payable, the proceeds of any Deposit Securities delivered to the Trustee or
any Paying Agent in trust for the payment of such principal or interest shall be
paid to the Issuer on Request; and the Holder of such Security shall hereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Issuer as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment or redelivery, may at the expense of the
Issuer cause notice to be given as provided in Section 1.06 that such payment
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notice, any unclaimed balance of such
Deposit Securities then remaining will be repaid or redelivered to the Issuer.
SECTION 10.04. Warranty of Title and Authority to
Pledge.
The Issuer warrants and agrees that all of the Collateral now or
hereafter subjected to the Lien of this Indenture is or will be, as the case may
be, owned by the Issuer and pledged by it hereunder free and clear of any
mortgage, pledge, security interest, lien, charge or encumbrance, except the
Lien of this Indenture, and that it has and will have full power and lawful
authority to pledge such Collateral and to assign, transfer and deliver such
Collateral in the manner and form aforesaid or to cause such Collateral so to be
pledged and such Collateral so to be assigned, transferred and delivered. The
Issuer hereby does and will forever warrant and defend the title of the Trustee
to the Collateral, whether now or hereafter pledged or assigned by the Issuer,
for the benefit of the Holders of Securities against the lawful claims and
demands of all Persons whomsoever.
SECTION 10.05. Protection of Lien.
(a) The Issuer will do all things and take all actions necessary to
keep the Lien of this Indenture a first, prior and perfected lien upon the
Collateral on behalf of the Holders of Securities and protect its title to the
Collateral against loss by reason of any foreclosure or other proceeding to
enforce any lien prior to or pari passu with the Lien of this Indenture, other
than the limited prior lien granted to the Trustee pursuant to Section 6.06.
(b) The Issuer will:
(i) duly and promptly pay and discharge, or cause
to be paid and discharged, before they become delinquent,
all taxes, assessments, governmental and other charges
lawfully levied, assessed or imposed upon or against any of
the Collateral including the income or profits therefrom and
the interests of the Trustee and Holders in such Collateral
or in any Mortgages securing Mortgage Notes included in the
Collateral;
(ii) duly observe and conform in all material
respects to all valid requirements of any governmental
authority imposed upon the Issuer relative to any of the
Collateral, and all covenants, terms and conditions under or
upon which any part thereof is held;
(iii) cause to be paid and discharged all lawful
claims (including, without limitation, income taxes) which,
if unpaid, might become a lien or charge upon the
Collateral; and
(iv) collect or cause to be collected all payments
due on the Collateral, take or cause to be taken appropriate
action in connection with defaults thereunder and otherwise
service or cause to be serviced such Collateral, all in
accordance with the Issuer's customary practices.
Nothing contained in this Section 10.05 shall require the payment of
any such tax, assessment, claim, lien or charge or the compliance with any such
requirement (i) so long as the validity, application or amount thereof shall be
contested in good faith, or (ii) with respect to any of the real property
covered by any Mortgage.
SECTION 10.06. Filing; Opinion of Counsel.
The Issuer will cause all financing and continuation statements, if
any, with respect to this Indenture and all supplemental indentures to be kept
recorded and filed in such manner and in such places, if any, as may in the
opinion of counsel for the Issuer be required by law in order to preserve and
protect the rights of the Holders of the Securities and the Trustee and will pay
all taxes and fees incidental thereto. The Issuer will furnish to the Trustee
concurrently with the execution and delivery of each supplemental indenture, an
Opinion of Counsel:
(i) that in the opinion of such counsel the Issuer
has effected all such filings as are necessary to make
effective the lien intended to be created hereby and
thereby, and reciting the details of such action, or that in
the opinion of such counsel no such action is necessary to
make effective such lien; and
(ii) that any other action required by this
Indenture to be taken so as to make such lien effective has
been taken, and reciting the details of such action, or that
in the opinion of such counsel no such other action is
necessary to make such lien effective.
The Issuer will also cause all Collateral assigned to the Trustee to
be kept recorded and filed in such manner and in such places as may in the
opinion of counsel for the Issuer be required by law in order to protect and
preserve the rights of the Trustee and the Issuer.
SECTION 10.07. Further Assurances.
The Issuer will execute and deliver, or cause to be executed and
delivered, all such additional instruments and do, or cause to be done, all such
additional acts as (a) may be necessary or proper, consistent with the Granting
Clauses hereof, to carry out the purposes of this Indenture and to make subject
to the lien hereof any property intended so to be subject, (b) may be necessary
or proper to transfer and deliver to any successor trustee the estate, powers,
instruments and funds held in trust hereunder and to confirm the Lien of this
Indenture or the priority thereof, or (c) the Trustee may reasonably request for
any of the foregoing purposes. The Issuer will also cause to be filed,
registered or recorded any instruments of conveyance, transfer, assignment or
further assurance in all offices in which such filing, registering or recording
is necessary to the validity thereof or to give notice thereof. The Issuer
hereby authorizes the Trustee to file all such financing statements and
continuation statements as the Trustee may deem necessary or advisable to make
or keep effective the Lien of this Indenture or the priority thereof but the
Trustee shall have absolutely no obligation to make any such filings.
SECTION 10.08. Advances by Trustee.
If the Issuer shall fail to perform any of its covenants contained in
this Indenture, the Trustee may (but shall not be obligated to) make advances to
perform the same on behalf of the Issuer, and the Issuer will repay upon demand
all sums so advanced, with interest from the date such advances are made to the
date such advances are repaid by the Issuer at the rate of interest borne by the
Securities. The principal amount of all sums so advanced, but not the interest
thereon, shall be secured by this Indenture and have priority to the Securities.
No such advance shall be deemed to relieve the Issuer from any default or Event
of Default hereunder.
SECTION 10.09. Restriction on Amendment of Certain
Instruments.
The Issuer will not enter into any agreement providing for, or consent
to, any modification, alteration, supplement or amendment of any Collateral,
except as provided in this Indenture. To the extent so permitted, the Issuer
may waive compliance with provisions in any Government Securities, Mortgage
Notes, Mortgages, Deposit Securities or other securities included in the Pledged
Property, either before or after the time when such compliance was required, but
no such waiver shall extend to or affect such provisions except to the extent
expressly waived.
SECTION 10.10. Maintenance of Books of Record and
Account; Financial Statements of the Issuer.
(a) The Issuer will keep proper books of record and account in which
full and correct entries will be made of its transactions pursuant hereto in
accordance with generally accepted accounting principles. The Issuer will
permit the Trustee and its agents, auditors, attorneys and counsel, at all
reasonable times, to examine all of the books of record and account of the
Issuer and to take copies and extracts therefrom in such manner that the
business operations of the Issuer are not unduly disrupted, and will from time
to time furnish, or cause to be furnished, to the Trustee such information and
statements as the Trustee may reasonably request, all as may be reasonably
necessary for the purpose of determining performance or observance by the Issuer
of the covenants, conditions and obligations contained in this Indenture.
(b) The Issuer will deliver to the Trustee within 120 days after the
expiration of each fiscal year of the Issuer, a consolidated statement of
operations for such fiscal year and a consolidated statement of condition of the
Issuer as of the last day of such fiscal year. Such consolidated statements of
operations and condition shall set forth in reasonable detail the results of
operations for the period ended, and the financial condition of the Issuer as at
the date thereof, and shall be accompanied by the report or opinion of the
Independent Accountants who have audited the books of the Issuer for such fiscal
year.
SECTION 10.11. Statement as to Compliance and Audit of
Collateral
(a) The Issuer will deliver to the Trustee within 120 days after the
end of each fiscal year of the Issuer, an Officers' Certificate stating that:
(1) a review of the activities of the Issuer and
of the performance by the Issuer under this Indenture during
such year has been made under such Officers' supervision,
and
(2) to the best of such Officers' knowledge,
based on such review, the Issuer has fulfilled all its
obligations under this Indenture throughout such year, or,
if there has been a default in the fulfillment of any such
obligation, specifying each such default known to them and
the nature and status thereof.
(b) Forthwith upon any officer of the Issuer obtaining information
causing him or her to believe there exists a default in the performance, or
breach, of any covenant of the Issuer contained in this Article Ten, the Issuer
will deliver to the Trustee an Officers' Certificate specifying the nature,
status and period of existence thereof.
SECTION 10.12. Title Insurance.
The Issuer agrees that unless an Opinion of Counsel to the effect set
forth in subclause (ii) of clause (d) of the second paragraph of Clause Second
of the Granting Clauses hereof is delivered to the Trustee, the Mortgages will
be insured by title insurance as described in the Officers' Certificate
delivered pursuant to clause (d) of the second paragraph of Clause Second of the
Granting Clauses hereof, and that the terms of each policy of such title
insurance will provide that any assignee (including the Trustee) of the Mortgage
covered by such policy will automatically be an insured thereunder. If an Event
of Default shall have occurred and be continuing, the Issuer, upon the request
of the Trustee, shall deliver or cause to be delivered to the Trustee all
mortgage title insurance policies that relate to Mortgage Notes included in the
Pledged Property.
SECTION 10.13. Fire and Extended Coverage Insurance.
The Issuer agrees to use its best efforts to cause to be maintained in
regard to each property covered by a Mortgage insurance against loss or damage
by fire and the risks embraced within the term "extended coverage" in an amount
not less than the maximum insurable value of the improvements securing the
related Mortgage Note or the principal balance owing on such Mortgage Note,
whichever is less. All insurance relating to Mortgage Notes shall be payable to
the Issuer as its interest may appear. Any proceeds of such insurance received
by the Issuer after an Event of Default shall have occurred and be continuing
shall be received and held by the Issuer in trust and paid to the Trustee.
SECTION 10.14. Selection of Eligible Mortgage Notes.
In selecting Eligible Fixed-Rate Mortgage Notes for inclusion in the
Eligible Collateral, the Issuer will use its best efforts to include Eligible
Fixed-Rate Mortgage Notes secured by Eligible Mortgages with a geographical
dispersion representative, to the extent possible, of the entire portfolio of
Eligible Fixed-Rate Mortgages originated and serviced by NationsBanc Mortgage.
In selecting Eligible Adjustable-Rate Mortgage Notes for inclusion in the
Eligible Collateral, the Issuer will use its best efforts to include Eligible
Adjustable-Rate Mortgage Notes secured by Eligible Mortgages with a geographical
dispersion representative, to the extent possible, of the entire portfolio of
Eligible Adjustable-Rate Mortgages originated and serviced by NationsBanc
Mortgage.
SECTION 10.15. Notice to Trustee of Change in
Regulations.
The Issuer will notify the Trustee within 60 days of any law,
regulation, rule or order instituted that could affect the ability of the Issuer
to pledge additional Collateral.
SECTION 10.16. Notices and Copies of Supplemental
Indentures, Collateral Reports and Accountants' Letters
to Rating Agencies.
The Trustee shall give each Rating Agency notice of the following
events: (1) failure of the Trustee to obtain two bid prices for any Collateral
as to which the definition of Market Value specifies that such bid prices be
obtained and (2) mandatory redemption of the Securities; provided, however, that
there shall be no liability of the Trustee for failure to do so.
The Trustee shall also provide each Rating Agency with a copy of each
Supplemental Indenture and each Collateral Report and Accountants' Letter
delivered pursuant to this Indenture; provided, however, that there shall be no
liability of the Trustee for failure to do so.
SECTION 10.17. Covenants Regarding Issuer's Business.
For so long as any Securities are Outstanding, the Issuer will not
engage in any business other than (i) issuing and selling the Securities and the
separate series of similar securities under separate indentures similar to this
Indenture as contemplated by Issuer's Registration Statement on Form S-3,
declared effective by the Commission on September 28, 1994, as amended, or
subsequent similar registration statements filed by the Issuer, and acquiring,
owning, holding and pledging the related pledged property in connection
therewith, (ii) issuing and selling certain subordinated indebtedness and (iii)
engaging in other activities which are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.01. Mandatory Redemption Due to Failure to
Meet Basic Maintenance Amount.
(a) The Securities are subject to mandatory redemption in part in
accordance with this Section 11.01 and the other sections of this Article Eleven
in the event that the Discounted Value of the Eligible Collateral included in
Pledged Property, as determined by the Trustee pursuant to Section 4.06 with
respect to any Regular Valuation Date, is less than the Basic Maintenance Amount
and the Issuer is unable by the Cure Date, to pledge additional Eligible
Collateral and/or substitute Eligible Collateral and/or deliver to the Trustee
for cancellation thereof Securities repurchased by the Issuer or by one of its
Affiliates in a principal amount sufficient to render the Discounted Value of
the Eligible Collateral included in Pledged Property at least equal to the Basic
Maintenance Amount. Notwithstanding the foregoing, if the report prepared by
the Trustee with respect to any Regular Valuation Date immediately following the
Cure Date and prior to the date on which the Trustee gives notice of redemption
to the Holders shows that the Discounted Value of the Eligible Collateral is at
least equal to the Basic Maintenance Amount as of such Regular Valuation Date,
the Issuer shall not be required to make a mandatory redemption of the
Securities.
Any such mandatory partial redemption shall require the redemption of
Securities in an aggregate principal amount that is the smallest principal
amount (rounded to the next higher integral multiple of $1,000) of the
Securities necessary in order (i) to bring the Discounted Value of the Eligible
Collateral included in Pledged Property (determined as of the Regular Valuation
Date immediately preceding the date on which the Trustee gives written notice of
redemption to the Holders) to the Basic Maintenance Amount as of the date on
which such calculation is being made (as adjusted to give effect to such
redemption), after giving effect to (A) the pledge of additional Eligible
Collateral, (B) the delivery to the Trustee for cancellation of Securities
repurchased by the Issuer or an Affiliate, and (C) such redemption and (ii) to
permit the delivery of the Collateral Report by the Trustee as required by
Section 11.01(b). Any such mandatory redemption shall be made at the Redemption
Price, on a Redemption Date within 30 days after the applicable Cure Date, which
Redemption Date shall be selected by the Trustee after consultation with the
Issuer.
(b) On each Redemption Date with respect to a redemption pursuant to
this Section 11.01, the Issuer shall deliver to the Trustee a Collateral Report,
dated as of such Redemption Date, which Collateral Report shall show that after
giving effect to the redemption of Securities pursuant to this Article Eleven,
and to any other actions taken by the Issuer pursuant to Section 11.01, the
Discounted Value of the Eligible Collateral included in the Pledged Property
(determined at the option of the Issuer as of the prior Valuation Date or the
Cure Valuation Date) is equal to or greater than the Basic Maintenance Amount as
of the Prior Valuation Date (as adjusted to give effect to such redemption).
SECTION 11.02. Selection of Securities to Be Redeemed.
Selection of the Securities to be redeemed shall be made in such
manner as the Trustee deems fair and reasonable, the particular Securities to be
redeemed to be selected by the Trustee not more than 12 or less than 7 days
prior to the Redemption Date in the case of a redemption pursuant to Section
11.01, from the Outstanding Securities not previously called for redemption by
lot or pro rata or by such other methods as the Trustee shall deem fair and
appropriate; provided, that the Trustee shall select Securities for redemption
in such manner that no single Security to be Outstanding following redemption
shall be in a denomination of less than $100,000. The Trustee shall notify the
Issuer in writing of the Securities selected for redemption and, in the case of
any Securities selected for partial redemption, the principal amount to be
redeemed, on the same day on which the Holders of the Securities are so
notified.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal of such Security which has been or is to be redeemed.
SECTION 11.03. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section
1.06 to the Holders of Securities to be redeemed. Notice of redemption pursuant
to Section 11.01 shall be given not more than 10 nor less than 5 days prior to
the Redemption Date.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) that on the Redemption Date the Redemption
Price will become due and payable upon each such Security to
be redeemed, and that interest thereon shall cease to accrue
on and after said date;
(4) the place where such Securities are to be
surrendered for payment of the Redemption Price; and
(5) the identification (and the respective
principal amounts) of the Securities to be redeemed.
Notice of redemption of Securities shall be given by the Issuer or, at
the Issuer's Request, by the Trustee in the name of and at the expense of the
Issuer.
SECTION 11.04. Securities Payable on Redemption Date.
(a) Notice of redemption having been given as aforesaid, each of the
Securities called for redemption shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified upon surrender of any such
Security in accordance with said notice. From and after the Redemption Date
(unless the Issuer shall default in the payment of the Redemption Price), the
principal amount of the Securities called for redemption shall cease to bear
interest and, except as set forth in Section 11.04(b), the only right of the
Holders of such Securities shall be to receive payment of the Redemption Price.
(b) The Issuer shall execute and the Trustee shall authenticate and
deliver to the Holder of any Security that is to be redeemed in part only a new
Security or Securities, as requested by such Holder, in authorized denomination
and in an aggregate principal amount equal to and in exchange for the unredeemed
portion, if any, of the Security surrendered for redemption. Such new Security
or Securities shall continue to bear interest at the interest rate borne by the
Securities, until the principal thereof shall be paid.
(c) If any Security called for redemption shall not be paid upon
surrender thereof for redemption, the principal thereof shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 11.05. Liquidation of Collateral in Respect of
Redemption.
Immediately after receiving notice of any redemption pursuant to
Section 11.01, the Trustee shall liquidate Collateral, as promptly as possible,
to the extent necessary to enable the Issuer to pay on the Redemption Date the
aggregate Redemption Price of all of the Securities required to be redeemed on
such Redemption Date; provided, that the Trustee will not do so if concurrently
with such notice the Issuer delivers Deposit Securities to the Trustee in an
amount sufficient to provide for full payment of the Redemption Price of the
Bonds required to be redeemed.
ARTICLE TWELVE
SECURITYHOLDERS' LISTS AND REPORTING REQUIREMENTS
The following provisions of this Article Twelve are all subject to
Section 12.05.
SECTION 12.01. Issuer To Furnish Trustee Names and
Addresses of Securityholders.
The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after each Regular Record Date with respect to the
Securities, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of the Securities as of such Regular Record
Date and (b) 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 Security
Registrar, no such list shall be required to be furnished.
SECTION 12.02. Preservation of Information;
Communications to Securityholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Securities contained in
the most recent list furnished to the Trustee as provided in Section 12.01
hereof and the names and addresses of Holders of Securities received by the
Trustee in its capacity as Security Registrar. The Trustee may destroy any list
furnished to it as provided in such Section 12.01 upon receipt of a new list so
furnished.
(b) If three or more Holders of Securities ("applicants") apply in
writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application and such application states that the
applicants desire to communicate with other Holders of Securities or with the
Holders of all Securities with respect to their rights under this Indenture or
under such Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, at its
election, either:
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with
Subsection (a) of this Section, or
(ii) inform such applicants as to the approximate
number of Holders of Securities whose names and addresses
appear in the information preserved at the time by the
Trustee in accordance with Subsection (a) of this Section,
and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if
any, specified in such application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder whose name and address appear in the
information preserved at the time by the Trustee in accordance with Subsection
(a) of this Section, a copy of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within five days after
such tender, the Trustee shall mail to such applicants and file with the
Commission, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the Holders of Securities or would be in
violation of applicable law. Such written statement shall specify the basis of
such opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Securityholders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders of Securities in accordance with
Subsection (b) of this Section 12.02, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Subsection (b)
of this Section 12.02.
SECTION 12.03. Reports by Trustee.
(a) Within 60 days after December 31 of each year commencing with
December 31, 1997, the Trustee shall transmit by mail to the Securityholders, as
their names and addresses then appear in the Security Register, a brief report
dated as of December 31 ("reporting date") with respect to each of the following
events; provided, however, that if no such event has occurred within the
previous twelve months (or within the period since the Closing Date, in the case
of the first such report) no report need be transmitted:
(1) any change to its eligibility and its
qualifications under Section 6.07 hereof, including a report
with respect to the creation of or any material change to a
relationship specified in paragraph (1) through (10) of
Section 310(b) of the TIA, or in lieu thereof, if to the
best of its knowledge it has continued to be eligible and
qualified under said Sections, a written Statement to such
effect;
(2) the character and amount of any advances (and
if the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as
such) which remain unpaid on the reporting date, and for the
reimbursement of which it claims or may claim a lien or
charge, prior to that of the Securities, on the Pledged
Property or on any property or funds held or collected by it
as Trustee, except that the Trustee shall not be required
(but may elect) to report such advances if such advances so
remaining unpaid aggregate not more than 1/2 of 1% of the
principal amount of the Securities Outstanding on the
reporting date;
(3) the amount, interest rate and maturity date
of all other indebtedness owing by the Issuer (or by any
other obligor on the Securities) to the Trustee in its
individual capacity on the reporting date, with a brief
description of any property held as collateral security
therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section
311(b) of the TIA;
(4) any change to the property and funds, if any,
physically in the possession of the Trustee as such on the
reporting date;
(5) any release, or release and substitution, of
property subject to the Lien of this Indenture (and the
consideration therefor, if any) which the Trustee has not
previously reported; and
(6) any action taken by the Trustee in the
performance of its duties hereunder which it has not
previously reported and which in its opinion materially
affects the Securities or the Pledged Property.
(b) The Trustee shall transmit by mail to all Securityholders, as
their names and addresses appear in the Security Register a brief report with
respect to (i) the release, or release and substitution, of property subject to
the Lien of this Indenture (and consideration therefor if any) unless the fair
value of such property is less than 10% of the principal amount of the
Securities Outstanding at the time of such release, or such release and substitu
tion, such report to be transmitted within 90 days of such time, and (ii) the
character and amount of any advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of this
Section 12.03 (or if no such report has yet be so transmitted, since the Closing
Date) for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Securities, on property or funds held or collected by it as
Trustee, and which it has not previously reported pursuant to this Subsection,
except that the Trustee shall not be required (but may elect) to report such
advances if such advances remaining unpaid at any time aggregate 10% or less of
the principal amount of the Securities Outstanding at such time, such report to
be transmitted within 90 days of such time. For purposes of this Section
12.03(b) and for purposes of Section 1.02(b) hereof, the term "fair value," as
that term may relate to the Collateral, shall be deemed to mean the Discounted
Value of such Collateral at the time of determination.
(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each securities
exchange upon which the Securities are listed, and also with the Commission.
The Issuer will notify the Trustee when the Securities are listed on any
securities exchange.
(d) The Trustee shall report to the Issuer with respect to the
balance in the Distribution Account and the Reserve Fund, the identities of the
investments included therein, and the aggregate principal amount of Outstanding
Securities as the Issuer may from time to time request.
SECTION 12.04. Reports by Issuer.
(a) The Issuer shall:
(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 15(d) of the Exchange Act; 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 Exchange Act 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 this Indenture
as may be required from time to time by such rules and
regulations;
(3) transmit by mail to all Securityholders as
their names and addresses appear in the Security Register,
or in the list of Securityholders most recently provided to
the Trustee by the Issuer under Section 12.01 hereof, 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 (1) and (2) of
this Section as may be required by rules and regulations
prescribed from time to time by the Commission;
(4) transmit by mail to all Holders of
Securities, as their names and addresses appear in the
Security Register, within 120 days after the end of each
fiscal year of the Issuer commencing with the fiscal year
ending December 31, 1997, (i) an audited balance sheet of
the Issuer as of the last day of the preceding fiscal year
and (ii) a statement setting forth the aggregate Discounted
Value of all Eligible Collateral securing the Securities on
the last day of the preceding fiscal year; and
(5) deliver or cause to be delivered to the
Trustee, on or before January 31 of each year, commencing
with January 31, 1998, an Opinion of Counsel either stating
that in the opinion of such counsel such action has been
taken with respect to the recording, filing, re-recording
and re-filing of this Indenture as is necessary to maintain
the Lien of the Indenture, and reciting the details of such
action, or stating that in the opinion of such counsel no
action is necessary to maintain such lien until February 1
in the following year.
(b) The fiscal year of the Issuer shall end on December 31 of each
year. The Issuer shall promptly notify the Trustee of any change in the
Issuer's fiscal year.
SECTION 12.05. Provisions of this Article Superseded
By Trust Indenture Act.
The Provisions of this Article Twelve are all intended to facilitate
compliance with the requirements of the TIA as in effect on the date hereof, and
shall be deemed superseded by any modifications or changes to such requirements
(to expand such requirements to eliminate such requirements or otherwise)
effected by amendment to the TIA, by regulation, by rule or by judicial or
administrative decision. The provisions of this Article Twelve shall not at any
time impose upon any Person obligated under this Article Twelve any greater
reporting obligation with respect to the matters covered by this Article Twelve
than the reporting obligation with respect to such matters imposed upon such
Person by the TIA as in effect with respect to such time.
SECTION 12.06. Luxembourg Reports and Notices.
So long as the Securities shall be listed on the Luxembourg Stock
Exchange or an application for such a listing shall be pending:
(a) Promptly after the determination of the interest rate on the
Securities applicable to each Interest Period pursuant to Section 2.01 (and in
no event later than the first day of such Interest Period), the Trustee shall
give notice of such interest rate, the related Interest Payment Date and the
amount of interest payable on the Bonds on such Interest Payment Date to the
Listing Agent and the Luxembourg Stock Exchange.
(b) The Issuer shall provide to the Listing Agent a copy of (i) its
declaration of trust and by-laws, and any amendments to such documents, (ii) any
report filed by the Issuer with the Commission, and (iii) the quarterly and
annual financial statements of NationsBank Corporation (commencing with such
statements for the period ending March 31, 1997 and the period ending December
31, 1997, respectively).
(c) The Issuer or the Trustee, as applicable, shall cause to be given
to the Listing Agent a copy of any notice by or on behalf of such Person to
Securityholders under this Indenture.
(d) Upon request to the Trustee, the Trustee shall cause to be given
to the Listing Agent a copy of the Trustee's periodic Valuation Date reports,
together with any letters from a firm of independent accountants.
ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE
SECTION 13.01. Satisfaction and Discharge of Indenture.
(a) This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for) and the Trustee shall, on demand of and at the
expense of the Issuer, execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(i) either
(1) all Securities theretofore authenticated and
delivered (other than (A) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.09, and (B) Securities for
whose payment Deposit Securities have theretofore been
delivered in trust or segregated and held in trust by the
Trustee as provided in Section 10.03) have been delivered to
the Trustee for cancellation; or
(2) all such Securities not theretofore delivered
to the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at
their Stated Maturity within six months,
and the Issuer, in the case of (2)(A) or (B) above, has
deposited or caused to be delivered to the Trustee in trust
an amount of Deposit Securities (which, in the case of
(2)(B) above, shall be limited to Cash and/or non-callable
Government Securities within the meaning of clause (b) of
the definition of "Deposit Securities") sufficient to pay
and discharge the entire indebtedness on the Securities not
theretofore delivered to the Trustee for cancellation, for
(x) in the case of Securities described by (2)(A), principal
and interest to the date of such deposit at the applicable
rate or rates calculated in accordance with Section 2.01 or
(y) in the case of Securities described by (2)(B), principal
and interest to the Stated Maturity at the Maximum Interest
Rate, unless such Securities will become due and payable at
their Stated Maturity within 30 days, in which case at the
rate calculated in accordance with Section 2.01;
(ii) The Issuer has paid or caused to be paid
all other sums payable hereunder by the Issuer; and
(iii) The Issuer has delivered to the
Trustee an Officers' Certificate substantially in the form
of Exhibit G-1 or G-2 (with appropriate modifications) and
an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer to the Trustee
under Section 6.06 shall survive and, if Deposit Securities
shall have been delivered to the Trustee pursuant to
subclause (B) of Clause (2) of this Section 13.01, the
obligations of the Trustee under Section 13.02 and the last
paragraph of Section 10.03 shall survive.
(b) The Trustee shall give notice of the satisfaction and discharge
of this Indenture to each Rating Agency.
SECTION 13.02. Application of Trust.
Subject to the provisions of Section 13.04, all Deposit Securities
delivered to the Trustee pursuant to Section 13.01 shall be segregated from
other trust funds and held in a separate trust and the cash payable in respect
thereof shall be applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, to the Persons entitled thereto,
of the principal and interest for whose payment Deposit Securities have been
delivered to the Trustee; but such Deposit Securities need not be segregated
except to the extent required by law, but shall be separately identified on the
records of accounts maintained by the Trustee. Any cash delivered by the Issuer
to the Trustee pursuant to this Article Thirteen, or otherwise held by the
Trustee in respect of this Article Thirteen shall be invested by the Trustee as
directed by the Issuer's Request in other Deposit Securities (which, in the case
of Cash delivered to the Trustee pursuant to Section 13.01(a)(i)(2)(B), shall be
limited to non-callable Government Securities within the meaning of clause (b)
of the definition of "Deposit Securities") having a maturity on or prior to the
date on which the payment in respect of the Securities is due and payable.
SECTION 13.03. Termination of Lien.
If this Indenture is discharged in accordance with this Article
Thirteen, the Lien of this Indenture in respect of the Pledged Property shall
cease, and become null and void (except the rights, obligations and immunities
of the Trustee hereunder), and the Trustee, on demand of and at the cost and
expense of the Issuer, shall, in a manner similar to the manner in which the
Issuer delivered such Pledged Property to the Trustee, execute and deliver such
instruments of assignment, transfer, release, discharge, termination and
satisfaction as may be reasonably requested by the Issuer in order to remove the
Lien of this Indenture from the Pledged Property and to evidence properly such
action, and forthwith the estate, right, title and interest of the Trustee in
and to the Pledged Property, any Securities, cash and other personal property
held by it under this Indenture as a part of the Pledged Property shall
thereupon cease, and become null and void, and the Trustee shall, in a manner
similar to the manner in which the Issuer delivered such Pledged Property to the
Trustee in such case transfer, deliver and pay the same to the Issuer or upon
the Issuer's Order.
SECTION 13.04. Repayment of Moneys Held by Paying
Agent.
In connection with the satisfaction and discharge of this Indenture,
all moneys then held by any Paying Agent (other than moneys payable in respect
of Deposit Securities delivered to the Trustee pursuant to Section 13.01) shall
upon demand of the Issuer or the Trustee be paid to the Trustee and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
MAIN PLACE REAL ESTATE INVESTMENT TRUST
By:/s/ John E. Mack
------------------------------------
Name: John E. Mack
Title: President
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By:/s/ Sheri Christopherson
-----------------------------------
Name: Sheri Christopherson
Title: Vice President
Exhibit 10(a)
SERVICING AGREEMENT
Dated as of March 18, 1997
between
MAIN PLACE REAL ESTATE INVESTMENT TRUST,
Issuer
and
NATIONSBANC MORTGAGE CORPORATION,
Servicer
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Incorporated Terms.
Section 1.02. Additional Terms.
ARTICLE II
ADMINISTRATION AND SERVICING OF THE MORTGAGE NOTES
Section 2.01. Contract for Servicing; Possession of
Servicing Files.
Section 2.02. Commencement of Servicing
Responsibilities.
Section 2.03. The Servicer to Act as Servicer
Section 2.04. Collection of Mortgage Note Payments
Section 2.05. Foreclosure
Section 2.06. Sub-Servicing Agreements
Section 2.07. Maintenance of Hazard Insurance
Section 2.08. Maintenance of PMI Policy
Section 2.09. Fidelity Bond and Errors and Omissions
Insurance
Section 2.10. Establishment of and Deposits to
Collection Account
Section 2.11. Permitted Withdrawals from Collection
Account
Section 2.12. Establishment of and Deposits to Escrow
Account
Section 2.13. Permitted Withdrawals from Escrow
Section 2.14. Maintenance of FHA Mortgage Insurance
and VA Guaranty
Section 2.15. Notification of Adjustments
Section 2.16. Completion and Recordation of Assignment
of Mortgage and FHA and
VA Change Notices
Section 2.17. Protection of Accounts; Eligible
Investments
Section 2.18. Custodial Agreement
Section 2.19. Servicing Compensation
Section 2.20. Withdrawals and Substitutions of
Mortgage Notes
ARTICLE III
REMITTANCES AND REPORTING BY THE SERVICER
Section 3.01. Remittances to Trustee
Section 3.02. Reporting by the Servicer
Section 3.03. Annual Certificate
Section 3.04. Annual Accountants' Report
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the
Servicer
Section 4.02. Remedies for Breach of Representations
and Warranties of the Servicer
ARTICLE V
THE SERVICER
Section 5.01. Corporate Existence of the Servicer;
Status as Servicer; Merger
Section 5.02. Performance of Obligations
Section 5.03. The Servicer Not to Resign; Assignment
ARTICLE VI
DEFAULT
Section 6.01. Events of Default
Section 6.02. No Effect on Other Parties
Section 6.03. Rights Cumulative.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Successor to the Servicer
Section 7.02. Termination of the Agreement
Section 7.03. Amendment.
Section 7.04. Governing Law
Section 7.05. Notices
Section 7.06. Severability of Provisions
Section 7.07. Inspection and Audit Rights
Section 7.08. Binding Effect
Section 7.09. Article and Section Headings
Section 7.10. Counterparts
SERVICING AGREEMENT
Servicing Agreement, dated March 18, 1997, between MAIN PLACE REAL
ESTATE INVESTMENT TRUST, a Maryland real estate investment trust (herein,
together with its successors and assigns, called the "Issuer"), and NATIONSBANC
MORTGAGE CORPORATION, a Texas corporation (herein, together with its successors
and assigns, called the "Servicer").
PRELIMINARY STATEMENT
The Issuer is the owner of certain Mortgages (as defined) and Mortgage
Notes (as defined) and the Servicer is an independent contractor in the business
of servicing mortgage loans. The Issuer has entered into an Indenture (the
"Indenture"), dated as of the date of this Agreement, with First Trust National
Association, as trustee (herein, together with its successors and assigns called
the "Trustee"), pursuant to which the Issuer intends to issue $1,000,000,000
aggregate principal amount of its Mortgage-Backed Bonds, Series 1997-1 Due 2000
(the "Securities"). Pursuant to the Indenture, as security for the indebtedness
represented by such Securities, the Issuer is and will be pledging with the
Trustee certain Mortgage Notes and is and will be assigning its rights under
this Agreement to the Trustee.
The Servicer and the Issuer desire to enter into this Agreement to
provide, among other things, for the servicing by the Servicer of the Mortgage
Notes pledged to the Trustee while such Mortgage Notes are subject to the lien
of the Indenture. The Servicer acknowledges that the Issuer's rights hereunder
are and will be assigned to the Trustee as security for the Securities, and
agrees that all covenants and agreements made by the Servicer herein with
respect to the Mortgage Notes shall also be for the benefit and security of the
Trustee and the Holders.
ARTICLE I
DEFINITIONS
Section 1.01. Incorporated Terms.
Capitalized terms not otherwise defined herein have the respective
meanings given to them under Article I of the Indenture, as said Indenture may
be amended from time to time.
Section 1.02. Additional Terms.
The following terms have the respective meanings set forth below for
all purposes of this Agreement, 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:
Accepted Servicing Practices: With respect to any Mortgage Notes, the
services and duties customary to the servicing by prudent mortgage lending
institutions of mortgages of the same type as such Mortgage Notes in the
jurisdictions where the related Mortgaged Properties are located.
Act: The National Housing Act, as amended from time to time.
Agreement: This Servicing Agreement and all amendments hereof and
supplements hereto.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the transfer of the Mortgage to the party indicated therein, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Notes secured by Mortgaged Properties
located in the same jurisdiction, if permitted by law.
Available Amount: The amount defined as such in Section 3.01 hereof.
Best Efforts: Efforts determined to be reasonably diligent by the
Issuer or Servicer, as the case may be, in its sole discretion. Such efforts do
not require the Issuer or Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding, nor do they
require the Issuer or Servicer, as the case may be, to advance or expend fees or
sums of money in addition to those specifically set forth in this Agreement.
Business Day: Any day other than (i) a Saturday, (ii) a Sunday, or
(iii) a day that is either a legal holiday or a day on which banking
institutions are authorized or obligated by law or regulation to close in the
States of North Carolina or Kentucky, or any other state in which the Servicer
is located (or, for purposes of remittances by the Servicer, any state in which
functions relating to the Collection Account are performed).
Closing Date: March 18, 1997.
Collection Account: The separate account or accounts created and
maintained pursuant to Section 2.10.
Collection Period: With respect to a Servicer Remittance Date, the
calendar month preceding the month in which such Servicer Remittance Date
occurs.
Condemnation Proceeds: All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Note documents.
Custodial Agreement: The agreement to be entered into pursuant to
Section 6.08 of the Indenture.
Custodian: The Custodian under the Custodial Agreement, or its
successor in interest or assigns or any successor to the Custodian under the
Custodial Agreement as provided therein.
Determination Date: A date not more than three Business Days prior to
the applicable Servicer Remittance Date.
Eligible Mortgage Note: Any Mortgage Note meeting the requirements of
Section 856 of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
Escrow Account: The separate account or accounts operated and
maintained pursuant to Section 2.12.
Escrow Payments: With respect to any Mortgage Note, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
Event of Default: Any event set forth in Section 6.01.
FHA Approved Mortgagee: A corporation or institution approved as a
mortgagee by FHA under the Act, and applicable HUD regulations, and eligible to
own and service mortgage loans such as the FHA Loans.
FHA Insurance Contract: The contractual obligation of FHA respecting
the insurance of a Mortgage Note.
FHA Loan: A residential Mortgage Note which is the subject of an FHA
Insurance Contract as evidenced by a mortgage insurance certificate.
FHA Mortgage Insurance: Mortgage insurance authorized under the Act
and provided by the FHA.
FHA Regulations: Regulations promulgated by HUD under the Act,
codified in 24 Code of Federal Regulations, and other HUD issuances relating to
FHA Loans, including the related handbooks, circulars, notices and mortgagee
letters.
Holder: The Person in whose name a Security is registered in
accordance with Section 2.08 of the Indenture.
Independent Accountant: Any accountant, who may also be the
accountant who audits the books of the Servicer, who is independent with respect
to the Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
Insurance Proceeds: With respect to each Mortgage Note, proceeds of
insurance policies insuring the Mortgage Note or the related Mortgaged Property
including FHA insurance proceeds and/or VA guaranty proceeds.
Liquidation Proceeds: Cash received in connection with the
liquidation of a defaulted Mortgage Note, whether through the sale or assignment
of such Mortgage Note, trustee's sale, foreclosure sale or otherwise, or the
sale of the related REO Property, if the Mortgaged Property is acquired in
satisfaction of the Mortgage Note.
Monthly Payment: The scheduled monthly payment of principal and
interest on a Mortgage Note.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien on an unsubordinated estate in real
property securing such Mortgage Note.
Mortgage Interest Rate: The annual rate of interest borne at any time
by a Mortgage Note.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage, each Mortgage Note subject to this Agreement
being identified on the Mortgage Note Schedule.
Mortgage Note Schedule: The schedule of Mortgage Notes delivered by
the Issuer to the Servicer setting forth information with respect to such
Mortgage Notes, which schedule shall be amended from time to time to reflect the
addition of Mortgage Notes to, or the withdrawal of Mortgage Notes from, the
terms of this Agreement and the Lien of the Indenture.
Mortgaged Property: The real property securing repayment of the debt
evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
NationsBank, N.A.: NationsBank, N.A., a national banking association,
and the indirect parent of the Issuer.
NationsBank South: NationsBank, N.A. (South), a national banking
association, and an affiliate of the Issuer.
NationsBank Texas: NationsBank of Texas, N.A., a national banking
association, and an Affiliate of Issuer.
NRSRO: Any nationally recognized statistical rating organization.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or any Vice President of
the Servicer, and delivered to the Issuer as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, who may be an
employee of the Servicer, and who is reasonably acceptable to the Issuer.
PMI Policy: A policy of private mortgage insurance issued by a
Qualified Insurer, as required by the Indenture with respect to certain Mortgage
Notes.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Note which is received in advance of its scheduled due date, including
any prepayment penalty or premium thereon, and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
Qualified Depository: NationsBank, N.A. or another Affiliate of the
Issuer or another depository the accounts of which are insured by the FDIC and
the short-term debt obligations of which are rated in at least one of the two
highest rating categories by an NRSRO.
Qualified Insurer: A mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA and FHLMC and rated in at
least one of the two highest rating categories by an NRSRO.
REO Disposition: The final sale by the Servicer, on behalf of the
Issuer, of any REO Property.
REO Disposition Proceeds: All amounts received with respect to an REO
Disposition.
REO Property: A Mortgaged Property acquired by the Servicer on behalf
and in the name of the Issuer through foreclosure or by deed in lieu of
foreclosure.
Servicer Remittance Date: The 23rd day of any month (or, if such day
is not a Business Day, the first Business Day immediately preceding such 23rd
day), commencing the month after the date of this Agreement.
Servicing Advances: All customary, reasonable and necessary "out-of-
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations. including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
administrative or judicial proceedings, including foreclosures, (c) the
management and liquidation of the Mortgaged Property if the Mortgaged Property
is acquired in satisfaction of the Mortgage, (d) taxes, assessments, water
rates, sewer rates and other charges which are or may become a lien upon the
Mortgaged Property, and PMI Policy premiums and fire and hazard insurance
coverage and (e) any losses sustained by the Servicer with respect to the
liquidation of the Mortgaged Property.
Servicing Fee:
(a) With respect to each Mortgage Note which was owned by NationsBank
of Texas, N.A., NationsBank, N.A. (South) or NationsBank, N.A. or by any of
their bank affiliates prior to January l, 1992, and is serviced hereunder, the
monthly fee the Issuer shall pay to the Servicer, which shall be equal to
one-twelfth of the product of (a)(i) three-eighths of one percent (3/8%) for
each such fixed rate Mortgage Note, and (ii) one-half of one percent (1/2%) for
each such adjustable rate Mortgage Note and (b) the outstanding principal
balance of such Mortgage Note.
(b) With respect to each Mortgage Note which was owned by NationsBank
of Texas, N.A., NationsBank, N.A. (South) or NationsBank, N.A. or by any of
their bank affiliates after January l, 1992, and is serviced hereunder, the
monthly fee the Issuer shall pay to the Servicer, which shall be equal to
one-twelfth of the product of (a)(i) one-half of one percent (1/2%) for each
such fixed rate or adjustable rate FHA and VA Loan serviced hereunder,
(ii) three-eighths of one percent (3/8%) for each such adjustable rate Mortgage
Note (other than FHA and VA Loans) the interest rate of which adjusts every
month, every 6 months, every year or every 3 years and (iii) one-quarter of one
percent (1/4%) for all other such Mortgage Notes serviced hereunder, and (b) the
outstanding principal balance of such Mortgage Note.
(c) Any prepayment penalty shall be paid to the Servicer and shall be
considered additional compensation to the Servicer.
Notwithstanding the foregoing, the Servicing Fee payable hereunder for any
Mortgage Note shall not be less than $10.00 per month.
Servicing File: The items pertaining to a particular Mortgage Note
including, but not limited to, a copy of the original Mortgage Note, the
computer files, data disks, books, records, data tapes, notes, and all
additional documents generated as a result of or utilized in originating and/or
servicing each Mortgage Note, which are held in trust for the Issuer by the
Servicer.
Trustee: The Trustee under the Indenture, or its successor in
interest or assigns or any successor to the Trustee under the Indenture as
provided therein.
VA Approved Lender: Those lenders which are approved by the VA to act
as a lender in connection with the origination of VA loans.
VA Loan: A Mortgage Loan which is the subject of a VA Loan Guaranty
Agreement as evidenced by a Loan Guaranty Certificate, or a Mortgage Loan which
is a vendee loan sold by the VA.
VA Loan Guaranty Agreement: The obligation of the United States to
pay a specific percentage of a Mortgage (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen's Readjustment Act, as
amended.
VA Loan Guaranty Certificate: The certificate evidencing a VA Loan
Guaranty Agreement.
VA Regulations: Regulations promulgated by the VA pursuant to the
Servicemen's Readjustment Act, as amended, codified in 38 Code of Federal
Regulations, and other VA issuances relating to VA Loans, including related
Handbooks, Circulars and Notices.
ARTICLE II
ADMINISTRATION AND SERVICING OF THE MORTGAGE NOTES
Section 2.01. Contract for Servicing; Possession of
Servicing Files.
The Issuer, by execution and delivery of this Agreement, does hereby
contract with the Servicer, subject to the terms of this Agreement, for the
servicing of the Mortgage Notes that are from time to time subject to this
Agreement. With respect to each Mortgage Note listed on the Mortgage Note
Schedule as of the date of this Agreement the Issuer shall cause to be delivered
or will use its Best Efforts to cause to be delivered, on or before the Closing
Date, the related Servicing File to the Servicer. With respect to each Mortgage
Note that becomes subject to this Agreement at any time after the date hereof,
the Issuer shall cause the Mortgage Note Schedule to be amended to reflect the
Mortgage Notes then subject to this Agreement and shall cause to be delivered or
will use its Best Efforts to cause to be delivered as soon as practicable each
related Servicing File to the Servicer. Each Servicing File delivered to the
Servicer shall be held by the Servicer in order to service the Mortgage Notes
pursuant to this Agreement and is and shall be held in trust as agent for the
Issuer and for the benefit of the Issuer as the Issuer thereof. The Servicer's
possession of any Servicing File shall be at the will of the Issuer for the sole
purpose of facilitating servicing of the related Mortgage Note pursuant to this
Agreement, and such retention and possession by the Servicer shall be in a
custodial capacity only. The ownership of each Mortgage Note, Mortgage, and the
contents of the Servicing File shall be vested in the Issuer and the ownership
of all records and documents with respect to the related Mortgage Loan prepared
by or which come into the possession of the Servicer shall immediately vest in
the Issuer and shall be retained and maintained, in trust, by the Servicer at
the will of the Issuer in such custodial capacity only. The Servicer shall
release from its custody the contents of any Servicing File retained by it only
in accordance with this Agreement.
Section 2.02. Commencement of Servicing Responsibilities.
On the Closing Date, the Servicer shall assume all servicing
responsibilities hereunder with respect to the Mortgage Notes.
Section 2.03. The Servicer to Act as Servicer.
(a) The Servicer, as an independent contractor, shall diligently
service and administer the Mortgage Notes from and after the Closing Date and
shall have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration which the Servicer may deem
necessary or desirable, consistent with Accepted Servicing Practices where such
practices do not conflict with the requirements of this Agreement, including
taking all actions that a mortgagee is permitted or required to take by the FHA
or VA, with respect to FHA Loans and VA Loans, as the case may be.
(b) Without limiting the generality of the foregoing, the Issuer and
the Servicer hereby agree as follows:
(i) The Servicer may waive any prepayment charge, assumption
fee, late payment charge or any other charge in connection with the
prepayment of a Mortgage Note;
(ii) The Servicer may arrange with a mortgagor a plan of relief,
including a modification or extension of the Mortgage Note, when
appropriate, rather than recommending liquidation; provided, however, such
arrangement will be made only upon determining that the coverage of such
Mortgage Note by any PMI Policy, FHA Insurance Contract or VA Loan Guaranty
Certificate will not be affected and that any such modified Mortgage Note
continues to be an Eligible Mortgage Note;
(iii) The Servicer shall enforce "due-on-sale" clauses with
respect to Mortgage Notes; provided, however, where an assumption of, or
substitution of liability with respect to, a Mortgage Note is required by
law, upon receipt of assurance that any PMI Policy covering such Mortgage
Note will not be affected, the Servicer may permit the assumption of a
Mortgage Note, pursuant to which the mortgagor shall remain liable on the
Mortgage Note, or a substitution of liability with respect to such Mortgage
Note, pursuant to which the new Mortgagor shall be substituted for the
original Mortgagor as being liable on the Mortgage Note. Notwithstanding
the foregoing, the Servicer shall not permit any modification with respect
to any Mortgage Note that would change the Mortgage Interest Rate or affect
the FHA Insurance Contract with respect to FHA Loans or the VA Loan
Guaranty Agreement with respect to VA Loans;
(iv) The Servicer may give any consents under the terms and
provisions of any Mortgage Note, including, without limitation, consents to
the placing of easements, covenants, conditions and restrictions on any
Mortgaged Property; and
(v) The Servicer may permit the modification of an Eligible
Mortgage Note which the related Mortgagor has indicated a desire to
refinance, or in connection with a prepayment, provided that any such
Mortgage Note would continue to be Eligible Mortgage Note following such
modification.
(c) In the event of any waiver or modification of the terms and
provisions of any Mortgage Note pursuant to subsection (b) of this Section 2.03,
the Servicer shall promptly deliver to the Trustee or pursuant to the Custodial
Agreement, to the Custodian, the original documentation reflecting such waiver
or modification for addition to the related Servicing File.
(d) The Servicer shall establish and maintain adequate and customary
books and records with respect to each Mortgage Note and, upon request of the
Issuer or Trustee shall, within a reasonable time following the Servicer's
receipt of such request, furnish the same (in the form of either an original
document or a certified true copy of such original document) to the Issuer or
Trustee. In the event of a request for any non-standard report, the Servicer
and the Issuer shall mutually agree in writing to a reasonable expense
reimbursement payable by the Issuer to the Servicer for such report.
In servicing and administering FHA Loans and VA Loans, if any, the
Servicer shall comply strictly with the Act and the FHA Regulations, the
Servicemen's Readjustment Act, the VA Regulations and administrative guidelines
issued thereunder or pursuant thereto, and, to the extent permitted hereunder,
promptly discharge all of the obligations of the mortgagee thereunder and under
each Mortgage, including the payment of any fees, premiums and charges and the
timely giving of notices.
Section 2.04. Collection of Mortgage Note Payments.
Continuously from the Closing Date until the date each Mortgage Note
ceases to be subject to this Agreement, the Servicer shall proceed diligently to
collect all payments due under each of the Mortgage Notes when the same shall
become due and payable and shall exercise reasonable diligence in ascertaining
and estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Notes and each related Mortgaged Property,
to the end that the installments payable by the Mortgagors will be sufficient to
pay such charges as and when they become due and payable.
Section 2.05. Foreclosure.
The Servicer shall process and manage: (i) the foreclosure or other
acquisition of the property securing any Mortgage Note; (ii) the transfer of
such property to the FHA, VA, or a private mortgage insurer, as applicable; and
(iii) the collection of any applicable mortgage insurance or guaranty proceeds;
and pending completion of these steps, the protection of the Mortgaged Property
from waste and vandalism. The Servicer will thereafter assign or convey to the
Issuer any title, equity or other property or right acquired by such
proceedings. In no event shall the Servicer be required to take title in its
name to any Mortgaged Property which has, or may reasonably be deemed to have,
an environmental or similar problem or defect for which the Servicer would
become liable by reason of its holding title to such property. The Issuer
agrees promptly to reimburse the Servicer for its reasonable Servicing Advances
incurred in complying with its obligations under this paragraph, including
attorney's fees. In case of a voluntary deed in lieu of foreclosure or the
purchase of any such property by the Issuer or for its account, the Issuer will
assume responsibility for the same. The marketing and sales of all REO
Properties will be the responsibility of the Servicer, on behalf of the Issuer.
Section 2.06. Sub-Servicing Agreements.
Any provision of this Agreement notwithstanding, the Servicer may
contract with other Persons for the performance of its responsibilities, duties
and obligations under this Agreement to service and administer any of the
Mortgage Notes, provided that none of the provisions of this Section 2.06
relating to agreements or arrangements between the Servicer and other Persons,
or to actions taken through any such other Persons or otherwise, shall be deemed
to relieve the Servicer of any of its duties and obligations to the Issuer, the
Trustee and the Holders with respect to the servicing and administration of the
Mortgage Notes, and the Servicer shall be obligated with respect thereto to the
same extent and under the same terms and conditions as if it alone were
performing all duties and obligations in connection with servicing and
administering the Mortgage Notes. The Servicer shall be entitled to enter into
any agreement with any Person performing services for it related to its duties
and obligations under this Agreement for indemnification of the Servicer by such
Person, and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification. Any transactions or services relating to the
Mortgage Notes involving any Person performing services for the Servicer shall
be deemed to be between such Person and the Servicer alone, and the Issuer, the
Trustee and the Holders shall not be deemed to be parties thereto and shall have
no claims, rights, obligations, duties or liabilities with respect to any such
Person.
Section 2.07. Maintenance of Hazard Insurance.
The Servicer will cause insurance to be maintained on the Mortgaged
Property covered by each Mortgage Note consistent with the Accepted Servicing
Practices and will make certain that each such property is insured as provided
below at all times for the benefit of the mortgagee on a standard insurance
policy form with an appropriate mortgagee payable clause. Such insurance shall
be in an amount not less than the lesser of the outstanding principal balance of
the Mortgage Note and the minimum amount necessary to compensate fully for any
damage or loss on a replacement cost basis. Such insurance shall be of a type
at least as protective as fire and extended coverage. The Servicer shall pay
the premium for such insurance as a Servicing Advance on a timely basis in the
event that the Mortgagor does not make such payments. With respect to any
Mortgaged Property located in an area identified by the Federal Emergency
Management Agency as having special flood hazards and as to which flood
insurance has been made available, the Servicer shall maintain or cause to be
maintained a flood insurance policy maintained with a generally acceptable
insurance carrier meeting the requirements of the current guidelines of the
Federal Insurance Administration. Such flood insurance policy will provide
coverage in an amount not less than the least of (i) the unpaid principal
balance of the Mortgage Note, (ii) the insurable value of the Mortgaged Property
and (iii) the maximum amount of insurance available under the Flood Disaster
Protection Act of 1973, as amended.
In the event that the Servicer chooses to maintain a blanket policy
insuring against hazard losses on certain of the Mortgage Notes, it shall
conclusively be deemed to have satisfied its obligation relating to the
maintenance of insurance under this Section 2.07. The Servicer shall maintain
accurate and complete records with respect to the insurance and insurance
premiums for each Mortgage Note and the status thereof. In the event the
Servicer receives actual notice of any loss or damage to any property securing a
Mortgage Note, the Servicer will proceed diligently to adjust any loss or damage
claim, and to protect the interest of the mortgagee under any such insurance
policy covering the incidence of damage. In the event that the Issuer shall
request an inspection by an engineer or other professional construction
inspector with respect to any such repairs, the Servicer will arrange for such
inspection.
Section 2.08. Maintenance of PMI Policy.
Pursuant to Section 1.01 of the Indenture, a Mortgage Note secured by
a Mortgaged Property having an original loan-to-value ratio in excess of 80%
must have a PMI Policy insuring against default of that portion of the principal
amount thereof in excess of 75% of the value of the Mortgaged Property. The
Servicer shall exercise its Best Efforts to keep each PMI Policy (if and so long
as any is required) in full force and effect. The Servicer shall pay the
premium for each PMI Policy as a Servicing Advance on a timely basis in the
event that the Mortgagor does not make such payments.
The Servicer, on behalf of the Issuer, shall present claims to the
insurer under any applicable PMI Policy and shall take such reasonable steps as
are necessary to permit recovery under such insurance policies respecting
defaulted Mortgage Notes. All Insurance Proceeds received by the Servicer under
such policies that are not applied to the restoration of the related Mortgaged
Property or refunded to the Mortgagor shall be deposited in the Collection
Account.
If any property securing a defaulted Mortgage Note is damaged and
proceeds, if any, from the related hazard insurance policy are insufficient to
restore the damaged property to a condition sufficient to permit recovery under
any applicable PMI Policy, the Servicer shall be required to expend its own
funds to restore the damaged property unless the Servicer reasonably determines
(i) that such restoration will not increase the proceeds to the Issuer upon
liquidation of the Mortgage Note after reimbursement of the Servicer for its
expenses and (ii) that such expenses will not be recoverable by it through
Liquidation Proceeds. In the event that the Servicer elects to restore the
damaged property and the cost of restoration exceeds the amount recovered by it
through Liquidation Proceeds, the Issuer shall reimburse the Servicer for the
difference between the amount expended by the Servicer and the amount recovered
through Liquidation Proceeds.
Section 2.09. Fidelity Bond and Errors and Omissions
Insurance.
The Servicer, at no expense to the Trustee or the Issuer, shall
maintain adequate fidelity bond coverage and adequate errors and omissions
insurance, and shall annually furnish to the Trustee or the Issuer proof of such
coverage in the form of an insurance certificate.
Section 2.10. Establishment of and Deposits to Collection
Account.
The Servicer shall establish and maintain the Collection Account in
the name of the Trustee for the benefit of the Holders and shall segregate and
hold all funds collected and received pursuant to the Mortgage Notes separate
and apart from any of its own funds and general assets in such Collection
Account. The Collection Account shall be established and maintained with a
Qualified Depository. The Collection Account may be maintained as an
interest-bearing account (which may include a money market savings account), or
the funds held therein may be invested from time to time in Eligible Investments
subject to the provisions of Section 2.17 hereof.
The Servicer shall deposit in or credit to the Collection Account on a
daily basis, as applicable, and retain therein, the following collections
received by the Servicer:
(i) All payments on account of principal and interest received
by the Servicer on the Mortgage Notes (which, at its option, may be net of
the Servicing Fee), including Principal Prepayments (in whole or in part);
(ii) All Liquidation Proceeds, net of expenses incurred in
connection with any liquidation;
(iii) All Insurance Proceeds received under any PMI Policy or
title, hazard or other insurance policy covering any Mortgage Note, other
than proceeds to be applied to the restoration or repair of the related
Mortgaged Property or to be refunded to the Mortgagor;
(iv) Any amounts required to be deposited or credited by the
Servicer in connection with losses realized on investments for the benefit
of the Servicer of funds held in the Collection Account;
(v) Any amounts required to be deposited or credited by the
Servicer in connection with interest loss or deferral as a result of a
failure to adjust a Mortgage Interest Rate or Monthly Payment under Section
2.15 hereof;
(vi) All rents collected on REO Properties; and
(vii) All other amounts required to be deposited in or credited to
the Collection Account under this Agreement.
Any interest paid on funds deposited in the Collection Account by the
related Qualified Depository shall accrue to the benefit of the Servicer, and
the Servicer shall be entitled to retain and withdraw such interest from the
Collection Account pursuant to Section 2.11 hereof.
Section 2.11. Permitted Withdrawals from Collection
Account.
The Servicer shall, from time to time, withdraw funds from the
Collection Account for the following purposes:
(i) To reimburse the Servicer from related Insurance or
Liquidation Proceeds for amounts expended by the Servicer in connection
with the restoration of property damaged by an uninsured cause or the
liquidation of a Mortgage Note;
(ii) To pay to the Servicer its Servicing Fee from interest
payments received on Mortgage Notes, if not previously retained, and any
earnings from the investment of funds in the Collection Account in Eligible
Investments;
(iii) To pay to the Servicer any expenses which were incurred by
the Servicer and are reimbursable pursuant to this Agreement, including but
not limited to expenses incurred by the Servicer in respect of property
repairs or maintenance on Mortgaged Properties;
(iv) To pay to the Servicer any amounts in respect of which the
Mortgagor's check has been returned and not honored by the Mortgagor's bank
for any reason or any amounts deposited in or credited to the Collection
Account in error;
(v) To remit funds to the Trustee in accordance with Section
3.01 hereof;
(vi) To remit funds to any Mortgagor or the designee of any
Mortgagor in respect of any payments due to the Mortgagor, including but
not limited to payments to be remitted to any Mortgagor under any
applicable insurance policy, as determined by the Servicer;
(vii) To transfer funds to another Qualified Depository in
accordance with Section 2.17 hereof;
(viii) To invest funds in certain Eligible Investments in
accordance with Section 2.17 hereof;
(ix) To remit funds to the Issuer or other Person entitled
thereto in accordance with Section 2.20 hereof; and
(x) To clear the Collection Account upon the termination of this
Agreement.
Section 2.12. Establishment of and Deposits to Escrow
Account.
The Servicer shall segregate and hold all funds collected and received
pursuant to a Mortgage Note constituting Escrow Payments separate and apart from
any of its own funds and general assets and shall establish and maintain one or
more Escrow Accounts, in the form of time deposit or demand accounts, titled in
the name of the Mortgagor. The Escrow Accounts shall be established with a
Qualified Depository and may be maintained as interest-bearing accounts.
The Servicer shall credit to the Escrow Account or Escrow Accounts on
a daily basis, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage
Notes for the purpose of effecting timely payment of any such items as are
required under the terms of this Agreement and the related Mortgage or
Mortgage Note; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property or refunded to the Mortgagor.
The Servicer shall retain any interest paid on funds deposited in the
Escrow Account by the depository institution, other than interest on escrowed
funds required by law to be paid to the Mortgagor. To the extent required by
law, the Servicer shall pay interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be non-interest bearing or that
interest paid thereon is insufficient for such purposes. The Servicer shall be
responsible for the administration of the Escrow Account or Escrow Accounts and
shall be expected to make Servicing Advances to such account when a deficiency
exists therein.
Section 2.13. Permitted Withdrawals from Escrow Account.
Withdrawals from the Escrow Account or Escrow Accounts may be made by
the Servicer only:
(i) to effect timely payments of taxes; assessments, water
rates, mortgage insurance premiums, condominium charges, fire and hazard
insurance premiums or other items constituting Escrow Payments for the
related Mortgage Note;
(ii) to reimburse the Servicer for any Servicing Advance made by
the Servicer with respect to a related Mortgage Note, but only from amounts
received on the related Mortgage Note;
(iii) to refund to any Mortgagor any funds found to be in excess
of the amounts required under the terms of the related Mortgage Note at any
time or funds remaining therein after the principal balance of the related
Mortgage Note has been paid in full;
(iv) for transfer to the Collection Account and application to
reduce the principal balance of the Mortgage Note in accordance with the
terms of the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the Mortgaged
Property;
(vi) for transfer to the Collection Account of fire and hazard
insurance proceeds and Escrow Payments with respect to any FHA Loan or VA
Loan, where the FHA or the VA, respectively, has directed application of
funds as a credit against the proceeds of the FHA Insurance Contract or VA
Loan Guaranty Agreement;
(vii) to pay to the Servicer, or any Mortgagor to the extent
required by law, any interest paid on the funds deposited therein;
(viii) to remit funds to the Issuer or other Person entitled
thereto in accordance with Section 2.20 hereof;
(ix) to pay to the Mortgagor or the Servicer as appropriate any
amounts in respect of which the Mortgagor's check has been returned and not
honored by the Mortgagor's bank for any reason or any amounts deposited or
credited to the Escrow Account in error;
(x) to pay late fees to the extent permitted by the terms of the
related Mortgage and Mortgage Note;
(xi) to withdraw funds deposited in error; and
(xii) to clear the Escrow Account or Accounts on the termination
of this Agreement.
Section 2.14. Maintenance of FHA Mortgage Insurance and VA
Guaranty.
With respect to any FHA Loans and VA Loans, the Servicer shall
maintain and keep the FHA Mortgage Insurance and the VA Guaranty Agreement,
respectively, in full force and effect throughout the term of this Agreement and
discharge its obligations arising out of FHA Mortgage Insurance and the VA Loan
Guaranty Agreement. The Servicer hereby agrees that it shall be liable to the
Issuer for any loss, liability or expense incurred by the Issuer by reason of
any FHA Mortgage Insurance or VA Loan Guaranty Agreement being voided, reduced,
released or adversely affected by reason of the negligence or willful misconduct
of the Servicer. The Servicer will service and administer the Mortgage Notes in
accordance with the obligations of mortgagees under the Act and the applicable
regulations thereunder and under the Servicemen's Readjustment Act and VA
Regulations and will discharge all obligations of the mortgagee under each
Mortgage Note including, with respect to FHA Loans and VA Loans, paying all FHA
and VA insurance premiums, fees or charges, as required, and, subject to the
right to assign the Mortgage Note to the FHA or VA, as the case may be, will
take all action reasonably necessary to preserve the lien of such Mortgage,
including, the defense of actions to challenge or foreclose such lien.
Section 2.15. Notification of Adjustments.
With respect to each adjustable rate Mortgage Note the Servicer shall
adjust the Mortgage Interest Rate on the related interest rate adjustment date
and shall adjust the Monthly Payment on the related mortgage payment adjustment
date, if applicable, in compliance with the requirements of applicable law and
the related Mortgage Note. The Servicer shall execute and deliver any and all
necessary notices required under applicable law and the terms of the related
Mortgage Note regarding the Mortgage Interest Rate and Monthly Payment
adjustments. The Servicer shall promptly, upon written request therefor,
deliver to the Issuer and the Trustee such notifications and any additional
applicable data regarding such adjustments and the methods used to calculate and
implement such adjustments. Upon the discovery by the Servicer or the receipt
of notice from the Issuer or the Trustee that the Servicer has failed to adjust
a Mortgage Interest Rate or Monthly Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in or credit to
the Collection Account from its own funds the amount of any interest loss or
deferral caused thereby.
Section 2.16. Completion and Recordation of Assignment of
Mortgage and FHA and VA Change Notices.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Issuer's expense at the direction of the Issuer, but only if
required and (if so required) in accordance with, the terms of the Indenture.
If applicable, at the Issuer's direction, the Servicer shall cause the
endorsements on the Mortgage Note, the Assignment of Mortgage, the assignment of
security agreement and the HUD form 92080 Mortgage Record Charge with respect to
all FHA Loans to be completed, and shall give notice to the VA of a transfer of
insurance credits, if applicable, with respect to VA Loans on the form
prescribed by the VA.
Section 2.17. Protection of Accounts; Eligible Investments.
The Servicer may transfer the Collection Account or the Escrow Account
to a different Qualified Depository from time to time. Such transfer shall be
made only upon obtaining the consent of the Issuer, which consent shall not be
withheld unreasonably.
The Servicer shall bear any expenses, losses or damages sustained by
the Issuer if the Collection Account and/or the Escrow Account are not demand
deposit accounts.
Amounts in the Collection Account may at the option of the Servicer be
invested in Eligible Investments. Any such Eligible Investment shall mature no
later than the date two Business Days prior to the Servicer Remittance Date next
following the date of such Eligible Investment, provided, however, that if such
Eligible Investment is an obligation of a Qualified Depository that maintains
the Collection Account, then such Eligible Investment may mature on such
Servicer Remittance Date. Any such Eligible Investment shall be made in the
name of the Servicer in trust for the benefit of the Issuer. All income on or
gain realized from any such Eligible Investment shall be for the benefit of the
Servicer and may be withdrawn at any time by the Servicer. Any losses incurred
in respect of any such investment shall be deposited in the Collection Account,
by the Servicer out of its own funds immediately as realized.
Section 2.18. Custodial Agreement.
Pursuant to the Custodial Agreement, the Issuer shall deliver to the
Custodian on or prior to the Closing Date those documents relating to the
Mortgage Notes required by Section 2.1 of the Custodial Agreement to be so
delivered. In the event of any conflict, inconsistency or discrepancy between
any of the provisions of this Agreement and any of the provisions of the
Custodial Agreement, the provisions of this Agreement shall control and be
binding upon the Issuer and the Servicer.
On or prior to the Closing Date, the Custodian shall have acknowledged
its receipt of all such documents required to be delivered to the Custodian
pursuant to the Custodial Agreement with respect to the Mortgage Notes initially
pledged to the Trustee.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Note entered into in accordance with this Agreement as soon as
practicable after their execution and recordation, if applicable, in the
appropriate public recording office; provided, however, that the Servicer shall
provide to the Custodian (i) a copy certified by the Servicer as true and
complete of any such executed document submitted for recordation within ten days
after receipt by the Servicer and (ii) with respect to each jurisdiction in
which such original documents are retained by the appropriate public recording
office, a copy of any document submitted for recordation certified by such
public recording office to be a true and complete copy of the original as soon
as practicable.
Section 2.19. Servicing Compensation.
As consideration for servicing the Mortgage Notes subject to this
Agreement, the Servicer shall retain the relevant Servicing Fee for each
Mortgage Note remaining subject to this Agreement during any month or part
thereof.
Such Servicing Fee shall be payable monthly. The obligation of the
Issuer to pay the Servicing Fee is limited to, and the Servicing Fee is payable
solely from, the interest portion (including recoveries with respect to interest
from Liquidation Proceeds or Insurance Proceeds) of each Monthly Payment
actually received by the Servicer. The Servicing Fee percentage shall be
computed on the same principal amount and for the same period as the interest
portion of each payment.
In addition, the Servicer shall be entitled to retain as additional
compensation the late charges and other fees and expenses related to loan
assumptions, delinquencies, modifications, partial releases of security and
releases for payment in full, if any, collected under the applicable loan
documents or customarily collected by servicers consistent with Accepted
Servicing Practices.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 2.20. Withdrawals and Substitutions of Mortgage
Notes.
Subject to the terms of the Indenture, the Issuer may, at its option,
at any time and from time to time, (i) withdraw Mortgage Notes from the Lien of
the Indenture or (ii) pledge additional Mortgage Notes for inclusion under the
Lien of the Indenture. All Mortgage Notes that become subject to the Lien of
the Indenture shall be subject to the terms of this Agreement. All Mortgage
Notes that are no longer subject to the Lien of the Indenture shall not be
subject to the terms of this Agreement and shall be serviced by the Servicer
pursuant to a separate servicing agreement.
Upon five days prior written notice to the Servicer, the Issuer may
cause Mortgage Notes to become subject to the terms of this Agreement or remove
Mortgage Notes from the terms of this Agreement. The addition of Mortgage Notes
under this Section 2.20 shall be in accordance with the provisions of Section
2.01. In connection with the removal of any Mortgage Notes under this Section
2.20, the Servicer shall promptly transfer any funds in the Collection Account
and the Escrow Account with respect to such Mortgage Notes not due to be paid to
the Trustee, to the Issuer or to such other Person as the Issuer may direct, and
the Servicer shall take such other actions as the Issuer may reasonably request
to transfer the Servicing Files with respect to such Mortgage Notes to the
Issuer or at the direction of the Issuer.
ARTICLE III
REMITTANCES AND REPORTING BY THE SERVICER
Section 3.01. Remittances to Trustee.
Subject to the provisions of this Section 3.01, on each Servicer
Remittance Date, the Servicer shall withdraw and remit by wire transfer of
immediately available funds to the Trustee all amounts on deposit in the
Collection Account received during the preceding Collection Period (net of
charges against or withdrawals from the Collection Account pursuant to Section
2.11(i) through (iv) and (viii)) (the "Available Amount"). Notwithstanding the
foregoing, in the event that the Servicer receives notice of an occurrence of an
Event of Default (as defined in the Indenture) with respect to the Issuer, the
Servicer shall remit to the Trustee all amounts on deposit in the Collection
Account (net of charges against or withdrawals from the Collection Account
pursuant to Section 2.11(i) through (iv) and (viii)) not later than (i) in the
case of funds deposited in the Collection Account on or prior to 1:00 p.m.
(central time), on the date of deposit of such funds or (ii) in the case of
funds deposited in the Collection Account after 1:00 p.m. (central time), the
Business Day following the date of deposit of such funds in the Collection
Account.
Section 3.02. Reporting by the Servicer.
(a) On the 18th day of each month (or, if such day is not a Business
Day, the preceding Business Day), the Servicer shall deliver to the Issuer and
the Trustee with a copy to the Rating Agencies, a report setting forth the
following information as of the end of the preceding day:
(i) The total amount of funds received by the Servicer and
credited to the Collection Account;
(ii) The aggregate outstanding principal balance of all of the
Eligible Mortgage Notes;
(iii) The weighted average coupon, weighted average maturity and
outstanding principal balance of the Eligible Mortgage Notes, grouped as
follows:
(A) for the Fixed Rate Mortgage Notes, by the
following ranges of original term to maturity:
(1) 15 years or less; and
(2) greater than 15 years and up to and
including 30 years; and
(B) for the Adjustable Rate Mortgage Notes, by index
and, for each index, by the length of the initial fixed rate period
and the length of the subsequent adjustable rate period; and
(iv) With respect to Eligible Mortgage Notes as to which there is
currently a Late Payment, the number and outstanding principal balance of
such Eligible Mortgage Notes, grouped in accordance with clause (iii)
above, that are (A) one installment delinquent, (B) two installments
delinquent, (C) three installments delinquent and (D) more than three
installments delinquent.
(b) In addition, the report delivered by the Servicer on the 18th day
of each month (or if such day is not a Business Day, the preceding Business Day)
shall contain the information set forth in Exhibit B attached hereto.
Section 3.03. Annual Certificate.
On or before March 31, 1998 and on or before each March 31st
thereafter, the Servicer shall deliver or cause to be delivered to the Issuer an
Officer's Certificate, to the effect that a review of the activities of the
Servicer during the last calendar year (or the period since the Closing Date in
the case of the first such Officer's Certificate required to be delivered) has
been made under the supervision of the officer executing such Officer's
Certificate with a view to determining whether during such period the Servicer
had performed and observed all of its obligations under this Agreement, and
either (A) stating that to the best of such officer's knowledge no default by
the Servicer under this Agreement has occurred and is continuing, or (B) if such
a default has occurred and is continuing, specifying such default and the nature
and status thereof.
Section 3.04. Annual Accountants' Report.
On or before March 31, 1997 and on or before each March 31st
thereafter, the Servicer shall deliver to the Issuer and the Trustee with a copy
to each Rating Agency a report, prepared by a firm of Independent Accountants of
recognized national standing selected by the Servicer, to the effect that
(i) they have examined certain documents and records relating to the Mortgage
Notes, in accordance with the requirements of the Uniform Single Audit Program
and (ii) their examinations disclosed no exceptions which, in their opinion,
were material, relating to such Mortgage Notes, or, if any such exceptions were
disclosed thereby, setting forth such exceptions which, in their opinion, were
material. If any of the Mortgage Notes are being serviced by a Person other
than the Servicer, as permitted by Section 2.06 hereof, the firm of Independent
Accountants preparing the report with respect to the servicing of such Mortgage
Notes by the Servicer may rely, as to matters relating to the servicing of such
Mortgage Notes, upon a comparable report (rendered with respect to the most
recent fiscal year of such other Person which ended at or prior to the end of
the Servicer's fiscal year) of another firm of Independent Accountants with
respect to such other Person's servicing of such Mortgage Notes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the
Servicer.
The Servicer, as a condition to the consummation of the transactions
contemplated hereby, makes the following representations and warranties to the
Issuer and to the Trustee, as assignee of the Issuer, as of the date hereof and
as of the Closing Date:
(a) Due Organization and Authority. The Servicer is a Texas
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Servicer, and in any event the Servicer is in compliance with
the laws of any such state to the extent necessary to ensure the enforceability
of the terms of this Agreement; the Servicer has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer and all requisite corporate action has
been taken by the Servicer to make this Agreement valid and binding upon the
Servicer in accordance with its terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the Servicer of
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, will conflict with or result in a
breach of any of the terms, conditions or provisions of the Servicer's charter
or by-laws or any legal restriction or any agreement or instrument to which the
Servicer is now a party or by which it is bound, or constitute a default or
result in an acceleration under any of the foregoing, or result in the violation
of any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject, or impair the ability of the Servicer to service the
Mortgage Notes, or impair the value of the Mortgage Notes;
(d) Ability to Perform. The Servicer does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the best of the Servicer's knowledge, threatened
against the Servicer which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations, financial
condition, properties or assets of the Servicer, or in any material impairment
of the right or ability of the Servicer to carry on its business substantially
as now conducted, or in any material liability on the part of the Servicer, or
which would draw into question the validity of this Agreement or of any action
taken or to be taken in connection with the obligations of the Servicer
contemplated herein, or which would be likely to impair materially the ability
of the Servicer to perform under the terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer with
this Agreement, or if required, such approval will be obtained prior to the
Closing Date;
(g) Ability to Service. The Servicer is an FHA Approved Mortgagee, a
VA Approved Lender and an approved seller/servicer of conventional residential
mortgage loans for FNMA or FHLMC, with the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Notes. The Servicer is in good standing to service
mortgage loans for the FHA and the VA and either FNMA or FHLMC, and no event has
occurred, including but not limited to a change in insurance coverage, which
would make the Servicer unable to comply with FHA and VA and either FNMA or
FHLMC eligibility requirements or which would require notification to any of the
FHA, the VA, FNMA or FHLMC; and
(h) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained therein not misleading.
Section 4.02. Remedies for Breach of Representations and
Warranties of the Servicer.
It is understood and agreed that the representations and warranties
set forth in Section 4.01 shall survive the engagement of the Servicer to
perform the servicing responsibilities as of the Closing Date hereunder and the
delivery of the Servicing Files to the Servicer and shall inure to the benefit
of the Issuer and the Trustee, as assignee of the Issuer. Upon discovery by any
of the Servicer, the Issuer or the Trustee of a breach of any of the foregoing
representations and warranties which materially and adversely affects the
ability of the Servicer to perform its duties and obligations under this
Agreement or otherwise materially and adversely affects the value of the
Mortgage Notes, the Mortgaged Property or the priority of the security interest
on such Mortgaged Property or the interest of the Issuer or the Trustee, the
Person discovering such breach shall give prompt written notice to the parties
to this Agreement and/or to the Trustee, as applicable.
Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in Section 4.01
which materially and adversely affects the ability of the Servicer to perform
its duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Notes, the Mortgaged Property or the
priority of the security interest on such Mortgaged Property, the Servicer shall
use its Best Efforts promptly to cure such breach in all material respects and,
if such breach cannot be cured, the Servicer shall, at the Issuer's or Trustee's
option, assign the Servicer's rights and obligations under this Agreement (or
respecting the affected Mortgage Notes) to a successor servicer, subject to the
approval of the Issuer and the Trustee, which approval shall be in the Issuer's
and Trustee's sole discretion. Such assignment shall be made in accordance with
Section 7.01.
In addition, the Servicer shall indemnify the Issuer and the Trustee
and hold the Issuer and the Trustee harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other reasonable out-of-pocket costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of the Servicer representations and warranties
contained in this Agreement.
Any cause of action against the Servicer relating to or arising out of
the breach of any representations and warranties made in Section 4.01 shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Issuer or the Trustee to the Servicer, (ii) failure by the Servicer to cure
such breach within the applicable cure period, and (iii) demand upon the
Servicer by the Issuer or the Trustee for compliance with this Agreement.
ARTICLE V
THE SERVICER
Section 5.01. Corporate Existence of the Servicer; Status
as Servicer; Merger.
(a) Subject to Section 5.01(b) hereof, the Servicer shall keep in
full force its existence, rights and franchises as a corporation, 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 Mortgage Notes and this
Agreement.
(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the properties
and assets of the Servicer substantially as a whole, shall be the successor of
the Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, provided, however, that the successor or surviving
Person shall execute an agreement of assumption to perform every obligation of
the Servicer hereunder and shall be an institution (i) having a net worth of not
less than $10,000,000, and (ii) which is an approved seller/servicer of
conventional residential mortgage loans for FNMA or FHLMC and an FHA Approved
Mortgagee and a VA Approved Lender.
Section 5.02. Performance of Obligations.
(a) The Servicer shall diligently perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Servicer shall not take any action, or permit any action to
be taken by others, which would excuse any Person from any of its covenants or
obligations under any Mortgage Note, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, a Mortgage Note or any such instrument, except as
expressly provided herein or therein.
Section 5.03. The Servicer Not to Resign; Assignment.
(a) The Issuer has entered into this Agreement with the Servicer in
reliance upon the status of the Servicer as a mortgage servicer, and the
representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. Therefore, the Servicer shall not assign
this Agreement or the servicing responsibilities hereunder or delegate its
rights or duties hereunder or any portion hereof (to other than a Subservicer)
or sell or otherwise dispose of all or substantially all of its property or
assets without the prior written consent of the Issuer and the Trustee, which
consent shall not be unreasonably withheld by the Issuer or the Trustee.
(b) The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon (i) the appointment of a successor Servicer in
the manner provided in Section 7.01 and receipt by the Trustee of a letter from
each Rating Agency that such resignation and appointment shall not result in the
withdrawal, qualification or downgrading of the ratings then assigned to the
Securities, or (ii) the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Issuer and the Trustee, which Opinion of Counsel shall be in form and substance
acceptable to the Issuer and the Trustee.
(c) Without in any way limiting the generality of this Section 5.03,
in the event that the Servicer either shall assign this Agreement or the
servicing responsibilities hereunder or delegate its duties hereunder or any
portion thereof (to other than a Subservicer) or sell or otherwise dispose of
all or substantially all of its property or assets, without the prior written
consent of the Issuer and the Trustee, then the Issuer or the Trustee shall have
the right to terminate this Agreement upon notice given as set forth in Section
6.01, without any payment of any penalty or damages and without any liability
whatsoever to the Servicer or any third party.
(d) Except as provided in this Section 5.03 or Sections 4.02 or 6.01
hereof, the duties and obligations of the Servicer under this Agreement shall
continue until this Agreement shall have been terminated as provided in Section
7.02 hereof, and shall survive the exercise by the Issuer or the Trustee of any
right or remedy under this Agreement or the enforcement by the Issuer, the
Trustee or any Holder of any provision of the Indenture, or the Securities, or
the enforcement by the Issuer or Trustee of this Agreement.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default.
Any of the following acts or occurrences shall constitute an Event of
Default by the Servicer under this Agreement:
(i) The Servicer shall fail to distribute any amounts required
to be distributed to the Trustee on behalf of the Holders pursuant to
Section 3.01 hereof, which failure continues unremedied for five days; or
(ii) The Servicer shall fail duly to observe or perform in any
material respects any covenants or agreements of this Agreement, which
failure continues for a period of 60 days after written notice thereof
shall have been given to the Servicer by the Trustee or by the Holders of
not less than 25% of the aggregate principal amount of the Outstanding
Securities; or
(iii) The entry against the Servicer of a decree or order of a
court or agency or supervisory authority having jurisdiction for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, which decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(iv) The Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or relating to all or substantially all of its
property; or
(v) The Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations or cease its normal business operations for three Business
Days.
If an Event of Default hereunder shall have occurred and be
continuing, the Issuer or the Trustee or the Holders of not less than 50% of the
aggregate principal amount of the Outstanding Securities may, by notice given to
the Servicer (with copies to the Issuer and the Trustee), terminate all of the
rights and powers of the Servicer under this Agreement, including without
limitation all rights of the Servicer to receive the servicing compensation.
Upon the giving of such notice, all rights, powers, duties and responsibilities
of the Servicer under this agreement, whether with respect to the Mortgage
Notes, the Collection Account, any servicing compensation or otherwise, but
excluding any obligation of the Servicer under Section 3.01 hereof with respect
to the immediately preceding Servicer Remittance Date (which obligation shall
remain an obligation of the Servicer notwithstanding any termination of the
Servicer's rights and powers under this Agreement), shall vest in and be assumed
by the Trustee or a new Servicer as provided in Section 7.01, and the Issuer and
Trustee are each hereby authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, all documents and
other instruments (including any notices to Mortgagors deemed necessary or
advisable by the Trustee), and to do or accomplish all other acts or things
necessary or appropriate to effect such vesting and assumption.
By a written notice, the Issuer, the Trustee or Holders of not less
than 50% of the aggregate principal amount of the Outstanding Securities may
waive any default by the Servicer in the performance of its obligations
hereunder and its consequences. Upon any waiver of a past default, such default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.
Section 6.02. No Effect on Other Parties.
Upon any termination of the rights and powers of the Servicer from
time to time pursuant to Section 6.01 hereof or upon any appointment of a
successor to the Servicer, all the rights, powers, duties and obligations of the
Issuer and the Trustee under this Agreement shall remain unaffected by such
termination or appointment and shall remain in full force and effect thereafter,
except as otherwise expressly provided in this Agreement or in the Indenture.
Section 6.03. Rights Cumulative.
All rights and remedies from time to time conferred upon or reserved
to the Issuer and the Trustee are cumulative, and none is intended to be
exclusive of another. No delay or omission in insisting upon the strict
observance or performance of any provision of this Agreement, or in exercising
any right or remedy, shall be construed as a waiver or relinquishment of such
provision, nor shall it impair such right or remedy. Every right and remedy may
be exercised from time to time and as often as deemed expedient.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Successor to the Servicer.
In the event that the Servicer's duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to Sections 4.02,
5.03, 6.01 or 7.02, the Trustee shall (i) succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth in
clauses (i) and (ii) of Section 5.01(b) and which shall succeed to all rights
and assume all of the responsibilities, duties and liabilities of the Servicer
under this Agreement simultaneously with the termination of the Servicer's
responsibilities, duties and liabilities under this Agreement. In addition,
with respect to all FHA Loans serviced hereunder, the Servicer shall provide
notice of such change in servicers to HUD on HUD form 92080 or such other form
as prescribed by HUD, at least 10 days prior to such transfer of servicing. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Notes as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer under this
Agreement without the consent of the Trustee. In the event that the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned Sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor servicer shall be appointed by the Issuer and such
resignation or removal of the Servicer shall not relieve the Servicer of the
representations and warranties made pursuant to Sections 4.01 and the remedies
available to the Issuer and Trustee under Section 4.02, it being understood and
agreed that the provisions of such Sections 4.01 and 4.02 shall be applicable to
the Servicer notwithstanding any such resignation or termination of the
Servicer, or the termination of this Agreement.
The Servicer shall deliver promptly to the successor Servicer the
funds in the Collection Account and Escrow Account, and the Servicer shall
account for all of such funds. Within 30 days of the appointment of a successor
entity by the Issuer, the Servicer shall prepare, execute and deliver to the
successor entity any and all documents and other instruments, place in such
successor's possession all Servicing Files and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of the notice of
termination described in Section 6.01 and to more fully and definitively vest in
the successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer. The Servicer shall cooperate with the Issuer, the
Trustee and such successor in effecting the termination of the Servicer's
responsibilities and rights hereunder and the transfer of servicing
responsibilities to the successor servicer, including, without limitation, the
transfer to such successor for administration by it of all cash amounts received
with respect to the Mortgage Notes by the Servicer after it has received notice
of termination. With respect to all FHA Loans serviced hereunder, the Servicer
shall provide notice of such change in servicers to HUD on HUD form 92080 or
such other form as prescribed by HUD, at least 10 days prior to such transfer of
servicing.
Any successor appointed as provided herein shall execute, acknowledge
and deliver to the Servicer, the Issuer and the Trustee an instrument accepting
such appointment, wherein the successor shall make the representations and
warranties set forth in Section 4.01, whereupon such successor shall become
fully vested with all the rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer, with like effect as if originally named as a
party to this Agreement. Any termination or resignation of the Servicer or
termination of this Agreement pursuant to Sections 4.02, 5.03, 6.01 or 7.02
shall not affect any claims that the Issuer or the Trustee may have against the
Servicer arising out of the Servicer's actions or failure to act prior to any
such termination or resignation.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify by mail the Issuer, the Trustee and each Rating Agency of such
appointment in accordance with the procedures set forth in Section 7.04.
Section 7.02. Termination of the Agreement.
(a) The respective duties and obligations of the Servicer and the
Issuer created by this Agreement shall terminate upon (i) the satisfaction and
discharge of the Indenture pursuant to Section 13.01 of the Indenture, (ii) the
distribution of the final payment or Liquidation Proceeds on the last Mortgage
Note to the Trustee, or (iii) the consent of the Servicer, the Issuer and the
Trustee in writing.
(b) Following an event of default by the Issuer under the Indenture
and foreclosure upon the Pledged Property pursuant thereto, the successor to the
rights of the Issuer in respect of the Mortgage Notes (including without
limitation the Trustee or any or all of the Holders) shall have the right to
terminate this Agreement, by notice to the Servicer and the Issuer, within
90 days after the date such successor shall have succeeded to such rights of the
Issuer.
Section 7.03. Amendment.
(a) This Agreement may not be amended without the consent of the
Holders of not less than 51% in principal amount of the Outstanding Securities;
provided, however, that this Agreement may be amended from time to time by the
Servicer and the Issuer without the consent of any Holders of Outstanding
Securities (i) to cure or correct any ambiguity or mistake, (ii) to correct or
supplement any provisions herein which may be inconsistent with any other
provisions herein or in the Indenture, (iii) to modify, eliminate or add to any
of its provisions to such extent as shall be necessary or helpful to comply or
maintain compliance with applicable law, (iv) to conform to evolving industry
standards regarding the servicing of residential mortgage loans generally,
(v) to change the timing and/or nature of deposits into the Collection Account,
Distribution Account or Reserve Fund (provided that (a) such change shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Holder and (b) such change shall not adversely affect the
then-current rating of the Securities as evidenced by written confirmation from
each Rating Agency to such effect) and (vi) to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
materially inconsistent with the provisions of this Agreement (provided that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Holder).
(b) Promptly after the execution of any amendment, the Servicer shall
send to the Trustee and each Rating Agency a conformed copy of each such
amendment, but the failure to do so will not impair or affect its validity.
(c) It shall not be necessary, in any consent of Holders under this
Section 7.03, to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Trustee may prescribe.
(d) Any amendment or modification effected contrary to the provisions
of this Section 7.03 shall be void.
Section 7.04. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 7.05. Notices.
All demand notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed by overnight courier,
delivered in person or mailed by registered or certified United States mail,
postage prepaid, addressed as follows (or such address as may hereafter be
furnished to the other party by like notice):
(a) If to the Issuer:
Main Place Real Estate Investment Trust
100 North Tryon Street, 23rd Floor
NC1-007-23-02
Charlotte, North Carolina 28255
Attention: Secretary
(b) If to the Servicer:
NationsBanc Mortgage Corporation
101 East Main Street, Suite 400
Louisville, Kentucky 40202-5318
Attention: Elise Boucher
(c) If to the Trustee
First Trust National Association
180 East Fifth Street, 2nd Floor
St. Paul, Minnesota 55101
Attention: Sheri Christopherson
(d) If to any Holder, as specified in the Indenture.
All notices and communications shall be deemed to have been
received either at the time of the personal delivery thereof to any officer of
the person entitled to receive such notices and communications at the address of
such person for notices hereunder, or on the third day after the mailing thereof
to such address, as the case may be.
Section 7.06. Severability of Provisions.
If one or more of the provisions of this Agreement shall be for any
reason whatever held invalid or unenforceable, such provisions shall be deemed
severable from the remaining covenants, agreements and provisions of this
Agreement and such invalidity of unenforceability shall in no way affect the
validity or enforceability of such remaining provisions, the rights of any
parties hereto or of the Trustee or any Holder. To the extent permitted by law,
the parties hereto hereby waive any provision of law which renders any provision
of this Agreement invalid or unenforceable in any respect.
Section 7.07. Inspection and Audit Rights.
The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Trustee or the Issuer, during the Servicer's normal
business hours, to examine all the books of account, records, reports and other
papers of the Servicer relating to the Mortgage Notes, to make copies and
extracts therefrom, to cause such books to be audited by Independent Accountants
selected by the Trustee or the Issuer, and to discuss its affairs, finances and
accounts relating to the Mortgage Notes with officers, employees and Independent
Accountants of the Issuer (and by this provision the Servicer hereby authorizes
said 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 this Section 7.07 shall be borne by the
Issuer, provided that if an audit is made during the continuance of an Event of
Default, the expense incident to such audit shall be borne by the Servicer.
Section 7.08. Binding Effect.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto.
Section 7.09. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
Section 7.10. Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original for all purposes and all of which constitute, collectively,
one Agreement.
IN WITNESS WHEREOF, the Issuer and the Servicer have caused this
Agreement to be duly executed by their respective officers duly authorized as of
the day and year first above written.
MAIN PLACE REAL ESTATE INVESTMENT TRUST
By:/s/ John E. Mack
------------------------------------
Name: John E. Mack
Title: President
NATIONSBANC MORTGAGE CORPORATION
By:/s/ Thomas W. Neary
-----------------------------
Name: Thomas W. Neary
Title: Senior Vice President
<TABLE>
Main Place Real Estate Investment Trust Exhibit 12
Ratio of Earnings to Fixed Charges
- ----------------------------------------------------------------------------------------
(Dollars in Thousands)
<CAPTION>
Year Year From Inception
Three Months Ended Ended Through
Ended December 31, December 31, December 31,
March 31, 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income before taxes.................... $ 214,618 $ 216,709 $ 48,070 $ 5,459
Fixed charges:
Interest expense ................. 68,694 255,318 145,822 25,701
Amortization of debt discount and
appropriate issuance costs...... 804 2,856 983 -
-------------------------------------------------
Total fixed charges............ 69,498 258,174 146,805 25,701
Earnings .............................. $ 284,116 $ 474,883 $ 194,875 $ 31,160
=================================================
Fixed charges.......................... $ 69,498 $ 258,174 $ 146,805 $ 25,701
=================================================
Ratio of Earnings to Fixed Charges..... 4.09 1.84 1.33 1.21
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the March 31, 1997
Form 10-Q for Main Place Real Estate Investment Trust and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,919
<INT-BEARING-DEPOSITS> 1,808,161
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 734,579
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 14,136,255
<ALLOWANCE> (42,398)
<TOTAL-ASSETS> 17,051,798
<DEPOSITS> 0
<SHORT-TERM> 738,403
<LIABILITIES-OTHER> 27,625
<LONG-TERM> 3,999,594
<COMMON> 1,200
0
0
<OTHER-SE> 12,284,976
<TOTAL-LIABILITIES-AND-EQUITY> 17,051,798
<INTEREST-LOAN> 268,488
<INTEREST-INVEST> 13,985
<INTEREST-OTHER> 9,759
<INTEREST-TOTAL> 292,232
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 69,498
<INTEREST-INCOME-NET> 222,734
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 50
<EXPENSE-OTHER> 8,166
<INCOME-PRETAX> 214,618
<INCOME-PRE-EXTRAORDINARY> 214,618
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 214,618
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 42,175
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 42,396
<CHARGE-OFFS> 0
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 42,398
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
