<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1999
REGISTRATION NO. 333-74817
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3*
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
MAIN PLACE FUNDING, LLC
(Exact name of registrant as specified in its charter)
---------------------
<TABLE>
<S> <C> <C>
DELAWARE
(State or other jurisdiction 57-0236115
of incorporation or (I.R.S. Employer
organization) Identification No.)
</TABLE>
100 NORTH TRYON STREET, CHARLOTTE, NORTH CAROLINA 28255
(704) 388-7436
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
JOHN E. MACK, PRESIDENT
MAIN PLACE FUNDING, LLC
100 NORTH TRYON STREET, CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5972
(Name, address, including zip code, and telephone number, including, area code,
of agent for service)
COPIES TO:
<TABLE>
<S> <C> <C>
MICHAEL NEDZBALA, ESQ. ANDREA GOLDENBERG, ESQ. JORDAN M. SCHWARTZ, ESQ.
HUNTON & WILLIAMS BANK OF AMERICA CORPORATION CADWALADER, WICKERSHAM & TAFT
101 SOUTH TRYON STREET 100 NORTH TRYON STREET 100 MAIDEN LANE
CHARLOTTE, NORTH CAROLINA 28280 CHARLOTTE, NORTH CAROLINA 28255 NEW YORK, NEW YORK 10038
(704) 378-4703 (704) 388-7449 (212) 504-6136
(704) 378-4890 (TELECOPY) (704) 387-0922 (TELECOPY) (212) 504-6666 (TELECOPY)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions and other factors.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of earlier effective registration statement for
the same offering. [ ]__________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]_______________
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
* Pursuant to Rule 429 of the General Rules and Regulations under the
Securities Act of 1933, the Prospectus and Prospectus Supplement contained in
this Registration Statement also relate to Registration Statement No. 33-82040
previously filed by a predecessor of the Registrant.
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<PAGE> 2
INTRODUCTORY STATEMENT NOT FORMING PART OF PROSPECTUS
On November 1, 1996, following a series of transactions, NationsBank, N.A.,
a national banking association, became the sole shareholder of Main Place
Funding Corporation, a Delaware corporation. NationsBank, N.A. contributed its
shares of Main Place Funding Corporation to its wholly-owned subsidiary, Main
Place Holdings Corporation. On November 1, 1996, Main Place Funding Corporation
merged with and into a newly formed, wholly-owned subsidiary of Main Place
Holdings Corporation, Main Place Real Estate Investment Trust, a Maryland real
estate investment trust ("Main Place REIT"), with Main Place REIT as the
surviving entity.
On October 15, 1998, Main Place Holdings Corporation merged with and into
Main Place Holdings, LLC, a Delaware limited liability company wholly-owned by
NationsBank, N.A., with Main Place Holdings, LLC as the surviving entity. The
merger resulted in the succession of Main Place Holdings, LLC to Main Place
Holdings Corporation, with Main Place Holdings, LLC as the holder of all of the
voting securities of Main Place REIT. On December 10, 1998, Main Place Holdings,
LLC was renamed Main Place Funding, LLC. On December 14, 1998, Main Place Trust,
a Delaware business trust, whose sole purpose is holding exclusive control over
the exercise of a bankruptcy veto with respect to Main Place Funding, LLC, was
admitted as an additional member of Main Place Funding, LLC and holds a 1%
membership interest in Main Place Funding, LLC. Main Place Trust was formed on
December 14, 1998 as a wholly-owned subsidiary of NationsBank, N.A., which
continued to hold the remaining 99% membership interest in Main Place Funding,
LLC.
On December 23, 1998, Main Place REIT merged with and into Main Place
Funding, LLC, with Main Place Funding, LLC as the surviving entity.
On July 5, 1999, NationsBank, N.A. changed its name to Bank of America,
N.A. and on July 23, 1999 was merged into Bank of America NT&SA, with the
surviving entity changing its name to Bank of America, N.A.
In accordance with paragraph (d) of Rule 414 of the Securities Act of 1933,
as amended (the "Securities Act"), except as modified by this Registration
Statement, Main Place Funding, LLC, as successor to Main Place REIT, expressly
adopts Registration Statement No. 33-82040 on Form S-3 as its own registration
statement for all purposes of the Securities Act and the Securities Exchange Act
of 1934, as amended. Main Place Funding, LLC is a Delaware limited liability
company and a direct subsidiary of Bank of America, N.A., which is itself a
wholly-owned, indirect subsidiary of Bank of America Corporation.
<PAGE> 3
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION DATED AUGUST 30, 1999
PROSPECTUS SUPPLEMENT [SINGLE CLASS OFFERING]
(TO PROSPECTUS DATED [ ])
$[ ]
MAIN PLACE FUNDING, LLC
MORTGAGE-BACKED BONDS, SERIES [1999- ]
DUE [ ]
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------
Main Place Funding, LLC is offering $[ ]
CONSIDER CAREFULLY THE RISK FACTORS principal amount of its Mortgage-Backed Bonds, Series
BEGINNING ON PAGE [ ] IN THE [1999- ]. The bonds are being offered by this prospectus
PROSPECTUS [AND PAGE S-[ ] OF THIS supplement and the accompanying prospectus, and will have
PROSPECTUS SUPPLEMENT]. the following characteristics:
The bonds represent limited BOND PAYMENT TERMS
recourse obligations of Main Place
only and will not represent - Interest Rate [Index] plus
interests in or obligations of any [ ]%
other entity. The bonds are not
insured or guaranteed by any - Interest Paid [Monthly][Quarterly]
government agency or any other
entity. - First Interest Payment Date [Date]
[Persons not residing in the United - Principal Due [Date]
States that are considering
purchasing bonds should read the - Optional Redemption [None]
information under the heading
"Additional Information for - Mandatory Redemption If collateral maintenance
Non-U.S. Persons" in the appendix requirements not met
to this prospectus supplement.]
BOND PRICING INFORMATION
This prospectus supplement may be
used to offer and sell the bonds - Price to Public [ ]%
only if accompanied by the
prospectus. - Underwriting Discount [ ]%
- Proceeds to Issuer $[ ], before
deducting expenses payable by
Main Place
- ------------------------------------
</TABLE>
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE BONDS OR
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[Application has been made to list the bonds on the Luxembourg Stock Exchange.
See "Additional Information for Non-U.S. Persons" in the appendix to this
prospectus supplement.]
Main Place expects to deliver the bonds to the underwriters on or about the
closing date of [ ], in book-entry form through The Depository
Trust Company, Cedel Bank, S.A. and the Euroclear System.
[NAMES OF UNDERWRITERS]
The date of this Prospectus Supplement is [ ]
<PAGE> 4
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important Notice about this Prospectus Supplement and the
Accompanying Prospectus................................... S-3
SUMMARY INFORMATION......................................... S-5
THE ISSUER.................................................. S-12
General................................................... S-12
Capitalization............................................ S-12
Summary Financial Data.................................... S-13
Managing Member........................................... S-13
DESCRIPTION OF THE BONDS.................................... S-14
General................................................... S-14
Interest Payments......................................... S-15
Calculation of LIBOR...................................... S-15
Determination of the Treasury Index....................... S-17
Determination of the Prime Rate........................... S-18
Payment of Principal; Redemption.......................... S-18
Security for the Bonds.................................... S-20
Eligible Mortgage Loans................................... S-21
Servicing of Eligible Mortgage Loans...................... S-29
Distribution Account...................................... S-33
Reserve Fund.............................................. S-34
Basic Maintenance Amount.................................. S-35
Withdrawals and Substitutions of Collateral............... S-37
Liquidity................................................. S-38
Purchase and Resale of Bonds.............................. S-39
Reports on Pledged Property............................... S-39
Example of Collection and Distribution of Payments........ S-40
RATIO OF EARNINGS TO FIXED CHARGES.......................... S-42
ERISA CONSIDERATIONS........................................ S-42
UNDERWRITING................................................ S-43
LEGAL MATTERS............................................... S-45
BOND RATINGS................................................ S-45
INDEX OF PROSPECTUS SUPPLEMENT DEFINITIONS.................. S-46
APPENDIX -- ADDITIONAL INFORMATION FOR NON-U.S. PERSONS..... A-1
</TABLE>
S-2
<PAGE> 5
IMPORTANT NOTICE ABOUT THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Main Place describes the bonds in two separate documents that progressively
provide more detail:
- the accompanying prospectus, which provides general information, some of
which may not apply to your bonds, and
- this prospectus supplement, which describes the specific terms of your
bonds.
IF THE DESCRIPTION OF THE TERMS OF YOUR BONDS VARIES BETWEEN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
This prospectus supplement begins with summary information to give you an
initial overview. The summary does not contain all the information that you need
to consider to make your investment decision.
Cross-references are included in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
additional information. The table of contents included in this prospectus
supplement and the accompanying prospectus provide the pages on which these
captions are located.
You can find a listing of the pages where some of the terms used in this
prospectus supplement and the accompanying prospectus are defined under the
caption "Index of Prospectus Supplement Definitions" beginning on page S-46 in
this document and under the caption "Index of Significant Definitions" beginning
on page 78 in the prospectus.
---------------------
The prospectus supplement and the accompanying prospectus contain
forward-looking statements relating to future economic performance or
projections and other financial items. These forward-looking statements,
together with related qualifying language and assumptions, are found in the
material set forth under "Risk Factors" in the prospectus and elsewhere in this
prospectus supplement and the prospectus, and may be identified by, among other
things, the use of forward-looking words such as "expects," "intends,"
"anticipates," "estimates," "believes," "may" or other comparable words. These
statements involve known and unknown risks, uncertainties and other important
factors that could cause the actual results or performance to differ materially
from these forward-looking statements. Those risks, uncertainties and other
factors include, among others, general economic and business conditions,
competition, changes in political, social and economic conditions, regulatory
initiatives and compliance with government regulations, customer preference and
various other matters, many of which are beyond the control of Main Place. These
forward-looking statements speak only as of the date of this prospectus
supplement. Main Place expressly disclaims any obligation or undertaking to
update or revise forward-looking statements to reflect any change in Main
Place's expectations or any change in events, conditions or circumstances on
which any forward-looking statement is based.
S-3
<PAGE> 6
Upon receipt of a request by an investor who has received an electronic
prospectus supplement and prospectus from an underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a prospectus supplement and prospectus, Main Place or the underwriter
will promptly deliver, or cause to be delivered, without charge, a paper copy of
the prospectus supplement and prospectus.
S-4
<PAGE> 7
SUMMARY INFORMATION
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making an
investment decision. To understand the terms of the bonds, you should read this
entire prospectus supplement and the accompanying prospectus carefully.
<TABLE>
<S> <C>
ISSUER: Main Place Funding, LLC
TITLE OF SERIES: Mortgage-Backed Bonds, Series [1999- ]
TRUSTEE: [Name]
SERVICERS: [Names](each, a "SERVICER")
RATING AGENCIES: [Rating Agencies](each, a "RATING AGENCY")
INTEREST PAYMENT DATE: The [ ] day of [month], [month],[month], and
[month], or, if not a business day, the next business day,
beginning [date]
PRINCIPAL DUE: [Date](the "STATED MATURITY")
CLOSING DATE: [Date]
CUT-OFF DATE: [Date]
RECORD DATE: The [ ]business day preceding an interest payment
date
</TABLE>
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INTEREST PAYMENTS
- Interest is paid [monthly] [quarterly] on each interest payment date.
- Interest accrues on the unpaid principal balance of your bonds during
each interest period at a floating rate equal to [(one, three, six,
twelve)-month LIBOR] [the treasury index] [the prime rate] [other
index] plus [ ]%.
Each interest period begins on and includes an interest payment date, or,
in the case of the initial interest payment date, begins on and includes the
closing date, and ends on and excludes the next interest payment date.
["LIBOR" is the rate for deposits in U.S. dollars for a [(one, three, six,
twelve)]-month period which appears on the Dow Jones Telerate page 3750, or
similar replacement page, as of 11:00 a.m., London time, on the LIBOR
determination date for the interest payment date. In addition, see "Description
of the Bonds -- Calculation of LIBOR" if that rate does not appear on Dow Jones
Telerate page 3750. The "LIBOR DETERMINATION DATE" is the second London business
day prior to the first day of the interest period for an interest payment date.]
[The "TREASURY INDEX" is the weekly average yield, expressed as a per annum
rate, on U.S. Treasury securities adjusted to a constant maturity of [one,
three, five, seven, ten] years as published by the Federal Reserve Board
S-5
<PAGE> 8
in the most recent edition of Federal Reserve Board Statistical Release No. H.15
(5.19). For any interest payment date, the "TREASURY INDEX DETERMINATION DATE"
is the second business day prior to the first day of the related interest
period.]
[The "PRIME RATE" is the rate published as the "Prime Rate" in the "Money
Rates" section or other comparable section of The Wall Street Journal. For any
interest payment date, the "PRIME RATE DETERMINATION DATE" is the second
business day prior to the first day of the related interest period.]
The amount of interest that will accrue on your bonds each interest period
is based on the actual number of days in the interest period over a 360-day year
multiplied by the product of:
- the interest rate for the bonds for that interest period; and
- the outstanding principal balance of your bonds at the beginning of each
interest period.
See "Description of the Bonds -- Interest Payments" in this prospectus
supplement for more detail.
PAYMENT OF PRINCIPAL; REDEMPTION
- Your bonds will mature and will be paid their entire principal balance,
plus accrued interest, at the stated maturity.
- To fund the return of principal at the stated maturity, Main Place will
be required, prior to the stated maturity, to pledge cash or certain
government securities (collectively, "DEPOSIT SECURITIES") maturing on
or prior to the stated maturity or make other arrangements acceptable
to each rating agency to provide liquidity for this payment of
principal.
- The bonds are not redeemable at the option of Main Place, although Main
Place may purchase bonds in open market transactions.
- The bonds are required to be redeemed in part if the collateral
maintenance requirements described in this prospectus supplement are
not met.
See "Description of the Bonds -- Payment of Principal; Redemption" and
"-- Liquidity" in this prospectus supplement for more detail.
BOOK-ENTRY REGISTRATION
The bonds will be issued in book-entry form only in minimum denominations
of [$ ] and integral multiples of [$ ] in excess of such
amount.
S-6
<PAGE> 9
See "Description of the Bonds -- Registration of the Bonds" and "-- Book-
Entry Registration" in the prospectus.
SECURITY FOR THE BONDS
The eligible collateral securing the bonds may include the following:
- Residential first [and second] lien mortgage loans meeting the
requirements for eligible mortgage loans set forth in the prospectus
under "Description of the Bonds -- Eligible Mortgage Loans," subject
to permitted changes in their characteristics as described in this
prospectus supplement (such mortgage loans are referred to in this
prospectus supplement as "ELIGIBLE MORTGAGE LOANS").
- Freddie Mac, Fannie Mae and Ginnie Mae certificates (collectively,
"AGENCY CERTIFICATES") and other government securities described under
"Description of the Bonds -- Government Securities" in the prospectus.
- Cash, including cash on deposit in various accounts held by or for the
benefit of the trustee.
Eligible collateral for the bonds will not include [multi-class agency
certificates, eligible mortgage pass-through certificates or short-term money
market instruments that are described in the prospectus or the mortgage loans
described under "Security for the Bonds -- Eligible Mortgage Loans -- Other
Eligible Mortgage Loans" in the prospectus. Eligible collateral for the bonds
also will not include balloon mortgage loans, simple interest mortgage loans,
negative amortization loans or manufactured home contracts that are described in
the prospectus.]
Investors should be aware that:
- Main Place may withdraw or substitute collateral at any time if, after
giving effect to these actions, the discounted value of the eligible
collateral pledged to secure the bonds is at least equal to the basic
maintenance amount determined as described in this prospectus
supplement and no event of default has occurred and is continuing with
respect to the bonds.
- the types, characteristics and permitted amounts of eligible collateral
may change at any time without the consent of bondholders if the
changes do not adversely affect the ratings then assigned to the bonds
by the rating agencies.
See "Description of the Bonds -- Security for the Bonds" and
"-- Withdrawals and Substitution of Collateral" in this prospectus supplement
for more detail.
S-7
<PAGE> 10
INITIAL COLLATERAL
The eligible collateral initially pledged to secure the bonds will consist
of eligible fixed-rate and adjustable-rate [first lien] mortgage loans. [All] of
the [initial] mortgage loans were originated or acquired by [NationsBanc
Mortgage Corporation] [Bank of America, FSB] [Bank of America, N.A.]
[ ], [which are affiliates of Main Place and Banc of America Securities
LLC, one of the underwriters].
The [initial] mortgage loans are expected to have the following approximate
characteristics:
SELECTED MORTGAGE LOAN DATA AS OF [DATE]
<TABLE>
<CAPTION>
TOTAL ADJUSTABLE-RATE FIXED-RATE
MORTGAGE MORTGAGE MORTGAGE
LOANS LOANS LOANS
-------- --------------- ----------
<S> <C> <C> <C> <C>
Number of mortgage loans.................
Aggregate current principal balance......
Range of current principal balance.......
[Percentage of first lien mortgage
loans.................................. ]
[Percentage of second lien mortgage
loans.................................. ]
Weighted average mortgage loan interest
rates..................................
Range of mortgage loan interest rates....
Weighted average [combined] original
loan-to-value ratio....................
Weighted average remaining term to
maturity (in months)...................
Range of remaining term to maturity in
months.................................
Weighted average original term to
maturity (in months)...................
Range of origination dates...............
Range of gross margins...................
Weighted average gross margins...........
[Percentage of balloon loans]............
Number of states with geographic
concentration of mortgaged properties
in excess of 5% of the aggregate
current principal balance..............
</TABLE>
Main Place may remove mortgage loans, or may make substitutions for
mortgage loans, in advance of, and following, the closing date as described in
S-8
<PAGE> 11
this prospectus supplement. The initial mortgage loans described in this
prospectus supplement have a discounted value in excess of the basic maintenance
amount. Main Place may remove certain of these mortgage loans prior to the
closing date, provided that the remaining eligible collateral pledged to secure
the bonds has a discounted value equal to or in excess of the basic maintenance
amount.
Additional information about the mortgage loans to be pledged to secure the
bonds appears under "Description of the Bonds -- Eligible Mortgage Loans" in
this prospectus supplement.
COLLATERAL VALUATION AND MAINTENANCE
Main Place is required to maintain eligible collateral pledged to secure
the bonds having a discounted value at least equal to the basic maintenance
amount, determined as described under "Description of the Bonds -- Basic
Maintenance Amount" in this prospectus supplement. The trustee is required to
value the collateral on the [ ] day of each month, or, if not a
business day, on the next business day, commencing on [date] and to deliver a
report concerning its valuation to Main Place and each rating agency within two
business days of each valuation date.
In the event that on any valuation date the discounted value of the pledged
collateral is less than the basic maintenance amount, Main Place is required,
within [10] days of receipt of the valuation report, to take one of the
following actions:
- deliver to the trustee or custodian additional eligible collateral and/or
substitute eligible collateral; or
- repurchase outstanding bonds; or
- if Main Place is unable to deliver or substitute eligible collateral or
to repurchase outstanding bonds, redeem outstanding bonds;
in each case, to the extent that, after these actions are taken, the discounted
value of the eligible collateral pledged to secure the bonds is at least equal
to the basic maintenance amount.
See "Description of the Bonds -- Basic Maintenance Amount," "-- Withdrawals
and Substitutions of Collateral," "Purchase and Resale of Bonds" and "Reports on
Pledged Collateral" in this prospectus supplement for more detail.
S-9
<PAGE> 12
ACCOUNTS
The following accounts shall be established in connection with the issuance
of the bonds:
- COLLECTION ACCOUNT -- A collection account shall be established by the
servicer in the name of the trustee in which all payments in respect
of any eligible mortgage loans pledged to secure the bonds shall be
deposited.
- DISTRIBUTION ACCOUNT -- A distribution account shall be established by
the trustee for deposit of all payments in respect of the eligible
collateral securing the bonds, including amounts deposited from the
collection account net of permitted withdrawals made from that
account. All payments of interest and principal on the bonds will be
made from amounts on deposit in the distribution account.
- RESERVE FUND -- A reserve fund shall be established by the trustee.
Amounts held in the reserve fund may be released to Main Place if, as
of the immediately preceding valuation date, the discounted value of
the remaining eligible collateral is at least equal to the basic
maintenance amount and no event of default has occurred and is
continuing.
Amounts held in the collection account, distribution account and reserve
fund will constitute a portion of the pledged collateral securing the bonds and
eligible collateral for purposes of satisfying the basic maintenance amount. The
servicer will not be required to make advances for delinquent monthly payments
on eligible mortgage loans.
See "Description of the Bonds -- Servicing of Eligible Mortgage Loans --
Collection Account," and "Description of the Bonds -- Distribution Account" and
"-- Reserve Fund" in this prospectus supplement.
USE OF PROCEEDS
Main Place intends to use substantially all of the net proceeds from the
sale of the bonds for one or more of the following:
- Purchase additional mortgage loans;
- Pay dividends to its members; and
- Reduce subordinated indebtedness of Main Place.
RATINGS
Main Place will not issue the bonds unless they are rated
[ ] by [rating agency] and [ ] by [rating
agency].
S-10
<PAGE> 13
- The ratings of the rating agencies are not recommendations to buy, sell
or hold the bonds. A rating may be revised or withdrawn at any time by
the assigning rating agency.
- If the ratings on your bonds are downgraded or withdrawn, you may have
difficulty selling your bonds.
See "Bond Ratings" in this prospectus supplement for more detail.
TAX STATUS
Special federal income tax counsel is of the opinion that under existing
law, the bonds will be treated as debt of Main Place for federal income tax
purposes.
You should consult your tax advisors and review "United States Federal
Income Tax Consequences" in the prospectus for a discussion of the United States
federal income tax consequences of the acquisition, ownership, and disposition
of the bonds.
ERISA
Subject to important considerations discussed under "ERISA Considerations"
in this prospectus supplement and the prospectus, it is expected that the bonds
will be eligible for purchase by pension, profit sharing and other employee
benefit plans and individual retirement accounts and annuities ("IRAS"). A plan
or IRA fiduciary should carefully review with its lawyer and tax advisor whether
the purchase or holding of the bonds could give rise to a prohibited
transaction.
See "ERISA Considerations" in this prospectus supplement and the prospectus
for more detail.
LEGAL INVESTMENT
The bonds will not constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984, as amended. If your
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities, then you
may be subject to restrictions on investment in the bonds. You should consult
your legal, tax and accounting advisors for assistance in determining the
suitability of and consequences to you of the purchase, ownership and sale of
the bonds.
For additional information, see "Legal Investment" in the prospectus.
S-11
<PAGE> 14
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THE ISSUER
- --------------------------------------------------------------------------------
GENERAL
The issuer of the bonds is Main Place Funding, LLC (referred to in this
prospectus supplement and the prospectus as "MAIN PLACE"), a Delaware limited
liability company and an indirect subsidiary of Bank of America, N.A., which is
itself an indirect, wholly-owned subsidiary of Bank of America Corporation. Main
Place is the successor by merger of Main Place Real Estate Investment Trust with
and into Main Place. That merger was effective on December 23, 1998, as more
fully described under "The Issuer" in the prospectus. Main Place has no
subsidiaries. The financial statements of Main Place and its predecessors are
included in the consolidated financial statements of Bank of America
Corporation.
CAPITALIZATION
The following table sets forth the capitalization of Main Place as of
December 31, 1998 and a pro forma capitalization table of Main Place as of the
same date. The pro forma capitalization table gives effect to the issuance of
the bonds offered hereby. There have been no material adverse changes in the
capitalization of Main Place since December 31, 1998.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1998
----------------------
ACTUAL PRO FORMA
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Indebtedness
Mortgage-Backed Bonds, Series 1995-2....................
Mortgage-Backed Bonds, Series 1997-1....................
Mortgage-Backed Bonds, Series 1999-1....................
Mortgage-Backed Bonds, Series [1999- ]..................
Total indebtedness...................................
Members' equity
Contributed equity......................................
Undistributed income....................................
Accumulated other comprehensive income..................
Net unrealized gains on securities available for sale...
Total members' equity................................
Total indebtedness and members' equity.............
</TABLE>
S-12
<PAGE> 15
SUMMARY FINANCIAL DATA
The following summary data of Main Place for the years ended December 31,
1998 and December 31, 1997, is derived from the audited financial statements and
should be read in conjunction with the financial statements that are contained
in Main Place's Annual Report on Form 10-K for the year ended December 31, 1998,
which has been incorporated by reference in this prospectus supplement and the
prospectus. The financial data for the year ended December 31, 1998 reflects the
transactions described in the accompanying prospectus under "The Issuer."
See "Listing of Bonds and Related Matters" in the appendix to this
prospectus supplement and "Incorporation of Certain Documents by Reference" in
the prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Income Statement Data
Interest and fees on loans............................... $ $
Interest on securities...................................
Other income.............................................
Interest Expense.........................................
Other expenses...........................................
Income before income taxes...............................
Net Income...............................................
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance Sheet Data
Total assets............................................. $ $
Loans, net of unearned income............................
Securities...............................................
Securities sold under agreements to repurchase from
affiliate.............................................
Mortgage-backed bonds....................................
Total members' equity....................................
</TABLE>
MANAGING MEMBER
The managing member of Main Place is Bank of America, N.A., an indirect,
wholly-owned subsidiary of Bank of America Corporation.
S-13
<PAGE> 16
- --------------------------------------------------------------------------------
DESCRIPTION OF THE BONDS
- --------------------------------------------------------------------------------
GENERAL
The issuance of the bonds has been duly authorized by Main Place. The bonds
will be issued under an indenture (the "INDENTURE") dated as of
[ ], between Main Place and the trustee. As of any date, all
bonds so issued will be deemed to be "OUTSTANDING," except bonds (1) previously
canceled or to be canceled by the trustee; (2) held by Main Place or its
affiliates, other than [Banc of America Securities LLC]; and (3) for whose
payment eligible government securities or cash in the necessary amount have been
delivered to the trustee or other arrangements satisfactory to each rating
agency have been made as described below under "-- Liquidity."
The following summaries of some of the provisions of the indenture are not
complete. Where particular provisions of the indenture are referred to, the
actual provisions are incorporated by reference as a part of those summaries,
and those summaries are qualified in their entirety by reference to the
indenture. Copies of the indenture may be obtained by writing to the principal
corporate trust office of the trustee, [address], Attention: [department], and
will also be available for inspection during normal business hours at the
principal executive offices of Main Place, and at the principal corporate trust
office of the trustee.
The bonds will be limited to $[ ] aggregate principal
amount, all of which are being offered hereby and will be direct obligations of
Main Place. The principal amount of each bond is due and payable on the stated
maturity. The bonds will bear interest on the unpaid principal balance thereof
at a floating rate calculated as set forth below under "-- Interest Payments,"
payable in arrears on each interest payment date commencing on
[ ], to the persons in whose names the bonds are registered
(this person may be referred to as a "BONDHOLDER" or "HOLDER") at the close of
business on the record date preceding that interest payment date, except in the
case of defaulted interest, as provided in the indenture. The bonds and
indenture will be governed by the laws of the State of New York.
The bonds will be secured by collateral as described below under
"-- Security for the Bonds." Under the indenture, Main Place is required to
maintain collateral of the type permitted under the indenture (this collateral
is referred to in this prospectus supplement as "ELIGIBLE COLLATERAL") having a
discounted value sufficient to meet levels of collateralization required from
time to time as described below under "-- Basic Maintenance Amount." The
eligible collateral will be valued by the trustee on the [ ]
day of each month, or, if such day is not a business day, on the next business
day, commencing on [ ] (each of these dates, a "VALUATION
DATE"),
S-14
<PAGE> 17
using market values, as defined in the prospectus under "Description of the
Bonds -- Basic Maintenance Amount," for this collateral obtained no more than
three business days prior to the applicable valuation date. The trustee will
deliver reports to the issuer and to each rating agency for each valuation date
within two business days after that date. See "-- Reports on Pledged
Collateral."
The indenture will provide that if any payment of interest or principal on
the bonds remains unclaimed by holders for two years after that payment has
become due, whether at the stated maturity or otherwise, the trustee will remit
the amount of the payment to Main Place at its request. Thereafter, the payment
will constitute a general unsecured obligation of Main Place only, and holders
may look only to Main Place for payment. Prior to making the remittance, the
trustee may, at the expense of Main Place, give notice to the holders that the
payment remains unclaimed and that, after a specified date, any remaining
portion of the payment will be remitted to Main Place.
INTEREST PAYMENTS
- Interest is paid [monthly] [quarterly] on each interest payment date.
- Interest accrues on the unpaid principal balance of your bonds during
each interest period at a floating rate equal to [(one, three, six,
twelve)-month LIBOR] [the treasury index] [the prime rate] [other
index] plus ___________%.
Each interest period begins on and includes an interest payment date, or,
in the case of the initial interest payment date, begins on and includes the
closing date, and ends on and excludes the next interest payment date.
The amount of interest that will accrue on your bonds each interest period
is based on [the actual number of days in the interest period over a 360-day
year] multiplied by the product of:
- the interest rate for the bonds for that interest period; and
- the outstanding principal balance of your bonds at the beginning of each
interest period.
[CALCULATION OF LIBOR
The following terms are used for purposes of describing the calculation of
LIBOR below:
- LIBOR BUSINESS DAY means a day that is not a Saturday, Sunday or other
day on which banking institutions in London, New York City or the
state in which the principal office of the trustee is located are
S-15
<PAGE> 18
authorized or required by law, regulation or executive order to be
closed.
- LIBOR DETERMINATION DATE means the second LIBOR business day preceding
the first day of each interest period.
- TELERATE PAGE 3750 means the display page designated "3750" on the Dow
Jones Telerate Service, or replacement page or successor service for
displaying comparable rates.
- REUTERS PAGE LIBO means Reuters Money Monitor Rates Page LIBO.
- REFERENCE BANKS means four banks in the London interbank market selected
by the trustee. Each reference bank will 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 Main
Place and which has been designated by the trustee and is able and
willing to provide these quotations to the trustee on each LIBOR
determination date.
The trustee will determine LIBOR for the succeeding interest period on the
basis of the rate that appears on the Telerate Page 3750 as of 11:00 a.m. London
time on that LIBOR determination date.
If on any LIBOR determination date, no rate appears on Telerate Page 3750
or Telerate Page 3750 is no longer available, the trustee will determine LIBOR
on the basis of the rate that appears on Reuters Page LIBO as of 11:00 a.m.
London time on that LIBOR determination date for [ ]-month U.S. dollar
deposits.
If the rate does not appear on Reuters Page LIBO as of 11:00 a.m. London
time on the LIBOR determination date, the trustee will determine LIBOR on the
basis of quotations provided by the reference banks to leading banks in the
London interbank market for a period of [ ] months as of 11:00 a.m. London
time on the LIBOR determination date. LIBOR as determined by the trustee is the
arithmetic mean of these quotations, rounding the arithmetic mean upwards, if
necessary, to the nearest whole multiple of 1/16%. If on any LIBOR determination
date at least two of the reference banks provide quotations, LIBOR will be
determined in accordance with the preceding sentence on the basis of the offered
quotations of those reference banks providing the quotations. If on the LIBOR
determination date only one or none of the reference banks provides the offered
quotations, the trustee will request four major New York City banks to provide
their offered quotations to leading European banks for loans in Eurodollars
having a [ ]-month maturity as of 11:00 a.m. London time on the LIBOR
determination date. If at least two of these quotations are provided, LIBOR will
be the arithmetic mean of these quotations, rounding this arithmetic mean
upwards, if necessary, to the
S-16
<PAGE> 19
nearest whole multiple of 1/16%, or if fewer than two of these quotations are
provided, LIBOR will be LIBOR as determined on the previous LIBOR determination
date.
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 bonds for the related interest period will, in the absence of manifest
error, be final and binding. Each rate of interest may be obtained by
telephoning the trustee at [telephone number].]
[DETERMINATION OF THE TREASURY INDEX
The trustee will calculate the interest rate for each interest period
(after the first) on the second business day before the interest period, or the
"TREASURY INDEX DETERMINATION DATE." On each treasury index determinate date,
the trustee will determine the applicable "TREASURY INDEX" which will be either
(i) the weekly average yield, expressed as a per annum rate, on U.S. Treasury
securities adjusted to a constant maturity of [one, three, five, seven or ten]
years as published by the Federal Reserve Board in the most recent edition of
Federal Reserve Board Statistical Release No. H.15 (519) that is available to
the trustee or (ii) the weekly auction average (investment) yield, expressed as
a per annum rate, on three-month or six-month U.S. Treasury bills that is
available on the Treasury Public Affairs Information Line, an automated
telephone system.
The Statistical Release No. H. 15 (519) is published by the Federal Reserve
on Monday or Tuesday of each week. Investors can order it from the Publications
Department at the Board of Governors of the Federal Reserve System, 21st and C
Streets, N.W., M.S. 138, Washington, D.C. 20551. The Trustee will consider a new
value for the treasury index to have been available on the day following the
date that Statistical Release No. H. 15 (519) is released by the Federal Reserve
Board or the Public Debt News is placed on the Treasury Public Affairs Public
Information Line and available to the public.
The applicable auction average (investment) yield for a given week is the
yield resulting from the auction of three-month or six-month U.S. Treasury bills
held the preceding week. The weekly average yield reflects the average yields of
the five calendar days ending on Friday of the previous week. Yields on Treasury
securities at "constant maturity" are estimated from the Treasury's daily yield
curve. This curve, which relates the yield on a security to its time to
maturity, is based on the closing market bid yields on actively traded Treasury
securities in the over-the-counter market. These market yields are calculated
from composites of quotations reported by five leading U.S. Government
securities dealers to the Federal Reserve Bank of New York. This method
S-17
<PAGE> 20
permits estimation of the yield for a given maturity even if no security with
that exact maturity is outstanding.
In the event that the applicable treasury index becomes unavailable, the
trustee will designate a new index based upon comparable information and
methodology.
If at any time after the applicable treasury index becomes unavailable it
again becomes available, the interest rates for each subsequent accrual period
will be calculated by reference to the applicable treasury index.]
[DETERMINATION OF THE PRIME RATE
On the second business day prior to any interest period, each a "PRIME RATE
DETERMINATION DATE", the trustee will calculate the interest rate for the next
interest period by reference to the rate published as the "Prime Rate" in the
"Money Rates" section or other comparable section of The Wall Street Journal on
that prime rate determination date. The published rate will be the applicable
"PRIME RATE" for certain classes of the bonds. If The Wall Street Journal
publishes a prime rate range, then the average of that range, as determined by
the trustee, will be the prime rate. In the event The Wall Street Journal no
longer publishes a "Prime Rate" entry, the trustee will designate a new
methodology for determining the prime rate based on comparable data. The trustee
will select a particular methodology as the alternative methodology.
If at any time after the prime rate becomes unavailable in The Wall Street
Journal it again becomes available, the trustee will calculate the interest
rates for each subsequent interest period by reference to the prime rate
published in The Wall Street Journal.]
PAYMENT OF PRINCIPAL; REDEMPTION
Your bonds will mature and will be paid their entire principal balance,
plus accrued interest, at the stated maturity. See "-- Liquidity" below.
The bonds are not subject to redemption at the option of Main Place,
although Main Place may purchase bonds in open market transactions. See
"-- Purchase and Resale of Bonds" below.
The bonds are subject to mandatory partial redemption upon not more than 10
nor less than 5 days' notice, in the event that:
- on any semi-monthly valuation date, the discounted value of the eligible
collateral pledged to secure the bonds is less than the basic
maintenance amount determined as described under "-- Basic Maintenance
Amount" below; and
S-18
<PAGE> 21
- Main Place is unable within a maximum of 10 days after receipt of the
trustee's valuation report following the valuation date (the "CURE
DATE"): (1) to pledge and deliver enough additional eligible
collateral and/or to substitute enough eligible collateral so that,
after the pledge, the discounted value of the eligible collateral is
at least equal to the basic maintenance amount; and (2) Main Place
does not deliver to the trustee, prior to the cure date for
cancellation, bonds reacquired by it in a principal amount sufficient
to cause the discounted value of the eligible collateral to be at
least equal to the basic maintenance amount.
However, Main Place will not be required to make a mandatory redemption of
the bonds if the report, prepared by the trustee for any valuation date
following the cure date and prior to the date on which the trustee gives notice
of redemption to the bondholders, shows that the discounted value of the
eligible collateral is at least equal to the basic maintenance amount as of the
valuation date.
Any mandatory partial redemption will require the redemption of bonds in an
aggregate principal amount that is the smallest principal amount, rounded to the
next higher integral multiple of $1,000, necessary to make the discounted value
of the eligible collateral at least equal to the basic maintenance amount,
calculated in each case as of the valuation date immediately preceding the date
on which the trustee gives notice of redemption to the bondholders, after giving
effect to: (1) the pledge of any additional eligible collateral and/or
substitution of eligible collateral by the issuer; (2) the delivery to the
trustee for cancellation of any bonds repurchased by or on behalf of Main Place;
and (3) the redemption.
Any mandatory partial redemption will be made within 30 days after the cure
date at a redemption price equal to 100% of the principal amount, or portion
thereof, of the bonds to be redeemed together with accrued interest to the date
fixed for redemption. Any partial redemption may be made on a pro rata basis or
by any method deemed fair and appropriate by the trustee, provided that the
method will not result in an outstanding bond in a denomination of less than
$100,000.
After notice of any redemption has been given to the bondholders, the
principal amount, or portion thereof, of the bonds to be redeemed will be due
and payable on the date fixed for that redemption at the place set forth in the
notice. From and after the date fixed for redemption, the bonds chosen to be
redeemed will cease to bear interest, unless Main Place defaults in the payment
of the redemption price, in which case the principal amount of the bonds will
continue to bear interest at the rate borne by the bonds until paid. Further,
the only right of bondholders will be to receive the redemption price; except
that, in the case of any redemption date on which bonds are redeemed in part,
new
S-19
<PAGE> 22
bonds representing the principal amounts of those bonds that have not been
redeemed will be issued to those bondholders. The holders of the new bonds will
continue to have the right to receive the principal amount of the bonds and
interest payments on that principal amount. Bonds that are redeemed will be
canceled by the trustee.
If Main Place fails to cure a collateral shortfall by the applicable cure
date, the trustee must liquidate pledged property securing the bonds to the
extent required to pay the redemption price of the bonds to be redeemed, unless
Main Place delivers on the cure date cash or other deposit securities to the
trustee, as described under "-- Liquidity," in an amount sufficient to provide
for the full payment of the redemption price of the bonds required to be
redeemed.
SECURITY FOR THE BONDS
The bonds will be secured by the pledged property, which will include the
initial collateral described below under "-- Eligible Mortgage Notes" and may
include any of the types of eligible collateral described in the prospectus or
otherwise as provided in this prospectus supplement. Eligible collateral for the
bonds of this series will not include [multi-class agency certificates, eligible
mortgage pass-through certificates or short-term money market instruments that
are described in the prospectus or the mortgage loans described under "Security
for the Bonds -- Eligible Mortgage Loans -- Other Eligible Mortgage Loans" in
the prospectus. Eligible collateral for the bonds also will not include balloon
mortgage loans, simple interest mortgage loans, negative amortization loans or
manufactured home contracts that are described in the prospectus.] See "Security
for the Bonds" in the prospectus.
The pledged property also will include, and the bonds will be secured from
time to time by:
- cash held in the collection account from time to time, representing
scheduled monthly interest and principal payments, principal
prepayments and various other amounts with respect to the eligible
mortgage loans received during each collection period, as described
below under "-- Collection Account";
- cash held in the reserve fund as described below under "-- Reserve Fund";
- cash held in the distribution account representing payments on all types
of pledged property other than eligible mortgage notes and any amounts
that are transferred from the collection account for payment on the
bonds, as described below under "-- Distribution Account"; and
S-20
<PAGE> 23
- the deposit securities described below under "-- Liquidity."
Investors should be aware that the types and characteristics of eligible
collateral, the percentage limitations on some types of eligible collateral as
described in the prospectus, the frequency of the valuation dates, the discount
factors used in valuing the eligible collateral, the methodology used in
calculating the market value of the eligible collateral and the definition of
basic maintenance amount may change from time to time, without the consent of
the bondholders, if the changes: (1) are permitted by applicable law; and (2)
will not adversely affect the rating then assigned to the bonds by each rating
agency, as confirmed in writing by those rating agencies. The rating agencies
are not obligated to review or approve any of the proposed changes set forth in
the preceding sentence and may, at any time, change or withdraw any rating on
the bonds.
ELIGIBLE MORTGAGE LOANS
GENERAL
The mortgage loans constituting the initial collateral or which are pledged
from time to time to secure the bonds will be "eligible mortgage loans," having
the characteristics set forth in the prospectus under "Security for the Bonds --
Eligible Mortgage Loans," subject to permitted changes in the characteristics as
described above.
INITIAL COLLATERAL
All of the eligible mortgage loans constituting the initial collateral were
sold or contributed to Main Place by [Bank of America, N.A. or NationsBanc
Mortgage Corporation] or their affiliates. These eligible mortgage loans were
either originated or purchased by [NationsBanc Mortgage Corporation] [Bank of
America, FSB] [Bank of America, N.A.] [ ], which [is]
[are] affiliated with Main Place.
As of the cut-off date, the initial collateral consisted of approximately
[ ] eligible mortgage loans with an aggregate principal balance
of $[ ]. The average unpaid principal balance of those mortgage
loans is $[ ] as of the cut-off date, with each mortgage loan
having an unpaid principal balance of not less than $[ ] and
not more than $[ ]. Approximately [ ]% of the
initial mortgage loans consist of eligible fixed-rate mortgage loans and
approximately [ ]% of the initial mortgage loans consists of
eligible adjustable-rate mortgage loans. [Approximately [ ]% of
the initial mortgage loans are jumbo mortgage loans, i.e., mortgage loans
originated in an amount in excess of Fannie Mae or Freddie Mac purchase limits,
currently $[240,000], otherwise generally underwritten in accordance with
guidelines of Fannie Mae and Freddie Mac.] Approximately [ ]%
of the initial mortgage
S-21
<PAGE> 24
loans meet the conforming loan balance requirements as set forth by Fannie Mae
or Freddie Mac. [describe non-jumbo mortgage loans] [Approximately
[ ]% of the initial mortgage loans are secured by a second
mortgage that is junior to a mortgage lien on the related mortgage property.]
Each initial fixed-rate mortgage loan has an original term to maturity of
not more than 30 years and provides for a schedule of payments that will be, if
timely paid, sufficient to amortize fully the principal balance of that mortgage
loan over its remaining term to maturity[, except [ ]% of those
mortgage loans are balloon loans]. [describe balloon loans] Interest on the
initial fixed rate mortgage loans will accrue based [either] on an actuarial
interest method [or a simple interest method]. See "Security for the Bonds --
Eligible Fixed-Rate Mortgage Loans" in the prospectus.
Each initial adjustable-rate mortgage loan has an original term to maturity
of not more than 30 years and provides for a fixed rate of interest for an
initial period of approximately either [ ],
[ ] or [ ] years. All of these eligible
adjustable-rate mortgage notes provide for level, amortizing payments over those
initial periods. Thereafter, the interest rate on each of those eligible
adjustable-rate mortgage note will adjust annually to a rate based on the level
of [insert relevant index], as described below, plus the applicable fixed
percentage (the "GROSS MARGIN"), subject to a maximum annual interest rate
increase or decrease and a maximum lifetime interest rate (the "LIFETIME CAP")
specified in the related mortgage note. As of the cut-off date, the weighted
average gross margin of the initial adjustable-rate mortgage loans was
approximately [ ]%, and the weighted average maximum interest
rate on these adjustable-rate mortgage loans was approximately
[ ]%. [The interest rates on the initial adjustable-rate
mortgage loans are not subject to maximum lifetime decreases.] [As of the
cut-off date, approximately [ ]% of the initial adjustable-rate
mortgage loans are convertible into fixed-rate loans at the option of the
mortgagor.]
The interest rate for each initial adjustable-rate mortgage loan will
generally adjust on the first day of the month in which the initial fixed-rate
period ends and annually thereafter (each, an "ARM INTEREST ADJUSTMENT DATE").
Effective with the first payment due on each of those adjustable-rate mortgage
loans after each related ARM interest adjustment date, the monthly principal and
interest payment will be adjusted to an amount that will fully amortize the
then-outstanding principal balance of this loan over its remaining term to
maturity and that will be sufficient to pay interest at the adjusted interest
rate for this loan. [The "CONSTANT MATURITY TREASURY INDEX" is the weekly
average yield on U.S. Treasury securities adjusted to a constant maturity of one
year as published by the Federal Reserve Board in Statistical Release H.15 (519)
or any similar publication or, if not so published, as reported by any Federal
Reserve Bank or by any U.S. Government department
S-22
<PAGE> 25
or agency and made available to the applicable servicer as of a date 45 days
prior to each ARM interest adjustment date for this adjustable-rate mortgage
loan. Should the Constant Maturity Treasury Index not be published or become
otherwise unavailable, the applicable servicer will select a comparable
alternative index over which it has no control and which is readily verifiable.]
For each of the initial mortgage loans, Main Place will deliver to the
trustee (or custodian) on or prior to the closing date mortgage notes endorsed
in blank and, within 60 days following the closing date, mortgage assignments of
the related mortgage in blank and in recordable form, as further described under
"The Indenture -- Pledge of Eligible Mortgage Loans" in the prospectus.
Set forth below is a description of some additional characteristics of the
initial mortgage loans as of the cut-off date, except as otherwise indicated.
Main Place believes that the information set forth below with respect to the
initial mortgage loans is representative of the characteristics of the initial
mortgage loans as it will be constituted on the closing date. The initial
mortgage loans described in this prospectus supplement have a discounted value
in excess of the basic maintenance amount. Main Place may remove certain of
these mortgage loans prior to the closing date, provided that the remaining
eligible collateral pledged to secure the bonds has a discounted value equal to
or in excess of the basic maintenance amount. Main Place will file a Current
Report on Form 8-K with the Securities and Exchange Commission setting forth
information with respect to the initial mortgage loans ultimately pledged to the
trustee on the closing date.
For purposes of the following tables, the initial mortgage loans have been
divided into two groups: fixed-rate mortgage loans and adjustable-rate mortgage
loans. The sums of the percentage columns set forth in the following tables may
not equal 100% due to rounding.
S-23
<PAGE> 26
MORTGAGE LOAN INTEREST RATES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS(1)
------------------------------------- -----------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
%.................... $ % $ %
%....................
%....................
%....................
%....................
%....................
%....................
%....................
%....................
---------------- ---------------- ---------------- ----------------
Total $ 100.00% $ 100.00%
================ ================ ================ ================
Weighted Average Weighted Average
Interest Rate Interest Rate
is [ ]% is [ ]%
</TABLE>
- -------------------------
(1) With the exception of approximately [ ]% of the aggregate unpaid
principal balance of the initial adjustable-rate mortgage loans, none of the
remaining initial adjustable-rate mortgage loans had reached their first ARM
interest adjustment date as of the cut-off date. As of the cut-off date, the
weighted average remaining period of time until the next ARM interest
adjustment date for the initial adjustable-rate mortgage loans was
approximately [ ] months.
ORIGINAL LOAN-TO-VALUE RATIO
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
ORIGINAL LOAN-TO- AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
VALUE RATIO PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
---------------- --------------- ---------------- ---------------
Total.............. $ 100.00% $ 100.00%
================ =============== ================ ===============
Weighted Average Weighted Average
Original Loan-to- Original Loan-to
Value Ratio is Value Ratio is
[ ]% [ ]%
</TABLE>
- -------------------------
* The loan-to-value ratio of an eligible mortgage loan is calculated using the
lesser of: (1) the appraised value of the related mortgaged property, as
established by an appraisal obtained by
S-24
<PAGE> 27
the originator from an appraiser in connection with the origination of the
eligible mortgage loan; and (2) the sale price for the property. For the
purpose of calculating the loan-to-value ratio of any eligible mortgage loan
that is the result of the refinancing, including a refinancing for "equity
take-out" purposes, of an existing mortgage loan, the appraised value of the
related mortgaged property is generally determined by reference to an
appraisal obtained in connection with the origination of the replacement loan.
REMAINING TERMS TO STATED MATURITY
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
REMAINING ------------------------------------- --------------------------------------
TERM TO PERCENTAGE OF PERCENTAGE OF
STATED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
MATURITY AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
(MONTHS) PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
--------- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
----------------- ---------------- ----------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================= ================
Weighted Average
Remaining Term to Weighted Average
Stated Maturity Remaining Term to
is Stated Maturity is
[ ] months [ ] months
</TABLE>
YEARS OF ORIGINATION
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
YEAR OF AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
ORIGINATION PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
---------------- ---------------- ---------------- ----------------
Total.............. $ 100.00% $ 100.00%
================ ================ ================ ================
</TABLE>
The earliest month and year of origination of any initial mortgage loan is
expected to be [date] and the latest month and year of origination is expected
to be [date].
S-25
<PAGE> 28
ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
---------------------------------------- ----------------------------------------
PERCENTAGE OF PERCENTAGE OF
ORIGINAL CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PRINCIPAL AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
--------- -------------------- ----------------- -------------------- -----------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
-------------------- ---------------- -------------------- ----------------
Total.............. $ 100.00% $ 100.00%
==================== ================ ==================== ================
Average Original Average Original
Principal Balance is Principal Balance is
$[ ] $[ ]
</TABLE>
CURRENT MORTGAGE LOAN PRINCIPAL BALANCES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
CURRENT PRINCIPAL AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
$ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
--------------- --------------- --------------- ---------------
Total.............. $ 100.00% $ 100.00%
=============== =============== =============== ===============
Average Current Average Current
Principal Balance Principal Balance
is $[ ] is $[ ]
</TABLE>
S-26
<PAGE> 29
MORTGAGE LOAN PRODUCT TYPES
<TABLE>
<CAPTION>
INITIAL MORTGAGE LOANS
-------------------------------------
PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE
MORTGAGE LOAN AGGREGATE UNPAID AGGREGATE UNPAID
PRODUCT TYPE PRINCIPAL BALANCE PRINCIPAL BALANCE
------------- ----------------- -----------------
<S> <C> <C>
10/1 Eligible Adjustable Rate Mortgage Loans(1)...
5/1 Eligible Adjustable Rate Mortgage Loans(1)....
7/1 Eligible Adjustable Rate Mortgage Loans(1)....
30 Year Eligible Fixed-Rate Mortgage Loans........
15 Year Eligible Fixed-Rate Mortgage Loans........
3/1 Eligible Adjustable Rate Mortgage Loans(1)....
1/1 Eligible Adjustable Rate Mortgage Loans(1)....
Totals..........................................
</TABLE>
- ------------------------
(1) 10/1, 5/1, 7/1, 3/1 and 1/1 refers to the initial period after origination
that each mortgage loan product type has a fixed rate of interest, e.g.,
10/1 refers to a fixed rate of interest for an initial period of
approximately 10 years after origination, 5/1 refers to a fixed rate of
interest for an initial period of approximately 5 years after origination,
and so on.
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE NOTES INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Condominium.......... $ % $ %
Planned Unit.........
Development..........
1 to 4 Family........
Town House...........
--------------- --------------- --------------- ---------------
Total.............. $ 100.00% $ 100.00%
=============== =============== =============== ===============
</TABLE>
S-27
<PAGE> 30
GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- --------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
STATE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
AL................... $ % $ %
AR...................
AZ...................
CA...................
CO...................
CT...................
DC...................
DE...................
FL...................
GA...................
HI...................
ID...................
IL...................
IN...................
KS...................
KY...................
LA...................
ME...................
MA...................
MD...................
MI...................
MN...................
MO...................
MS...................
NC...................
ND...................
NE...................
NH...................
NJ...................
NM...................
NV...................
NY...................
OH...................
OK...................
OR...................
PA...................
SC...................
SD...................
TN...................
TX...................
UT...................
VA...................
WA...................
WI...................
WV...................
WY...................
----------------- ---------------- ----------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================= ================
</TABLE>
No more than approximately [ ]% of the initial fixed-rate
mortgage loans and approximately [ ]% of the initial
adjustable-rate mortgage loans are secured by mortgaged properties located in
any one five-digit zip code region.
S-28
<PAGE> 31
PURPOSES OF INITIAL MORTGAGE LOANS
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
LOAN PURPOSE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
------------ ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Purchase............. $ % $ %
Refinance -- No
Cashout............
Refinance --
Cashout............
----------------- ---------------- ---------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================ ================
</TABLE>
In the case of an initial mortgage loan made for "No Cashout" refinance
purposes, substantially all of the proceeds are used to pay in full the
principal balance of a previous mortgage loan of the mortgagor with respect to a
mortgaged property and to pay origination and closing costs associated with the
refinancing. However, in the case of an initial mortgage loan made for "Cashout"
refinance purposes, all or a portion of the proceeds are generally retained by
the mortgagor for uses unrelated to the mortgaged property. The amount of the
proceeds retained by the mortgagor may be substantial.
UNDERWRITING GUIDELINES FOR INITIAL MORTGAGE LOANS
Each initial mortgage loan has satisfied the credit, appraisal and
underwriting guidelines established by [ ], [NationsBanc
Mortgage Corporation] [Bank of America, FSB], [Bank of America, N.A.] and
applicable at the time of origination, which guidelines may be varied in cases
deemed appropriate by [ ], [NationsBanc Mortgage Corporation]
[Bank of America, FSB] [Bank of America, N.A.].
See "Mortgage Loan Programs" in the prospectus for a discussion of the
underwriting guidelines of [NationsBanc Mortgage Corporation] [Bank of America,
FSB].
[Insert underwriting guidelines if not NationsBanc Mortgage Corporation,
Bank of America, N.A. or Bank of America, FSB]
SERVICING OF ELIGIBLE MORTGAGE LOANS
THE SERVICER
The servicer is a wholly-owned subsidiary of [Bank of America, N.A., which
is an indirect, wholly-owned subsidiary of] [Bank of America Corporation]. [The
servicer has entered into a sub-servicing agreement with Bank of America, N.A.
under which Bank of America, N.A. shall be required to service the eligible
mortgage loans.] The servicer [is primarily engaged in the business of: (1)
originating and purchasing residential mortgage loans in its own name; and (2)
servicing residential mortgage loans for its own account and for the account of
others]. The servicer's principal executive offices are located at [address] and
the telephone number is [telephone number], and the servicer's operations
S-29
<PAGE> 32
offices are located at [address] and the telephone number is [telephone number].
SERVICING PROCEDURES
Under a servicing agreement with Main Place [or assigned to Main Place],
the servicer will be responsible for servicing and administering the eligible
mortgage loans. The servicer will at all times remain responsible for the
performance of its duties under the servicing agreement. On the closing date,
Main Place will assign its rights under the servicing agreement to the trustee
for the benefit of the bondholders.
The servicer is required to perform diligently all services and duties
customary to the servicing by prudent mortgage lending institutions of mortgages
of the same type as the eligible mortgage loans in those jurisdictions where the
related mortgaged properties are located. The duties to be performed by a
servicer include:
- collection and remittance of principal and interest payments;
- administration of mortgage escrow accounts, to which the servicer will be
expected to make advances when a deficiency exists, as described more
fully in the servicing agreement;
- collection of insurance claims; and
- if necessary, foreclosure.
The servicer will not be required to make advances in respect of delinquent
monthly payments of principal and interest on eligible mortgage loans.
The servicer will be entitled to a monthly servicing fee for each eligible
mortgage loan, payable only from the interest portion of any monthly payment
collected on an eligible mortgage loan, ranging from [ ]% to
[ ]% of the unpaid principal balance of such eligible mortgage
loan, based on, among other things, its date of origination, the size of its
original principal balance and whether it is a fixed- or adjustable-rate
mortgage loan. The servicer will be entitled to retain its servicing fee from
interest payments collected prior to depositing the payments into the collection
account. In addition, the servicer will be entitled to investment income from
amounts on deposit in the collection account as described below and to retain
late payment charges and other fees and expenses related to loan assumptions,
delinquencies, modifications, partial releases of security and releases for
payment in full, if any, to the extent collected from mortgagors.
For a more detailed description of the servicing procedures applicable to
the servicer with respect to the eligible mortgage loans, see "Servicing of
Eligible Mortgage Loans" in the prospectus.
S-30
<PAGE> 33
COLLECTION ACCOUNT
The servicer will establish the collection account into which it will
collect and deposit payments on the eligible mortgage loans in accordance with
the procedures described in the prospectus under "Servicing of Eligible Mortgage
Loans." Amounts on deposit from time to time in the collection account may be
invested by the servicer in eligible investments. "ELIGIBLE INVESTMENTS" include
deposit securities and any other investments that are acceptable to each rating
agency. Amounts received on the eligible mortgage loans on deposit in the
collection account from time to time will constitute a portion of the pledged
property securing the bonds and eligible collateral for purposes of satisfying
the basic maintenance amount. The collection account may be a commingled account
containing other servicer funds if certain conditions are satisfied as described
under "Servicing of Eligible Mortgage Loans -- Payments on Eligible Mortgage
Loans" in the prospectus.
On the [ ] day of each month, or, if this day is not a
business day, the preceding business day, the servicer will deliver a report to
the trustee: (1) detailing collections on the eligible mortgage loans during the
preceding calendar month (each, a "COLLECTION PERIOD"); and (2) stating the
total amount of funds received on the eligible mortgage loans on deposit in the
collection account and the aggregate principal balance of the eligible mortgage
loans, in each case, as of the end of the preceding day. On the
[ ] day of each month or, if not a business day, the preceding
business day (each, a "SERVICER REMITTANCE DATE"), the servicer will withdraw
and remit to the trustee the amount of cash on deposit in the collection account
that was collected during the preceding collection period after deducting
amounts permitted to be withdrawn by the servicer, including its fee, as
described under "Servicing of Eligible Mortgage Loans -- Payments on Eligible
Mortgage Loans" in the prospectus (the "AVAILABLE AMOUNT"). In addition, on the
[ ] day of each month or, if not a business day, the preceding
business day, the servicer will deliver a similar report to the trustee stating:
(1) the total amount of funds on deposit in the collection account; and (2) the
aggregate principal balance of the eligible mortgage loans, in each case, as of
the end of the preceding day.
THE SERVICER'S FORECLOSURE AND DELINQUENCY EXPERIENCE
[Historically, a variety of factors, including the appreciation of real
estate values, have limited the servicer's loss and delinquency experience on
its portfolio of mortgage loans. Factors beyond the servicer's control, such as
national or local economic conditions or downturns in the real estate markets in
its lending areas, may result in increased rates of delinquencies and
foreclosure losses in the future.
S-31
<PAGE> 34
The information in the table below has not been adjusted to eliminate the
effect of the significant growth in the size of the portfolio of mortgage loans
serviced by the servicer during the periods shown. Accordingly, foreclosures and
delinquencies as percentages of aggregate principal balance of mortgage loans
serviced for each period may be higher than those that would be shown if a group
of mortgage loans were artificially isolated at a point in time and the
information disclosed the activity only in that isolated group. However, because
most of the mortgage loans in the portfolio of mortgage loans serviced by the
servicer during the periods shown are not fully seasoned, the foreclosure and
delinquency information for this type of isolated group would also be distorted
to some degree.
The following table summarizes the delinquency and foreclosure experience,
on the dates indicated, on non-conforming and Freddie Mac- and Fannie
Mae-conforming first deed of trust or mortgage loans serviced by the servicer,
excluding some recent bulk acquisitions of servicing rights, at its Louisville
servicing center and which were originated in a manner consistent with the
underwriting criteria of the servicer described in the prospectus under
"Mortgage Loan Programs -- Underwriting Standards of NationsBanc Mortgage
Corporation." The servicer's portfolio of non-conforming and Freddie Mac- and
Fannie Mae-conforming, first deed of trust and mortgage loans described below
contains fixed- and adjustable-rate mortgage loans having a variety of original
terms to maturity and payment characteristics. Investors should be aware that:
- This portfolio may differ significantly from the eligible mortgage loans
securing the bonds at any time in terms of interest rates, principal
balances, geographic distribution, loan-to-value ratios and other
possibly relevant characteristics.
- It is highly likely that the delinquency and foreclosure experience with
respect to the eligible mortgage loans will differ from that reflected
in the table below.
- It is highly likely that any losses experienced on liquidation of
defaulted mortgage loans will occur at different rates than those
shown below.
- The actual delinquency and foreclosure experience on the mortgage loans
will depend, among other things, upon the value of the real estate
securing the mortgage loans and the ability and willingness of
mortgagors to make required payments.
S-32
<PAGE> 35
DELINQUENCY AND FORECLOSURE EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31, 1998 AT DECEMBER 31, 1997 AT DECEMBER 31, 1996
------------------------- ------------------------- -------------------------
NUMBER/% OUTSTANDING NUMBER/% OF OUTSTANDING NUMBER/% OF OUTSTANDING
OF MORTGAGE PRINCIPAL MORTGAGE PRINCIPAL MORTGAGE PRINCIPAL
LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio...... $ $ $
- --------------------------------------------------------------------------------------------------------
Delinquencies*
One installment
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
Two installments
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
Three or more
installments
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
In Foreclosure....... $ $ $
Percent in
Foreclosure...... % % %
- --------------------------------------------------------------------------------------------------------
Delinquent and in
Foreclosure........ $ $ $
Percent Delinquent
and in
Foreclosure**.... % % %
- --------------------------------------------------------------------------------------------------------
</TABLE>
* A mortgage loan is deemed to have "one installment delinquent" if any
scheduled payment of principal or interest is delinquent past the end of the
month in which the payment was due, "two installments delinquent" if this
delinquency persists past the end of the month following the month in which
the payment was due, and so forth.
** The sums of the Percent Delinquent and Percent in Foreclosure set forth in
this table may not equal the Percent Delinquent and in Foreclosure due to
rounding.]
DISTRIBUTION ACCOUNT
On the closing date, the trustee will establish the distribution account
for the benefit of the bondholders. All payments in respect of any eligible
collateral securing the bonds from time to time other than eligible mortgage
loans will be made directly to the trustee for deposit into the distribution
account. In addition, if an event of default under the indenture should occur
and be continuing, all payments on eligible mortgage loans will be remitted
directly to the trustee for deposit into the distribution account.
On each servicer remittance date, upon receipt of the available amount from
the servicer, the trustee will apply those funds in the following order of
priority:
- 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: (1) in the case
of servicer remittance dates occurring in months in which the interest
payment date does not occur, the amount of interest accrued or to
accrue on
S-33
<PAGE> 36
the bonds from and including the [ ] day of the
preceding month to and including the [ ] day of the
month of the servicer remittance date less any amounts deposited in
the distribution account since the immediately preceding servicer
remittance date and available for payment on the bonds; and (2) in the
case of servicer remittance dates occurring in months in which the
interest payment date does occur, the amount payable on the interest
payment date occurring in that month, less any amounts then on deposit
in the distribution account and available for payments on the bonds;
and
- second, for deposit into the reserve fund, the remaining portion of the
available amount.
On each interest payment date, the trustee will withdraw from the
distribution account an amount equal to the amount of interest accrued on the
principal amount of the bonds during the related interest period and distribute
this amount to the bondholders as of the immediately preceding record date.
On any mandatory redemption date and at the stated maturity of the bonds,
the trustee will withdraw sufficient amounts from the distribution account to
make required interest and principal payments on the bonds on those dates and
distribute these amounts to the bondholders as of the immediately preceding
record date.
If, on any interest payment date or mandatory redemption date or at the
stated maturity of the bonds, the amount on deposit in the distribution account
is less than the amount necessary to make required interest and principal
payments on the bonds on that date, the trustee will withdraw from the reserve
fund and deposit into the distribution account, to the extent of amounts
available in the reserve fund, an amount equal to the difference between the
required amount and the amount then on deposit in the distribution account.
At the direction of Main Place, the trustee will invest amounts on deposit
in the distribution account in eligible investments. Investment earnings from
eligible investments will be credited to the distribution account. Amounts held
in the distribution account will constitute a portion of the pledged property
securing the bonds and eligible collateral for purposes of satisfying the basic
maintenance amount.
RESERVE FUND
On the closing date, the trustee will establish the reserve fund for the
benefit of the bondholders. On each servicer remittance date, the trustee will
deposit into the reserve fund the portion of the available amount remaining
after making the required deposit into the distribution account described above.
S-34
<PAGE> 37
At the direction of Main Place, the trustee will invest amounts on deposit
in the reserve fund in eligible investments. Investment earnings from eligible
investments will be credited to the reserve fund. Amounts held in the reserve
fund will constitute a portion of the pledged property securing the bonds and
eligible collateral for purposes of satisfying the basic maintenance amount.
At the request of Main Place, the trustee will withdraw amounts on deposit
in the reserve fund and release those amounts to Main Place free of the lien of
the indenture if: (1) as of the valuation date immediately preceding the
release, the discounted value of the eligible collateral, after giving effect to
the release, is at least equal to the basic maintenance amount; and (2) no event
of default has occurred and is continuing. Main Place currently intends to cause
the trustee to release to Main Place on each servicer remittance date, subject
to the limitations described in the preceding sentence, any portion of the
related available amount deposited in the reserve fund on that date representing
principal and interest payments on the eligible mortgage loans. In addition, as
more fully described above under "-- Distribution Account," the trustee will
withdraw amounts from the reserve fund and deposit those amounts into the
distribution account to the extent amounts on deposit in the distribution
account are insufficient to make required payments of interest and principal on
the bonds on any date.
BASIC MAINTENANCE AMOUNT
The terms of the indenture will require Main Place to maintain eligible
collateral with an aggregate discounted value of at least equal to the basic
maintenance amount, which means that the eligible collateral would have a market
value of (1) as much as [ ]% to [ ]% of the
basic maintenance amount to the extent that the eligible collateral consists of
collateral other than cash; and (2) 100% of the basic maintenance amount if the
eligible collateral consisted solely of cash or specified cash equivalents. The
determination of "MARKET VALUE" is set forth under "Security for the Bonds --
Basic Maintenance Amount" in the prospectus. For purposes of this calculation,
eligible collateral will include amounts on deposit in the collection account,
the distribution account and the reserve fund. In determining the market value
of eligible mortgage loans as to which there is currently a late payment, the
market value will be reduced as follows:
- by [ ]% if the mortgage loan is one installment delinquent;
- by [ ]% if the mortgage loan is two installments delinquent;
- by [ ]% if the mortgage loan is three installments delinquent; and
- by 100% if the mortgage loan is more than three installments delinquent.
S-35
<PAGE> 38
The "BASIC MAINTENANCE AMOUNT" as of each valuation date, or any other date
of valuation, means an amount equal to the sum of: (1) the aggregate principal
amount of outstanding bonds plus (2) an amount equal to 90 days' accrued
interest on the outstanding bonds at a rate of [ ]% per annum.
The "DISCOUNTED VALUE" of the eligible collateral as of any date will be
the lower of the sum determined for either rating agency calculated as follows:
- multiplying for each rating agency (1) its discount factor for the
applicable type of eligible collateral by (2) the market value of that
eligible collateral; and
- summing for each rating agency the discounted amounts so calculated for
each applicable type of eligible collateral.
The ranges of "DISCOUNT FACTORS" required by the rating agencies for some
types of eligible collateral, including the types of eligible mortgage loans
included in the initial collateral, are as follows:
<TABLE>
<CAPTION>
DISCOUNT
FACTORS
--------
<S> <C>
Cash, demand deposits and next business day's repurchase
agreements................................................
Repurchase agreements/other than next business day's
repurchase agreements and other short-term money market
instruments...............................................
Direct obligations of the United States Government.......... (a)
Ginnie Mae Certificates.....................................
Freddie Mac Certificates or Fannie Mae Certificates.........
Eligible fixed-rate Mortgage Loans [specify types]..........
Eligible adjustable-rate Mortgage Loans [specify types].....
Eligible mortgage pass-through certificates that are rated
at least "AAA" by [rating agency] and "AAA" by [rating
agency] which are:
Backed by fixed-rate mortgage loans.......................
Backed by adjustable-rate mortgage loans..................
</TABLE>
- -------------------------
(a) The discount factor applied within the range shown depends upon the
particular rating agency as well as the period to maturity of each
obligation, which varies from 30 days to 30 years.
The indenture requires the trustee to deliver a report containing the
information described below under "-- Reports on Pledged Property" to Main Place
within two business days after each valuation date relating to the status of the
pledged property as of the valuation date using market values determined as of a
date not more than three business days prior to that valuation date (a
"DETERMINATION DATE"). Scheduled reductions in the principal amounts of the
eligible collateral included in the pledged property or possible prepayments or
decreases in the market value of the pledged property may cause the discounted
value of the eligible collateral to be less than the basic maintenance
S-36
<PAGE> 39
amount. In that event, the indenture requires Main Place, no later than the cure
date, to take one of the following actions:
- to deliver additional eligible collateral to the trustee or if eligible
mortgage loans are delivered, to the custodian and/or substitute
eligible collateral; and/or
- to the extent it elects to do so, to repurchase a number of outstanding
bonds so that the trustee can, no later than the cure date, deliver a
new report showing that, as of the date of the report, the discounted
value of the eligible collateral, determined as of the date that the
basic maintenance amount was not met, or, at the option of Main Place,
as of a later date of valuation, but no later than the cure date, is
at least equal to the basic maintenance amount.
If Main Place elects to satisfy its obligation to restore the discounted
value of the eligible collateral to the basic maintenance amount by delivering
mortgage loans to the custodian, the mortgage loans included in the pledged
property after the delivery of those mortgage loans must meet the requirements
relating to the limits on the types and characteristics of those mortgage loans
in order to ensure that all mortgage loans delivered to the custodian are
eligible mortgage loans.
In the event that Main Place is unable by the cure date to cause the
discounted value of the eligible collateral to be at least equal to the basic
maintenance amount by pledging additional eligible collateral or substituting
eligible collateral or repurchasing outstanding bonds to the extent necessary to
cause the discounted value of the eligible collateral to be at least equal to
the basic maintenance amount, then Main Place must redeem bonds no more than 30
days after the cure date, as described above under "-- Redemption."
WITHDRAWALS AND SUBSTITUTIONS OF COLLATERAL
Main Place may, at its option, at any time and from time to time, withdraw
or substitute pledged property if either:
- the discounted value of the eligible collateral, based upon the then most
recent report of the trustee valuing the eligible collateral,
remaining as pledged property following the proposed withdrawal or
substitution, after giving effect to withdrawals from, and
substitutions of, pledged property during the period following such
report, would at least equal the basic maintenance amount as of the
then most recent report of the trustee valuing the eligible
collateral; or
- Main Place causes the trustee to prepare a new report, containing
information as of its date, showing that the discounted value of the
eligible collateral, calculated no more than three business days prior
to
S-37
<PAGE> 40
the date of the report, included in the pledged property following the
proposed withdrawal, and after giving effect to any proposed
substitution, will at least equal the basic maintenance amount as
calculated in the new report.
Pledged property which was not included in the discounted value of the
eligible collateral as of the most recent valuation date may be withdrawn at any
time so long as: (1) the discounted value of the eligible collateral was at
least equal to the basic maintenance amount as of that valuation date; and (2)
no withdrawals of eligible collateral were made after that valuation date.
During the continuance of any event of default, Main Place may not withdraw or
substitute pledged property.
Main Place may pledge additional eligible collateral at any time.
The indenture permits Main Place to consent to some modifications or
waivers with respect to the eligible collateral, including, for example,
assumptions of mortgage notes and related mortgages.
LIQUIDITY
No later than 15 days before the stated maturity, Main Place must either:
(1) pledge deposit securities to the trustee; or (2) make other arrangements
acceptable to each rating agency to deposit cash on the business day preceding
the stated maturity, in each case in an amount sufficient, together with the
amount of cash that will otherwise be available in the distribution account and
the reserve fund on the stated maturity, to pay all of the interest and
principal payable on the bonds on the stated maturity. If, as of the 45th day
preceding the stated maturity, the rating by [Rating Agency] of the long-term
unsecured debt of [Bank of America Corporation] has fallen below ["BBB" or
"Baa2"], respectively, then no later than 30 days before the stated maturity,
Main Place must pledge deposit securities to the trustee as described in the
preceding sentence. In order to satisfy the foregoing obligations, Main Place
may, for example, sell all or a portion of the pledged property at fair market
value to one or more purchasers which may include affiliates of Main Place,
although no affiliate of Main Place or any other entity has any obligation to
make any purchase of pledged property and deposit the proceeds of the sale with
the trustee.
If Main Place fails to effect any of the options described above within the
prescribed period, then the trustee must immediately liquidate pledged property
in an amount sufficient to pay all of the interest and principal payable on the
bonds on the stated maturity. Upon delivery of the required amount of deposit
securities or cash, the bonds will no longer be deemed to be outstanding, and
the trustee will be obligated to release all other pledged property held by the
trustee from the lien of the indenture.
S-38
<PAGE> 41
In addition, if Main Place elects to deliver deposit securities to the
trustee to provide for payment of the redemption price pursuant to a mandatory
partial redemption of the bonds instead of having the trustee liquidate pledged
property, then, on the cure date on which it is required to notify the trustee
of the redemption, Main Place must deliver deposit securities in the full amount
of the redemption price of the bonds to be redeemed.
Deposit securities delivered in accordance with the preceding paragraphs
must mature prior to the date for which those deposit securities were delivered.
Deposit securities include (1) cash and (2) government securities, other than
agency certificates, provided that these investments must have a remaining term
to maturity of 30 days or less on the date they are delivered to the trustee.
[In addition, in order to maintain liquidity for the payment of interest on
the bonds on each interest payment date, Main Place will enter into a liquidity
agreement, or other liquidity arrangement acceptable to each rating agency, with
[Bank of America, N.A.], which agreement may be replaced from time to time with
a liquidity agreement or other liquidity arrangement from some other bank as may
be acceptable to each rating agency, in the amount of one month's interest on
the bonds at an interest rate on the bonds of [ ]% per annum (the
"LIQUIDITY FACILITY"). This liquidity facility may be drawn upon by the trustee
only if on any servicer remittance date the trustee fails to receive the
available amount from the servicer.]
PURCHASE AND RESALE OF BONDS
Main Place may at any time and from time to time purchase outstanding bonds
on the open market or by private sale. Bonds held by the issuer or its
affiliates [other than Banc of America Securities LLC] will not be deemed to be
outstanding for purposes of determining the basic maintenance amount or for
other purposes under the indenture. The indenture provides that Main Place will
not, and it will not permit any affiliate [other than Banc of America Securities
LLC] to, sell any bonds acquired by Main Place or any affiliate of Main Place
unless the trustee is able to prepare a report dated no more than five days
prior to the date of sale, showing that, after giving effect to the sale, the
discounted value of the eligible collateral, determined at the option of Main
Place, as of the then most recent valuation date or as of any date subsequent to
that date but no later than the date of that report, would not be less than the
basic maintenance amount.
REPORTS ON PLEDGED PROPERTY
Upon issuance of the bonds, Main Place is required to deliver to the
trustee, and, within two business days after each valuation date commencing with
the [date] valuation date, the trustee is required to deliver to Main Place
reports regarding the status of the pledged property which set forth the
S-39
<PAGE> 42
discounted value of the eligible collateral. Copies of these reports will also
be delivered to each rating agency. Main Place may also cause the trustee to
deliver similar reports in connection with the withdrawal or substitution of
pledged property, as described above under "-- Withdrawals and Substitutions of
Collateral."
In preparing these reports, the trustee will use information provided by
the servicer in its semi-monthly reports preceding the related valuation dates
as to the amounts on deposit in the collection account, the aggregate principal
balance of the eligible mortgage loans and the weighted average interest rate,
weighted average maturity and principal balance of specified groups of eligible
mortgage loans. These reports will also contain information obtained from the
servicer concerning the occurrence of late payments with respect to the eligible
mortgage loans. In addition: (1) the report to be delivered by Main Place upon
issuance of the bonds; (2) each report delivered by the trustee in connection
with the withdrawal or substitution of pledged property; and (3) each report
delivered by the trustee in connection with the valuation date following the
pledge by Main Place of additional eligible collateral, other than in connection
with a substitution, will also contain information on specified characteristics
of the mortgage loans, as described in the prospectus under "Security for the
Bonds -- Eligible Mortgage Loans," and the percentages of the mortgage loans
having those characteristics.
Main Place's initial report upon the issuance of the bonds, the trustee's
report delivered in connection with each cure date and some of the trustee's
monthly valuation date reports will be accompanied by letters from a firm of
independent accountants selected by Main Place regarding the calculations made
by Main Place and the trustee in the applicable reports. With respect to the
trustee's reports, the accountant's letter will be delivered quarterly,
commencing with the report delivered in connection with the [date] valuation
date, and will relate to one of the trustee's reports delivered during the
three-month period ending on the last day of the preceding month, which report
will be selected at random by the firm of independent accountants.
EXAMPLE OF COLLECTION AND DISTRIBUTION OF PAYMENTS
The following chart sets forth an example of: (1) the application of
collections on the eligible collateral received during a collection period to
the payment of the bonds and other amounts on the following interest payment
date; and (2) a one-month cycle of collateral valuations and reports. Each month
in a three month period will be the same except that the record date, [LIBOR]
[treasury index] [prime rate] [other index] determination date and interest
payment date will occur only in [month], [month], [month] and [month]. For
purposes of the following chart, each day shown is assumed to be a business day.
S-40
<PAGE> 43
[May] [ ]-[May] [ ]..... Collection Period. The servicer receives
scheduled monthly payments, prepayments, and
other payments in respect of the eligible
mortgage loans and deposits them in the
collection account, net of its servicing fee.
The trustee receives payments on all other
eligible collateral and deposits them in the
distribution account.
[June] [ ]............... Determination date for the [June] [ ]
valuation date.
[June] [ ]............... The servicer delivers a report to the trustee
detailing collections on the eligible mortgage
loans during the preceding collection period and
stating the total amount of funds on deposit in
the collection account and the aggregate
principal balance of the eligible mortgage
loans, in each case, as of the end of the
preceding day.
[June] [ ]............... Valuation date. The trustee prepares a valuation
report showing the discounted value of the
eligible collateral as of a date no earlier than
the preceding determination date.
[June] [ ]............... The trustee delivers the valuation report to
Main Place. If the discounted value of the
eligible collateral is less than the basic
maintenance amount as of the [June] [ ]
valuation date, Main Place has until the next
cure date, 10 days following receipt of the
report, to pledge additional eligible collateral
and/or substitute eligible collateral and/or
repurchase bonds so as to make them no longer
outstanding in order to remove the collateral
shortfall.
[June] [ ]............... Cure date. If Main Place has not remedied the
collateral shortfall described above by this
date, the trustee will be required to cause a
partial mandatory redemption of the bonds within
30 days of the cure date in an amount that,
after giving effect to the redemption, makes the
discounted value of the eligible collateral at
least equal to the basic maintenance amount,
unless the collateral value test is met on a
subsequent valuation date and no notice of
redemption has yet been sent to the holders.
[June] [ ]............... Record date for the [June] [ ] interest
payment date.
[June] [ ]............... Servicer remittance date. The servicer remits
the available amount to the trustee. The
trustee: (1) deposits into the distribution
account and the reserve fund, as applicable, the
required portions of the available amount; and
(2) upon request of the issuer and subject to
the limitations discussed above under
"-- Reserve Fund," releases amounts on deposit
in the reserve fund
S-41
<PAGE> 44
to Main Place, free of the lien of the
indenture, if the discounted value of the
eligible collateral as of the most recent
valuation date, after giving effect to the
release, is at least equal to the basic
maintenance amount.
[June] [ ]............... [LIBOR] [prime rate] [treasury index] [other
index] determination date. The trustee
determines [LIBOR] [prime rate] [treasury index]
[other index] and the applicable interest rate
on the bonds for the next interest period,
[June] [ ]through [September] [ ].
[June] [ ]............... Interest payment date. The trustee distributes
to the holder, DTC, interest payable on the
bonds on this date.
- --------------------------------------------------------------------------------
RATIO OF EARNINGS TO FIXED CHARGES
- --------------------------------------------------------------------------------
Set forth below is the ratio of earnings to fixed charges for Main Place
for the periods indicated. Earnings represent income before income taxes plus
fixed charges less capitalized interest. Fixed charges consist of interest
expense, capitalized interest, amortization of debt discount and appropriate
issuance costs and one-third, the amount deemed to represent an appropriate
interest factor, of net rent expense under all lease commitments. For the
periods indicated, Main Place's fixed charge consisted of interest expense and
amortization of debt discount and appropriate issuance costs.
<TABLE>
<CAPTION>
FISCAL YEAR
DECEMBER 31,
----------------------------------------- JUNE 24 THROUGH
1998 1997 1996 1995 DECEMBER 31, 1994(1)
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges..................
</TABLE>
- -------------------------
(1) Main Place's predecessor, Main Place Funding Corporation, was incorporated
on June 24, 1994.
- --------------------------------------------------------------------------------
ERISA CONSIDERATIONS
- --------------------------------------------------------------------------------
The bonds may be purchased by employee benefit plans or other retirement
arrangements that are subject to the Employee Retirement Income Security Act of
1974, as amended, or individual retirement accounts or annuities (IRAs) that are
subject to the prohibited transaction rules of the federal income tax laws. Upon
acquiring a bond, an employee benefit plan or IRA will be deemed to represent
that an exemption from the prohibited transaction rules will be applicable to
its purchase and holding of that bond.
See "ERISA Considerations" in the prospectus for a discussion of the
potential prohibited transactions relating to the acquisition and holding of a
bond for which exemptive relief is required.
S-42
<PAGE> 45
- --------------------------------------------------------------------------------
UNDERWRITING
- --------------------------------------------------------------------------------
Main Place and the underwriters named below (the "UNDERWRITERS") have
entered into an underwriting agreement ("UNDERWRITING AGREEMENT") under which
the underwriters have agreed to purchase, and Main Place has agreed to sell, the
principal amounts of the bonds set forth opposite their names below.
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
[Banc of America Securities LLC]............................ $
----------
[Other underwriters]........................................
----------
Total..................................................... $
==========
</TABLE>
Subject to the terms of the underwriting agreement, the underwriters have
agreed to purchase all of the bonds offered if any of the bonds are purchased.
The underwriters propose initially to offer the bonds in part to the public
at the price set forth on the cover page of this prospectus supplement and in
part to certain dealers at that price less concessions not in excess of
[ ]% of the principal amount of the bonds. The underwriters may allow, and
those dealers may reallow, concessions not in excess of [ ]% of the
principal amount of the bonds to certain brokers and dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the underwriters.
[The bonds will be offered simultaneously in the United States and abroad.]
[Each underwriter has represented and agreed that: (1) it has not offered
or sold and will not offer or sell in the United Kingdom any bonds 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 Regulation 1995 or the
Financial Services Act 1986 (the "FINANCIAL SERVICES ACT"); and (2) 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 bonds, 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 Financial 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 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on.]
S-43
<PAGE> 46
[The bonds have not been and will not be registered under the Securities
and Exchange Law of Japan (the "SECURITIES AND EXCHANGE LAW") and each
underwriter has agreed and each other purchaser will be required to agree that
it will not offer or sell any bonds, 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 and any relevant laws and regulations of Japan.]
Main Place has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
There currently is no secondary market for this series of bonds. The
underwriters intend to make a secondary market in the bonds, but none of the
underwriters has any obligation to do so. There is no assurance that a secondary
market in the bonds will develop or, if one does develop, that it will continue
until the bonds are paid in full.
[Banc of America Securities LLC] is an affiliate of Main Place and is a
registered broker/dealer. This prospectus supplement and the prospectus may be
used by [Banc of America Securities LLC] in connection with offers and sales
related to market-making transactions in the bonds. [Banc of America Securities
LLC] may act as principal or agent in these transactions. [Bank of America
International Limited, an affiliate of Banc of America Securities LLC, may act
as agent in these transactions.]
In connection with the offering, the underwriters and selling group members
and their respective affiliates may engage in transactions that stabilize,
maintain or otherwise affect the market price of the bonds:
- These transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which a person
may bid for or purchase bonds for the purpose of stabilizing their
market price.
- The underwriters may create a short position for the account of the
underwriters by selling more bonds in connection with the offering
than it is committed to purchase from Main Place, and in that case may
purchase bonds in the open market following completion of the offering
to cover all or a portion of the short position. [Banc of America
Securities LLC], on behalf of the underwriters, may impose "penalty
bids" under contractual arrangements with the underwriters whereby it
may reclaim from an underwriter, or dealer participating in the
offering, for the account of the other underwriters, the selling
concessions with respect to the bonds that are distributed in the
S-44
<PAGE> 47
offering but subsequently purchased for the account of the
underwriters in the open market.
- Any of the transactions described above may result in the maintenance of
the price of the bonds at a level above that which might otherwise
prevail in the open market.
- None of the transactions described above is required, and, if they are
undertaken, they may be discontinued at any time.
Main Place estimates that its expenses relating to the issuance and
offering of the bonds will be approximately $[ ].
- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------
The legality of the bonds will be passed upon for Main Place by [Hunton &
Williams, Charlotte, North Carolina] [Cadwalader, Wickersham & Taft, New York,
New York and Charlotte, North Carolina] and for the underwriters by [Hunton &
Williams, Charlotte, North Carolina] [Cadwalader, Wickersham & Taft, New York,
New York and Charlotte, North Carolina]. Certain other legal matters with
respect to the issuance of the bonds will be passed upon by Andrea Goldenberg,
Counsel of Bank of America Corporation, Charlotte, North Carolina.
- --------------------------------------------------------------------------------
BOND RATINGS
- --------------------------------------------------------------------------------
The bonds will not be issued unless they are rated "[ ]"
by [rating agency] and "[ ]" by [rating agency]. A security
rating is not a recommendation to buy, sell or hold securities and may be
revised or withdrawn at any time by the assigning rating agency.
Main Place has not requested a rating of the bonds by any rating agency
other than the rating agencies specified above. However, another rating agency
could rate the bonds lower than the ratings assigned by the rating agencies
specified above.
S-45
<PAGE> 48
- --------------------------------------------------------------------------------
INDEX OF PROSPECTUS SUPPLEMENT DEFINITIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
agency certificates................ S-7
ARM interest adjustment date....... S-22
available amount................... S-31
basic maintenance amount........... S-36
bondholder......................... S-14
closing date....................... S-5
collection period.................. S-31
constant maturity treasury index... S-22
cure date.......................... S-19
cut-off date....................... S-5
deposit securities................. S-6
determination date................. S-36
discount factors................... S-36
discounted value................... S-36
eligible collateral................ S-14
eligible investments............... S-28
eligible mortgage loans............ S-7
Financial Services Act............. S-43
gross margin....................... S-22
holder............................. S-14
indenture.......................... S-14
interest payment date.............. S-5
IRAs............................... S-11
LIBOR.............................. S-5
LIBOR determination date........... S-5
lifetime cap....................... S-22
liquidity facility................. S-39
listing agent...................... A-3
Main Place......................... S-12
market value....................... S-35
outstanding........................ S-14
prime rate......................... S-6
prime rate determination date...... S-6
rating agency...................... S-5
record date........................ S-5
Securities and Exchange Law........ S-44
servicer........................... S-5
servicer remittance date........... S-31
servicers.......................... S-5
stated maturity.................... S-5
treasury index..................... S-5
treasury index determination
date............................. S-6
trustee............................ S-5
underwriters....................... S-43
underwriting agreement............. S-43
valuation date..................... S-14
</TABLE>
S-46
<PAGE> 49
APPENDIX
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION FOR NON-U.S. PERSONS
- --------------------------------------------------------------------------------
THIS APPENDIX CONTAINS SOME ADDITIONAL LIMITED INFORMATION ABOUT THE
OFFERING OF THE BONDS WHICH IS RELEVANT TO NON-U.S. PERSONS. DETAILED
INFORMATION CONCERNING THE OFFERING IS CONTAINED IN THE PROSPECTUS AND
PROSPECTUS SUPPLEMENT AND PURCHASERS ARE URGED TO READ BOTH THIS APPENDIX AND
THE PROSPECTUS AND PROSPECTUS SUPPLEMENT IN FULL.
The distribution of the prospectus supplement containing this appendix and
the prospectus and the offering of the bonds in some jurisdictions may be
restricted by law. Main Place requires that persons who obtain the prospectus
supplement containing this appendix and the prospectus inform themselves about
and observe these restrictions.
The prospectus supplement containing this appendix and the prospectus do
not constitute an offer to sell or the solicitation of an offer to buy the bonds
in any jurisdiction in which this offer or solicitation is unlawful.
As used in the prospectus supplement containing this appendix and the
prospectus, all references to "dollars" and "$" are to United States dollars.
Sales of the bonds may not be consummated unless the purchaser has received
both the prospectus supplement containing this appendix and the prospectus.
MATTERS RELATED TO THE BONDS
DEFINITIVE BONDS
If definitive bonds are issued, Main Place will appoint a paying and
transfer agent in Luxembourg at whose offices the definitive bonds may be
presented for payment and/or transfer for so long as they are outstanding. The
paying and transfer agent that is expected to be appointed in these
circumstances is the listing agent, whose name and address is set forth at the
end of this appendix. In addition, at the stated maturity of the bonds or
otherwise upon final payment, the definitive bonds may be presented for payment
at the offices of the paying and transfer agent in Luxembourg up to two years
after the stated maturity or final payment. See "Description of the
Bonds -- General" in the prospectus supplement. Pending the issuance of the
definitive bonds, the listing agent will serve as a special agent to act as an
intermediary in Luxembourg between holders of the bonds and Main Place.
A-1
<PAGE> 50
NOTICES
Any notices required to be given to holders under the indenture will be
given to DTC or its nominee, as the registered holder of the bonds, and by
publication in a daily newspaper in Luxembourg, which is expected to be the
Luxemburger Wort. Promptly after the determination of the interest rate on the
bonds applicable to each interest period, and in no event later than the first
day of each interest period, the trustee, as defined in the prospectus
supplement, will give notice of: (1) the interest rate; (2) the related interest
payment date; and (3) the amount of interest payable on the bonds interest
payment date to the listing agent and the Luxembourg Stock Exchange. If
definitive bonds are issued, notices to holders will also be given by mail to
the addresses of these bondholders as they appear in the register maintained by
the trustee. See "Description of the Bonds -- Definitive Bond Registration" in
the prospectus. In addition, Main Place will cause to be published in a daily
newspaper in Luxembourg, as described above: (1) the interest rate on the bonds
applicable to each interest period; and (2) the related interest payment date
and the amount of interest payable on the bonds for the interest payment date.
Any changes of the type described under "Description of the Bonds -- Security
for the Bonds" in the prospectus supplement will be published as set forth above
and made available to the listing agent.
REDEMPTION
The bonds will be subject to mandatory redemption upon notice to the
holders and under the circumstances described in the prospectus supplement under
"Description of the Bonds -- Redemption." In the event that definitive bonds
have been issued and notice of redemption has been given to the holders, the
principal amount, or portion thereof, of the bonds to be redeemed will be due
and payable in Luxembourg on the date fixed for the redemption at the place set
forth in the notice. In the case of any redemption of those definitive bonds in
part, new definitive bonds representing the principal amounts of the bonds that
have not been redeemed will be issued to the holders of the definitive bonds at
the office of the transfer agent in Luxembourg.
TAXATION
For a discussion of the United States federal income tax consequences of
the acquisition of the bonds by foreign investors, including the possible
imposition of withholding taxes, see "United States Federal Income Tax
Consequences" in the prospectus. Foreign holders of the bonds should consult
their tax advisors as to the tax consequences of holding a bond in the
applicable foreign jurisdictions.
A-2
<PAGE> 51
LISTING OF BONDS AND RELATED MATTERS
Application has been made to list the bonds on the Luxembourg Stock
Exchange. Main Place does not intend to list the bonds on any other securities
exchange. Prior to listing, a legal notice relating to the issuance of the
bonds, the limited liability company agreement for Main Place, the indenture and
the underwriting agreement will be deposited with the Chief Registrar of the
District Court of Luxembourg, where the documents may be inspected and copies
thereof obtained upon request.
As long as any of the bonds are outstanding, copies of the limited
liability company agreement for Main Place, the indenture and the underwriting
agreement and copies of the documents referred to under "Available Information"
in the accompanying Prospectus, including the Current Report on Form 8-K to be
filed by Main Place with the Commission shortly after completion of the
offering, will be available at the offices of Kredietbank S.A. Luxembourgeoise
(the "LISTING AGENT") in the City of Luxembourg. In addition, the [year] and
[year] annual financial statements and all future quarterly and annual financial
statements commencing with the [date] statements of [Bank of America
Corporation] will be available on demand free of charge at the offices of the
listing agent in the City of Luxembourg. Also, upon request the trustee's
periodic valuation date reports, together with any letters from a firm of
independent accountants as described in "The Indenture -- Reports on Pledged
Property" in the prospectus will be made available at the office of the listing
agent.
Copies of all documents incorporated by reference in this document will be
available on demand free of charge from the listing agent in Luxembourg.
There has been no material adverse change in the consolidated financial
condition of Main Place since December 31, [year].
Main Place is not a party to any legal proceeding which, if determined
adversely, would materially and adversely affect its condition or operations or
would materially and adversely affect its ability to perform its obligations
under the indenture. Main Place accepts responsibility for information in this
prospectus supplement (including the appendix) and the accompanying prospectus.
The bonds have been accepted for clearance through Euroclear and Cedel with
a Common Code number of [ ] and an international securities
identification number of US [ ]. The CUSIP number of the bonds
is [ ]. The issuance and sale of the bonds were authorized by a
resolution of the managing member of Main Place.
A-3
<PAGE> 52
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION DATED AUGUST 30, 1999
PROSPECTUS SUPPLEMENT
[MULTICLASS OFFERING]
(TO PROSPECTUS DATED [ ])
$[ ]
MAIN PLACE FUNDING, LLC
MORTGAGE-BACKED BONDS, SERIES [1999- ]
Main Place Funding, LLC is offering $[ ] principal amount of
its Mortgage-Backed Bonds, Series [1999- ]. The bonds are being offered by this
prospectus supplement and the accompanying prospectus, and will have the
following characteristics:
<TABLE>
<CAPTION>
PRINCIPAL STATED PRICE TO UNDERWRITING PROCEEDS
CLASS AMOUNT INTEREST RATE(1) MATURITY(2) PUBLIC DISCOUNT TO ISSUER(3)
- ----- --------- ---------------- ----------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
A1 $ [ ]+[ ]% % % %
A2 $ [ ]+[ ]% % % %
</TABLE>
- -------------------------
(1) Interest is paid [quarterly] [monthly]. The first interest payment date is
expected to be [date].
(2) The bonds are subject to mandatory redemption if the collateral maintenance
requirements are not met.
(3) Before deducting expenses payable by Main Place.
The bonds represent limited recourse obligations of Main Place only and
will not represent interests in or obligations of any other entity. The bonds
are not insured or guaranteed by any government agency or any other entity.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE [ ] IN THE
PROSPECTUS [AND PAGE S-[ ] OF THIS PROSPECTUS SUPPLEMENT].
[Persons not residing in the United States that are considering purchasing
bonds should read the information under the heading "Additional Information for
Non-U.S. Persons" in the appendix to this prospectus supplement.]
This prospectus supplement may be used to offer and sell the bonds only if
accompanied by the prospectus.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
BONDS OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[Application has been made to list the bonds on the Luxembourg Stock
Exchange. See "Additional Information for Non-U.S. Persons" in the appendix to
this prospectus supplement.]
Main Place expects to deliver the bonds to the underwriters on or about the
closing date of [ ], in book-entry form through The Depository
Trust Company, Cedel Bank, S.A. and the Euroclear System.
[NAMES OF UNDERWRITERS]
The date of this Prospectus Supplement is [ ]
<PAGE> 53
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important Notice about this Prospectus Supplement and the
Accompanying Prospectus................................... S-3
SUMMARY INFORMATION......................................... S-5
THE ISSUER.................................................. S-13
General................................................... S-13
Capitalization............................................ S-13
Summary Financial Data.................................... S-14
Managing Member........................................... S-14
DESCRIPTION OF THE BONDS.................................... S-15
General................................................... S-15
Interest Payments......................................... S-16
Calculation of LIBOR...................................... S-16
Determination of the Treasury Index....................... S-18
Determination of the Prime Rate........................... S-19
Payment of Principal; Redemption.......................... S-19
Security for the Bonds.................................... S-21
Eligible Mortgage Loans................................... S-22
Servicing of Eligible Mortgage Loans...................... S-30
Distribution Account...................................... S-34
Reserve Fund.............................................. S-35
Basic Maintenance Amount.................................. S-36
Withdrawals and Substitutions of Collateral............... S-38
Liquidity................................................. S-39
Purchase and Resale of Bonds.............................. S-40
Reports on Pledged Property............................... S-41
Example of Collection and Distribution of Payments........ S-41
RATIO OF EARNINGS TO FIXED CHARGES.......................... S-43
ERISA CONSIDERATIONS........................................ S-43
UNDERWRITING................................................ S-45
LEGAL MATTERS............................................... S-47
BOND RATINGS................................................ S-47
INDEX OF PROSPECTUS SUPPLEMENT DEFINITIONS.................. S-48
APPENDIX -- ADDITIONAL INFORMATION FOR NON-U.S. PERSONS..... A-1
</TABLE>
S-2
<PAGE> 54
IMPORTANT NOTICE ABOUT THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Main Place describes the bonds in two separate documents that progressively
provide more detail:
- the accompanying prospectus, which provides general information, some of
which may not apply to your bonds, and
- this prospectus supplement, which describes the specific terms of your
bonds.
IF THE DESCRIPTION OF THE TERMS OF YOUR BONDS VARIES BETWEEN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
This prospectus supplement begins with summary information to give you an
initial overview. The summary does not contain all the information that you need
to consider to make your investment decision.
Cross-references are included in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
additional information. The table of contents included in this prospectus
supplement and the accompanying prospectus provide the pages on which these
captions are located.
You can find a listing of the pages where some of the terms used in this
prospectus supplement and the accompanying prospectus are defined under the
caption "Index of Prospectus Supplement Definitions" beginning on page S-48 in
this document and under the caption "Index of Significant Definitions" beginning
on page 78 in the prospectus.
---------------------
The prospectus supplement and the accompanying prospectus contain
forward-looking statements relating to future economic performance or
projections and other financial items. These forward-looking statements,
together with related qualifying language and assumptions, are found in the
material set forth under "Risk Factors" in the prospectus and elsewhere in this
prospectus supplement and the prospectus, and may be identified by, among other
things, the use of forward-looking words such as "expects," "intends,"
"anticipates," "estimates," "believes," "may" or other comparable words. These
statements involve known and unknown risks, uncertainties and other important
factors that could cause the actual results or performance to differ materially
from these forward-looking statements. Those risks, uncertainties and other
factors include, among others, general economic and business conditions,
competition, changes in political, social and economic conditions, regulatory
initiatives and compliance with government regulations, customer preference and
various other matters, many of which are beyond the control of Main Place. These
forward-looking statements speak only as of the date of this prospectus
supplement. Main Place expressly disclaims any obligation or undertaking to
update or revise forward-looking statements to reflect any change in Main
Place's expectations or any change in events, conditions or circumstances on
which any forward-looking statement is based.
S-3
<PAGE> 55
Upon receipt of a request by an investor who has received an electronic
prospectus supplement and prospectus from an underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a prospectus supplement and prospectus, Main Place or the underwriter
will promptly deliver, or cause to be delivered, without charge, a paper copy of
the prospectus supplement and prospectus.
S-4
<PAGE> 56
SUMMARY INFORMATION
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making an
investment decision. To understand the terms of the bonds, you should read this
entire prospectus supplement and the accompanying prospectus carefully.
<TABLE>
<S> <C>
ISSUER: Main Place Funding, LLC
TITLE OF SERIES: Mortgage-Backed Bonds, Series [1999- ]
TRUSTEE: [Name]
SERVICERS: [Names](each, a "SERVICER")
RATING AGENCIES: [Rating Agencies](each, a "RATING AGENCY")
INTEREST PAYMENT DATE: The [ ] day of [month], [month],[month], and
[month], or, if not a business day, the next business day,
beginning [date]
CLOSING DATE: [Date]
CUT-OFF DATE: [Date]
RECORD DATE: The [ ]business day preceding an interest payment
date
</TABLE>
---------------------
INTEREST PAYMENTS
- Interest is paid [monthly] [quarterly] on each interest payment date.
- Interest accrues on the unpaid principal balance of each class of bonds
during each interest period at the following rates:
<TABLE>
<CAPTION>
CLASS MONTHLY INTEREST RATE
- ----- ---------------------
<S> <C>
A1 [index] + [ ]%
A2 [index] + [ ]%
</TABLE>
Each interest period begins on and includes an interest payment date, or,
in the case of the initial interest payment date, begins on and includes the
closing date, and ends on and excludes the next interest payment date.
["LIBOR" is the rate for deposits in U.S. dollars for a [(one, three, six,
twelve)]-month period which appears on the Dow Jones Telerate page 3750, or
similar replacement page, as of 11:00 a.m., London time, on the LIBOR
determination date for the interest payment date. In addition, see "Description
of the Bonds -- Calculation of LIBOR" if that rate does not appear on Dow Jones
Telerate page 3750. The "LIBOR DETERMINATION DATE" is the second London business
day prior to the first day of the interest period for an interest payment date.]
[The "TREASURY INDEX" is the weekly average yield, expressed as a per annum
rate, on U.S. Treasury securities adjusted to a constant maturity of [one,
three, five, seven, ten] years as published by the Federal Reserve Board
S-5
<PAGE> 57
in the most recent edition of Federal Reserve Board Statistical Release
No. H.15 (5.19). For any interest payment date, the "TREASURY INDEX
DETERMINATION DATE" is the second business day prior to the first day of the
related interest period.]
[The "PRIME RATE" is the rate published as the "Prime Rate" in the "Money
Rates" section or other comparable section of The Wall Street Journal. For any
interest payment date, the "PRIME RATE DETERMINATION DATE" is the second
business day prior to the first day of the related interest period.]
The amount of interest that will accrue on each class of bonds each
interest period is based on the actual number of days in the interest period
over a 360-day year multiplied by the product of:
- the interest rate for the class of bonds for that interest period; and
- the outstanding principal balance of the class of bonds at the beginning
of each interest period.
See "Description of the Bonds -- Interest Payments" in this prospectus
supplement for more detail.
PAYMENT OF PRINCIPAL; REDEMPTION
- Each class of bonds will mature and will be paid its entire principal
balance, plus accrued interest, at its stated maturity:
<TABLE>
<CAPTION>
CLASS STATED MATURITY
- ----- ---------------
<S> <C>
A1 [ ]
A2 [ ]
</TABLE>
- To fund the return of principal at the applicable stated maturity, Main
Place will be required, prior to the stated maturity, to pledge cash
or certain government securities (collectively, "DEPOSIT SECURITIES")
maturing on or prior to the stated maturity or make other arrangements
acceptable to each rating agency to provide liquidity for this payment
of principal.
- The bonds are not redeemable at the option of Main Place, although Main
Place may purchase bonds in open market transactions.
- The bonds are required to be redeemed in part if the collateral
maintenance requirements described in this prospectus supplement are
not met.
See "Description of the Bonds -- Payment of Principal; Redemption" and
"-- Liquidity" in this prospectus supplement for more detail.
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<PAGE> 58
BOOK-ENTRY REGISTRATION
The bonds will be issued in book-entry form only in minimum denominations
of [$ ] and integral multiples of [$ ] in excess of such
amount.
See "Description of the Bonds -- Registration of the Bonds" and "-- Book-
Entry Registration" in the prospectus.
SECURITY FOR THE BONDS
The eligible collateral securing the bonds may include the following:
- Residential first [and second] lien mortgage loans meeting the
requirements for eligible mortgage loans set forth in the prospectus
under "Description of the Bonds -- Eligible Mortgage Loans," subject
to permitted changes in their characteristics as described in this
prospectus supplement (such mortgage loans are referred to in this
prospectus supplement as "ELIGIBLE MORTGAGE LOANS").
- Freddie Mac, Fannie Mae and Ginnie Mae certificates (collectively,
"AGENCY CERTIFICATES") and other government securities described under
"Description of the Bonds -- Government Securities" in the prospectus.
- Cash, including cash on deposit in various accounts held by or for the
benefit of the trustee.
Eligible collateral for the bonds will not include [multi-class agency
certificates, eligible mortgage pass-through certificates or short-term money
market instruments that are described in the prospectus or the mortgage loans
described under "Security for the Bonds -- Eligible Mortgage Loans -- Other
Eligible Mortgage Loans" in the prospectus. Eligible collateral for the bonds
also will not include balloon mortgage loans, simple interest mortgage loans,
negative amortization loans or manufactured home contracts that are described in
the prospectus.]
Investors should be aware that:
- Main Place may withdraw or substitute collateral at any time if, after
giving effect to these actions, the discounted value of the eligible
collateral pledged to secure the bonds is at least equal to the basic
maintenance amount determined as described in this prospectus
supplement and no event of default has occurred and is continuing with
respect to the bonds.
- the types, characteristics and permitted amounts of eligible collateral
may change at any time without the consent of bondholders if the
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<PAGE> 59
changes do not adversely affect the ratings then assigned to the bonds
by the rating agencies.
See "Description of the Bonds -- Security for the Bonds" and
"-- Withdrawals and Substitution of Collateral" in this prospectus supplement
for more detail.
INITIAL COLLATERAL
The eligible collateral initially pledged to secure the bonds will consist
of eligible fixed-rate and adjustable-rate [first lien] mortgage loans. [All] of
the [initial] mortgage loans were originated or acquired by [NationsBanc
Mortgage Corporation] [Bank of America, FSB] [Bank of America, N.A.]
[ ], [which are affiliates of Main Place and Banc of America Securities
LLC, one of the underwriters].
The initial mortgage loans are expected to have the following approximate
characteristics:
SELECTED MORTGAGE LOAN DATA AS OF [DATE]
<TABLE>
<CAPTION>
TOTAL ADJUSTABLE-RATE FIXED-RATE
MORTGAGE MORTGAGE MORTGAGE
LOANS LOANS LOANS
-------- --------------- ----------
<S> <C> <C> <C> <C>
Number of mortgage loans.................
Aggregate current principal balance......
Range of current principal balance.......
[Percentage of first lien mortgage
loans.................................. ]
[Percentage of second lien mortgage
loans.................................. ]
Weighted average mortgage loan interest
rates..................................
Range of mortgage loan interest rates....
Weighted average [combined] original
loan-to-value ratio....................
Weighted average remaining term to
maturity (in months)...................
Range of remaining term to maturity in
months.................................
Weighted average original term to
maturity (in months)...................
Range of origination dates...............
</TABLE>
S-8
<PAGE> 60
<TABLE>
<CAPTION>
TOTAL ADJUSTABLE-RATE FIXED-RATE
MORTGAGE MORTGAGE MORTGAGE
LOANS LOANS LOANS
-------- --------------- ----------
<S> <C> <C> <C> <C>
Range of gross margins...................
Weighted average gross margins...........
[Percentage of balloon loans]............
Number of states with geographic
concentration of mortgaged properties
in excess of 5% of the aggregate
current principal balance..............
</TABLE>
Main Place may remove mortgage loans, or may make substitutions for
mortgage loans, in advance of, and following, the closing date as described in
this prospectus supplement. The initial mortgage loans described in this
prospectus supplement have a discounted value in excess of the basic maintenance
amount. Main Place may remove certain of these mortgage loans prior to the
closing date, provided that the remaining eligible collateral pledged to secure
the bonds has a discounted value equal to or in excess of the basic maintenance
amount.
Additional information about the mortgage loans to be pledged to secure the
bonds appears under "Description of the Bonds -- Eligible Mortgage Loans" in
this prospectus supplement.
COLLATERAL VALUATION AND MAINTENANCE
Main Place is required to maintain eligible collateral pledged to secure
the bonds having a discounted value at least equal to the basic maintenance
amount, determined as described under "Description of the Bonds -- Basic
Maintenance Amount" in this prospectus supplement. The trustee is required to
value the collateral on the [ ] day of each month, or, if not a
business day, on the next business day, commencing on [date] and to deliver a
report concerning its valuation to Main Place and each rating agency within two
business days of each valuation date.
In the event that on any valuation date the discounted value of the pledged
collateral is less than the basic maintenance amount, Main Place is required,
within [10] days of receipt of the valuation report, to take one of the
following actions:
- deliver to the trustee or custodian additional eligible collateral and/or
substitute eligible collateral; or
- repurchase outstanding bonds; or
- if Main Place is unable to deliver or substitute eligible collateral or
to repurchase outstanding bonds, redeem outstanding bonds;
S-9
<PAGE> 61
in each case, to the extent that, after these actions are taken, the discounted
value of the eligible collateral pledged to secure the bonds is at least equal
to the basic maintenance amount.
See "Description of the Bonds -- Basic Maintenance Amount," "-- Withdrawals
and Substitutions of Collateral," "Purchase and Resale of Bonds" and "Reports on
Pledged Collateral" in this prospectus supplement for more detail.
ACCOUNTS
The following accounts shall be established in connection with the issuance
of the bonds:
- COLLECTION ACCOUNT -- A collection account shall be established by the
servicer in the name of the trustee in which all payments in respect
of any eligible mortgage loans pledged to secure the bonds shall be
deposited.
- DISTRIBUTION ACCOUNT -- A distribution account shall be established by
the trustee for deposit of all payments in respect of the eligible
collateral securing the bonds, including amounts deposited from the
collection account net of permitted withdrawals made from that
account. All payments of interest and principal on the bonds will be
made from amounts on deposit in the distribution account.
- RESERVE FUND -- A reserve fund shall be established by the trustee.
Amounts held in the reserve fund may be released to Main Place if, as
of the immediately preceding valuation date, the discounted value of
the remaining eligible collateral is at least equal to the basic
maintenance amount and no event of default has occurred and is
continuing.
Amounts held in the collection account, distribution account and reserve
fund will constitute a portion of the pledged collateral securing the bonds and
eligible collateral for purposes of satisfying the basic maintenance amount. The
servicer will not be required to make advances for delinquent monthly payments
on eligible mortgage loans.
See "Description of the Bonds -- Servicing of Eligible Mortgage Loans --
Collection Account," and "Description of the Bonds -- Distribution Account" and
"-- Reserve Fund" in this prospectus supplement.
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<PAGE> 62
USE OF PROCEEDS
Main Place intends to use substantially all of the net proceeds from the
sale of the bonds for one or more of the following:
- Purchase additional mortgage loans;
- Pay dividends to its members; and
- Reduce subordinated indebtedness of Main Place.
RATINGS
Main Place will not issue the bonds unless each class of bonds is rated
[ ] by [rating agency] and [ ] by [rating
agency].
- The ratings of the rating agencies are not recommendations to buy, sell
or hold the bonds. A rating may be revised or withdrawn at any time by
the assigning rating agency.
- If the ratings on your class of bonds are downgraded or withdrawn, you
may have difficulty selling your bonds.
See "Bond Ratings" in this prospectus supplement for more detail.
TAX STATUS
Special federal income tax counsel is of the opinion that under existing
law, the bonds will be treated as debt of Main Place for federal income tax
purposes.
You should consult your tax advisors and review "United States Federal
Income Tax Consequences" in the prospectus for a discussion of the United States
federal income tax consequences of the acquisition, ownership, and disposition
of the bonds.
ERISA
Subject to important considerations discussed under "ERISA Considerations"
in this prospectus supplement and the prospectus, it is expected that the bonds
will be eligible for purchase by pension, profit sharing and other employee
benefit plans and individual retirement accounts and annuities ("IRAS"). A plan
or IRA fiduciary should carefully review with its lawyer and tax advisor whether
the purchase or holding of the bonds could give rise to a prohibited
transaction.
See "ERISA Considerations" in this prospectus supplement and the prospectus
for more detail.
S-11
<PAGE> 63
LEGAL INVESTMENT
The bonds will not constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984, as amended. If your
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities, then you
may be subject to restrictions on investment in the bonds. You should consult
your legal, tax and accounting advisors for assistance in determining the
suitability of and consequences to you of the purchase, ownership and sale of
the bonds.
For additional information, see "Legal Investment" in the prospectus.
S-12
<PAGE> 64
- --------------------------------------------------------------------------------
THE ISSUER
- --------------------------------------------------------------------------------
GENERAL
The issuer of the bonds is Main Place Funding, LLC (referred to in this
prospectus supplement and the prospectus as "MAIN PLACE"), a Delaware limited
liability company and an indirect subsidiary of Bank of America, N.A., which is
itself an indirect, wholly-owned subsidiary of Bank of America Corporation. Main
Place is the successor by merger of Main Place Real Estate Investment Trust with
and into Main Place. That merger was effective on December 23, 1998, as more
fully described under "The Issuer" in the prospectus. Main Place has no
subsidiaries. The financial statements of Main Place and its predecessors are
included in the consolidated financial statements of Bank of America
Corporation.
CAPITALIZATION
The following table sets forth the capitalization of Main Place as of
December 31, 1998 and a pro forma capitalization table of Main Place as of the
same date. The pro forma capitalization table gives effect to the issuance of
the bonds offered hereby. There have been no material adverse changes in the
capitalization of Main Place since December 31, 1998.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1998
----------------------
ACTUAL PRO FORMA
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Indebtedness
Mortgage-Backed Bonds, Series 1995-2....................
Mortgage-Backed Bonds, Series 1997-1....................
Mortgage-Backed Bonds, Series 1999-1....................
Mortgage-Backed Bonds, Series [1999- ]..................
Total indebtedness...................................
Members' equity
Contributed equity......................................
Undistributed income....................................
Accumulated other comprehensive income..................
Net unrealized gains on securities available for sale...
Total members' equity................................
Total indebtedness and members' equity.............
</TABLE>
S-13
<PAGE> 65
SUMMARY FINANCIAL DATA
The following summary data of Main Place for the years ended December 31,
1998 and December 31, 1997, is derived from the audited financial statements and
should be read in conjunction with the financial statements that are contained
in Main Place's Annual Report on Form 10-K for the year ended December 31, 1998,
which has been incorporated by reference in this prospectus supplement and the
prospectus. The financial data for the year ended December 31, 1998 reflects the
transactions described in the accompanying prospectus under "The Issuer."
See "Listing of Bonds and Related Matters" in the appendix to this
prospectus supplement and "Incorporation of Certain Documents by Reference" in
the prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Income Statement Data
Interest and fees on loans............................... $ $
Interest on securities...................................
Other income.............................................
Interest Expense.........................................
Other expenses...........................................
Income before income taxes...............................
Net Income...............................................
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance Sheet Data
Total assets............................................. $ $
Loans, net of unearned income............................
Securities...............................................
Securities sold under agreements to repurchase from
affiliate.............................................
Mortgage-backed bonds....................................
Total members' equity....................................
</TABLE>
MANAGING MEMBER
The managing member of Main Place is Bank of America, N.A., an indirect,
wholly-owned subsidiary of Bank of America Corporation.
S-14
<PAGE> 66
- --------------------------------------------------------------------------------
DESCRIPTION OF THE BONDS
- --------------------------------------------------------------------------------
GENERAL
The issuance of the bonds has been duly authorized by Main Place. The bonds
will be issued under an indenture (the "INDENTURE") dated as of
[ ], between Main Place and the trustee. As of any date, all
bonds so issued will be deemed to be "OUTSTANDING," except bonds (1) previously
canceled or to be canceled by the trustee; (2) held by Main Place or its
affiliates, other than [Banc of America Securities LLC]; and (3) for whose
payment eligible government securities or cash in the necessary amount have been
delivered to the trustee or other arrangements satisfactory to each rating
agency have been made as described below under "-- Liquidity."
The following summaries of some of the provisions of the indenture are not
complete. Where particular provisions of the indenture are referred to, the
actual provisions are incorporated by reference as a part of those summaries,
and those summaries are qualified in their entirety by reference to the
indenture. Copies of the indenture may be obtained by writing to the principal
corporate trust office of the trustee, [address], Attention: [department], and
will also be available for inspection during normal business hours at the
principal executive offices of Main Place, and at the principal corporate trust
office of the trustee.
The bonds will be limited to $[ ] aggregate principal
amount, all of which are being offered hereby and will be direct obligations of
Main Place. The principal amount of each class of bonds is due and payable on
the stated maturity for that class. Each class of bonds will bear interest on
the unpaid principal balance thereof at a floating rate calculated as set forth
below under "-- Interest Payments," payable in arrears on each interest payment
date commencing on [ ], to the persons in whose names the bonds
are registered (this person may be referred to as a "BONDHOLDER" or "HOLDER") at
the close of business on the record date preceding that interest payment date,
except in the case of defaulted interest, as provided in the indenture. The
bonds and indenture will be governed by the laws of the State of New York.
The bonds will be secured by collateral as described below under
"-- Security for the Bonds." Under the indenture, Main Place is required to
maintain collateral of the type permitted under the indenture (this collateral
is referred to in this prospectus supplement as "ELIGIBLE COLLATERAL") having a
discounted value sufficient to meet levels of collateralization required from
time to time as described below under "-- Basic Maintenance Amount." The
eligible collateral will be valued by the trustee on the [ ]
day of each month, or, if such day is not a business day, on the next business
day, commencing on [ ] (each of these dates, a "VALUATION
DATE"),
S-15
<PAGE> 67
using market values, as defined in the prospectus under "Description of the
Bonds -- Basic Maintenance Amount," for this collateral obtained no more than
three business days prior to the applicable valuation date. The trustee will
deliver reports to the issuer and to each rating agency for each valuation date
within two business days after that date. See "-- Reports on Pledged
Collateral."
The indenture will provide that if any payment of interest or principal on
the bonds remains unclaimed by holders for two years after that payment has
become due, whether at the stated maturity or otherwise, the trustee will remit
the amount of the payment to Main Place at its request. Thereafter, the payment
will constitute a general unsecured obligation of Main Place only, and holders
may look only to Main Place for payment. Prior to making the remittance, the
trustee may, at the expense of Main Place, give notice to the holders that the
payment remains unclaimed and that, after a specified date, any remaining
portion of the payment will be remitted to Main Place.
INTEREST PAYMENTS
- Interest is paid [monthly] [quarterly] on each interest payment date.
- Interest accrues on the unpaid principal balance of each class of bonds
during each interest period at the following rates:
<TABLE>
<CAPTION>
CLASS MONTHLY INTEREST RATE
- ----- ---------------------
<S> <C>
A1 [index] + [ ]%
A2 [index] + [ ]%
</TABLE>
Each interest period begins on and includes an interest payment date, or,
in the case of the initial interest payment date, begins on and includes the
closing date, and ends on and excludes the next interest payment date.
The amount of interest that will accrue on each class of bonds each
interest period is based on [the actual number of days in the interest period
over a 360-day year] multiplied by the product of:
- the interest rate for the class of bonds for that interest period; and
- the outstanding principal balance of that class of bonds at the beginning
of each interest period.
[CALCULATION OF LIBOR
The following terms are used for purposes of describing the calculation of
LIBOR below:
- LIBOR BUSINESS DAY means a day that is not a Saturday, Sunday or other
day on which banking institutions in London, New York City or
S-16
<PAGE> 68
the state in which the principal office of the trustee is located are
authorized or required by law, regulation or executive order to be
closed.
- LIBOR DETERMINATION DATE means the second LIBOR business day preceding
the first day of each interest period.
- TELERATE PAGE 3750 means the display page designated "3750" on the Dow
Jones Telerate Service, or replacement page or successor service for
displaying comparable rates.
- REUTERS PAGE LIBO means Reuters Money Monitor Rates Page LIBO.
- REFERENCE BANKS means four banks in the London interbank market selected
by the trustee. Each reference bank will 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 Main
Place and which has been designated by the trustee and is able and
willing to provide these quotations to the trustee on each LIBOR
determination date.
The trustee will determine LIBOR for the succeeding interest period on the
basis of the rate that appears on the Telerate Page 3750 as of 11:00 a.m. London
time on that LIBOR determination date.
If on any LIBOR determination date, no rate appears on Telerate Page 3750
or Telerate Page 3750 is no longer available, the trustee will determine LIBOR
on the basis of the rate that appears on Reuters Page LIBO as of 11:00 a.m.
London time on that LIBOR determination date for [ ]-month U.S. dollar
deposits.
If the rate does not appear on Reuters Page LIBO as of 11:00 a.m. London
time on the LIBOR determination date, the trustee will determine LIBOR on the
basis of quotations provided by the reference banks to leading banks in the
London interbank market for a period of [ ] months as of 11:00 a.m. London
time on the LIBOR determination date. LIBOR as determined by the trustee is the
arithmetic mean of these quotations, rounding the arithmetic mean upwards, if
necessary, to the nearest whole multiple of 1/16%. If on any LIBOR determination
date at least two of the reference banks provide quotations, LIBOR will be
determined in accordance with the preceding sentence on the basis of the offered
quotations of those reference banks providing the quotations. If on the LIBOR
determination date only one or none of the reference banks provides the offered
quotations, the trustee will request four major New York City banks to provide
their offered quotations to leading European banks for loans in Eurodollars
having a [ ]-month maturity as of 11:00 a.m. London time on the LIBOR
determination date. If at least two of these quotations are provided, LIBOR will
be the arithmetic mean
S-17
<PAGE> 69
of these quotations, rounding this arithmetic mean upwards, if necessary, to the
nearest whole multiple of 1/16%, or if fewer than two of these quotations are
provided, LIBOR will be LIBOR as determined on the previous LIBOR determination
date.
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 bonds for the related interest period will, in the absence of manifest
error, be final and binding. Each rate of interest may be obtained by
telephoning the trustee at [telephone number].]
[DETERMINATION OF THE TREASURY INDEX
The trustee will calculate the interest rate for each interest period
(after the first) on the second business day before the interest period, or the
"TREASURY INDEX DETERMINATION DATE." On each treasury index determinate date,
the trustee will determine the applicable "TREASURY INDEX" which will be either
(i) the weekly average yield, expressed as a per annum rate, on U.S. Treasury
securities adjusted to a constant maturity of [one, three, five, seven or ten]
years as published by the Federal Reserve Board in the most recent edition of
Federal Reserve Board Statistical Release No. H.15 (519) that is available to
the trustee or (ii) the weekly auction average (investment) yield, expressed as
a per annum rate, on three-month or six-month U.S. Treasury bills that is
available on the Treasury Public Affairs Information Line, an automated
telephone system.
The Statistical Release No. H. 15 (519) is published by the Federal Reserve
on Monday or Tuesday of each week. Investors can order it from the Publications
Department at the Board of Governors of the Federal Reserve System, 21st and C
Streets, N.W., M.S. 138, Washington, D.C. 20551. The Trustee will consider a new
value for the treasury index to have been available on the day following the
date that Statistical Release No. H. 15 (519) is released by the Federal Reserve
Board or the Public Debt News is placed on the Treasury Public Affairs Public
Information Line and available to the public.
The applicable auction average (investment) yield for a given week is the
yield resulting from the auction of three-month or six-month U.S. Treasury bills
held the preceding week. The weekly average yield reflects the average yields of
the five calendar days ending on Friday of the previous week. Yields on Treasury
securities at "constant maturity" are estimated from the Treasury's daily yield
curve. This curve, which relates the yield on a security to its time to
maturity, is based on the closing market bid yields on actively traded Treasury
securities in the over-the-counter market. These market yields are calculated
from composites of quotations reported by five leading U.S. Government
securities dealers to the Federal Reserve Bank of New York. This method
S-18
<PAGE> 70
permits estimation of the yield for a given maturity even if no security with
that exact maturity is outstanding.
In the event that the applicable treasury index becomes unavailable, the
trustee will designate a new index based upon comparable information and
methodology.
If at any time after the applicable treasury index becomes unavailable it
again becomes available, the interest rates for each subsequent accrual period
will be calculated by reference to the applicable treasury index.]
[DETERMINATION OF THE PRIME RATE
On the second business day prior to any interest period, each a "PRIME RATE
DETERMINATION DATE", the trustee will calculate the interest rate for the next
interest period by reference to the rate published as the "Prime Rate" in the
"Money Rates" section or other comparable section of The Wall Street Journal on
that prime rate determination date. The published rate will be the applicable
"PRIME RATE" for certain classes of the bonds. If The Wall Street Journal
publishes a prime rate range, then the average of that range, as determined by
the trustee, will be the prime rate. In the event The Wall Street Journal no
longer publishes a "Prime Rate" entry, the trustee will designate a new
methodology for determining the prime rate based on comparable data. The trustee
will select a particular methodology as the alternative methodology.
If at any time after the prime rate becomes unavailable in The Wall Street
Journal it again becomes available, the trustee will calculate the interest
rates for each subsequent interest period by reference to the prime rate
published in The Wall Street Journal.]
PAYMENT OF PRINCIPAL; REDEMPTION
Each class of bonds will mature and will be paid its entire principal
balance, plus accrued interest, at its stated maturity. See "-- Liquidity"
below.
The bonds are not subject to redemption at the option of Main Place,
although Main Place may purchase bonds in open market transactions. See
"-- Purchase and Resale of Bonds" below.
The bonds are subject to mandatory partial redemption upon not more than 10
nor less than 5 days' notice, in the event that:
- on any semi-monthly valuation date, the discounted value of the eligible
collateral pledged to secure the bonds is less than the basic
maintenance amount determined as described under "-- Basic Maintenance
Amount" below; and
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<PAGE> 71
- Main Place is unable within a maximum of 10 days after receipt of the
trustee's valuation report following the valuation date (the "CURE
DATE"): (1) to pledge and deliver enough additional eligible
collateral and/or to substitute enough eligible collateral so that,
after the pledge, the discounted value of the eligible collateral is
at least equal to the basic maintenance amount; and (2) Main Place
does not deliver to the trustee, prior to the cure date for
cancellation, bonds reacquired by it in a principal amount sufficient
to cause the discounted value of the eligible collateral to be at
least equal to the basic maintenance amount.
However, Main Place will not be required to make a mandatory redemption of
the bonds if the report, prepared by the trustee for any valuation date
following the cure date and prior to the date on which the trustee gives notice
of redemption to the bondholders, shows that the discounted value of the
eligible collateral is at least equal to the basic maintenance amount as of the
valuation date.
Any mandatory partial redemption will require the redemption of bonds in an
aggregate principal amount that is the smallest principal amount, rounded to the
next higher integral multiple of $1,000, necessary to make the discounted value
of the eligible collateral at least equal to the basic maintenance amount,
calculated in each case as of the valuation date immediately preceding the date
on which the trustee gives notice of redemption to the bondholders, after giving
effect to: (1) the pledge of any additional eligible collateral and/or
substitution of eligible collateral by the issuer; (2) the delivery to the
trustee for cancellation of any bonds repurchased by or on behalf of Main Place;
and (3) the redemption.
Any mandatory partial redemption will be made within 30 days after the cure
date at a redemption price equal to 100% of the principal amount, or portion
thereof, of the bonds to be redeemed together with accrued interest to the date
fixed for redemption. If Main Place redeems a portion of the bonds, it will
redeem the class A1 and class A2 bonds on a pro rata basis. Within each class,
any partial redemption may be made on a pro rata basis or by any method deemed
fair and appropriate by the trustee, provided that the method will not result in
an outstanding bond in a denomination of less than $100,000.
After notice of any redemption has been given to the bondholders, the
principal amount, or portion thereof, of the bonds to be redeemed will be due
and payable on the date fixed for that redemption at the place set forth in the
notice. From and after the date fixed for redemption, the bonds chosen to be
redeemed will cease to bear interest, unless Main Place defaults in the payment
of the redemption price, in which case the principal amount of the bonds will
continue to bear interest at the rate borne by the bonds until paid. Further,
the only right of bondholders will be to receive the redemption price; except
that,
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<PAGE> 72
in the case of any redemption date on which bonds are redeemed in part, new
bonds representing the principal amounts of those bonds that have not been
redeemed will be issued to those bondholders. The holders of the new bonds will
continue to have the right to receive the principal amount of the bonds and
interest payments on that principal amount. Bonds that are redeemed will be
canceled by the trustee.
If Main Place fails to cure a collateral shortfall by the applicable cure
date, the trustee must liquidate pledged property securing the bonds to the
extent required to pay the redemption price of the bonds to be redeemed, unless
Main Place delivers on the cure date cash or other deposit securities to the
trustee, as described under "-- Liquidity," in an amount sufficient to provide
for the full payment of the redemption price of the bonds required to be
redeemed.
SECURITY FOR THE BONDS
The bonds will be secured by the pledged property, which will include the
initial collateral described below under "-- Eligible Mortgage Notes" and may
include any of the types of eligible collateral described in the prospectus or
otherwise as provided in this prospectus supplement. Eligible collateral for the
bonds of this series will not include [multi-class agency certificates, eligible
mortgage pass-through certificates or short-term money market instruments that
are described in the prospectus or the mortgage loans described under "Security
for the Bonds -- Eligible Mortgage Loans -- Other Eligible Mortgage Loans" in
the prospectus. Eligible collateral for the bonds also will not include balloon
mortgage loans, simple interest mortgage loans, negative amortization loans or
manufactured home contracts that are described in the prospectus.] See "Security
for the Bonds" in the prospectus.
The pledged property also will include, and the bonds will be secured from
time to time by:
- cash held in the collection account from time to time, representing
scheduled monthly interest and principal payments, principal
prepayments and various other amounts with respect to the eligible
mortgage loans received during each collection period, as described
below under "-- Collection Account";
- cash held in the reserve fund as described below under "-- Reserve Fund";
- cash held in the distribution account representing payments on all types
of pledged property other than eligible mortgage notes and any amounts
that are transferred from the collection account for payment on the
bonds, as described below under "-- Distribution Account"; and
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<PAGE> 73
- the deposit securities described below under "-- Liquidity."
Investors should be aware that the types and characteristics of eligible
collateral, the percentage limitations on some types of eligible collateral as
described in the prospectus, the frequency of the valuation dates, the discount
factors used in valuing the eligible collateral, the methodology used in
calculating the market value of the eligible collateral and the definition of
basic maintenance amount may change from time to time, without the consent of
the bondholders, if the changes: (1) are permitted by applicable law; and (2)
will not adversely affect the rating then assigned to any class of bonds by each
rating agency, as confirmed in writing by those rating agencies. The rating
agencies are not obligated to review or approve any of the proposed changes set
forth in the preceding sentence and may, at any time, change or withdraw any
rating on the bonds.
ELIGIBLE MORTGAGE LOANS
GENERAL
The mortgage loans constituting the initial collateral or which are pledged
from time to time to secure the bonds will be "eligible mortgage loans," having
the characteristics set forth in the prospectus under "Security for the Bonds --
Eligible Mortgage Loans," subject to permitted changes in the characteristics as
described above.
INITIAL COLLATERAL
All of the eligible mortgage loans constituting the initial collateral were
sold or contributed to Main Place by [Bank of America, N.A. or NationsBanc
Mortgage Corporation] or their affiliates. These eligible mortgage loans were
either originated or purchased by [NationsBanc Mortgage Corporation] [Bank of
America, FSB] [Bank of America, N.A.] [ ], which [is]
[are] affiliated with Main Place.
As of the cut-off date, the initial collateral consisted of approximately
[ ] eligible mortgage loans with an aggregate principal balance
of $[ ]. The average unpaid principal balance of those mortgage
loans is $[ ] as of the cut-off date, with each mortgage loan
having an unpaid principal balance of not less than $[ ] and
not more than $[ ]. Approximately [ ]% of the
initial mortgage loans consist of eligible fixed-rate mortgage loans and
approximately [ ]% of the initial mortgage loans consists of
eligible adjustable-rate mortgage loans. [Approximately [ ]% of
the initial mortgage loans are jumbo mortgage loans, i.e., mortgage loans
originated in an amount in excess of Fannie Mae or Freddie Mac purchase limits,
currently $[240,000], otherwise generally underwritten in accordance with
guidelines of Fannie Mae and Freddie Mac.] Approximately [ ]%
of the initial mortgage
S-22
<PAGE> 74
loans meet the conforming loan balance requirements as set forth by Fannie Mae
or Freddie Mac. [describe non-jumbo mortgage loans] [Approximately
[ ]% of the initial mortgage loans are secured by a second
mortgage that is junior to a mortgage lien on the related mortgage property.]
Each initial fixed-rate mortgage loan has an original term to maturity of
not more than 30 years and provides for a schedule of payments that will be, if
timely paid, sufficient to amortize fully the principal balance of that mortgage
loan over its remaining term to maturity[, except [ ]% of those
mortgage loans are balloon loans]. [describe balloon loans] Interest on the
initial fixed rate mortgage loans will accrue based [either] on an actuarial
interest method [or a simple interest method]. See "Security for the Bonds --
Eligible Fixed-Rate Mortgage Loans" in the prospectus.
Each initial adjustable-rate mortgage loan has an original term to maturity
of not more than 30 years and provides for a fixed rate of interest for an
initial period of approximately either [ ],
[ ] or [ ] years. All of these eligible
adjustable-rate mortgage notes provide for level, amortizing payments over those
initial periods. Thereafter, the interest rate on each of those eligible
adjustable-rate mortgage note will adjust annually to a rate based on the level
of [insert relevant index], as described below, plus the applicable fixed
percentage (the "GROSS MARGIN"), subject to a maximum annual interest rate
increase or decrease and a maximum lifetime interest rate (the "LIFETIME CAP")
specified in the related mortgage note. As of the cut-off date, the weighted
average gross margin of the initial adjustable-rate mortgage loans was
approximately [ ]%, and the weighted average maximum interest
rate on these adjustable-rate mortgage loans was approximately
[ ]%. [The interest rates on the initial adjustable-rate
mortgage loans are not subject to maximum lifetime decreases.] [As of the
cut-off date, approximately [ ]% of the initial adjustable-rate
mortgage loans are convertible into fixed-rate loans at the option of the
mortgagor.]
The interest rate for each initial adjustable-rate mortgage loan will
generally adjust on the first day of the month in which the initial fixed-rate
period ends and annually thereafter (each, an "ARM INTEREST ADJUSTMENT DATE").
Effective with the first payment due on each of those adjustable-rate mortgage
loans after each related ARM interest adjustment date, the monthly principal and
interest payment will be adjusted to an amount that will fully amortize the
then-outstanding principal balance of this loan over its remaining term to
maturity and that will be sufficient to pay interest at the adjusted interest
rate for this loan. [The "CONSTANT MATURITY TREASURY INDEX" is the weekly
average yield on U.S. Treasury securities adjusted to a constant maturity of one
year as published by the Federal Reserve Board in Statistical Release H.15 (519)
or any similar publication or, if not so published, as reported by any Federal
Reserve Bank or by any U.S. Government department
S-23
<PAGE> 75
or agency and made available to the applicable servicer as of a date 45 days
prior to each ARM interest adjustment date for this adjustable-rate mortgage
loan. Should the Constant Maturity Treasury Index not be published or become
otherwise unavailable, the applicable servicer will select a comparable
alternative index over which it has no control and which is readily verifiable.]
For each of the initial mortgage loans, Main Place will deliver to the
trustee (or custodian) on or prior to the closing date mortgage notes endorsed
in blank and, within 60 days following the closing date, mortgage assignments of
the related mortgage in blank and in recordable form, as further described under
"The Indenture -- Pledge of Eligible Mortgage Loans" in the prospectus.
Set forth below is a description of some additional characteristics of the
initial mortgage loans as of the cut-off date, except as otherwise indicated.
Main Place believes that the information set forth below with respect to the
initial mortgage loans is representative of the characteristics of the initial
mortgage loans as it will be constituted on the closing date. The initial
mortgage loans described in this prospectus supplement have a discounted value
in excess of the basic maintenance amount. Main Place may remove certain of
these mortgage loans prior to the closing date, provided that the remaining
eligible collateral pledged to secure the bonds has a discounted value equal to
or in excess of the basic maintenance amount. Main Place will file a Current
Report on Form 8-K with the Securities and Exchange Commission setting forth
information with respect to the initial mortgage loans ultimately pledged to the
trustee on the closing date.
For purposes of the following tables, the initial mortgage loans have been
divided into two groups: fixed-rate mortgage loans and adjustable-rate mortgage
loans. The sums of the percentage columns set forth in the following tables may
not equal 100% due to rounding.
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<PAGE> 76
MORTGAGE LOAN INTEREST RATES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS(1)
------------------------------------- -----------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
%.................... $ % $ %
%....................
%....................
%....................
%....................
%....................
%....................
%....................
%....................
---------------- ---------------- ---------------- ----------------
Total $ 100.00% $ 100.00%
================ ================ ================ ================
Weighted Average Weighted Average
Interest Rate Interest Rate
is [ ]% is [ ]%
</TABLE>
- -------------------------
(1) With the exception of approximately [ ]% of the aggregate unpaid
principal balance of the initial adjustable-rate mortgage loans, none of the
remaining initial adjustable-rate mortgage loans had reached their first ARM
interest adjustment date as of the cut-off date. As of the cut-off date, the
weighted average remaining period of time until the next ARM interest
adjustment date for the initial adjustable-rate mortgage loans was
approximately [ ] months.
ORIGINAL LOAN-TO-VALUE RATIO
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
ORIGINAL LOAN-TO- AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
VALUE RATIO PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
---------------- --------------- ---------------- ---------------
Total.............. $ 100.00% $ 100.00%
================ =============== ================ ===============
Weighted Average Weighted Average
Original Loan-to- Original Loan-to
Value Ratio is Value Ratio is
[ ]% [ ]%
</TABLE>
- -------------------------
* The loan-to-value ratio of an eligible mortgage loan is calculated using the
lesser of: (1) the appraised value of the related mortgaged property, as
established by an appraisal obtained by
S-25
<PAGE> 77
the originator from an appraiser in connection with the origination of the
eligible mortgage loan; and (2) the sale price for the property. For the
purpose of calculating the loan-to-value ratio of any eligible mortgage loan
that is the result of the refinancing, including a refinancing for "equity
take-out" purposes, of an existing mortgage loan, the appraised value of the
related mortgaged property is generally determined by reference to an
appraisal obtained in connection with the origination of the replacement loan.
REMAINING TERMS TO STATED MATURITY
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
REMAINING ------------------------------------- --------------------------------------
TERM TO PERCENTAGE OF PERCENTAGE OF
STATED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
MATURITY AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
(MONTHS) PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
--------- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
----------------- ---------------- ----------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================= ================
Weighted Average
Remaining Term to Weighted Average
Stated Maturity Remaining Term to
is Stated Maturity is
[ ] months [ ] months
</TABLE>
YEARS OF ORIGINATION
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
YEAR OF AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
ORIGINATION PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
---------------- ---------------- ---------------- ----------------
Total.............. $ 100.00% $ 100.00%
================ ================ ================ ================
</TABLE>
The earliest month and year of origination of any initial mortgage loan is
expected to be [date] and the latest month and year of origination is expected
to be [date].
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<PAGE> 78
ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
---------------------------------------- ----------------------------------------
PERCENTAGE OF PERCENTAGE OF
ORIGINAL CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PRINCIPAL AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
--------- -------------------- ----------------- -------------------- -----------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
-------------------- ---------------- -------------------- ----------------
Total.............. $ 100.00% $ 100.00%
==================== ================ ==================== ================
Average Original Average Original
Principal Balance is Principal Balance is
$[ ] $[ ]
</TABLE>
CURRENT MORTGAGE LOAN PRINCIPAL BALANCES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
CURRENT PRINCIPAL AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
$ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
--------------- --------------- --------------- ---------------
Total.............. $ 100.00% $ 100.00%
=============== =============== =============== ===============
Average Current Average Current
Principal Balance Principal Balance
is $[ ] is $[ ]
</TABLE>
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<PAGE> 79
MORTGAGE LOAN PRODUCT TYPES
<TABLE>
<CAPTION>
INITIAL
MORTGAGE LOANS PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE
MORTGAGE LOAN AGGREGATE UNPAID AGGREGATE UNPAID
PRODUCT TYPE PRINCIPAL BALANCE PRINCIPAL BALANCE
------------- ----------------- -----------------
<S> <C> <C>
10/1 Eligible Adjustable Rate Mortgage Loans(1)...
5/1 Eligible Adjustable Rate Mortgage Loans(1)....
7/1 Eligible Adjustable Rate Mortgage Loans(1)....
30 Year Eligible Fixed-Rate Mortgage Loans........
15 Year Eligible Fixed-Rate Mortgage Loans........
3/1 Eligible Adjustable Rate Mortgage Loans(1)....
1/1 Eligible Adjustable Rate Mortgage Loans(1)....
Totals..........................................
</TABLE>
- ------------------------
(1) 10/1, 5/1, 7/1, 3/1 and 1/1 refers to the initial period after origination
that each mortgage loan product type has a fixed rate of interest, e.g.,
10/1 refers to a fixed rate of interest for an initial period of
approximately 10 years after origination, 5/1 refers to a fixed rate of
interest for an initial period of approximately 5 years after origination,
and so on.
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE NOTES INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Condominium.......... $ % $ %
Planned Unit.........
Development..........
1 to 4 Family........
Town House...........
--------------- --------------- --------------- ---------------
Total.............. $ 100.00% $ 100.00%
=============== =============== =============== ===============
</TABLE>
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<PAGE> 80
GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- --------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
STATE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
AL................... $ % $ %
AR...................
AZ...................
CA...................
CO...................
CT...................
DC...................
DE...................
FL...................
GA...................
HI...................
ID...................
IL...................
IN...................
KS...................
KY...................
LA...................
ME...................
MA...................
MD...................
MI...................
MN...................
MO...................
MS...................
NC...................
ND...................
NE...................
NH...................
NJ...................
NM...................
NV...................
NY...................
OH...................
OK...................
OR...................
PA...................
SC...................
SD...................
TN...................
TX...................
UT...................
VA...................
WA...................
WI...................
WV...................
WY...................
----------------- ---------------- ----------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================= ================
</TABLE>
No more than approximately [ ]% of the initial fixed-rate
mortgage loans and approximately [ ]% of the initial
adjustable-rate mortgage loans are secured by mortgaged properties located in
any one five-digit zip code region.
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<PAGE> 81
PURPOSES OF INITIAL MORTGAGE LOANS
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
LOAN PURPOSE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
------------ ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Purchase............. $ % $ %
Refinance -- No
Cashout............
Refinance --
Cashout............
----------------- ---------------- ---------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================ ================
</TABLE>
In the case of an initial mortgage loan made for "No Cashout" refinance
purposes, substantially all of the proceeds are used to pay in full the
principal balance of a previous mortgage loan of the mortgagor with respect to a
mortgaged property and to pay origination and closing costs associated with the
refinancing. However, in the case of an initial mortgage loan made for "Cashout"
refinance purposes, all or a portion of the proceeds are generally retained by
the mortgagor for uses unrelated to the mortgaged property. The amount of the
proceeds retained by the mortgagor may be substantial.
UNDERWRITING GUIDELINES FOR INITIAL MORTGAGE LOANS
Each initial mortgage loan has satisfied the credit, appraisal and
underwriting guidelines established by [ ], [NationsBanc
Mortgage Corporation] [Bank of America, FSB], [Bank of America, N.A.] and
applicable at the time of origination, which guidelines may be varied in cases
deemed appropriate by [ ], [NationsBanc Mortgage Corporation]
[Bank of America, FSB] [Bank of America, N.A.].
See "Mortgage Loan Programs" in the prospectus for a discussion of the
underwriting guidelines of [NationsBanc Mortgage Corporation] [Bank of America,
FSB].
[Insert underwriting guidelines if not NationsBanc Mortgage Corporation,
Bank of America, N.A. or Bank of America, FSB]
SERVICING OF ELIGIBLE MORTGAGE LOANS
THE SERVICER
The servicer is a wholly-owned subsidiary of [Bank of America, N.A., which
is an indirect, wholly-owned subsidiary of] [Bank of America Corporation]. [The
servicer has entered into a sub-servicing agreement with Bank of America, N.A.
under which Bank of America, N.A. shall be required to service the eligible
mortgage loans.] The servicer [is primarily engaged in the business of: (1)
originating and purchasing residential mortgage loans in its own name; and (2)
servicing residential mortgage loans for its own account and for the account of
others]. The servicer's principal executive offices are located at [address] and
the telephone number is [telephone number], and the servicer's
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<PAGE> 82
operations offices are located at [address] and the telephone number is
[telephone number].
SERVICING PROCEDURES
Under a servicing agreement with Main Place [or assigned to Main Place],
the servicer will be responsible for servicing and administering the eligible
mortgage loans. The servicer will at all times remain responsible for the
performance of its duties under the servicing agreement. On the closing date,
Main Place will assign its rights under the servicing agreement to the trustee
for the benefit of the bondholders.
The servicer is required to perform diligently all services and duties
customary to the servicing by prudent mortgage lending institutions of mortgages
of the same type as the eligible mortgage loans in those jurisdictions where the
related mortgaged properties are located. The duties to be performed by a
servicer include:
- collection and remittance of principal and interest payments;
- administration of mortgage escrow accounts, to which the servicer will be
expected to make advances when a deficiency exists, as described more
fully in the servicing agreement;
- collection of insurance claims; and
- if necessary, foreclosure.
The servicer will not be required to make advances in respect of delinquent
monthly payments of principal and interest on eligible mortgage loans.
The servicer will be entitled to a monthly servicing fee for each eligible
mortgage loan, payable only from the interest portion of any monthly payment
collected on an eligible mortgage loan, ranging from [ ]% to
[ ]% of the unpaid principal balance of such eligible mortgage
loan, based on, among other things, its date of origination, the size of its
original principal balance and whether it is a fixed- or adjustable-rate
mortgage loan. The servicer will be entitled to retain its servicing fee from
interest payments collected prior to depositing the payments into the collection
account. In addition, the servicer will be entitled to investment income from
amounts on deposit in the collection account as described below and to retain
late payment charges and other fees and expenses related to loan assumptions,
delinquencies, modifications, partial releases of security and releases for
payment in full, if any, to the extent collected from mortgagors.
For a more detailed description of the servicing procedures applicable to
the servicer with respect to the eligible mortgage loans, see "Servicing of
Eligible Mortgage Loans" in the prospectus.
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<PAGE> 83
COLLECTION ACCOUNT
The servicer will establish the collection account into which it will
collect and deposit payments on the eligible mortgage loans in accordance with
the procedures described in the prospectus under "Servicing of Eligible Mortgage
Loans." Amounts on deposit from time to time in the collection account may be
invested by the servicer in eligible investments. "ELIGIBLE INVESTMENTS" include
deposit securities and any other investments that are acceptable to each rating
agency. Amounts received on the eligible mortgage loans on deposit in the
collection account from time to time will constitute a portion of the pledged
property securing the bonds and eligible collateral for purposes of satisfying
the basic maintenance amount. The collection account may be a commingled account
containing other servicer funds if certain conditions are satisfied as described
under "Servicing of Eligible Mortgage Loans -- Payments on Eligible Mortgage
Loans" in the prospectus.
On the [ ] day of each month, or, if this day is not a
business day, the preceding business day, the servicer will deliver a report to
the trustee: (1) detailing collections on the eligible mortgage loans during the
preceding calendar month (each, a "COLLECTION PERIOD"); and (2) stating the
total amount of funds received on the eligible mortgage loans on deposit in the
collection account and the aggregate principal balance of the eligible mortgage
loans, in each case, as of the end of the preceding day. On the
[ ] day of each month or, if not a business day, the preceding
business day (each, a "SERVICER REMITTANCE DATE"), the servicer will withdraw
and remit to the trustee the amount of cash on deposit in the collection account
that was collected during the preceding collection period after deducting
amounts permitted to be withdrawn by the servicer, including its fee, as
described under "Servicing of Eligible Mortgage Loans -- Payments on Eligible
Mortgage Loans" in the prospectus (the "AVAILABLE AMOUNT"). In addition, on the
[ ] day of each month or, if not a business day, the preceding
business day, the servicer will deliver a similar report to the trustee stating:
(1) the total amount of funds on deposit in the collection account; and (2) the
aggregate principal balance of the eligible mortgage loans, in each case, as of
the end of the preceding day.
THE SERVICER'S FORECLOSURE AND DELINQUENCY EXPERIENCE
[Historically, a variety of factors, including the appreciation of real
estate values, have limited the servicer's loss and delinquency experience on
its portfolio of mortgage loans. Factors beyond the servicer's control, such as
national or local economic conditions or downturns in the real estate markets in
its lending areas, may result in increased rates of delinquencies and
foreclosure losses in the future.
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The information in the table below has not been adjusted to eliminate the
effect of the significant growth in the size of the portfolio of mortgage loans
serviced by the servicer during the periods shown. Accordingly, foreclosures and
delinquencies as percentages of aggregate principal balance of mortgage loans
serviced for each period may be higher than those that would be shown if a group
of mortgage loans were artificially isolated at a point in time and the
information disclosed the activity only in that isolated group. However, because
most of the mortgage loans in the portfolio of mortgage loans serviced by the
servicer during the periods shown are not fully seasoned, the foreclosure and
delinquency information for this type of isolated group would also be distorted
to some degree.
The following table summarizes the delinquency and foreclosure experience,
on the dates indicated, on non-conforming and Freddie Mac- and Fannie
Mae-conforming first deed of trust or mortgage loans serviced by the servicer,
excluding some recent bulk acquisitions of servicing rights, at its Louisville
servicing center and which were originated in a manner consistent with the
underwriting criteria of the servicer described in the prospectus under
"Mortgage Loan Programs -- Underwriting Standards of NationsBanc Mortgage
Corporation." The servicer's portfolio of non-conforming and Freddie Mac- and
Fannie Mae-conforming, first deed of trust and mortgage loans described below
contains fixed- and adjustable-rate mortgage loans having a variety of original
terms to maturity and payment characteristics. Investors should be aware that:
- This portfolio may differ significantly from the eligible mortgage loans
securing the bonds at any time in terms of interest rates, principal
balances, geographic distribution, loan-to-value ratios and other
possibly relevant characteristics.
- It is highly likely that the delinquency and foreclosure experience with
respect to the eligible mortgage loans will differ from that reflected
in the table below.
- It is highly likely that any losses experienced on liquidation of
defaulted mortgage loans will occur at different rates than those
shown below.
- The actual delinquency and foreclosure experience on the mortgage loans
will depend, among other things, upon the value of the real estate
securing the mortgage loans and the ability and willingness of
mortgagors to make required payments.
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DELINQUENCY AND FORECLOSURE EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31, 1998 AT DECEMBER 31, 1997 AT DECEMBER 31, 1996
------------------------- ------------------------- -------------------------
NUMBER/% OUTSTANDING NUMBER/% OF OUTSTANDING NUMBER/% OF OUTSTANDING
OF MORTGAGE PRINCIPAL MORTGAGE PRINCIPAL MORTGAGE PRINCIPAL
LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio...... $ $ $
- --------------------------------------------------------------------------------------------------------
Delinquencies*
One installment
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
Two installments
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
Three or more
installments
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
In Foreclosure....... $ $ $
Percent in
Foreclosure...... % % %
- --------------------------------------------------------------------------------------------------------
Delinquent and in
Foreclosure........ $ $ $
Percent Delinquent
and in
Foreclosure**.... % % %
- --------------------------------------------------------------------------------------------------------
</TABLE>
* A mortgage loan is deemed to have "one installment delinquent" if any
scheduled payment of principal or interest is delinquent past the end of the
month in which the payment was due, "two installments delinquent" if this
delinquency persists past the end of the month following the month in which
the payment was due, and so forth.
** The sums of the Percent Delinquent and Percent in Foreclosure set forth in
this table may not equal the Percent Delinquent and in Foreclosure due to
rounding.]
DISTRIBUTION ACCOUNT
On the closing date, the trustee will establish the distribution account
for the benefit of the bondholders. All payments in respect of any eligible
collateral securing the bonds from time to time other than eligible mortgage
loans will be made directly to the trustee for deposit into the distribution
account. In addition, if an event of default under the indenture should occur
and be continuing, all payments on eligible mortgage loans will be remitted
directly to the trustee for deposit into the distribution account.
On each servicer remittance date, upon receipt of the available amount from
the servicer, the trustee will apply those funds in the following order of
priority:
- 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: (1) in the case
of servicer remittance dates occurring in months in which the interest
payment date does not occur, the amount of interest accrued or to
accrue on
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each class of bonds from and including the [ ] day of
the preceding month to and including the [ ] day of
the month of the servicer remittance date less any amounts deposited
in the distribution account since the immediately preceding servicer
remittance date and available for payment on the bonds; and (2) in the
case of servicer remittance dates occurring in months in which the
interest payment date does occur, the amount payable on the interest
payment date occurring in that month, less any amounts then on deposit
in the distribution account and available for payments on the bonds;
and
- second, for deposit into the reserve fund, the remaining portion of the
available amount.
On each interest payment date, the trustee will withdraw from the
distribution account an amount equal to the amount of interest accrued on the
principal amount of each class of bonds during the related interest period and
distribute this amount to the bondholders as of the immediately preceding record
date.
On any mandatory redemption date and at the stated maturity of any class of
bonds, the trustee will withdraw sufficient amounts from the distribution
account to make required interest and principal payments on the bonds on those
dates and distribute these amounts to the bondholders as of the immediately
preceding record date.
If, on any interest payment date or mandatory redemption date or at the
stated maturity of any class of bonds, the amount on deposit in the distribution
account is less than the amount necessary to make required interest and
principal payments on the class of bonds on that date, the trustee will withdraw
from the reserve fund and deposit into the distribution account, to the extent
of amounts available in the reserve fund, an amount equal to the difference
between the required amount and the amount then on deposit in the distribution
account.
At the direction of Main Place, the trustee will invest amounts on deposit
in the distribution account in eligible investments. Investment earnings from
eligible investments will be credited to the distribution account. Amounts held
in the distribution account will constitute a portion of the pledged property
securing the bonds and eligible collateral for purposes of satisfying the basic
maintenance amount.
RESERVE FUND
On the closing date, the trustee will establish the reserve fund for the
benefit of the bondholders. On each servicer remittance date, the trustee will
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deposit into the reserve fund the portion of the available amount remaining
after making the required deposit into the distribution account described above.
At the direction of Main Place, the trustee will invest amounts on deposit
in the reserve fund in eligible investments. Investment earnings from eligible
investments will be credited to the reserve fund. Amounts held in the reserve
fund will constitute a portion of the pledged property securing the bonds and
eligible collateral for purposes of satisfying the basic maintenance amount.
At the request of Main Place, the trustee will withdraw amounts on deposit
in the reserve fund and release those amounts to Main Place free of the lien of
the indenture if: (1) as of the valuation date immediately preceding the
release, the discounted value of the eligible collateral, after giving effect to
the release, is at least equal to the basic maintenance amount; and (2) no event
of default has occurred and is continuing. Main Place currently intends to cause
the trustee to release to Main Place on each servicer remittance date, subject
to the limitations described in the preceding sentence, any portion of the
related available amount deposited in the reserve fund on that date representing
principal and interest payments on the eligible mortgage loans. In addition, as
more fully described above under "-- Distribution Account," the trustee will
withdraw amounts from the reserve fund and deposit those amounts into the
distribution account to the extent amounts on deposit in the distribution
account are insufficient to make required payments of interest and principal on
the bonds on any date.
BASIC MAINTENANCE AMOUNT
The terms of the indenture will require Main Place to maintain eligible
collateral with an aggregate discounted value of at least equal to the basic
maintenance amount, which means that the eligible collateral would have a market
value of (1) as much as [ ]% to [ ]% of the
basic maintenance amount to the extent that the eligible collateral consists of
collateral other than cash; and (2) 100% of the basic maintenance amount if the
eligible collateral consisted solely of cash or specified cash equivalents. The
determination of "MARKET VALUE" is set forth under "Security for the Bonds --
Basic Maintenance Amount" in the prospectus. For purposes of this calculation,
eligible collateral will include amounts on deposit in the collection account,
the distribution account and the reserve fund. In determining the market value
of eligible mortgage loans as to which there is currently a late payment, the
market value will be reduced as follows:
- by [ ]% if the mortgage loan is one installment delinquent;
- by [ ]% if the mortgage loan is two installments delinquent;
- by [ ]% if the mortgage loan is three installments delinquent; and
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<PAGE> 88
- by 100% if the mortgage loan is more than three installments delinquent.
The "BASIC MAINTENANCE AMOUNT" as of each valuation date, or any other date
of valuation, means an amount equal to the sum of: (1) the aggregate principal
amount of outstanding bonds plus (2) an amount equal to 90 days' accrued
interest on the outstanding bonds at a rate of [ ]% per annum.
The "DISCOUNTED VALUE" of the eligible collateral as of any date will be
the lower of the sum determined for either rating agency calculated as follows:
- multiplying for each rating agency (1) its discount factor for the
applicable type of eligible collateral by (2) the market value of that
eligible collateral; and
- summing for each rating agency the discounted amounts so calculated for
each applicable type of eligible collateral.
The ranges of "DISCOUNT FACTORS" required by the rating agencies for some
types of eligible collateral, including the types of eligible mortgage loans
included in the initial collateral, are as follows:
<TABLE>
<CAPTION>
DISCOUNT
FACTORS
--------
<S> <C>
Cash, demand deposits and next business day's repurchase
agreements................................................
Repurchase agreements/other than next business day's
repurchase agreements and other short-term money market
instruments...............................................
Direct obligations of the United States Government.......... (a)
Ginnie Mae Certificates.....................................
Freddie Mac Certificates or Fannie Mae Certificates.........
Eligible fixed-rate Mortgage Loans [specify types]..........
Eligible adjustable-rate Mortgage Loans [specify types].....
Eligible mortgage pass-through certificates that are rated
at least "AAA" by [rating agency] and "AAA" by [rating
agency] which are:
Backed by fixed-rate mortgage loans.......................
Backed by adjustable-rate mortgage loans..................
</TABLE>
- -------------------------
(a) The discount factor applied within the range shown depends upon the
particular rating agency as well as the period to maturity of each
obligation, which varies from 30 days to 30 years.
The indenture requires the trustee to deliver a report containing the
information described below under "-- Reports on Pledged Property" to Main Place
within two business days after each valuation date relating to the status of the
pledged property as of the valuation date using market values determined as of a
date not more than three business days prior to that valuation date (a
"DETERMINATION DATE"). Scheduled reductions in the principal amounts of the
eligible collateral included in the pledged property or possible prepayments or
decreases in the market value of the pledged property may cause the
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<PAGE> 89
discounted value of the eligible collateral to be less than the basic
maintenance amount. In that event, the indenture requires Main Place, no later
than the cure date, to take one of the following actions:
- to deliver additional eligible collateral to the trustee or if eligible
mortgage loans are delivered, to the custodian and/or substitute
eligible collateral; and/or
- to the extent it elects to do so, to repurchase a number of outstanding
bonds so that the trustee can, no later than the cure date, deliver a
new report showing that, as of the date of the report, the discounted
value of the eligible collateral, determined as of the date that the
basic maintenance amount was not met, or, at the option of Main Place,
as of a later date of valuation, but no later than the cure date, is
at least equal to the basic maintenance amount.
If Main Place elects to satisfy its obligation to restore the discounted
value of the eligible collateral to the basic maintenance amount by delivering
mortgage loans to the custodian, the mortgage loans included in the pledged
property after the delivery of those mortgage loans must meet the requirements
relating to the limits on the types and characteristics of those mortgage loans
in order to ensure that all mortgage loans delivered to the custodian are
eligible mortgage loans.
In the event that Main Place is unable by the cure date to cause the
discounted value of the eligible collateral to be at least equal to the basic
maintenance amount by pledging additional eligible collateral or substituting
eligible collateral or repurchasing outstanding bonds to the extent necessary to
cause the discounted value of the eligible collateral to be at least equal to
the basic maintenance amount, then Main Place must redeem bonds no more than 30
days after the cure date, as described above under "-- Redemption."
WITHDRAWALS AND SUBSTITUTIONS OF COLLATERAL
Main Place may, at its option, at any time and from time to time, withdraw
or substitute pledged property if either:
- the discounted value of the eligible collateral, based upon the then most
recent report of the trustee valuing the eligible collateral,
remaining as pledged property following the proposed withdrawal or
substitution, after giving effect to withdrawals from, and
substitutions of, pledged property during the period following such
report, would at least equal the basic maintenance amount as of the
then most recent report of the trustee valuing the eligible
collateral; or
- Main Place causes the trustee to prepare a new report, containing
information as of its date, showing that the discounted value of the
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<PAGE> 90
eligible collateral, calculated no more than three business days prior
to the date of the report, included in the pledged property following
the proposed withdrawal, and after giving effect to any proposed
substitution, will at least equal the basic maintenance amount as
calculated in the new report.
Pledged property which was not included in the discounted value of the
eligible collateral as of the most recent valuation date may be withdrawn at any
time so long as: (1) the discounted value of the eligible collateral was at
least equal to the basic maintenance amount as of that valuation date; and (2)
no withdrawals of eligible collateral were made after that valuation date.
During the continuance of any event of default, Main Place may not withdraw or
substitute pledged property.
Main Place may pledge additional eligible collateral at any time.
The indenture permits Main Place to consent to some modifications or
waivers with respect to the eligible collateral, including, for example,
assumptions of mortgage notes and related mortgages.
LIQUIDITY
No later than 15 days before the stated maturity of a class of bonds, Main
Place must either: (1) pledge deposit securities to the trustee; or (2) make
other arrangements acceptable to each rating agency to deposit cash on the
business day preceding the stated maturity, in each case in an amount
sufficient, together with the amount of cash that will otherwise be available in
the distribution account and the reserve fund on the stated maturity, to pay all
of the interest and principal payable on the related class of bonds on the
stated maturity. If, as of the 45th day preceding any stated maturity date, the
rating by [ ] of the long-term unsecured debt of [Bank of
America Corporation] has fallen below ["BBB" or "Baa2"], respectively, then no
later than 30 days before the stated maturity, Main Place must pledge deposit
securities to the trustee as described in the preceding sentence. In order to
satisfy the foregoing obligations, Main Place may, for example, sell all or a
portion of the pledged property at fair market value to one or more purchasers
which may include affiliates of Main Place, although no affiliate of Main Place
or any other entity has any obligation to make any purchase of pledged property
and deposit the proceeds of the sale with the trustee.
If Main Place fails to effect any of the options described above within the
prescribed period, then the trustee must immediately liquidate pledged property
in an amount sufficient to pay all of the interest and principal payable on the
related class of bonds on the stated maturity. Upon delivery of the required
amount of deposit securities or cash, the class of bonds will no longer be
deemed to be outstanding. If no other class of bonds is outstanding, the trustee
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<PAGE> 91
will be obligated to release all other pledged property held by the trustee from
the lien of the indenture.
In addition, if Main Place elects to deliver deposit securities to the
trustee to provide for payment of the redemption price pursuant to a mandatory
partial redemption of the bonds instead of having the trustee liquidate pledged
property, then, on the cure date on which it is required to notify the trustee
of the redemption, Main Place must deliver deposit securities in the full amount
of the redemption price of the bonds to be redeemed.
Deposit securities delivered in accordance with the preceding paragraphs
must mature prior to the date for which those deposit securities were delivered.
Deposit securities include (1) cash and (2) government securities, other than
agency certificates, provided that these investments must have a remaining term
to maturity of 30 days or less on the date they are delivered to the trustee.
[In addition, in order to maintain liquidity for the payment of interest on
the bonds on each interest payment date, Main Place will enter into a liquidity
agreement, or other liquidity arrangement acceptable to each rating agency, with
[Bank of America, N.A.], which agreement may be replaced from time to time with
a liquidity agreement or other liquidity arrangement from some other bank as may
be acceptable to each rating agency, in the amount of one month's interest on
each class of bonds at an interest rate on the bonds of [ ]% per annum (the
"LIQUIDITY FACILITY"). This liquidity facility may be drawn upon by the trustee
only if on any servicer remittance date the trustee fails to receive the
available amount from the servicer.]
PURCHASE AND RESALE OF BONDS
Main Place may at any time and from time to time purchase outstanding bonds
on the open market or by private sale. Bonds held by the issuer or its
affiliates [other than Banc of America Securities LLC] will not be deemed to be
outstanding for purposes of determining the basic maintenance amount or for
other purposes under the indenture. The indenture provides that Main Place will
not, and it will not permit any affiliate [other than Banc of America Securities
LLC] to, sell any bonds acquired by Main Place or any affiliate of Main Place
unless the trustee is able to prepare a report dated no more than five days
prior to the date of sale, showing that, after giving effect to the sale, the
discounted value of the eligible collateral, determined at the option of Main
Place, as of the then most recent valuation date or as of any date subsequent to
that date but no later than the date of that report, would not be less than the
basic maintenance amount.
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<PAGE> 92
REPORTS ON PLEDGED PROPERTY
Upon issuance of the bonds, Main Place is required to deliver to the
trustee, and, within two business days after each valuation date commencing with
the [date] valuation date, the trustee is required to deliver to Main Place
reports regarding the status of the pledged property which set forth the
discounted value of the eligible collateral. Copies of these reports will also
be delivered to each rating agency. Main Place may also cause the trustee to
deliver similar reports in connection with the withdrawal or substitution of
pledged property, as described above under "-- Withdrawals and Substitutions of
Collateral."
In preparing these reports, the trustee will use information provided by
the servicer in its semi-monthly reports preceding the related valuation dates
as to the amounts on deposit in the collection account, the aggregate principal
balance of the eligible mortgage loans and the weighted average interest rate,
weighted average maturity and principal balance of specified groups of eligible
mortgage loans. These reports will also contain information obtained from the
servicer concerning the occurrence of late payments with respect to the eligible
mortgage loans. In addition: (1) the report to be delivered by Main Place upon
issuance of the bonds; (2) each report delivered by the trustee in connection
with the withdrawal or substitution of pledged property; and (3) each report
delivered by the trustee in connection with the valuation date following the
pledge by Main Place of additional eligible collateral, other than in connection
with a substitution, will also contain information on specified characteristics
of the mortgage loans, as described in the prospectus under "Security for the
Bonds -- Eligible Mortgage Loans," and the percentages of the mortgage loans
having those characteristics.
Main Place's initial report upon the issuance of the bonds, the trustee's
report delivered in connection with each cure date and some of the trustee's
monthly valuation date reports will be accompanied by letters from a firm of
independent accountants selected by Main Place regarding the calculations made
by Main Place and the trustee in the applicable reports. With respect to the
trustee's reports, the accountant's letter will be delivered quarterly,
commencing with the report delivered in connection with the [date] valuation
date, and will relate to one of the trustee's reports delivered during the
three-month period ending on the last day of the preceding month, which report
will be selected at random by the firm of independent accountants.
EXAMPLE OF COLLECTION AND DISTRIBUTION OF PAYMENTS
The following chart sets forth an example of: (1) the application of
collections on the eligible collateral received during a collection period to
the payment of the outstanding classes of bonds and other amounts on the
following interest payment date; and (2) a one-month cycle of collateral
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<PAGE> 93
valuations and reports. Each month in a three month period will be the same
except that the record date, [LIBOR] [treasury index] [prime rate] [other index]
determination date and interest payment date will occur only in [month],
[month], [month] and [month]. For purposes of the following chart, each day
shown is assumed to be a business day.
[May] [ ]-[May] [ ]..... Collection Period. The servicer receives
scheduled monthly payments, prepayments, and
other payments in respect of the eligible
mortgage loans and deposits them in the
collection account, net of its servicing fee.
The trustee receives payments on all other
eligible collateral and deposits them in the
distribution account.
[June] [ ]............... Determination date for the [June] [ ]
valuation date.
[June] [ ]............... The servicer delivers a report to the trustee
detailing collections on the eligible mortgage
loans during the preceding collection period and
stating the total amount of funds on deposit in
the collection account and the aggregate
principal balance of the eligible mortgage
loans, in each case, as of the end of the
preceding day.
[June] [ ]............... Valuation date. The trustee prepares a valuation
report showing the discounted value of the
eligible collateral as of a date no earlier than
the preceding determination date.
[June] [ ]............... The trustee delivers the valuation report to
Main Place. If the discounted value of the
eligible collateral is less than the basic
maintenance amount as of the [June] [ ]
valuation date, Main Place has until the next
cure date, 10 days following receipt of the
report, to pledge additional eligible collateral
and/or substitute eligible collateral and/or
repurchase bonds so as to make them no longer
outstanding in order to remove the collateral
shortfall.
[June] [ ]............... Cure date. If Main Place has not remedied the
collateral shortfall described above by this
date, the trustee will be required to cause a
partial mandatory redemption of the bonds within
30 days of the cure date in an amount that,
after giving effect to the redemption, makes the
discounted value of the eligible collateral at
least equal to the basic maintenance amount,
unless the collateral value test is met on a
subsequent valuation date and no notice of
redemption has yet been sent to the holders.
[June] [ ]............... Record date for the [June] [ ] interest
payment date.
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<PAGE> 94
[June] [ ]............... Servicer remittance date. The servicer remits
the available amount to the trustee. The
trustee: (1) deposits into the distribution
account and the reserve fund, as applicable, the
required portions of the available amount; and
(2) upon request of the issuer and subject to
the limitations discussed above under
"-- Reserve Fund," releases amounts on deposit
in the reserve fund to Main Place, free of the
lien of the indenture, if the discounted value
of the eligible collateral as of the most recent
valuation date, after giving effect to the
release, is at least equal to the basic
maintenance amount.
[June] [ ]............... [LIBOR] [prime rate] [treasury index] [other
index] determination date. The trustee
determines [LIBOR] [prime rate] [treasury index]
[other index] and the applicable interest rate
on the bonds for the next interest period,
[June] [ ]through [September] [ ].
[June] [ ]............... Interest payment date. The trustee distributes
to the holder, DTC, interest payable on the
bonds on this date.
- --------------------------------------------------------------------------------
RATIO OF EARNINGS TO FIXED CHARGES
- --------------------------------------------------------------------------------
Set forth below is the ratio of earnings to fixed charges for Main Place
for the periods indicated. Earnings represent income before income taxes plus
fixed charges less capitalized interest. Fixed charges consist of interest
expense, capitalized interest, amortization of debt discount and appropriate
issuance costs and one-third, the amount deemed to represent an appropriate
interest factor, of net rent expense under all lease commitments. For the
periods indicated, Main Place's fixed charge consisted of interest expense and
amortization of debt discount and appropriate issuance costs.
<TABLE>
<CAPTION>
FISCAL YEAR
DECEMBER 31,
----------------------------------------- JUNE 24 THROUGH
1998 1997 1996 1995 DECEMBER 31, 1994(1)
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges..................
</TABLE>
- -------------------------
(1) Main Place's predecessor, Main Place Funding Corporation, was incorporated
on June 24, 1994.
- --------------------------------------------------------------------------------
ERISA CONSIDERATIONS
- --------------------------------------------------------------------------------
The bonds may be purchased by employee benefit plans or other retirement
arrangements that are subject to the Employee Retirement Income Security Act of
1974, as amended, or individual retirement accounts or annuities (IRAs) that are
subject to the prohibited transaction rules of the federal income tax laws. Upon
acquiring a bond, an employee benefit plan or
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<PAGE> 95
IRA will be deemed to represent that an exemption from the prohibited
transaction rules will be applicable to its purchase and holding of that bond.
See "ERISA Considerations" in the prospectus for a discussion of the
potential prohibited transactions relating to the acquisition and holding of a
bond for which exemptive relief is required.
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<PAGE> 96
- --------------------------------------------------------------------------------
UNDERWRITING
- --------------------------------------------------------------------------------
Main Place and the underwriters named below (the "UNDERWRITERS") have
entered into an underwriting agreement ("UNDERWRITING AGREEMENT") under which
the underwriters have agreed to purchase, and Main Place has agreed to sell, the
principal amounts of the bonds set forth opposite their names below.
<TABLE>
<CAPTION>
CLASS A1 CLASS A2
UNDERWRITER PRINCIPAL AMOUNT PRINCIPAL AMOUNT
----------- ---------------- ----------------
<S> <C> <C>
[Banc of America Securities LLC]..................... $ $
---------- ----------
[Other underwriters].................................
---------- ----------
Total.............................................. $ $
========== ==========
</TABLE>
Subject to the terms of the underwriting agreement, the underwriters have
agreed to purchase all of the bonds offered if any of the bonds are purchased.
The underwriters propose initially to offer the bonds in part to the public
at the price set forth on the cover page of this prospectus supplement and in
part to certain dealers at that price less concessions not in excess of
[ ]% of the principal amount of the bonds. The underwriters may allow, and
those dealers may reallow, concessions not in excess of [ ]% of the
principal amount of the bonds to certain brokers and dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the underwriters.
[The bonds will be offered simultaneously in the United States and abroad.]
[Each underwriter has represented and agreed that: (1) it has not offered
or sold and will not offer or sell in the United Kingdom any bonds 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 Regulation 1995 or the
Financial Services Act 1986 (the "FINANCIAL SERVICES ACT"); and (2) 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 bonds, 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 Financial 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 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on.]
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<PAGE> 97
[The bonds have not been and will not be registered under the Securities
and Exchange Law of Japan (the "SECURITIES AND EXCHANGE LAW") and each
underwriter has agreed and each other purchaser will be required to agree that
it will not offer or sell any bonds, 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 and any relevant laws and regulations of Japan.]
Main Place has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
There currently is no secondary market for this series of bonds. The
underwriters intend to make a secondary market in the bonds, but none of the
underwriters has any obligation to do so. There is no assurance that a secondary
market in the bonds will develop or, if one does develop, that it will continue
until the bonds are paid in full.
[Banc of America Securities LLC] is an affiliate of Main Place and is a
registered broker/dealer. This prospectus supplement and the prospectus may be
used by [Banc of America Securities LLC] in connection with offers and sales
related to market-making transactions in the bonds. [Banc of America Securities
LLC] may act as principal or agent in these transactions. [Bank of America
International Limited, an affiliate of Banc of America Securities LLC, may act
as agent in these transactions.]
In connection with the offering, the underwriters and selling group members
and their respective affiliates may engage in transactions that stabilize,
maintain or otherwise affect the market price of the bonds:
- These transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which a person
may bid for or purchase bonds for the purpose of stabilizing their
market price.
- The underwriters may create a short position for the account of the
underwriters by selling more bonds in connection with the offering
than it is committed to purchase from Main Place, and in that case may
purchase bonds in the open market following completion of the offering
to cover all or a portion of the short position. [Banc of America
Securities LLC], on behalf of the underwriters, may impose "penalty
bids" under contractual arrangements with the underwriters whereby it
may reclaim from an underwriter, or dealer participating in the
offering, for the account of the other underwriters, the selling
concessions with respect to the bonds that are distributed in the
S-46
<PAGE> 98
offering but subsequently purchased for the account of the
underwriters in the open market.
- Any of the transactions described above may result in the maintenance of
the price of the bonds at a level above that which might otherwise
prevail in the open market.
- None of the transactions described above is required, and, if they are
undertaken, they may be discontinued at any time.
Main Place estimates that its expenses relating to the issuance and
offering of the bonds will be approximately $[ ].
- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------
The legality of the bonds will be passed upon for Main Place by [Hunton &
Williams, Charlotte, North Carolina] [Cadwalader, Wickersham & Taft, New York,
New York and Charlotte, North Carolina] and for the underwriters by [Hunton &
Williams, Charlotte, North Carolina] [Cadwalader, Wickersham & Taft, New York,
New York and Charlotte, North Carolina]. Certain other legal matters with
respect to the issuance of the bonds will be passed upon by Andrea Goldenberg,
Counsel of Bank of America Corporation, Charlotte, North Carolina.
- --------------------------------------------------------------------------------
BOND RATINGS
- --------------------------------------------------------------------------------
The bonds will not be issued unless each class of bonds is rated
"[ ]" by [rating agency] and "[ ]" by [rating
agency]. A security rating is not a recommendation to buy, sell or hold
securities and may be revised or withdrawn at any time by the assigning rating
agency.
Main Place has not requested a rating of the bonds by any rating agency
other than the rating agencies specified above. However, another rating agency
could rate the bonds lower than the ratings assigned by the rating agencies
specified above.
S-47
<PAGE> 99
- --------------------------------------------------------------------------------
INDEX OF PROSPECTUS SUPPLEMENT DEFINITIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
agency certificates................ S-7
ARM interest adjustment date....... S-23
available amount................... S-32
basic maintenance amount........... S-36
bondholder......................... S-15
closing date....................... S-5
collection period.................. S-32
constant maturity treasury index... S-23
cure date.......................... S-20
cut-off date....................... S-5
deposit securities................. S-6
determination date................. S-36
discount factors................... S-36
discounted value................... S-36
eligible collateral................ S-15
eligible investments............... S-32
eligible mortgage loans............ S-7
Financial Services Act............. S-45
gross margin....................... S-23
holder............................. S-15
indenture.......................... S-15
interest payment date.............. S-5
IRAs............................... S-10
LIBOR.............................. S-5
LIBOR determination date........... S-5
lifetime cap....................... S-23
liquidity facility................. S-40
listing agent...................... A-3
Main Place......................... S-13
market value....................... S-36
outstanding........................ S-15
prime rate......................... S-6
prime rate determination date...... S-6
rating agency...................... S-5
record date........................ S-5
Securities and Exchange Law........ S-46
servicer........................... S-5
servicer remittance date........... S-32
servicers.......................... S-5
stated maturity.................... S-6
treasury index..................... S-5
treasury index determination
date............................. S-6
trustee............................ S-5
underwriters....................... S-45
underwriting agreement............. S-45
valuation date..................... S-15
</TABLE>
S-48
<PAGE> 100
APPENDIX
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION FOR NON-U.S. PERSONS
- --------------------------------------------------------------------------------
THIS APPENDIX CONTAINS SOME ADDITIONAL LIMITED INFORMATION ABOUT THE
OFFERING OF THE BONDS WHICH IS RELEVANT TO NON-U.S. PERSONS. DETAILED
INFORMATION CONCERNING THE OFFERING IS CONTAINED IN THE PROSPECTUS AND
PROSPECTUS SUPPLEMENT AND PURCHASERS ARE URGED TO READ BOTH THIS APPENDIX AND
THE PROSPECTUS AND PROSPECTUS SUPPLEMENT IN FULL.
The distribution of the prospectus supplement containing this appendix and
the prospectus and the offering of the bonds in some jurisdictions may be
restricted by law. Main Place requires that persons who obtain the prospectus
supplement containing this appendix and the prospectus inform themselves about
and observe these restrictions.
The prospectus supplement containing this appendix and the prospectus do
not constitute an offer to sell or the solicitation of an offer to buy the bonds
in any jurisdiction in which this offer or solicitation is unlawful.
As used in the prospectus supplement containing this appendix and the
prospectus, all references to "dollars" and "$" are to United States dollars.
Sales of the bonds may not be consummated unless the purchaser has received
both the prospectus supplement containing this appendix and the prospectus.
MATTERS RELATED TO THE BONDS
DEFINITIVE BONDS
If definitive bonds are issued, Main Place will appoint a paying and
transfer agent in Luxembourg at whose offices the definitive bonds may be
presented for payment and/or transfer for so long as they are outstanding. The
paying and transfer agent that is expected to be appointed in these
circumstances is the listing agent, whose name and address is set forth at the
end of this appendix. In addition, at the stated maturity of the bonds or
otherwise upon final payment, the definitive bonds may be presented for payment
at the offices of the paying and transfer agent in Luxembourg up to two years
after the stated maturity or final payment. See "Description of the
Bonds -- General" in the prospectus supplement. Pending the issuance of the
definitive bonds, the listing agent will serve as a special agent to act as an
intermediary in Luxembourg between holders of the bonds and Main Place.
A-1
<PAGE> 101
NOTICES
Any notices required to be given to holders under the indenture will be
given to DTC or its nominee, as the registered holder of the bonds, and by
publication in a daily newspaper in Luxembourg, which is expected to be the
Luxemburger Wort. Promptly after the determination of the interest rate on the
bonds applicable to each interest period, and in no event later than the first
day of each interest period, the trustee, as defined in the prospectus
supplement, will give notice of: (1) the interest rate; (2) the related interest
payment date; and (3) the amount of interest payable on the bonds interest
payment date to the listing agent and the Luxembourg Stock Exchange. If
definitive bonds are issued, notices to holders will also be given by mail to
the addresses of these bondholders as they appear in the register maintained by
the trustee. See "Description of the Bonds -- Definitive Bond Registration" in
the prospectus. In addition, Main Place will cause to be published in a daily
newspaper in Luxembourg, as described above: (1) the interest rate on the bonds
applicable to each interest period; and (2) the related interest payment date
and the amount of interest payable on the bonds for the interest payment date.
Any changes of the type described under "Description of the Bonds -- Security
for the Bonds" in the prospectus supplement will be published as set forth above
and made available to the listing agent.
REDEMPTION
The bonds will be subject to mandatory redemption upon notice to the
holders and under the circumstances described in the prospectus supplement under
"Description of the Bonds -- Redemption." In the event that definitive bonds
have been issued and notice of redemption has been given to the holders, the
principal amount, or portion thereof, of the bonds to be redeemed will be due
and payable in Luxembourg on the date fixed for the redemption at the place set
forth in the notice. In the case of any redemption of those definitive bonds in
part, new definitive bonds representing the principal amounts of the bonds that
have not been redeemed will be issued to the holders of the definitive bonds at
the office of the transfer agent in Luxembourg.
TAXATION
For a discussion of the United States federal income tax consequences of
the acquisition of the bonds by foreign investors, including the possible
imposition of withholding taxes, see "United States Federal Income Tax
Consequences" in the prospectus. Foreign holders of the bonds should consult
their tax advisors as to the tax consequences of holding a bond in the
applicable foreign jurisdictions.
A-2
<PAGE> 102
LISTING OF BONDS AND RELATED MATTERS
Application has been made to list the bonds on the Luxembourg Stock
Exchange. Main Place does not intend to list the bonds on any other securities
exchange. Prior to listing, a legal notice relating to the issuance of the
bonds, the limited liability company agreement for Main Place, the indenture and
the underwriting agreement will be deposited with the Chief Registrar of the
District Court of Luxembourg, where the documents may be inspected and copies
thereof obtained upon request.
As long as any of the bonds are outstanding, copies of the limited
liability company agreement for Main Place, the indenture and the underwriting
agreement and copies of the documents referred to under "Available Information"
in the accompanying Prospectus, including the Current Report on Form 8-K to be
filed by Main Place with the Commission shortly after completion of the
offering, will be available at the offices of Kredietbank S.A. Luxembourgeoise
(the "LISTING AGENT") in the City of Luxembourg. In addition, the [year] and
[year] annual financial statements and all future quarterly and annual financial
statements commencing with the [date] statements of [Bank of America
Corporation] will be available on demand free of charge at the offices of the
listing agent in the City of Luxembourg. Also, upon request the trustee's
periodic valuation date reports, together with any letters from a firm of
independent accountants as described in "The Indenture -- Reports on Pledged
Property" in the prospectus will be made available at the office of the listing
agent.
Copies of all documents incorporated by reference in this document will be
available on demand free of charge from the listing agent in Luxembourg.
There has been no material adverse change in the consolidated financial
condition of Main Place since December 31, [year].
Main Place is not a party to any legal proceeding which, if determined
adversely, would materially and adversely affect its condition or operations or
would materially and adversely affect its ability to perform its obligations
under the indenture. Main Place accepts responsibility for information in this
prospectus supplement (including the appendix) and the accompanying prospectus.
The bonds have been accepted for clearance through Euroclear and Cedel with
a Common Code number of [ ] and an international securities
identification number of US [ ]. The CUSIP number of the bonds
is [ ]. The issuance and sale of the bonds were authorized by a
resolution of the managing member of Main Place.
A-3
<PAGE> 103
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED AUGUST 30, 1999
PROSPECTUS
MAIN PLACE FUNDING, LLC
ISSUER
MORTGAGE-BACKED BONDS
ISSUABLE IN SERIES
---------------------
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------
EACH SERIES OF BONDS --
CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE OF THIS - will consist of one or more classes; and
PROSPECTUS. - will be secured by eligible collateral, such as mortgage
loans, mortgage pass-through certificates and government
The bonds represent limited securities.
recourse obligations of Main Place
and they will not represent EACH BONDHOLDER --
interests in or obligations of any
other entity. They are not insured - will be entitled to payments of interest on the interest
or guaranteed by the government or payment date indicated in the prospectus supplement for
any other entity. the bondholder's class of bonds; and
- will be entitled to a return of principal at the stated
This prospectus may be used to maturity for the bondholder's class of bonds.
offer and sell a particular series
of bonds only if accompanied by the MAIN PLACE --
prospectus supplement for that
series. - may have the option or may be required to redeem one or
more classes of bonds prior to the stated maturity;
- will be required to deliver additional collateral to the
trustee in some circumstances; and
- will be required before the stated maturity of each
class to deliver cash, government securities or other
instruments to provide available funds for final
payments on that class of bonds.
- ------------------------------------
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE BONDS OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is [ ]
<PAGE> 104
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important Notice About This Prospectus and the Prospectus
Supplement................................................ 4
RISK FACTORS................................................ 5
Limited Liquidity......................................... 5
Limited Recourse Obligation............................... 5
Deficiency on Sale of Collateral.......................... 6
Insolvency Related Matters................................ 6
Book-Entry Registration................................... 7
Year 2000 Relief for Borrowers............................ 7
Year 2000 Compliance...................................... 8
THE ISSUER.................................................. 10
Background................................................ 10
Structure................................................. 10
Business Activities....................................... 10
DESCRIPTION OF THE BONDS.................................... 11
General Information....................................... 11
Registration of the Bonds................................. 12
Book-Entry Registration................................... 12
Definitive Bond Registration.............................. 17
Payment of Principal; Redemption.......................... 18
SECURITY FOR THE BONDS...................................... 20
Eligible Mortgage Loans................................... 21
Manufactured Home Contracts............................... 26
Eligible Mortgage Pass-Through Certificates............... 27
Government Securities..................................... 28
Short-Term Money Market Instruments....................... 30
Basic Maintenance Amount.................................. 31
MORTGAGE LOAN PROGRAMS...................................... 36
Underwriting Standards of NationsBanc Mortgage
Corporation............................................ 36
Underwriting Standards of Bank of America, FSB............ 38
Underwriting Standards of Bank of America, N.A. .......... 41
THE INDENTURE............................................... 44
General................................................... 44
Pledge of Eligible Mortgage Loans......................... 44
Withdrawals and Substitutions of Collateral............... 46
Liquidity................................................. 47
Purchase and Resale of the Bonds.......................... 48
Reports on the Pledged Property........................... 48
Payments on the Pledged Property.......................... 49
Modifications of the Indenture............................ 49
Events of Default under the Indenture..................... 51
Authentication and Delivery of Bonds...................... 54
List of Bondholders....................................... 54
</TABLE>
2
<PAGE> 105
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Annual Compliance Statement............................... 55
Trustee's Annual Report................................... 55
Trustee................................................... 55
Satisfaction and Discharge of the Indenture............... 56
SERVICING OF ELIGIBLE MORTGAGE LOANS........................ 56
General................................................... 56
Servicing................................................. 57
Payments on Eligible Mortgage Loans....................... 57
Collection and other Servicing Procedures................. 59
Hazard Insurance.......................................... 60
Private Mortgage Insurance................................ 62
Maintenance of Insurance Policies; Claims thereunder and
other Realization upon Defaulted Eligible Mortgage
Loans.................................................. 62
Servicing Compensation and Payment of Expenses............ 63
Evidence as to Compliance................................. 63
Resignation of the Servicer; Successor Servicer........... 63
Events of Default under the Servicing Agreement........... 64
Rights upon Event of Default.............................. 64
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............... 65
General................................................... 65
Tax Status of the Bonds................................... 66
Interest, Discount, and Premium........................... 66
Market Discount........................................... 67
Premium................................................... 68
Sale, Exchange, and Retirement of Bonds................... 68
Backup Withholding........................................ 69
Tax Treatment of Non-U.S. Investors....................... 69
ERISA CONSIDERATIONS........................................ 71
Fiduciary Standards....................................... 72
Prohibited Transaction Rules.............................. 72
Plan Asset Regulations.................................... 73
PLAN OF DISTRIBUTION........................................ 73
USE OF THE PROCEEDS......................................... 74
LEGAL MATTERS............................................... 74
EXPERTS..................................................... 75
LEGAL INVESTMENT............................................ 75
ADDITIONAL INFORMATION...................................... 76
Incorporation of Information by Reference................. 76
Where You Can Find More Information....................... 77
INDEX OF SIGNIFICANT DEFINITIONS............................ 78
</TABLE>
3
<PAGE> 106
IMPORTANT NOTICE ABOUT THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT
Information about the bonds is provided to you in two separate documents
which progressively provide more detail: (a) this prospectus, which provides
general information, some of which may not apply to a particular series or class
of bonds, including your series or class; and (b) the accompanying prospectus
supplement, which will describe the specific terms of your bonds, including:
- the aggregate principal amount of each class of bonds;
- the interest rate of each class of bonds, or the method of calculating
the interest rate for each class;
- the authorized denominations of the bonds;
- information concerning the property securing the bonds;
- the stated maturity of each class of bonds;
- the interest payment dates for the bonds; and
- additional information about the plan of distribution of the bonds.
In addition, if a series or class of bonds is to be offered in whole or in
part to foreign investors, the prospectus supplement will contain information
about the series or class of bonds relevant to those investors, including any
information regarding the listing of those bonds on a foreign stock exchange.
IF THE TERMS OF A PARTICULAR SERIES OF BONDS VARY BETWEEN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. No one has been authorized to provide you with different information.
The bonds are not being offered in any state where the offer is not permitted.
Cross-references are included in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find
additional information. The table of contents included in this prospectus and
the accompanying prospectus supplement provide the pages on which these captions
are located.
You can find a listing of the pages where terms used in this prospectus are
defined under the caption "Index of Significant Definitions" beginning on page
74 in this prospectus.
Main Place's principal offices are located at 100 North Tryon Street, 23rd
Floor, Charlotte, North Carolina and its phone number is (704) 388-7436.
4
<PAGE> 107
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
Investors should consider, among other things, the following description of
the risks associated with the purchase of the bonds.
LIMITED LIQUIDITY
The liquidity of your bonds may be limited. You should consider that:
- a secondary market for the bonds may not develop, or if it does, it may
not provide you with the liquidity of investment that you want, or it
may not continue for the life of the bonds;
- the prospectus supplement for any series of bonds may indicate that an
underwriter intends to establish a secondary market for the bonds, but
no underwriter will be obligated to do so; and
- unless specified in the applicable prospectus supplement, the bonds will
not be listed on any securities exchange.
LIMITED RECOURSE OBLIGATION
The bonds represent the obligations of Main Place and no one else. If
collateral maintenance requirements are not met for a series of bonds, Main
Place must:
- pledge additional collateral to secure the bonds;
- substitute new collateral for collateral previously pledged; and/or
- repurchase bonds of one or more classes of that series in order to remedy
the shortfall.
If Main Place is unable to pledge additional collateral to the trustee for
the series of the bonds, you may receive mandatory unscheduled redemptions of
principal in an amount sufficient to remedy the collateral shortfall. In
addition, Main Place will be required within a specified number of days prior to
the stated maturity for the series of the bonds to do one of the following:
- to pledge deposit securities to the trustee; or
- to make other arrangements to pay all of the interest and principal
payable on the bonds of that series at their stated maturity in a
manner acceptable to each rating agency that rates the series of
bonds.
Main Place may be unable to take the actions stated above. In that event,
the trustee will be obligated immediately to liquidate the pledged property
securing the series of the bonds and to use the proceeds to pay all of the
5
<PAGE> 108
interest and principal payable on those bonds at their stated maturity. However,
there can be no assurance that the proceeds of that liquidation will be
sufficient to pay all of the interest and principal due on the bonds.
DEFICIENCY ON SALE OF COLLATERAL
In the event of an acceleration of the payment of the bonds following an
event of default for a series, if the assets securing the bonds of the series
were to be sold, there can be no assurance that the proceeds of the sale would
be sufficient to pay in full the outstanding principal amount of the related
bonds and interest payments due on them. The market value of the assets
generally will fluctuate with changes in prevailing rates of interest.
Consequently, the collateral for a series may be liquidated at a discount, in
which case the proceeds of liquidation might be less than the aggregate
outstanding principal amount and interest payable on the bonds of that series.
For more information on the risks identified in this section, see the
sections in the prospectus entitled "Description of the Bonds -- Payment of
Principal; Redemption" and "The Indenture -- Liquidity."
INSOLVENCY RELATED MATTERS
Main Place is a Delaware limited liability company. As such, Main Place is
eligible for bankruptcy relief. However, Main Place has been structured as a
limited purpose entity with the specific intent to reduce its risk of filing for
bankruptcy. If Main Place were to file for bankruptcy, delays and reductions in
payments of principal and interest on the bonds could result.
Main Place is an indirect, wholly-owned subsidiary of Bank of America, N.A.
Main Place and Bank of America have undertaken to follow certain procedures to
preserve the separateness of Main Place so that its assets would not be
available directly to creditors of Bank of America, N.A. or to any receiver or
conservator of Bank of America, N.A. that may be appointed. However, even with
these procedures and the bankruptcy remote nature of Main Place, there can be no
assurance that the FDIC would not seek to consolidate the assets and liabilities
of Main Place with those of Bank of America, N.A., or that the appointment of
the FDIC as receiver or conservator of Bank of America, N.A. would not have an
impact on one or more series of bonds.
Unless otherwise specified in the prospectus supplement, the eligible
collateral securing a series of bonds will be sold or contributed to Main Place
by an affiliate of Main Place. If the transferor of the eligible collateral were
to become a debtor in a bankruptcy case, a creditor or trustee, or the debtor
itself, may take the position that the contribution or transfer of the eligible
collateral
6
<PAGE> 109
by the transferor to Main Place should be recharacterized as a pledge of the
eligible collateral securing a loan from Main Place to the transferor. If such
attempt were successful, delays in payments of collections on the eligible
collateral could occur or reductions on the amount of those payments could
result.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the prospectus supplement, the bonds will not
be registered in your name after you purchase them. The bonds will be
represented by one or more certificates in the name of Cede & Co. ("CEDE") the
nominee of the Depository Trust Company ("DTC"), unless otherwise specified in
the accompanying prospectus supplement. Thus, you will be able to exercise your
rights of ownership only indirectly through DTC and its participating
organizations.
Similarly, if you are an investor outside the United States, you will be
able to exercise your rights of ownership only indirectly through Cedel Bank,
societe anonyme ("CEDEL") or Euroclear System ("EUROCLEAR") and their
participating organizations. This means your ability to pledge the book-entry
bonds to someone who does not participate in the DTC system, Cedel or the
Euroclear systems as applicable, or to act otherwise with respect to the
book-entry bonds, may be limited because of the lack of an actual certificate in
your name.
In addition, if the bonds are book-entry bonds, you may experience a delay
in payment because payments will be forwarded to DTC, and DTC will credit its
participants, which will then credit you either directly or indirectly through
any indirect participant. See "Description of the Bonds -- Book-Entry
Registration."
YEAR 2000 RELIEF FOR BORROWERS
In July 1999, Congress approved, and the President signed into law,
legislation that limits legal liability for losses due to year 2000
computer-related errors. This legislation, among other things, also protects
borrowers from foreclosure if their residential mortgage loans become delinquent
because an actual year 2000 failure results in the inability to accurately or
timely process their mortgage payments.
This legislation is not intended to extinguish or otherwise affect a
borrower's payment obligations but instead delays the enforcement of obligations
on an otherwise defaulted mortgage loan. Borrowers seeking foreclosure
protection under this legislation must provide timely written notice and
documentation to the servicer of the failure of their mortgage payments to be
accurately or timely applied. Absent an extension from the lender, borrowers
will then have four weeks to make up late payments on their loans. This
7
<PAGE> 110
legislation does not apply to mortgage loans for which a default occurs before
December 15, 1999, or for which an imminent default is foreseeable before that
date. Moreover, this legislation does not protect borrowers who deliver notice
of a year 2000 failure after March 15, 2000. Mortgage loans that remain in
default after the applicable grace period will be subject to foreclosure or
other enforcement.
This legislation could delay the servicer's ability to foreclose on some
mortgage loans during the first quarter of the year 2000. These delays could
consequently affect the timing of payment on the bonds.
YEAR 2000 COMPLIANCE
The following is a Year 2000 readiness disclosure within the meaning of the
Year 2000 Information and Readiness Disclosure Act.
SERVICERS
NationsBanc Mortgage Corporation, Bank of America, N.A. and/or Bank of
America, FSB (each, an "AFFILIATED SERVICER") may act as servicer of eligible
mortgage loans representing pledged property for a series of bonds. Each of the
affiliated servicers and their ultimate corporate parent, Bank of America
Corporation, like all financial institutions, are faced with the challenge of
correctly stating and processing data containing dates from the Year 2000 and
beyond, i.e. becoming Year 2000 ready. Computers programmed with a two-digit
field for identifying the year interpret "98" as "1998," but may interpret "00"
as "1900" rather than "2000." If not remedied, this problem could create system
errors and failures resulting in the disruption of normal business operations.
Bank of America Corporation has established project teams to address these Year
2000 issues. For additional information on Bank of America Corporation's Year
2000 remediation efforts, readers of this prospectus are referred to Bank of
America Corporation's periodic reports filed under the Securities Exchange Act
of 1934, which reports are incorporated herein by reference.
The affiliated servicers and their major vendors of mortgage servicing
software are preparing contingency plans which will be implemented, if required
to minimize interruptions to mortgage servicing operations. However, due to the
size and complexity of some systems, some of which are provided by outside
vendors, and the necessity for these systems to interface correctly, both within
and outside the affiliated servicers, there is the possibility that some systems
may not handle date-related data correctly after January 1, 2000. Nevertheless,
based on their efforts and those of their major vendors and the information
available to date, and assuming the continued availability to the affiliated
servicers and to their significant vendors of staff and other technical
resources and no unexpected difficulty in implementing system enhancements, each
8
<PAGE> 111
affiliated servicer believes that it will not incur significant operational
disruptions to mortgage servicing operations as a result of the Year 2000
problem. Each affiliated servicer has made its mission critical mortgage
servicing systems Year 2000 ready, and expects the mission critical systems
provided by vendors will be Year 2000 ready before January 1, 2000. However, the
affiliated servicers are heavily dependent on their outside vendors and the
systems of third parties. There can be no assurance that the systems of third
parties with which the affiliated servicers deal will be timely converted.
Likewise, the affiliated servicers do not have the same ability to monitor and
control their outside vendors as they have for their internal systems.
If either of the affiliated servicers or any of their vendors or third
party service providers is not Year 2000 ready, that servicer most likely will
not be able to process payments on the mortgage loans on a timely basis or
accurately. These problems could lead to the occurrence of an event of default
under the servicing agreement. See "Servicing of Eligible Mortgage
Loan -- Events of Default under the Servicing Agreement."
TRUSTEE
If the trustee or any of its vendors or third party service providers is
not Year 2000 ready, the trustee may not be able to make timely or accurate
payments to bondholders of a series. Replacement of a trustee could lead to
payment delays on the bonds of a series during any transition period.
DTC
With respect to year 2000 issues, DTC has informed members of the financial
community that it has developed and is implementing a program so that its
systems, as they relate to the timely payment of distributions, including
principal and interest payments, to security holders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately on and after
January 1, 2000. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to, its participating
organizations, through which bondholders will hold their bonds, as well as the
computer systems of third party service providers. DTC has informed the
financial community that it is contacting, and will continue to contact, third
party vendors from whom DTC acquires services to: (1) impress upon them the
importance of these services being year 2000 compliant; and (2) determine the
extent of their efforts for year 2000 remediation, and, as appropriate, testing,
of their services. In addition, DTC has stated that it is in the process of
developing these contingency plans as it deems appropriate.
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If problems associated with the Year 2000 issue were to occur with respect
to DTC and the services described above, payments to bondholders could be
delayed or otherwise adversely affected.
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THE ISSUER
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BACKGROUND
On December 10, 1998, Main Place changed its name from Main Place Holding,
LLC, to Main Place Funding, LLC. Then, in December 23, 1998, Main Place merged
with Main Place Real Estate Investment Trust, with Main Place Funding, LLC, as
the surviving corporate entity and assuming the obligations of Main Place Real
Estate Investment Trust under various indentures relating to outstanding series
of mortgage-backed bonds.
STRUCTURE
Main Place is a limited liability company organized under the laws of the
State of Delaware. It is an indirect subsidiary of Bank of America, N.A., which
holds a 99% membership interest in Main Place. The other 1% percent interest is
held by Main Place Trust. Main Place Trust is a Delaware business trust. Bank of
America, N.A. is a wholly-owned, indirect subsidiary of Bank of America
Corporation.
BUSINESS ACTIVITIES
Main Place will limit its business activities to:
- consolidating the acquisition, holding and management of certain
residential mortgage assets of Bank of America, N.A., and its
affiliates;
- issuing and selling the bonds for each series under a separate indenture
and acquiring, owning, holding and pledging the related pledged
property;
- issuing subordinated indebtedness; and
- engaging in other activities that are necessary, suitable or convenient
to carry out the company's business purposes.
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DESCRIPTION OF THE BONDS
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GENERAL INFORMATION
Main Place will issue bonds secured by mortgage loans, mortgage pass-
through certificates, government securities and other collateral.
Main Place will issue the bonds in separate series, each of which will
consist of one or more classes of bonds. Each series of bonds will be issued
under a separate indenture between Main Place and an independent trustee. All
bonds issued will be considered "OUTSTANDING" except for the following:
- those bonds previously canceled by the trustee;
- those bonds held by Main Place or its affiliates, other than Banc of
America Securities LLC; and
- those bonds for which deposit securities have been delivered to the
trustee or other arrangements satisfactory to the rating agencies have
been made.
The bonds of each series will be direct obligations of Main Place. The
prospectus supplement for a series of bonds will tell you:
- the specific designation of each class of bonds;
- when each class of bonds will mature;
- the interest rate of each class of bonds or the method of calculating the
interest rate;
- if the series consist of two or more classes of bonds, the timing of
payments of principal and interest on each class;
- the record date applicable to the series of bonds you purchased;
- how accrued interest on each class of bonds will be calculated; and
- if principal payments for any class of bonds may be made prior to their
stated maturity.
The bonds of a series will be secured by collateral (the "PLEDGED
PROPERTY") of the type permitted under the indenture for that series of bonds
("ELIGIBLE COLLATERAL"). The eligible collateral must have a discounted value
that is sufficient to meet those levels of collateralization required from time
to time under that indenture (the "BASIC MAINTENANCE AMOUNT"). The discounted
value is determined as described under "-- Basic Maintenance Amount."
The trustee will value the collateral at times established in the
prospectus supplement. These values will be based on the market values for the
collateral
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described under "-- Basic Maintenance Amount" obtained no more than three
business days prior to the date the trustee makes its determination. The trustee
will give valuation reports on the collateral to Main Place on dates established
in the prospectus supplement.
REGISTRATION OF THE BONDS
There are two ways that the bonds may be registered: (1) you may be the
fully registered holder of a bond and hold an actual certificate representing
the bond; or (2) your bond may be represented by a certificate registered in the
name of the nominee of DTC.
The prospectus supplement will tell you:
- how each class of bonds will be registered;
- the minimum denominations that may be purchased; and
- the integral multiples in excess of the minimum denominations that may be
purchased.
BOOK-ENTRY REGISTRATION
BACKGROUND
Your bonds may be registered by book entry. Bonds of this kind are known as
"BOOK-ENTRY BONDS." In short, book-entry means that you will not be the
registered holder of your bond and you will not actually have a physical bond to
hold in your hands. Instead, if the bonds in a series are book-entry bonds, the
bonds initially will be registered in the name of Cede, the nominee of DTC. If
you are in the United States, you will hold a beneficial interest in your bonds
through DTC, either directly with DTC if you are a participant in DTC, or
indirectly through a broker or other financial intermediary, who either is a
participant in DTC or holds its interest through a participant in DTC.
Alternatively, if you are located in Europe, you may hold a beneficial
interest in your bonds through Cedel or Euroclear. Cedel and Euroclear hold
positions on behalf of their participants through customers' securities accounts
in Cedel's and Euroclear's names on the books of their depositaries. In turn,
the depositaries hold these positions in customers' securities accounts in the
depositaries' name on the books of DTC. Cedel's depositary is Citibank, N.A.,
known as "CITIBANK," and Euroclear's is Morgan Guaranty Trust Company of New
York, known as "MORGAN GUARANTY."
HOW THE BOOK-ENTRY SYSTEM DIRECTLY APPLIES TO YOU
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among
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participants on whose behalf it acts with respect to the bonds and is required
to receive and transmit distributions of principal and interest on the bonds.
Participants and indirect participants with which you have accounts for your
bonds are also required to make book-entry transfers and receive and transmit
those payments on behalf of their respective bond owners. Accordingly, although
you will not have a physical certificate representing your bond, you will
receive payments and will be able to transfer your interests in your bond.
Here is some additional information which may help you understand how the
book-entry system applies to you:
- You will receive payments on the bonds indirectly. The trustee will make
payments on the bonds to DTC, who in turn will forward the payments to
its participants, who in turn will forward the payments on to those
who hold interests in the bonds through them.
- Under a book-entry format, you may experience some delay in your receipt
of payments, since the payments will be forwarded by the trustee to
Cede, as nominee for DTC. DTC will forward these payments to its
participants which then will forward them to indirect participants or
you.
- If you are not a participant or indirect participant in this book-entry
system, but desire to purchase, sell or otherwise transfer ownership
of, or other interest in, your bonds you must use a participant or
indirect participant.
- Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, your ability to
pledge your bonds to persons or entities that do not participate in
the DTC system, or to take other actions with your bonds, may be
limited due to the lack of a physical certificate for these bonds.
- It is anticipated that only Cede, the nominee of DTC, will actually hold
the bonds which you own. You will not be recognized by the trustee as
the holder, and you will be permitted to exercise the rights of a
holder of the bond only indirectly through the participants, who in
turn will exercise the rights of a holder through DTC.
TRANSFERS UNDER THE BOOK-ENTRY SYSTEM
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Cedel participants and Euroclear participants will occur in
the ordinary way and in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
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through Cedel participants or Euroclear participants, on the other, will be
effected in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its depository. These cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in the system in accordance with its rules
and procedures and within its established deadlines. The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its depository to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel participants and Euroclear
participants may not deliver instructions directly to the depositories.
Because of time-zone differences, credits or securities in Cedel or
Euroclear of a transaction with a DTC participant will be made during the
subsequent securities settlement processing, dated the business day following
the DTC settlement date, and the credits or any transactions in the securities
settled during the processing will be reported to the relevant Cedel participant
or Euroclear participant on that business day. Cash received by Cedel or
Euroclear as a result of sales of securities by or through a Cedel participant
or a Euroclear participant to a DTC participant will be received with value on
the DTC settlement date, but it will not be available in the relevant Cedel or
Euroclear cash account until the business day following settlement in DTC.
THE DEPOSITORY TRUST COMPANY
DTC has the following characteristics:
- it is a limited-purpose trust company organized under the laws of the
State of New York;
- it is a member of the Federal Reserve System;
- it is a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- it is a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities and Exchange Act of 1934.
DTC was created to hold securities for its participating organizations and
to facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in the accounts of its
participants. The benefit of this system is that it eliminates the need for
physical movement of certificates. Participants include securities brokers and
dealers who may include the underwriters of the bonds, banks, trust companies
and clearing corporations and may include other organizations. Indirect access
to the DTC system also is available to others as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly by indirect participants.
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SOME MORE INFORMATION ABOUT HOW DTC INTENDS TO OPERATE
DTC advised Main Place that it will only take actions on your bonds if:
- the action is permitted by the indenture for your bonds; and
- the holder of your bond who requests the action is a participant who has
an account with DTC for those bonds.
Additionally, DTC advised Main Place that it will take actions in specified
percentages of the bonds only at the direction of, and on behalf of,
participants whose holdings include undivided interests that satisfy the
percentage requirements. DTC may take conflicting actions on other undivided
interests if those actions are also on behalf of participants whose holdings
include undivided interests.
CEDEL
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Cedel participants through electronic book-entry changes in accounts of Cedel
participants, which eliminates the need for physical movement of certificates.
Transactions may be settled by Cedel in any of 32 currencies, including United
States dollars.
Cedel provides to its Cedel participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel works with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters of any series
of the bonds. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel participant, either directly or indirectly.
EUROCLEAR
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 32 currencies, including United States dollars. Euroclear
includes various other services, including securities lending and borrowing and
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interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above.
Euroclear is operated by Morgan Guaranty Trust Company of New York,
Brussels, Belgium office, which functions as the Euroclear operator. The
Euroclear operator is under contract with Euroclear Clearance System, S.C., a
Belgian cooperative corporation. All operations are conducted by the Euroclear
operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear operator, not the cooperative. The
cooperative establishes policy for Euroclear on behalf of Euroclear
participants.
The Euroclear operator is the Belgian branch of Morgan Guaranty, a New York
banking corporation that is a member bank of the Federal Reserve System. As
such, it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of Euroclear and applicable Belgian law
(collectively, known as the "terms and conditions"). The terms and conditions
govern transfers of securities and cash within Euroclear, withdrawal of
securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear operator acts under the terms and conditions
only on behalf of Euroclear participants and has no record of or relationship
with persons holding through Euroclear participants.
Euroclear participants include banks, securities brokers and dealers and
other professional financial intermediaries and may include the underwriters of
the bonds. Indirect access to Euroclear is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear participant,
either directly or indirectly.
SOME MORE INFORMATION ABOUT HOW CEDEL AND EUROCLEAR INTEND TO
OPERATE
Distributions for the bonds held through Cedel or Euroclear will be
credited to the cash accounts of Cedel participants or Euroclear participants in
accordance with the relevant system's rules and procedures, as received by its
depository. These distributions will be subject to tax reporting in accordance
with relevant United States tax laws and regulations. See "United States Federal
Income Tax Consequences -- Tax Treatment of Non-U.S. Investors" in this
prospectus.
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Cedel or Euroclear will only take actions on your bonds if:
- the action is permitted by the indenture for your bonds;
- these actions are in accordance with its rules and procedures; and
- Cedel or Euroclear is able to make those actions on its behalf through
DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of the bonds among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
those procedures and those procedures may be discontinued at any time.
DEFINITIVE BOND REGISTRATION
Your bonds may be registered directly in your name or the name of your
nominee. These bonds will be given to a holder and you will be given a
certificate representing your interest in the bonds. Bonds registered in this
manner are commonly called "DEFINITIVE BONDS." The prospectus supplement will
tell you if your bond is registered as a definitive bond.
Your bond may also become a definitive bond, even though it was issued as a
book-entry bond under the indenture. This may happen only if:
- Main Place advises the trustee in writing that DTC is no longer willing
or able to discharge properly its responsibilities as a depository of
the bonds, and neither Main Place nor the trustee can find a
successor; or
- Main Place, at its option, advises the trustee in writing that it wants
to stop using DTC's book-entry system.
If either of these happens, DTC is required to notify all of its
participants of the availability through DTC of the definitive bonds.
After DTC surrenders the bonds and provides instructions for re-
registration of the bonds, the trustee will issue the bonds as definitive bonds.
Then the trustee will recognize the holders of the definitive bonds as the
holders of the bonds as described in the indenture for those bonds.
Principal and interest on the bonds will be:
- paid by the trustee directly to the holders of the definitive bonds, as
described in the indenture;
- paid on each interest payment date to the holders in whose name the
definitive bonds were registered at the close of business on the
record date; and
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- distributed by a check mailed to the holder at the address in the
register of the trustee, or by wire transfer to the holder's account.
The holder must hold the minimum aggregate principal amount of the bonds
specified in the prospectus supplement.
Final payment on your bond, whether book-entry or definitive, will be made
only if the holder gives your certificate to the person or business that has
been designated to receive it. The trustee will notify the holder not later than
the fifth day of the month of the final payment.
Definitive bonds will be transferable and exchangeable at the offices of
the authenticating agent. Initially, the trustee will be the authenticating
agent. There will not be a service charge for any registration of transfer or
exchange of the definitive bonds, but the authenticating agent may require
payment for taxes or other government required charges.
PAYMENT OF PRINCIPAL; REDEMPTION
GENERAL
Each class of bonds for a series will mature and will be paid at 100% of
its principal amount plus accrued interest at the stated maturity for that class
specified in the prospectus supplement for that series. Your bonds may be
subject to "REDEMPTION" at the option of Main Place if specified in the
prospectus supplement for your bonds.
WHEN THERE WILL BE MANDATORY PARTIAL REDEMPTION
Your bonds may be subject to mandatory partial redemption. The prospectus
supplement will inform you of the number of days of notice you will receive.
Mandatory partial redemption will take place if:
- on any applicable valuation date, the discounted value of the eligible
collateral is less than the basic maintenance amount;
- Main Place is unable to "cure" the deficiency in the valuation of the
collateral by providing additional eligible collateral within the
number of days stated in the prospectus supplement; and
- Main Place does not deliver to the trustee, prior to the cure date,
outstanding bonds reacquired by Main Place for cancellation in
principal amounts sufficient to make the discounted value of the
eligible collateral at least equal to the basic maintenance amount.
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When the discounted value of the eligible collateral is less than the basic
maintenance amount, Main Place may cure that deficiency by taking the following
actions:
- by pledging and delivering additional eligible collateral; and/or
- substituting eligible collateral.
To be considered cured, the discounted value of the eligible collateral
after these actions are taken must at least be equal to the basic maintenance
amount.
There is an exception to these mandatory redemption requirements. If,
before the holders of the bonds are given notice of redemption, the valuation
report prepared by the trustee provides that the discounted value of the
eligible collateral is at least equal to the basic maintenance amount on the
next valuation date after the cure date, Main Place will not have to undertake
mandatory partial redemption of the bonds.
HOW MANDATORY PARTIAL REDEMPTION WILL TAKE PLACE
The bonds will be redeemed in an aggregate principal amount that is the
smallest principal amount, rounded to the next higher integral multiple of
$1,000, necessary to make the discounted value of the eligible collateral at
least equal to the basic maintenance amount. This calculation will be based on
the valuation date prior to the date the trustee provides notice of redemption
to the bondholders and will take into account:
- Main Place's pledge of additional collateral;
- the delivery to the trustee for cancellation of any bonds repurchased by
Main Place; and
- any redemption of the bonds.
Mandatory partial redemption will be made within the number of days
specified in the prospectus supplement. The redemption price will equal 100% of
the principal amount, or portion thereof, of the bonds to be redeemed. It will
also include accrued interest up to the date of the redemption.
Any partial redemption may be made on a pro rata basis or by any alternate
method deemed fair and appropriate by the trustee. Any alternate method,
however, shall not result in an outstanding bond in a denomination of less than
the minimum permitted denomination of that series or class of bonds.
After holders of the bonds are given notice of redemption for their series
of bonds, the principal amount of the bonds to be redeemed will be due and
payable on the date for which redemption is set and at the place identified in
the notice. For those bonds to be redeemed, they will cease to bear interest on
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the redemption date. In cases where Main Place defaults in the payment of the
redemption price, those bonds will continue to bear interest at their
established rate until paid. The holders of the bonds will only have the right
to receive the redemption price, except that if the bonds are only redeemed in
part, then new bonds representing the principal amounts of those bonds will be
issued to those holders. The holders of the new bonds will continue to have the
right to receive the principal amount remaining and interest payments on that
amount.
If Main Place fails to cure a collateral shortfall by the applicable cure
date, the trustee must liquidate the pledged property to the extent required to
pay the redemption price of the bonds to be redeemed.
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SECURITY FOR THE BONDS
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Main Place will pledge collateral to secure each series of bonds. The
collateral will be described in the prospectus supplement, and may include:
- residential mortgage loans;
- manufactured housing contracts;
- mortgage pass-through certificates;
- government securities, including those issued or guaranteed by Freddie
Mac, Fannie Mae and Ginnie Mae;
- short-term money market instruments; and
- cash.
There are several accounts in which cash can be held as collateral for a
series of bonds. First, if the collateral for a series includes mortgage loans,
then the servicer of the mortgage loans will deposit payments on the mortgage
loans into an account called a "COLLECTION ACCOUNT." Second, the trustee will
establish another account, known as a "DISTRIBUTION ACCOUNT," to hold cash until
it is distributed to the bondholders. Once a month, the servicer will wire money
from the collection account to the distribution account. If a series includes
collateral other than mortgage loans, payments on that collateral will be
deposited directly into the distribution account. Third, if specified in the
prospectus supplement for a series, the trustee will establish a "RESERVE FUND"
where cash will be held.
Main Place and the trustee can change the types and characteristics of
eligible collateral, the percentage limitations on types of eligible collateral,
the frequency of the valuation dates, the discount factors used in valuing the
eligible collateral, the methodology used in calculating the market value of the
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eligible collateral and the definition of basic maintenance amount, without the
consent of bond owners, as long as the changes are permitted by applicable law
and will not impair the rating assigned to the bonds by each of the nationally
recognized statistical rating organizations rating that series, known as "RATING
AGENCIES," as confirmed in writing by the rating agencies. If any of the changes
in the preceding sentence are made before issuing a new series of bonds, they
will be described in the prospectus supplement.
ELIGIBLE MORTGAGE LOANS
Mortgage loans eligible as collateral for a series of bonds ("ELIGIBLE
MORTGAGE LOANS") are loans that are secured by first or second lien mortgages on
real estate. Eligible mortgage loans can include mortgage loans insured by the
FHA ("FHA INSURED MORTGAGE LOANS") or partially guaranteed by the VA ("VA
GUARANTEED MORTGAGE LOANS"). In addition, mortgage loans that are not insured or
guaranteed by FHA or VA, known as "CONVENTIONAL MORTGAGE LOANS," can be included
as collateral for a series of bonds. Eligible mortgage loans will be secured by
one of the following types of property, called "MORTGAGED PROPERTIES":
- one-to four-family residences;
- townhouses;
- condominium units;
- units within planned unit developments; or
- manufactured homes.
Whenever eligible mortgage loans are included in the collateral for a
series of bonds, Main Place will enter into a servicing agreement with an
eligible servicer to provide for the servicing of the mortgage loans. See
"Servicing of Eligible Mortgage Loans" for a description of the servicing
procedures applicable to a series of bonds secured by eligible mortgage loans.
In addition, unless otherwise disclosed in the prospectus supplement, Main Place
will deliver the mortgage notes and other mortgage documents to a custodian,
which will hold the mortgage notes and other documents on behalf of the
bondholders.
ELIGIBLE FIXED-RATE MORTGAGE LOANS
"ELIGIBLE FIXED-RATE MORTGAGE LOANS" provide that the borrower must make
monthly payments of principal and interest. In most cases, an eligible
fixed-rate mortgage loan requires the borrower to make an equal payment each
month for the term of the mortgage loan, and at the end of the term no further
payments are required. This kind of mortgage loan is known as a "FULLY
AMORTIZING MORTGAGE LOAN." Eligible fixed-rate mortgage notes also may include
balloon
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mortgage loans. "BALLOON MORTGAGE LOANS" require the borrower to make monthly
payments, generally equal monthly payments, until the end of the term, and then
at the end of the term, the borrower must make a large final payment, known as
the "BALLOON PAYMENT." The monthly payments on many balloon mortgage loans
consist of both principal and interest determined at a rate that would amortize
the mortgage loan over a long period, such as 30 years, but require full payment
of remaining principal at an earlier time, such as five years after origination.
Other balloon mortgage loans require payments only of interest, and no
principal, until the balloon payment is due.
A mortgage loan will generally provide for level monthly installments,
except, in the case of balloon loans, the final payment, consisting of interest
equal to one-twelfth of the interest rate on the mortgage (called the "MORTGAGE
INTEREST RATE") times the unpaid principal balance, with the remainder of the
payment applied to principal. These kinds of loans are known as "ACTUARIAL
MORTGAGE LOANS." No adjustment is made if a payment on an actuarial mortgage
loan is made earlier or later than the due date, although the mortgagor may be
subject to a late payment charge.
If specified in the prospectus supplement, some mortgage loans may be
simple interest mortgage loans. A "SIMPLE INTEREST MORTGAGE LOAN" provides for
the amortization of the amount financed under the mortgage loan over a series of
equal monthly payments, except, in the case of a balloon loan, the final
payment. Each monthly payment consists of an installment of interest that is
calculated on the basis of the outstanding principal balance of the mortgage
loan multiplied by the mortgage interest rate. This product is further
multiplied by a fraction, the numerator of which is the number of days in the
period elapsed since the preceding payment of interest was made and the
denominator of which is the number of days in the annual period for which
interest accrues on the mortgage loan. As payments are received under a simple
interest mortgage loan, the amount received is applied first to interest accrued
to the date of payment and the balance is applied to reduce the unpaid principal
balance. Accordingly, if a borrower pays a fixed monthly installment on a simple
interest mortgage loan before its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made will
be less than it would have been had the payment been made as scheduled, and the
portion of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. The next scheduled payment, however, will result in an
allocation of a greater amount to interest if that payment is made on its
scheduled due date. Conversely, if a borrower pays a fixed monthly installment
after its scheduled due date, the portion of the payment allocable to interest
for the period since the preceding payment was made will be greater than it
would have been had the payment been made as scheduled, and the remaining
portion, if any, of the payment applied to reduce the unpaid principal balance
will be correspondingly less. Accordingly, if the borrower consistently makes
scheduled payments after the scheduled due date,
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the mortgage loan will amortize more slowly than scheduled. If a mortgage loan
is prepaid, the borrower is required to pay interest only to the date of
prepayment.
ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS
"ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" can be actuarial mortgage loans
or simple interest mortgage loans. They bear interest at a rate that adjusts
periodically, but no more frequently than annually. The interest rate is
calculated by adding a percentage, known as a "MARGIN" of between 1% and 5% to
one of the following "INDICES":
(1) the average yields for U.S. Treasury Securities, adjusted to a
constant maturity of one year as published by the Federal Reserve
Board, known as "ONE MONTH TREASURY";
(2) the cost of funds index published by the Eleventh District Federal
Home Loan Bank, known as "COFI";
(3) the London interbank offered rates for Eurodollar deposits of
various maturities, known as "LIBOR";
(4) the prime lending rate of Bank of America, N.A., known as "PRIME";
or
(5) any other index acceptable to the rating agencies.
Eligible adjustable-rate mortgage loans are either fully amortizing
mortgage loans or balloon mortgage loans, and may be convertible into fixed-rate
mortgage loans. Like eligible fixed rate mortgage loans, eligible
adjustable-rate mortgage loans generally have monthly payments due on the first
day of each month, but if they have a different due date that will be specified
in the prospectus supplement.
Some adjustable-rate mortgage loans may have an ultimate maximum limit,
called a "LIFETIME CAP," on the mortgage interest rate, or a minimum limit,
called a "MINIMUM MORTGAGE INTEREST RATE." Other loans can provide for
limitations, known as "PERIODIC CAPS," in the amount the mortgage interest rate
can increase for a single adjustment period. Some loans provide for limits,
known as "PAYMENT CAPS," on the amount that scheduled monthly payments can
increase. To the extent that the interest rate on a mortgage loan is adjusted,
but the monthly payment on the mortgage loan is subject to a payment cap, the
mortgage loan may accrue interest that the borrower is not required to pay at
the time of accrual. Generally, this excess interest, called "DEFERRED
INTEREST," is added to the principal of the mortgage loan. This is called
"NEGATIVE AMORTIZATION."
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If specified in the prospectus supplement, eligible collateral may include
mortgage loans with a fixed mortgage interest rate for an initial period of a
specified number of years, after which the mortgage interest rate adjusts at
one-month, six-month, one-year or other intervals, based on the sum of an index
and a specified margin, just as the mortgage interest rate on an adjustable-rate
mortgage loan adjusts. Changes in the mortgage interest rate result in
corresponding changes to the amount of monthly payments.
OTHER ELIGIBLE MORTGAGE LOANS
If specified in the prospectus supplement, the collateral may include a
mortgage loan subject to a temporary buydown plan, known as a "BUY-DOWN LOAN."
The borrower under a buy-down loan makes monthly payments during the early years
that are less than the scheduled monthly payments on the loans, and the
remaining funds come from another source, such as the originator of the loan. If
specified in the prospectus supplement, the originator will have deposited the
additional funds into a custodial account, known as a "BUY-DOWN FUND," held by
the servicer of the mortgage loan.
Collateral for a series also may include mortgage loans known as "GRADUATED
PAY MORTGAGE LOANS" or "GPMS." These mortgage loans provide for monthly payments
during the first year calculated based on an assumed rate of interest that is
lower than the actual interest rate on the mortgage loan. Unpaid interest is
added to the principal balance of the mortgage loan, resulting in negative
amortization. In later years, the monthly payments are increased to the extent
needed to amortize the mortgage loan in full over the remainder of the term.
"GROWING EQUITY MORTGAGE LOANS" are similar to GPMs, except that the monthly
payments increase over time at a rate that has the effect of amortizing the loan
over a period shorter than the stated term. "TIERED PAYMENT MORTGAGE LOANS" are
GPMs, but the interest not paid by the borrower is paid from a subsidy account,
which generally is established by the builder of the mortgaged property or one
of the borrower's family members at the closing of the mortgage loan.
If specified in the prospectus supplement, collateral may include loans
known as "SUBSIDY LOANS." A subsidy loan permits the borrower to make monthly
payments that are less than the scheduled monthly payments on the mortgage loan.
The borrower's employer pays a "SUBSIDY PAYMENT" equal to the present value of
the difference between the scheduled monthly payments and the monthly payments
required from the borrower. Generally, the employer makes a subsidy payment
annually, and the servicer deposits the subsidy payment into a custodial
account, known as a "SUBSIDY ACCOUNT." The borrower remains primarily liable for
all scheduled payments on the mortgage loan. If the borrower dies or leaves his
employment, the employer can require the borrower to refinance the mortgage
loan, which would result in a prepayment.
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Collateral for a series also may include loans known as "PLEDGED ASSET
MORTGAGE LOANS," if the prospectus supplement specifies. Pledged asset mortgage
loans are secured not only by a lien on a mortgaged property, but also are
secured by additional collateral, such as securities, owned by the borrower, or
are supported by a third-party guarantee, typically the borrower's parent, and
the guarantee is secured by a security interest in collateral, generally
securities, owned by the guarantor. The amount of the additional collateral
generally cannot exceed 30% of the amount of the loan. Generally, the
requirement to maintain the additional collateral terminates when the loan is
paid down to a predetermined amount.
If specified in the prospectus supplement, other types of residential
mortgage loans can be pledged under the indenture to secure the bonds.
LIMITATIONS ON ELIGIBLE MORTGAGE LOANS
To be eligible for a series, a mortgage loan must have an original term to
maturity of no more than 30 years. In addition, at the time the mortgage loan is
pledged as collateral, it must:
(1) have a remaining term to maturity of at least one year;
(2) have an unpaid principal balance of at least $1,000 and no more
than $1,000,000;
(3) have an original loan-to-value ratio not greater than 95%;
(4) be secured by a mortgage that creates a valid first or second lien
on a mortgaged property, is recorded and either is covered by a
title insurance policy or other evidence of title is obtained,
such as an attorney's opinion of title or certificate of title, a
preliminary title report, a title search or a property information
report;
(5) is accompanied by appropriate documents or is otherwise
acceptable, as is more fully described under the heading
"Servicing of Eligible Mortgage Loans -- Pledge of Eligible
Mortgage Loans;"
(6) is not a mortgage loan as to which any scheduled payment of
principal or interest is 30 days or more contractually delinquent;
and
(7) if it is an FHA insured or VA guaranteed mortgage loan, is secured
by a mortgage on a one- to four-family dwelling.
If specified in the prospectus supplement, eligible mortgage loans with
original loan-to-value ratios in excess of 80% may be insured by private
mortgage insurance covering that portion of the principal amount that exceeds
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the amounts specified under Fannie Mae and Freddie Mac guidelines. As is
required by law, however, the private mortgage insurance generally will be
discharged when the principal balance of the mortgage loan is reduced to a
specified level. The issuer of the private mortgage insurance must have a rating
in one of the two highest rating categories from at least one rating agency
rating the applicable series, unless otherwise provided in the related
prospectus supplement.
In addition, in selecting eligible mortgage loans to include as collateral
for a series of bonds, Main Place considers the characteristics of the entire
pool of loans. In doing so, Main Place follows these guidelines:
(1) Main Place uses its best efforts to include mortgage loans with a
geographical dispersion similar to that of the entire portfolio of
mortgage loans of the same type serviced by NationsBanc Mortgage
Corporation and Bank of America, FSB affiliates of Main Place;
(2) Main Place includes at least 100 eligible mortgage loans in the
pool;
(3) Main Place ensures that no more than 15% of all mortgage loans
included in the collateral have unpaid principal balances in
excess of $600,000. These larger mortgage loans are known as "HIGH
BALANCE LOANS";
(4) No more than 25% of all mortgage loans included in the collateral
for a series may be loans with loan-to-value ratios over 80%,
which are known as "OVER 80% LOANS." No more than 10% of all
mortgage loans included in the collateral for a series may have
original loan-to-value ratios over 90%; and
(5) No more than 10% of all mortgage loans included in the collateral
for a series may be "CONDOMINIUM LOANS," which are mortgage loans
secured by condominium units.
Eligible mortgage loans must meet these additional limitations as of the
date the series of bonds are issued and as of any date on which Main Place
pledges additional eligible mortgage loans to the trustee or withdraws any
eligible mortgage loan from the lien of the indenture for the series.
MANUFACTURED HOME CONTRACTS
Eligible collateral may include manufactured housing conditional sales
contracts and installment sales or loan agreements, secured by manufactured
homes. These "MANUFACTURED HOME CONTRACTS" may be conventional, insured by the
FHA or partially guaranteed by the VA, as specified in the related prospectus
supplement. Each manufactured home contract generally will be
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fully amortizing and will bear interest at a fixed rate of interest.
Manufactured home contracts will have individual principal balances at
origination of not less than $10,000 and not more than $1,000,000 and original
terms to stated maturity of 5 to 40 years, or other individual principal
balances at origination and/or original terms to stated maturity as are
specified in the related prospectus supplement.
The "MANUFACTURED HOMES" securing the manufactured home contracts generally
will consist of manufactured homes within the meaning of 42 United States Code,
Section 5402(6), which defines a "manufactured home" as "a structure,
transportable in one or more sections, which in the traveling mode, is eight
body feet or more in width or forty body feet or more in length, or, when
erected on site, is three hundred twenty or more square feet, and which is built
on a permanent chassis and designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air conditioning, and electrical systems contained in the
structure; except that the term shall include any structure which meets all the
requirements of [this] paragraph except the size requirements and with respect
to which the manufacturer voluntarily files a certification required by the
Secretary of Housing and Urban Development and complies with the standards
established under [this] chapter."
ELIGIBLE MORTGAGE PASS-THROUGH CERTIFICATES
Eligible collateral for a series includes not only mortgage loans, but also
eligible mortgage pass-through certificates. "ELIGIBLE MORTGAGE PASS-THROUGH
CERTIFICATES" are certificates or other instruments that:
(1) evidence an undivided interest in pools of fixed or
adjustable-rate residential mortgage loans; and
(2) have either:
- been rated by each rating agency rating the bonds in a rating
category at least as high as the rating of the bonds; or
- been rated by one of the rating agencies, and the other rating
agency has consented in writing to including the
certificates in the eligible collateral for the series; or
- been otherwise approved for inclusion in the eligible
collateral by all of the rating agencies rating the bonds,
as confirmed in writing by each of the rating agencies.
In addition, before including a mortgage pass-through certificate in the
eligible collateral for a series, Main Place must obtain a written confirmation
from each rating agency rating the series that including the certificates will
not affect the ratings of the bonds.
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Unless otherwise specified in the prospectus supplement, the mortgage note
and other mortgage documents related to the mortgage loans underlying an
eligible mortgage pass-through certificate to be held by a trustee or an
independent custodian. In addition, unless otherwise specified in the prospectus
supplement, the underlying mortgage loans are required to be serviced by a
servicer that is approved by Ginnie Mae, Fannie Mae or Freddie Mac. The servicer
is also required to advance funds in the event of payment delinquencies, which
is known as making an "ADVANCE." A servicer is not required to make advances
unless the servicer reasonably believes that the advance is recoverable from
future collections or recoveries on the mortgage loan.
GOVERNMENT SECURITIES
Government securities are eligible as collateral for the bonds. "GOVERNMENT
SECURITIES" consist of the following:
- direct obligations of the United States, entitled to the full faith and
credit of the United States;
- Freddie Mac certificates;
- Fannie Mae certificates; and
- Ginnie Mae certificates.
Government securities that, by their terms, do not bear interest are not
eligible collateral unless they mature in less than one year.
FREDDIE MAC CERTIFICATES
"FREDDIE MAC CERTIFICATES" are issued by Federal Home Loan Mortgage
Corporation, known as "FREDDIE MAC." Freddie Mac is a publicly held
government-sponsored enterprise created pursuant to Title III of the Emergency
Home Finance Act of 1970. Freddie Mac's statutory mission is to provide
stability in the secondary market for home mortgages, to respond appropriately
to the private capital market and to provide ongoing assistance to the home
mortgage secondary market and promote nationwide access to residential mortgage
credit by increasing the liquidity of mortgage investments and improving the
distribution of investment capital available for home mortgage financing.
Freddie Mac's principal activity consists of purchasing first lien residential
mortgage loans and participation interests in mortgage loans from mortgage
lending institutions and reselling those loans and participations in the form of
guaranteed mortgage securities.
Each Freddie Mac certificate represents an undivided interest in a pool of
mortgage loans. The mortgage loans may be fixed or adjustable-rate mortgage
loans or participation interests in mortgage loans, including conventional
mortgage loans, FHA insured mortgage loans or VA guaranteed mortgage
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loans. Most loans underlying a Freddie Mac certificate are secured by first
liens on one-to four-family residential properties.
Freddie Mac guarantees to each registered holder of a Freddie Mac
certificate the timely payment of interest by each borrower at the rate provided
for by the guarantee, whether the borrower actually makes the payment or not.
Freddie Mac also guarantees to each registered holder of a Freddie Mac
certificate that all principal on the underlying mortgage loans eventually will
be paid through to the registered holders of the Freddie Mac certificate. In the
case of some Freddie Mac certificates, Freddie Mac guarantees the timely payment
of scheduled principal. The Freddie Mac guarantee is an obligation solely of
Freddie Mac. It is not backed by, nor entitled to, the full faith and credit of
the United States. There is currently an active secondary market for Freddie Mac
certificates, but there is no assurance that this market will continue.
FANNIE MAE CERTIFICATES
"FANNIE MAE CERTIFICATES" are mortgage pass-through certificates issued by
Federal National Mortgage Association, known as "FANNIE MAE." Fannie Mae is a
federally chartered and privately owned corporation organized and existing under
the Federal National Mortgage Association Charter Act. Fannie Mae was originally
established in 1938 as a United States government agency and was transformed
into a stockholder-owned and privately managed corporation by legislation
enacted in 1968.
Fannie Mae provides funds to the mortgage market primarily by purchasing
mortgage loans from lenders, thereby replenishing the lenders' funds for
additional lending. Fannie Mae acquires funds to purchase mortgage loans from
many capital market investors. By attracting these investors, who may not
ordinarily invest in mortgages, Fannie Mae expands the total amount of funds
available for housing. Fannie Mae issues mortgage-backed securities primarily in
exchange for pools of mortgage loans from lenders.
Each Fannie Mae certificate represents an undivided interest in a pool of
mortgage loans, which may consist of FHA insured mortgage loans, VA guaranteed
mortgage loans or conventional mortgage loans. Fannie Mae guarantees the full
and timely payment of scheduled principal and interest at the applicable
certificate rate, and full collection of principal on the mortgage loans in the
pool represented by each Fannie Mae certificate. The obligations of Fannie Mae
under its guarantees are obligations solely of Fannie Mae and are not backed by,
nor entitled to, the full faith and credit of the United States. There is
currently an active secondary market for Fannie Mae certificates, but there is
no assurance that this market will continue.
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GINNIE MAE CERTIFICATES
"GINNIE MAE CERTIFICATES" are guaranteed by Government National Mortgage
Association, known as "GINNIE MAE." Ginnie Mae is a wholly-owned corporate
instrumentality of the United States within the Department of Housing and Urban
Development. Section 306(g) of Title III of the National Housing Act of 1934,
authorizes Ginnie Mae to guarantee the timely payments of the principal of, and
interest on, certificates that are based on and backed by a pool of eligible
loans, including FHA-insured and VA-guaranteed mortgage loans.
The full faith and credit of the United States is pledged to the payment of
any amounts owed under a Ginnie Mae guaranty.
Each Ginnie Mae certificate is a "fully-modified pass-through" mortgage-
backed certificate issued and serviced by a mortgage banking company or other
financial concern approved by Ginnie Mae or Fannie Mae as a seller-servicer of
FHA insured or VA guaranteed mortgage loans. Each Ginnie Mae certificate
evidences a proportional undivided interest in a pool of FHA insured or VA
guaranteed mortgage loans secured by single family residences. Ginnie Mae
guarantees the timely payment of principal and interest at the applicable
certificate rate on, and the full collection of the principal of, the mortgage
loans underlying each Ginnie Mae certificate. There is currently an active
secondary market in Ginnie Mae certificates, but there is no assurance that this
market will continue.
SHORT-TERM MONEY MARKET INSTRUMENTS
"SHORT-TERM MONEY MARKET INSTRUMENTS" include cash and any of the following
instruments, but only if the instrument has a remaining term to maturity not in
excess of 90 days from the date on which the instrument is pledged to the
trustee:
(1) demand deposits in, certificates of deposit of, or bankers'
acceptances issued by, any depository institution or trust company
organized under the laws of the United States or any State and
subject to the supervision of and examination by Federal and/or
State banking or depository institution authorities, so long as
the commercial paper, if any, of the depository institution or
trust company (or, in the case of the principal depository
institution in a holding company system, the commercial paper, if
any, of the holding company) at the time of the investment or
contractual commitment providing for such investment has the
highest commercial paper credit rating from each rating agency (or
which meets the other criteria as will not result in a downgrading
or removal of the rating of the bonds by either rating agency);
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(2) repurchase obligations with respect to government securities
entered into either:
- pursuant to a written agreement with an entity that has
received the highest short-term credit rating from each
rating agency, where the trustee has taken delivery of any
such security; or
- with a depository institution or trust company described in
clause (1) above; and
(3) commercial paper rated by each rating agency rating the bonds in
its highest short-term rating category or that meets other
criteria that will not result in a downgrading or removal of the
rating of the bonds by any rating agency.
BASIC MAINTENANCE AMOUNT
The indenture for a series will require Main Place to maintain eligible
collateral with an aggregate discounted value at least equal to the basic
maintenance amount. If the only eligible collateral pledged to secure bonds in a
series were cash, then the amount of cash could equal the basic maintenance
amount. Because the market value of other eligible collateral must be
discounted, eligible collateral other than cash will have a market value
significantly higher than the basic maintenance amount.
The "BASIC MAINTENANCE AMOUNT" as of the date of a valuation means an
amount equal to the sum of:
(1) the aggregate principal amount of the outstanding bonds; plus
(2) an amount equal to interest accrued on the outstanding bonds for
the number of days specified in the prospectus supplement.
Notwithstanding the foregoing, the basic maintenance amount for a
particular series of bonds may be changed in accordance with the requirements of
the rating agencies rating the series.
Each rating agency for a series of bonds will determine the "DISCOUNT
FACTORS" that it deems appropriate for each type of eligible collateral. The
discount factors will be set forth in the prospectus supplement. The "DISCOUNTED
VALUE" of the eligible collateral for a series will be the lesser of the sum of
the market values of the eligible collateral multiplied by the applicable
discount factors determined by each rating agency.
The "MARKET VALUE" of eligible collateral as of a valuation date is
determined as of a date, called the "DETERMINATION DATE," not more than three
business days, or another number of days if specified in the prospectus
supplement relating to a series, before the relevant valuation date. The market
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value of any security or instrument may not exceed the unpaid principal balance
of the security or instrument, and is determined as follows:
(1) The market value of cash, demand deposits, and next business day's
repurchase agreements is equal to the face value of the security
or instrument.
(2) The market value of Freddie Mac certificates, Fannie Mae
certificates, Ginnie Mae certificates and other government
securities, with a remaining term to maturity of more than 90
days, is equal to the product of:
(a) the aggregate principal amount of the mortgage loans
evidenced by each Freddie Mac, Fannie Mae or Ginnie Mae
certificate, as shown in the most recent report received by
the trustee, or the aggregate principal amount of the other
government securities, and
(b) the lower bid price for the same kind of certificate having
as nearly as practicable the same interest rate and
maturity, as quoted to the trustee by two nationally
recognized securities dealers.
If only one bid price is available, then the market value
will equal the aggregate principal amount multiplied by the
bid price. If no bid prices are available, the market value
will equal the aggregate principal amount multiplied by the
bid price that would result in the yield for the same type
of certificate 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.
(3) The market value of a short-term money market instrument (other
than those described in (1) above), or any government security,
other than Fannie Mae, Freddie Mac or Ginnie Mae certificates,
having a remaining term to maturity 90 days or less, is equal to
the face amount of the instrument multiplied by the lower of the
bid prices therefor obtained by the trustee as of the close of
business on the determination date from two nationally recognized
securities dealers making a market in securities of that type.
(4) The market value of eligible mortgage pass-through certificates is
equal to the lesser of:
(a) the outstanding aggregate principal balance of the eligible
mortgage pass-through certificates; and
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(b) the outstanding aggregate principal balance of the mortgage
loans underlying the eligible mortgage pass-through
certificates, as shown by the most recent report related to
each such certificate received by the trustee, multiplied
by:
- the lower of the bid prices per dollar of outstanding
principal amount on the determination date for the
eligible mortgage pass-through certificates; the
trustee will seek the bid prices as of the
determination date from two nationally recognized
securities dealers making a market in the mortgage
pass-through certificates;
- if only one bid price for the certificates is available,
the dollar value of that bid price;
- if no bid price for the certificates is available, then
the dollar value of the lower of the bid prices per
dollar of outstanding principal amount for
conventional mortgage pass-through certificates with
comparable pass-through rates and with underlying
mortgage loans of comparable terms, as quoted to the
trustee as of the determination date by two nationally
recognized securities dealers selected by the trustee
and making a market in conventional mortgage
pass-through certificates;
- if only one bid price for comparable certificates is
available, the dollar value of that bid price.
In the event the trustee cannot obtain bid prices for the certificates or
for comparable certificates, the market value will equal the lesser of:
(1) the outstanding aggregate principal balance of the eligible
mortgage pass through certificates; and
(2) the outstanding aggregate principal balance of the mortgage loans
underlying the eligible mortgage pass-through certificates, as
shown by the most recent report related to each such certificate
received by the trustee before the determination date, multiplied
by the price per dollar of outstanding principal amount that would
result in a yield, computed on the basis of the same prepayment
assumptions then accepted in the market for use in calculating
yields on Ginnie Mae certificates, 0.10% greater than the yield on
the determination date, as published by The Wall Street Journal or
The New York Times, for Ginnie Mae certificates with the same
pass-through rate, or, if there are none with the same, then the
next higher pass-through rate as the eligible mortgage
pass-through certificates.
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To determine the market value of eligible mortgage loans, the trustee first
will group the loans according to weighted average interest rate and weighted
average maturity, and other group criteria provided for in the indenture. Then
the trustee will obtain market quotations for each group of eligible mortgage
loans. The market value of the eligible mortgage loans will equal the lower of
the market quotations for the eligible mortgage loans obtained from any two
nationally recognized dealers in mortgage instruments selected by the trustee.
If only one quotation is available, then the market value will equal that
quotation. Market value is determined as of the determination date based upon
unpaid principal balances shown in the most recent report prepared by or for the
trustee. The report must contain information as of a date no more than 30 days
prior to the determination date.
If market quotations are not available, the market value of eligible
mortgage loans will be determined by discounting the remaining scheduled
payments of principal of, and interest on, the eligible mortgage loans. If a
borrower is delinquent in payments on an eligible mortgage loan, its market
value is discounted by an amount, if any, required by each rating agency rating
the series. This amount will be described in the prospectus supplement. The rate
at which the payments are discounted to derive market value is known as the
market value rate. "MARKET VALUE RATE" means:
(1) As to conventional mortgage loans (other than mortgage loans known
as "JUMBO MORTGAGE LOANS" having principal balances at origination
in excess of the applicable maximum amounts established by Fannie
Mae and Freddie Mac for mortgage loan purchases), a rate (rounded
to the nearest one-hundredth of one percent) equivalent to the
yields at which either Fannie Mae or Freddie Mac, at the election
of the trustee, committed itself to purchase conventional mortgage
loans of the same type for the shortest available delivery period,
determined as of the determination date; and
(2) As to FHA insured or VA guaranteed mortgage loans, a rate (rounded
to the nearest one-hundredth of one percent) equivalent to the
yields at which Fannie Mae committed itself to purchase FHA
insured and VA guaranteed mortgage loans, as the case may be (or
either, if commitments for both were not made), for the shortest
available delivery period, determined as of the determination
date.
The trustee will find the yields used to determine the market value rate in
The Wall Street Journal or The New York Times or will obtain them directly by
Fannie Mae or Freddie Mac. In each case, the yields will be reduced by any
servicing fee that is included in the gross yield quotations.
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In the event that the Fannie Mae and Freddie Mac rates are not available as
of a determination date, then the trustee will make this calculation using a
rate 0.50% greater than the yield Fannie Mae quotes as of the determination date
for a Fannie Mae certificate with the same coupon interest rate as the weighted
average coupon interest rate of the eligible mortgage loans, or, if there are
none with the same, then the next higher coupon interest rate. This alternative
method also will be used with respect to conventional mortgage loans, including
jumbo mortgage loans, in the event that Fannie Mae or Freddie Mac cease to
conduct auctions or post rates with respect to those kinds of mortgage loans,
and with respect to FHA insured or VA guaranteed mortgage loans, in the event
that Fannie Mae ceases to post FHA-VA commitment rates.
Main Place and the trustee may change the definition of basic maintenance
amount, the frequency of valuation dates, the discount factors, or any other
aspect of the method for determining the market value of any item of eligible
collateral without the consent of the holders of the bonds if those changes are
permitted by law and will not impair the rating assigned to the bonds by each
rating agency rating the series, as confirmed in writing by the rating agencies.
To the extent these items are changed before a series of bonds is issued, the
changes will be explained in the prospectus supplement.
The trustee is required to deliver a report containing information about
the market value of the collateral to Main Place within two business days after
each valuation date. The information required to be included in the report is
described in more detail under "The Indenture -- Reports on Pledged Property."
Scheduled reductions in the principal amounts of the eligible collateral or
possible prepayments or decreases in the market value of the eligible collateral
may cause the discounted value of the eligible collateral to be less than the
basic maintenance amount. In that event, the indenture requires that Main Place,
no later than the cure date, deliver additional eligible collateral to the
trustee or the custodian, substitute eligible collateral, or, if it elects to do
so, repurchase a number of outstanding bonds so that the trustee can, no later
than the cure date, deliver a new report showing that the discounted value of
the eligible collateral, determined as of a date no later than the cure date is
at least equal to the basic maintenance amount. If Main Place elects to satisfy
the foregoing obligation to restore the discounted value of the eligible
collateral to the basic maintenance amount by delivering mortgage loans to the
custodian, the mortgage loans included in the pledged property after the
delivery of the mortgage loans must meet the requirements relating to the limits
on the types and characteristics of those mortgage loans to ensure that all
mortgage loans delivered to the trustee or custodian are eligible mortgage
loans.
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MORTGAGE LOAN PROGRAMS
- --------------------------------------------------------------------------------
As specified in the prospectus supplement, Main Place expects to acquire
mortgage loans that are originated by parties who may or may not be affiliated
with Main Place. The mortgage loans will be underwritten in accordance with the
underwriting guidelines of the originator of the loans. The underwriting
guidelines of two of Main Place's affiliates are described below. To the extent
the underwriting guidelines used to originate mortgage loans included in the
collateral for a series differ from the description below, the underwriting
guidelines used will be summarized in the prospectus supplement.
UNDERWRITING STANDARDS OF NATIONSBANC MORTGAGE CORPORATION
NATIONSBANC MORTGAGE
Main Place may purchase mortgage loans originated or acquired by
NationsBanc Mortgage Corporation ("NATIONSBANC MORTGAGE"). NationsBanc Mortgage
is a wholly-owned subsidiary of Bank of America, N.A., which is an indirect,
wholly-owned subsidiary of Bank of America Corporation. NationsBanc Mortgage is
primarily engaged in the business of:
(1) originating and purchasing residential mortgage loans in its own
name; and
(2) servicing residential mortgage loans for its own account or for
the account of others.
NationsBanc Mortgage's principal executive offices are located at 201 North
Tryon Street, 14th Floor, Charlotte, North Carolina 28255 and the telephone
number is (704) 388-4545, and NationsBanc Mortgage's operations offices are
located at 101 East Main Street, Suite 400, Louisville, Kentucky 40202 and the
telephone number is (502) 566-5100. NationsBanc Mortgage is approved by Ginnie
Mae, Fannie Mae and Freddie Mac as a seller/servicer.
UNDERWRITING STANDARDS
The following is a description of the underwriting standards used by
NationsBanc Mortgage with respect to mortgage loans underwritten by it before
April 19, 1999. On April 19, 1999, NationsBanc Mortgage began using the
underwriting guidelines described under "-- Underwriting Standards of Bank of
America, N.A." below.
Each mortgage loan originated or acquired by NationsBanc Mortgage has
satisfied the company's credit, appraisal and underwriting guidelines, which can
be varied when NationsBanc Mortgage deems the variation appropriate. NationsBanc
Mortgage's underwriting guidelines are intended to evaluate the borrower's
credit standing and repayment ability and the value and adequacy of
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the mortgaged property as collateral. These underwriting guidelines are applied
in a standard procedure intended to comply with applicable federal and state
laws and regulations and are revised from time to time based on prevailing
conditions in the residential mortgage market, evolving credit standards of
NationsBanc Mortgage and the investment market for residential mortgage loans.
The underwriting procedure generally includes a set of specific criteria
pursuant to which the underwriting evaluation is made. However, the loan does
not need to satisfy each of the criteria individually. NationsBanc Mortgage will
have considered a mortgage loan to be originated in accordance with a given set
of underwriting guidelines if, based on an overall qualitative evaluation, the
loan is in substantial compliance with the underwriting guidelines. A mortgage
loan may be considered to comply with a set of underwriting standards, even if
one or more specific criteria included in the underwriting standards were not
satisfied, if other factors compensated for those criteria or if for other
reasons the mortgage loan is considered to be in substantial compliance with the
underwriting standards.
Initially, a prospective borrower is required to fill out a detailed
industry standard application designed to provide pertinent credit information.
As part of the description of the prospective borrower's financial condition,
the applicant must provide current information describing assets and liabilities
and a statement of income and expenses. The applicant also authorizes
NationsBanc Mortgage to apply for a credit report summarizing the applicant's
credit history with merchants and lenders and any record of bankruptcy. In most
cases, NationsBanc Mortgage obtains an employment verification in which the
applicant's employer confirms the length of the applicant's employment, the
applicant's current salary and an indication whether the employer expects the
applicant to continue that employment in the future. In the alternative,
NationsBanc Mortgage may verify employment and earnings through analysis of
copies of IRS W-2 federal withholding forms, current payroll earnings statements
and account statements of the applicant. If a prospective borrower is
self-employed, the applicant is required to submit copies of signed tax returns.
The applicant also authorizes deposit verification at all financial institutions
where the applicant has accounts. NationsBanc Mortgage may, as part of its
overall evaluation of the applicant's creditworthiness, use a credit scoring
system or mortgage scoring system to evaluate in a statistical manner the
expected performance of a mortgage loan. These credit scoring systems are based
on the pertinent credit information concerning the applicant provided through
national credit bureaus, other information provided by the applicant and an
assessment of specific mortgage loan characteristics, including loan-to-value
ratio and type of loan product.
NationsBanc Mortgage has employed alternative underwriting guidelines (the
"limited or reduced documentation guidelines") for some qualifying
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mortgage loans underwritten by NationsBanc Mortgage through an underwriting
program designed to streamline the loan review process. Some of these reduced
loan documentation programs may not require income, employment or asset
verifications. Generally, in order to be eligible for a reduced loan
documentation program, the mortgaged property must have a loan-to-value ratio
that supports the amount of the mortgage loan and the borrower must have a good
credit history. Eligibility for this type of program may be determined by use of
a credit scoring model.
Once all applicable employment and deposit documentation and the credit
report are received, NationsBanc Mortgage determines whether the prospective
borrower has sufficient monthly income available: (1) to meet the borrower's
monthly obligations on the proposed mortgage loan and other expenses related to
the mortgaged property, such as property taxes, hazard insurance and maintenance
and utility costs; and (2) to meet other financial obligations and monthly
living expenses.
To determine the adequacy of the mortgaged property as collateral, an
independent appraisal is made of each mortgaged property considered for
financing. The appraiser is required to inspect the mortgaged property and
verify that it is in acceptable condition and that construction, if recent, has
been completed. The appraisal is based on the appraiser's estimate of values,
giving appropriate weight to both the market value of comparable housing, as
well as the cost of replacing the mortgaged property.
Certain states where the mortgaged properties securing the mortgage loans
are located are "anti-deficiency" states where, in general, lenders providing
credit on one- to four-family properties must look solely to the property for
repayment in the event of foreclosure. NationsBanc Mortgage's underwriting
guidelines in all states require that the value of the mortgaged property being
financed, as indicated by the independent appraisal, currently supports and is
anticipated to support in the future the outstanding loan balance and provides
sufficient value to mitigate the effects of adverse shifts in real estate
values. There can be no assurance, however, that the value of the mortgaged
property will support the outstanding loan balance in the future.
UNDERWRITING STANDARDS OF BANK OF AMERICA, FSB
BANK OF AMERICA, FSB
Bank of America, FSB, is a wholly-owned subsidiary of Bank of America
Corporation. Bank of America, FSB originates and services home loans nationwide
through retail, wholesale, and other specialized channels.
Bank of America, FSB's headquarters are located at 121 SW Morrison Street,
Portland, Oregon, and its administrative offices are located at 555 California
Street, San Francisco, California 94104, and the telephone number is
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(415) 622-2220. Bank of America, FSB is subject to regulation, supervision
and examination by the Office of Thrift Supervision and has been approved as a
mortgagee and seller/servicer by the Department of Housing and Urban
Development, the VA, Ginnie Mae, Fannie Mae and Freddie Mac.
UNDERWRITING STANDARDS
The following is a description of the underwriting standards used by Bank
of America, FSB with respect to mortgage loans originated by it before April 19,
1999. On April 19, 1999, Bank of America, FSB began using the underwriting
guidelines described under "-- Underwriting Standards of Bank of America, N.A."
below.
Bank of America, FSB, and certain "affiliated sellers" have written, and
are continuously updating, underwriting guides for the origination of one- to
four-family residential first mortgage loans (as modified from time to time, the
"guides"). The underwriting standards as set forth in the guides are
continuously revised based on prevailing conditions in the residential mortgage
market, evolving credit standards of the affiliated sellers and the investment
market for residential mortgage loans. Each mortgage loan originated or acquired
by Bank of America, FSB, has satisfied the underwriting standards set forth in
the guides.
The underwriting standards set forth in the guides are intended to assess
the prospective borrower's ability and willingness to repay the debt and the
adequacy of the property as collateral for the loan requested. Credit policies
of the affiliated sellers require that loan underwriters be satisfied that the
value of the property being financed supports the outstanding loan balance with
sufficient value at loan origination to mitigate the effects of adverse shifts
in real estate values. The emphasis, however, remains on the borrowers' ability
to repay debt.
The real estate lending processes of the affiliated sellers for one- to
four-family mortgage loans follow standard procedures, designed to comply with
federal and state laws. Initially, a prospective borrower is required to
complete a detailed application designed to provide to the underwriter pertinent
information about the prospective borrower, the property to be financed and the
type of loan desired. Information regarding the property to be financed may be
provided by the prospective borrower after the applicable affiliated seller has
approved, subject to review of the property to be financed, a loan to the
prospective borrower. As part of the description of the prospective borrower's
financial condition, the affiliated sellers generally require a description of
assets and liabilities and income and expenses and obtain a credit report that
summarizes the prospective borrower's credit history with merchants and lenders
and any public records, such as bankruptcy. In most cases, employment
verification is obtained providing current and historical income information.
The
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affiliated seller often obtains employment verification through an analysis of
the prospective borrower's W-2 forms for the most recent two years and year-to-
date earnings statement or most recent two years' tax returns. In the
alternative, the affiliated seller can obtain this information from the
prospective borrower's employer, who is asked to report the length of employment
and current salary with that organization. Self-employed prospective borrowers
generally are required to submit their federal tax returns for the past two
years, plus year-to-date financial statements if the loan application is made
120 days or longer after the end of the most recent tax year for which a federal
tax return was provided. With respect to some loans, the affiliated seller
telephones the employer to verify employment.
Beginning in April 1994, the affiliated sellers began using an automated
process to assist in making credit decisions on some residential real estate
loans. As part of this process, a prospective borrower's credit history is
assigned a score based on standard criteria designed to predict the possibility
of a default by the prospective borrower on a mortgage loan. An application from
a prospective borrower whose score indicates a high probability of a default
will receive scrutiny from a senior underwriter who may override a decision
based on the credit score. An application from a prospective borrower whose
score indicates a low probability of default is eligible for the affiliated
sellers' rapid processing program (the "RAPID PROCESSING PROGRAM"). Loans in the
rapid processing program are subject to less stringent underwriting guidelines
and documentation standards to verify the information in the application.
With respect to most mortgage loans originated by the affiliated sellers,
once the underwriter considering the loan application receives employment
verification, or confirmation, and the credit report, the underwriter determines
whether the prospective borrower has sufficient monthly income available to meet
the borrower's monthly obligations on the proposed loan and other expenses
related to the residence, as well as to meet other financial obligations and
monthly living expenses. Where there are two individuals co-signing any mortgage
note, the income and payment obligations of both may be included in the
computation.
Prior to final loan approval a prospective borrower generally is expected
to have liquid assets sufficient to cover the down-payment, closing costs and
cash reserves that could be used to pay future housing expenses in a depository
or related account of the borrower. However, the affiliated sellers generally do
not require prospective borrowers to have these liquid assets when they
originate refinance loans.
An appraisal is made of each property to be financed. The appraisal is
conducted by either a staff appraiser of the applicable affiliated seller, or in
some instances, an independent fee appraiser licensed in the jurisdiction where
the property is located. Generally, as part of the loan origination process, the
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appraiser personally visits the property and estimates its market value on the
basis of comparable properties and other factors.
The affiliated sellers generally have not made one- to four-family mortgage
loans having loan-to-value ratios above 80% unless they have obtained or caused
the borrowers to obtain primary mortgage insurance policies.
The mortgaged properties may be located in states where, in general, a
lender providing credit on a single-family property may not seek a deficiency
judgment against the borrower but rather must look solely to the property for
repayment in the event of foreclosure.
The underwriting standards contained in the guides applicable to all states
require that the value of the property being financed, as indicated by the
appraisal, currently supports and is anticipated to support in the future the
outstanding loan balance. There can be no assurance, however, that the value
will support the loan balance in the future.
UNDERWRITING STANDARDS OF BANK OF AMERICA, N.A.
BANK OF AMERICA, N.A.
Bank of America, N.A. is a wholly-owned, indirect subsidiary of Bank of
America Corporation. Bank of America, N.A. is engaged in a general commercial
banking business, offering a full range of commercial, corporate, international,
financial and real estate banking services to corporations, governments and
individuals. Bank of America, N.A. originates and services residential mortgage
loans and performs subservicing functions for affiliates, including NationsBanc
Mortgage and Bank of America, FSB. Before July 23, 1999, Bank of America, N.A.
was called Bank of America NT&SA. On July 23, 1999, Bank of America, N.A., which
before July 5, 1999 was known as NationsBank, N.A., was merged into Bank of
America NT&SA, and Bank of America NT&SA changed its name to Bank of America,
N.A.
Bank of America, N.A. originates, services and subservices mortgage loans
using some of the former facilities and former employees of NationsBanc Mortgage
and Bank of America, FSB.
Bank of America, N.A.'s headquarters and its executive offices are located
at 101 South Tryon Street, Charlotte, North Carolina 28255. The telephone number
is (704) 388-3232. Bank of America, N.A. is subject to regulation, supervision
and examination by the Office of the Comptroller of the Currency and has been
approved as a mortgagee and seller/servicer by the Department of Housing and
Urban Development, the Veterans Administration, Ginnie Mae, Fannie Mae and
Freddie Mac.
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UNDERWRITING STANDARDS
With respect to mortgage loans underwritten before April 19, 1999, Bank of
America, N.A. used the underwriting guidelines discussed under "--Underwriting
Standards of Bank of America, FSB" above. Each mortgage loan underwritten by
Bank of America, N.A. on or after April 19, 1999 has been underwritten in
accordance with guidelines established in product and policy guides (the
"product guides"). These underwriting guidelines are intended to establish
methods to evaluate the applicants' repayment ability, credit standing and
assets available for downpayment, closing costs and cash reserves. Additionally,
guidelines are established regarding the adequacy of the property as collateral
for the loan requested. The underwriting standards as set forth in the product
guides are continuously updated to reflect prevailing conditions in the
residential market, new mortgage products, and the investment market for
residential mortgage loans.
The use of standardized underwriting guidelines does not imply that each
specific criteria was satisfied individually. Bank of America, N.A. will
consider a mortgage loan to be originated in accordance with a given set of
guidelines if, based on an overall qualitative evaluation, the loan is in
substantial compliance with such underwriting guidelines. Even if one or more
specific criteria included in such underwriting guidelines were not satisfied,
if other factors compensated for the standards that were not satisfied, the
mortgage loan may be considered to be in substantial compliance with the
underwriting guidelines.
The real estate lending processes for one- to four-family mortgage loans
follow standard procedures, designed to comply with applicable federal and state
laws and regulations. Initially, a prospective borrower is required to complete
an application designed to provide pertinent information about the prospective
borrower, the property to be financed and the type of loan desired. Information
regarding the property to be financed may be provided by the prospective
borrower, after Bank of America, N.A. has approved, subject to review of the
property to be financed, a loan to the prospective borrower. As part of the
description of the prospective borrower's financial condition, Bank of America,
N.A. generally requires a description of assets and liabilities and income and
expenses and obtains a credit report, which summarizes the prospective
borrower's credit history with merchants and lenders and any public records,
such as bankruptcy. In general, an employment verification is obtained providing
current and historical income information, and with respect to certain loans, a
telephone employment confirmation is obtained. Such employment verification may
be obtained, either through analysis of the prospective borrower's W-2 forms for
the most recent two years and year-to-date earnings statement or most recent two
years' tax returns, or from the prospective borrower's employer, wherein the
employer reports the length of employment and current salary with that
organization. Self-employed prospective borrowers generally are required to
submit their federal tax returns for the past two years
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plus year-to-date financial statements, if the loan application is made 120 days
or longer after the end of the most recent tax year for which a federal tax
return was provided.
Bank of America, N.A. uses an automated process to assist in making credit
decisions on certain residential real estate loans. A prospective borrower's
credit history is assigned a score, based on criteria designed to predict the
possibility of a default by the prospective borrower on a mortgage loan. An
application from the prospective borrower whose score indicates a high
probability of a default will receive scrutiny from a senior underwriter who may
override a recommended decision based on the credit score. An application from a
prospective borrower whose score indicates a low probability of default is
eligible for the rapid processing program.
Once all applicable employment and deposit documentation and the credit
report are received, a determination is made as to whether the prospective
mortgagor has sufficient monthly income available (1) to meet the mortgagor's
monthly obligations on the proposed mortgage loan and other expenses related to
the mortgaged property (such as property taxes, hazard insurance and maintenance
and utility costs) and (2) to meet other financial obligations and monthly
living expenses.
To determine the adequacy of the mortgaged property as collateral,
generally an independent appraisal is made of each mortgaged property considered
for financing. In certain instances the appraisal may be conducted by an
employee of Bank of America, N.A. or an affiliate. An appraiser is required to
inspect the mortgaged property and verify that it is in acceptable condition and
that construction, if recent, has been completed. The evaluation is based on the
appraiser's estimate of value, giving appropriate weight to both the market
value of comparable housing, as well as the cost of replacing the mortgaged
property.
Certain states where the mortgaged properties securing the mortgage loans
are located are "anti-deficiency" states, where, in general, lenders providing
credit on one- to four-family properties must look solely to the property for
repayment in the event of foreclosure. Bank of America, N.A.'s underwriting
guidelines in all states, including anti-deficiency states, require that the
value of the mortgaged property being financed, as indicated by the independent
evaluation, currently supports and is anticipated to support in the future the
outstanding loan balance and provides sufficient value to mitigate the effects
of adverse shifts in real estate values. There can be no assurance however that
such value will support the outstanding loan balance in the future.
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- --------------------------------------------------------------------------------
THE INDENTURE
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GENERAL
For each series, Main Place will pledge collateral to a trustee under an
"INDENTURE" to secure payments on the bonds issued under that indenture.
The following summaries describe some of the provisions of the indenture.
When particular provisions or terms used in the indenture are referred to, the
actual provisions, including definitions of terms, are incorporated by reference
as part of those summaries.
PLEDGE OF ELIGIBLE MORTGAGE LOANS
Some or all of the bonds will be secured in whole or in part by eligible
mortgage loans. If these types of bonds are issued, Main Place will pledge
eligible mortgage loans, together with all principal and interest received on
the eligible mortgage loans after a specified date, known as the "CUT-OFF DATE,"
for the related series. It will not include principal and interest due on or
before the cut-off date for those bonds. Each eligible mortgage loan included in
the initial pledged property will be identified in a schedule appearing as an
exhibit to the servicing agreement. This exhibit will be amended from time to
time to reflect the addition or deletion of eligible mortgage loans. The
schedule will include information as to the principal balance of each eligible
mortgage loan, the address of the property, the interest rate and the maturity
of each mortgage loan.
If specified in the prospectus supplement, Main Place will not be required
to deliver mortgage notes and other loan documents related to a mortgage loan to
the trustee or a document custodian (the "CUSTODIAN") at closing or at any later
time unless there is a trigger event described in the prospectus supplement.
Otherwise, Main Place will be required, as to each eligible mortgage loan,
to deliver to the trustee or the custodian:
- the mortgage note endorsed in blank; and
- an assignment of the related mortgage in blank in a form for recording or
filing as may be appropriate for the state where the mortgaged
property is located.
In lieu of delivering an individual mortgage assignment, Main Place may
instead deliver a blanket assignment by county, which will also be in recordable
form. In addition, Main Place also will deliver to the trustee or the custodian
the original recorded mortgage with evidence of recording or filing indicated on
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it, or a copy of the mortgage certified by the recording office in those
jurisdictions where the original is retained by the recording office. In the
event that recorded documents cannot be delivered due to delays in connection
with recording, the indenture permits Main Place to deliver to the trustee
copies of them, certified by Main Place or the servicer to be true and complete
copies of the documents sent for recording. In that event, the indenture
requires Main Place to deliver the original recorded documents to the trustee
promptly upon receipt by Main Place.
For any mortgage that has been recorded in the name of Mortgage Electronic
Registration Systems, Inc. ("MERS"), or its designee, no mortgage assignment in
favor of the trustee will be required to be prepared or delivered. Instead, the
trustee and the applicable servicers will be required to take all actions as are
necessary to cause the trustee to be shown as the owner of the related Mortgage
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
The custodian will review the mortgage documents within a specified number
of days of receipt to ascertain that all required documents have been executed
and received and are in proper form on their face. The custodian will hold
mortgage documents for each series of bonds in trust for the benefit of holders
of the bonds for that series. If any document is found by the custodian not to
have been properly executed or received or to be unrelated to the eligible
mortgage loans identified in the servicing agreement, and this defect cannot be
cured within the permitted time period, Main Place will pledge and deliver
enough additional collateral so that, after the pledge, the discounted value of
the eligible collateral is at least equal to the basic maintenance amount. This
additional collateral may include:
- additional eligible mortgage loans;
- other eligible collateral and/or substitute eligible mortgage loans; or
- other eligible collateral.
Under the indenture for a series of bonds secured in whole or in part by
eligible mortgage loans, the trustee will require that Main Place record the
assignments of the mortgages securing the eligible mortgage loans be pledged to
the trustee when it receives notification that the ratings of Bank of America,
N.A.'s debt obligations have fallen below the rating specified in the indenture.
Main Place will use its best efforts to record these assignments at its own
expense promptly following a demand by the trustee. If the assignments are not
recorded after demand by the trustee, the trustee will itself record the
assignments of the mortgages, at the expense of Main Place. Main Place will not
be required to record any assignment prior to its receipt of a demand from the
trustee.
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Recordation is not necessary to make the pledge of the eligible mortgage
loans to the trustee effective as between Main Place and the trustee. However,
if Main Place makes a sale, assignment, satisfaction or discharge for any of the
eligible mortgage loans prior to recording the assignments to the trustee, the
other parties to the sales, assignments, satisfactions or discharges might have
rights superior to those of the trustee. If Main Place takes this type of action
without having the authority to do so under the indenture, Main Place will be
liable to the trustee and the holders of those bonds. Moreover, if insolvency
proceedings relating to Main Place are commenced prior to a recording, creditors
of Main Place may be able to assert rights in the affected eligible mortgage
loans superior to those of the trustee.
The indenture for your series of bonds will allow Main Place to grant
modifications or waivers with respect to the eligible collateral, including, for
example, assumption of mortgage loans and related mortgages.
WITHDRAWALS AND SUBSTITUTIONS OF COLLATERAL
Main Place may, from time to time as it chooses, withdraw or substitute the
pledged property. In order for Main Place to withdraw or substitute the pledged
property, it must either:
(1) Demonstrate that the discounted value of the eligible collateral
of the remaining pledged property after the withdrawal or
substitution would at least equal the basic maintenance amount.
This shall be based on the most recent report of the trustee
valuing the eligible collateral and it will include withdrawals
and substitutions of pledged property which occurred after the
report was made;
or
(2) Main Place has the trustee prepare a new report showing that the
discounted value of the eligible collateral of the pledged
property after the proposed withdrawal or substitution will at
least equal the basic maintenance amount. This calculation of the
discounted value of the eligible collateral will be based on value
no more than three business days, or other number of days as
specified in the prospectus supplement, prior to the date of the
trustee's report.
Pledged property which was not included in the discounted value of the
eligible property as of the most recent valuation date may be withdrawn at any
time:
- so long as the discounted value of the eligible collateral was at least
equal to the basic maintenance amount as of the valuation date; and
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- no withdrawals of eligible collateral were made after the valuation date.
During the continuance of any event of default, Main Place may not withdraw
or substitute pledged property. Main Place may pledge additional eligible
collateral at any time.
LIQUIDITY
Main Place will be obligated to pledge deposit securities to the trustee or
make other arrangements acceptable to the rating agencies for the bonds that are
sufficient to pay all interest and principal on each class of bonds on its
stated maturity. The prospectus supplement for a series of bonds will tell you
the number of days before the stated maturity for each class of bonds in which
Main Place will be required to make the pledge or other arrangement. The amount
of cash that will be available in the distribution account and the reserve fund
on the stated maturity shall be taken into account with the deposit securities
or other arrangement in determining that there is a sufficient amount to pay all
interest and principal on each class of bonds at the stated maturity.
If Main Place does not use any of these options, the trustee will be
obligated immediately to liquidate the "PLEDGED PROPERTY" in an amount
sufficient to pay all of the interest and principal payable on each class of
bonds on the stated maturity.
When the deposit securities are delivered, or other arrangements completed,
the bonds of that series or class will no longer be deemed outstanding. If no
other classes of that series remain outstanding, the trustee will be obligated
to release all other pledged property held by the trustee under the lien of the
indenture.
In addition, Main Place may choose to deliver deposit securities to the
trustee as payment for the redemption price pursuant to a mandatory partial
redemption of any series or class of bonds. Main Place may do this instead of
having the trustee liquidate the pledged property. If Main Place chooses this
option, it must:
- notify the trustee on the cure date of the redemption; and
- deliver the deposit securities in the full amount of the redemption price
of the bonds to be redeemed.
Deposit securities delivered in accordance with the preceding paragraphs
must mature prior to the date on which those deposit securities were delivered.
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"DEPOSIT SECURITIES" include:
- cash;
- government securities, other than Freddie Mac certificates, Fannie Mae
certificates or Ginnie Mae certificates;
- short-term money market instruments; and
- other instruments specified in the prospectus supplement for the series
of bonds.
PURCHASE AND RESALE OF THE BONDS
Main Place may, from time to time, purchase outstanding bonds of a series
or class on the open market or by private sale. Bonds held by Main Place or its
affiliates, other than Banc of America Securities LLC, will not be deemed
outstanding for the purposes of determining the basic maintenance amount or for
other purposes under the indenture for that series of bonds.
Under the indenture, Main Place will not, and will not permit its
affiliates, other than Banc of America Securities LLC, to sell any bonds
acquired by Main Place or its affiliates unless the trustee prepares a report
dated no more than five days prior to the sale. This report must also show that
after the sale, the discounted value of the eligible collateral will not be less
than the basic maintenance amount. The discounted value of the eligible
collateral will be determined at Main Place's option as of the most recent
valuation date or any subsequent date, but no later than the date of the report.
REPORTS ON THE PLEDGED PROPERTY
When the bonds are issued, Main Place will deliver to the trustee reports
as to the pledged property securing the series of bonds. Likewise, the trustee
will deliver to Main Place reports after each valuation date on the pledged
property securing the series of bonds. The reports will include:
- the discounted value of the eligible collateral for the series of bonds;
- information concerning the occurrence of late payments with respect to
the eligible mortgage loans and the mortgage loans underlying the
eligible mortgage pass-through certificates if included in the pledged
property for the series of bonds;
Market values will be determined as of the applicable determination dates.
The reports may also contain information on specified characteristics of
the mortgage loans and the percentages of mortgage loans having those
characteristics.
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The first report made after the issuance of the series of bonds and some of
the trustee's periodic valuation date reports on the series of bonds will be
accompanied by letters from a firm of independent accountants regarding the
calculations of Main Place and the trustee. Main Place will select the
accounting firm.
PAYMENTS ON THE PLEDGED PROPERTY
Under the indenture for the bonds, the trustee will be entitled to receive
payments on the pledged property securing the bonds. This will include
prepayments and payments as a result of default, but it will not include
payments on eligible mortgage loans. Payments on eligible mortgage loans will be
made directly to the servicer for deposit in the collection account.
The servicer will not be entitled to payments if an event of default has
occurred and is continuing. In this event, all those payments will be made
directly to the trustee. Payments for other types of pledged property will be
made directly to the trustee for deposit in the distribution account.
Some funds, as described in the prospectus supplement, will be deposited
into the reserve fund for that series of bonds.
If specified in the prospectus supplement for the bonds, the trustee will
remit to Main Place, upon Main Place's request, any excess funds in the
distribution account and the reserve fund. This remittance will be made after
required payments of interest and principal on the bonds in the series have been
made or provided, so long as the discounted value of the eligible collateral,
after giving effect to the request, will be equal to the basic maintenance
account. This will not occur if an event of default occurred and is continuing.
Some of the funds may be retained in the reserve fund for that series of
bonds to pay some expenses of Main Place, if those expenses are not otherwise
paid by Main Place.
MODIFICATIONS OF THE INDENTURE
The indenture for each series of bonds, including the terms and conditions
of the related classes of bonds, may be modified or amended by Main Place and
the trustee without the consent of the holders of the bonds. The modifications
or amendments may be made for the following purposes:
- evidencing the succession of another entity to Main Place;
- adding to the covenants of Main Place for the benefit of the holders of
any class of bonds of that series or surrendering any right or power
conferred upon Main Place;
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- securing the bonds of the series in any manner which is in addition to
the manner in which the bonds are secured by the indenture and the
pledged property;
- correcting any ambiguity or defective or inconsistent provisions
contained in the indenture or making any other provisions as to
matters or questions arising under the indenture, but these changes
must not adversely affect the interests of the holders of the bonds of
any class or series in any material respect; or
- modifying, eliminating or adding to the provisions of the indenture as
necessary to continue compliance of the indenture under the Trust
Indenture Act of 1939.
In addition, the indenture may be modified or amended by Main Place and the
trustee, without the consent of the holder of any bond, for the following
reasons:
- to provide for the addition of new types of eligible collateral to the
types of eligible collateral currently allowed under the indenture;
- changing the characteristics of, or percentage limitations applicable to,
some types of eligible collateral;
- providing for reductions in the discount factors used in valuing the
eligible collateral;
- providing for an increase in the frequency of valuation dates; or
- providing for a change in the definition of basic maintenance amount or
the methodology used in calculating market value if these additions,
changes, reductions or increases are approved of by each rating agency
rating the bonds of that series and will not impair the rating then
assigned to any class of bonds by each of the rating agencies, as
confirmed in writing by the rating agencies.
Modifications and amendments to the indenture relating to a series may also
be made, and future compliance with, or past default under, by Main Place may be
waived, either:
- with the written consent of the holders of at least 66 2/3% in aggregate
principal amount of the bonds of the series at the time outstanding;
or
- by the adoption of a resolution, at a meeting of the holders of the bonds
of the series at which a quorum, as defined below, is present, by at
least 66 2/3% in aggregate principal amount of the outstanding bonds
represented at this meeting.
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However, no modification or amendment to the indenture mentioned above may,
without the written consent or the affirmative vote of the holder of each bond
of the series affected:
- change the time of payment of the principal of any class of bonds when
the principal is due, whether at stated maturity, upon call for
redemption, acceleration or otherwise;
- change the time of payment of any installment of interest on any class of
bonds when the payment is due, whether on any interest payment date,
at the stated maturity, on any redemption date, upon acceleration of
the principal of the bonds, or otherwise;
- reduce the principal of or interest on any class of bonds;
- make the principal or interest of the bonds payable in any coin or
currency other than that provided in the bonds;
- impair the right to institute suit for the enforcement of any payment as
to the bond;
- permit the creation of any lien, other than the lien of the indenture, on
the pledged property or terminate the lien of the indenture on the
pledged property, except in such cases as permitted by, and pursuant
to, the indenture, or deprive the bonds of the security afforded by
the lien of the indenture and the pledged property;
- reduce the percentage of the principal amount of the outstanding bonds
necessary to modify or amend the indenture or to waive any future
compliance with it or past default under it; or
- reduce the percentage of votes required for the adoption of a resolution
or the quorum required at any meeting of the holders of the bonds at
which a resolution is adopted or remove the obligation of Main Place
to maintain an office or agency in the place described in the
indenture to make payments on the bonds.
The quorum, at any meeting called to adopt a resolution, will be persons
holding or representing a majority in aggregate principal amount of the
outstanding bonds and, at any reconvened meeting adjourned for lack of a quorum,
25% of the aggregate principal amount.
EVENTS OF DEFAULT UNDER THE INDENTURE
The indenture for the bonds will define an event of default. An "EVENT OF
DEFAULT" will be:
(1) failure by Main Place to deliver to the trustee deposit securities
or to make other arrangements satisfactory to the rating agencies
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to provide for the payment of the principal and accrued interest
on any class of bonds, when this principal becomes due and payable
at the stated maturity for that class of bonds;
(2) default in the payment of any interest on any class of bonds when
the interest becomes due and payable, whether on any interest
payment date, at stated maturity, on any redemption date, upon
acceleration of the principal of any class of bonds, or otherwise
and continuation of this default for a period of five days;
(3) default in the payment of the principal of any class of bonds when
this principal becomes due and payable, whether at stated
maturity, upon call for redemption, or by acceleration or
otherwise;
(4) material breach or inaccuracy of any representation or warranty of
Main Place made in, or pursuant to, the indenture and Main Place
has been given notice of default, or notice has been given to Main
Place and the trustee by the holders of at least 10% in the
aggregate principal amount of the outstanding bonds, which shall
occur if Main Place does not remedy the breach or inaccuracy
within 30 days after it is given notice;
(5) material default in the performance or observance by Main Place of
any other material covenant or condition to be performed or
observed by it in the indenture and continuance of this default
for a period of 30 days after notice to Main Place by the trustee
or to Main Place and the trustee by the holders of at least 10% in
aggregate principal amount of the outstanding bonds;
(6) the entry of a decree or order by a court having jurisdiction in
the premises adjudging Main Place bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of, or in respect to, Main
Place under any bankruptcy, insolvency or any other applicable
law, or appointing a receiver, liquidator, assignee, trustee,
conservator, sequestrator, or other similar official, of Main
Place or of any substantial part of the Main Place's property, or
ordering the winding up or liquidation of Main Place's affairs,
and the continuance of this decree or order unstayed and in effect
for a period of 60 consecutive days; or
(7) the institution by Main Place of proceedings to be adjudicated
bankrupt or insolvent, or Main Place's consent to the institution
of bankruptcy or insolvency proceedings against it, or the filing
by Main Place of a petition or answer or consent seeking
reorganization or relief under any bankruptcy, insolvency or any
other
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applicable law or the consent by Main Place to the filing of this
type of petition or to the appointment of a receiver, liquidator,
assignee, trustee, conservator, sequestrator, or other similar
official, of Main Place, or of any substantial part of Main
Place's property, or the making by Main Place of an assignment for
the benefit of creditors, or the admission by Main Place in
writing of its inability to pay its debts generally as they become
due, or the taking of limited liability company action which
furthers those actions.
In the case of an event of default of the type described in clauses (1),
(2) or (3) of the preceding paragraph, the entire principal amount of the bonds
shall automatically become due and payable immediately. If an event of default
of the type described in clauses (4), (5), (6) or (7) of the preceding paragraph
shall have occurred and be continuing, the trustee or the holders of not less
than 25% in aggregate principal amount of the outstanding bonds may declare the
entire principal amount of the bonds to be due and payable immediately.
In realizing upon the pledged property upon the occurrence of an event of
default on a series of bonds, the trustee will be permitted:
- to register and/or record in its name any of the pledged property not yet
registered and/or recorded;
- to sell the pledged property in one lot or several lots as it may be
deemed appropriate; and
- to exercise otherwise the remedies of a secured party under the Uniform
Commercial Code.
These actions will occur unless an event of default has been annulled or
waived by the holders of at least 66 2/3% in aggregate principal amount of the
outstanding bonds, or such lesser amount as shall have acted at a meeting
pursuant to the provisions of the indenture.
The trustee also will be authorized to institute suits against Main Place
for the collection of all unpaid principal of and interest on the bonds, to
collect the deficiency, if any, after the sale of the pledged property, and to
file proofs of claim in any bankruptcy, insolvency or similar proceedings
involving Main Place. The trustee may also take other appropriate action to
enforce payment of the bonds or to enforce any of the above-described rights or
powers under the indenture, but shall not be required to take any action that
would involve the trustee in personal liability or expense.
In addition, following an acceleration of the bonds of a series arising out
of an event of default, the trustee will be required to use its best efforts to
arrange for the sale of the pledged property and the repayment of the bonds on a
date
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not later than 15 days, or 30 days if eligible mortgage loans or eligible
mortgage pass-through certificates are included in the eligible collateral,
following the date on which payment of principal of the bonds has been
accelerated.
Under the indenture for the series of bonds, the trustee will have a lien
on the pledged property superior to that of the holders of the bonds. This
superior lien will be used for the payment of all expenses, liabilities and
advances incurred or made by the trustee in connection with the collection or
other realization upon the pledged property upon the occurrence of an event of
default. These expenses, liabilities and advances include reasonable
compensation for any required servicing of eligible mortgages and for
extraordinary time spent by the officers, employees, agents or attorneys of the
trustee directly in connection with the collection or other realization upon the
pledged property because of the event of default.
If, following an event of default on a series of bonds, the proceeds of
liquidation of the related pledged property are not sufficient to pay the entire
amount remaining payable on the bonds of that series, those holders would, as to
the deficiency, be general creditors of Main Place, and upon any liquidation of
Main Place, the holders of those bonds would rank on a parity with the general
creditors of Main Place.
AUTHENTICATION AND DELIVERY OF BONDS
Main Place may deliver, from time to time, bonds executed by it to the
trustee and request that the trustee authenticate those bonds. Upon the receipt
of the bonds and the request, and subject to Main Place's compliance with the
conditions specified in the indenture, the trustee will authenticate and deliver
the bonds as Main Place may direct.
LIST OF BONDHOLDERS
Three or more bondholders of the bonds of a series, each of whom has owned
a bond of a series for at least six months, may, by written request to the
trustee, obtain access to the list of all bondholders of bonds of the same
series or of all bonds, as specified in the request, maintained by the trustee
for the purpose of communicating with other bondholders with respect to their
rights under the indenture. The trustee may elect not to afford the requesting
bondholders access to the list of bondholders if it agrees to mail the desired
communication or proxy, on behalf and at the expense of the requesting
bondholders, to these bondholders. In addition, if the trustee believes the
mailing would not be in the best interests of bondholders or in violation of
law, the trustee may file an objection with the SEC and the requesting
bondholders. If the SEC overrules the trustee's objections, then the trustee
will mail the communications to the bondholders.
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ANNUAL COMPLIANCE STATEMENT
Main Place will be required to file annually with the trustee a written
statement as to fulfillment of its obligations under the indenture.
TRUSTEE'S ANNUAL REPORT
The trustee under present law is required to mail each year to all
registered bondholders of bonds of a series a brief report about any of the
following events that may have occurred within the previous year, but if no
event of this type has occurred, no report is required:
- any change in its eligibility and qualifications to continue as the
trustee under the indenture;
- any amounts advanced by it under the indenture;
- the amount, interest rate and maturity date of indebtedness owing by Main
Place to it in the trustee's individual capacity;
- any change in the property and funds relating to the series physically
held by the trustee;
- any additional issue of bonds of the series not previously reported, any
change in the release or release and substitution of any property
relating to the series subject to the lien of the indenture; and
- any action taken by it that materially affects the bonds or collateral
and that has not been previously reported. In any event, the trustee
will make this information available to all bondholders on an annual
basis.
TRUSTEE
The trustee of each series of bonds will be specified in the prospectus
supplement. The commercial bank or trust company serving as trustee may have
normal banking relationships with Main Place or any of its affiliates.
The trustee may resign at any time, in which event Main Place will be
obligated to appoint a successor trustee. Main Place may remove the trustee and
appoint a successor trustee if the trustee ceases to be eligible to act as
trustee under the indenture, except in some cases in which a co-trustee is
appointed that is eligible, or if the trustee becomes insolvent or otherwise
incapable of acting with respect to any series of bonds. Main Place may also
remove the trustee and appoint a successor trustee for any series of bonds at
any time provided that Main Place receives confirmation that the appointment of
the successor trustee will not result in the lowering of the rating of any class
or series of bonds. The trustee with respect to a series of bonds may also be
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removed at any time by the holders of a majority in principal amount of the
bonds of that series then outstanding.
Any resignation and removal of the trustee, and the appointment of a
successor trustee, will not become effective until acceptance of this
appointment by the successor trustee. The trustee, and any successor trustee,
each will have a combined capital and surplus of at least $50,000,000, or will
be a member of a bank holding system, the aggregate combined capital and surplus
of which is at least $50,000,000. The trustee's and the successor trustee's
separate capital and surplus must at all times be at least the amount required
by the Trust Indenture Act of 1939. Moreover, the trustee and the successor
trustee will be subject to supervision or examination by federal or state
authorities and will have an office in the United States.
SATISFACTION AND DISCHARGE OF THE INDENTURE
The indenture will be discharged as to a series upon the cancellation of
all of the bonds of that series or, with some limitations, upon deposit with the
trustee of funds sufficient for the payment or redemption of every class of
bonds in that series.
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SERVICING OF ELIGIBLE MORTGAGE LOANS
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GENERAL
For each series of bonds for which the pledged property includes eligible
mortgage loans, Main Place will enter into a servicing agreement with a
servicer, which may be an affiliate of Main Place. The servicer will be
responsible for servicing and administering the eligible mortgage loans pursuant
to the servicing agreement. Main Place's rights under the servicing agreement
for a series of bonds will be pledged to the trustee as additional security for
the those bonds. The servicer will be paid a servicing fee.
The servicer may enter into a subservicing agreement with a subservicer to
perform various servicing functions for the servicer. The subservicer will be an
independent contractor and will be subject to the supervision of the servicer. A
subservicing agreement will not contain any terms or conditions that are
inconsistent with the servicing agreement and will be approved by Main Place.
The subservicer will receive a fee for its services and the fee will be paid by
the servicer out of the fee paid to the servicer. The servicer will have the
right to remove the subservicer of any eligible mortgage loan at any time for
cause and at any other time upon the giving of the required notice and the
payment of any required fee. If this happens, the servicer will continue to be
responsible for
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servicing the eligible mortgage loan and will designate a replacement
subservicer, which may include an affiliate of Main Place or the servicer.
SERVICING
The servicer will perform diligently all services and duties customary by
prudent mortgage lending institutions to the servicing of mortgages of the same
type as the eligible mortgage loans in those jurisdictions where the related
mortgaged properties are located. The servicer may perform these duties directly
or, pursuant to subservicing contracts, through subservicers. The servicer will
monitor each subservicer's performance and will have the right to remove a
subservicer at any time if it considers this removal to be in the best interest
of holders. The duties of the servicer include collection and remittance of
principal and interest payments received, administration of mortgage escrow
accounts, collection of insurance claims and, if necessary, foreclosure. Unless
otherwise specified in the prospectus supplement relating to a series of bonds,
the servicer will not be obligated to make any advances with respect to
delinquent payments on eligible mortgage loans.
PAYMENTS ON ELIGIBLE MORTGAGE LOANS
Pursuant to the servicing agreement relating to a series of bonds, the
servicer will establish and maintain a collection account in the name of the
trustee for the benefit of the holders. The servicer will remit directly to the
collection account for the related series of bonds payments on the related
eligible mortgage loans as they are received. The collection account may be
maintained as an interest-bearing account, or the funds held may be invested
from time to time in eligible investments, as defined in the related prospectus
supplement. The servicer or its designee will be entitled to receive any such
interest or other income earned on funds in the collection account as additional
compensation and will be obligated to deposit in or credit to the collection
account the amount of any loss immediately as realized.
The collection account for a series of bonds must be maintained as a trust
account or with a depository institution. This depository institution may be an
affiliate of the servicer or Main Place, but its short-term debt obligations
must be rated in at least as one of the two highest rating categories by each
rating agency. In particular, if Bank of America, N.A. or an affiliate is the
servicer for the series of bonds, the account may be a money market savings
account maintained with Bank of America, N.A., or an affiliated bank. In
addition, the collection account shall not be required to be invested in
eligible investments and may be a commingled account containing other servicer
funds so long as Bank of America, N.A. or an affiliate is servicer and Bank of
America Corporation or other party has (1) a rating acceptable to each rating
agency rating the bonds and (2) guarantees the performance by the servicer to
make
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the required remittances from the collection account to the distribution
account.
The servicer will deposit in the collection account payments and
collections its received and credit payments and collections received on its
behalf. The credits and deposits will be made on a daily basis, to the extent
applicable, and after the date of the pledge to the trustee for the related
series of bonds, other than payments due on or before the date of the pledge.
The payments and collections will include:
- all payments on account of principal and interest received by the
servicer on the eligible mortgage loans, which, at its option, may be
net of the servicing fee, including principal prepayments, in whole or
in part;
- all amounts received by foreclosure or otherwise in connection with the
liquidation of defaulted eligible mortgage loans, net of expenses
incurred in connection with the liquidation;
- all proceeds received under any private mortgage insurance policy or
title, hazard or other insurance policy covering any eligible mortgage
loan, other than proceeds to be applied to the restoration or repair
of the related mortgaged property;
- 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 the funds held in the collection account; and
- all other amounts required to be deposited in or credited to the
collection account under the servicing agreement.
Under the servicing agreement for each series of bonds, the servicer will
be authorized to make withdrawals from the collection account:
- 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 an eligible mortgage loan;
- to pay to the servicer its servicing fee from interest payments received,
if not previously retained, and any earnings from the investment of
funds in the collection account in eligible investments, as defined in
the related prospectus supplement;
- to pay any expenses which were incurred and are reimbursable pursuant to
the servicing agreement;
- to pay to the servicer any amounts deposited in or credited to the
collection account in error or any amounts for which a mortgagor's
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check has been returned and not honored by the mortgagor's bank for
any reason;
- to remit funds to the trustee for deposit into the applicable
distribution account or reserve fund;
- to clear and terminate the collection account upon the stated maturity of
the related series of bonds; and
- for other purposes as provided in the servicing agreement.
COLLECTION AND OTHER SERVICING PROCEDURES
The servicer will collect with diligence all required payments under the
eligible mortgage loans securing the series of bonds. To do this, the servicer
may, in its discretion:
- waive any prepayment charge, assumption fee, late payment charge or any
other charge in connection with the prepayment of an eligible mortgage
loan; and
- arrange with a mortgagor a plan of relief, including a modification or
extension of the mortgage loan, when appropriate, rather than
recommending liquidation.
In addition, the servicer may permit the modification of an eligible
mortgage loan for the loan which the mortgagor has indicated its desire to
refinance, but the mortgage loan must continue to be an eligible mortgage loan
following the modification. Any arrangement of this kind will be made only upon
determining that the coverage of the eligible mortgage loan by any private
mortgage insurance policy will not be affected.
Under the servicing agreement for a series of bonds, the servicer will be
required to enforce "due-on-sale" clauses for the eligible mortgage loans to the
extent contemplated by the terms of the eligible mortgage loans and permitted by
applicable law. Where an assumption of, or substitution of liability to, an
eligible mortgage loan is required by law, the servicer may permit the
assumption of an eligible mortgage loan. If an assumption is to be allowed:
- the mortgagor will remain liable on the mortgage loan, or a substitution
of liability of the eligible mortgage loan; and
- the new mortgagor will be substituted for the original mortgagor as being
liable on the mortgage loan.
Before allowing assumption, the servicer must receive assurance that the
private mortgage insurance policy covering the eligible mortgage loan will not
be affected.
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The servicing agreement may require the servicer to establish and maintain
one or more escrow accounts to receive mortgagors' deposit amounts sufficient to
pay taxes, assessments, hazard insurance premiums or comparable items.
Withdrawals from the mortgagors' escrow accounts may, among other things, be
made:
- to make timely payment of taxes, assessments and hazard insurance
premiums or comparable items;
- to reimburse the servicer out of related assessments for maintaining
hazard insurance;
- to refund to mortgagors amounts determined to be overages;
- to remit to mortgagors, if required, interest earned, if any, on balances
in any of the escrow accounts; and/or
- to repair or otherwise protect the mortgaged property and to clear and
terminate any of the escrow accounts.
The servicer will be solely responsible for administration of the escrow
accounts and will be expected to make advances to such accounts when a
deficiency exists.
HAZARD INSURANCE
Under the servicing agreement for a series of bonds, unless otherwise
provided in the prospectus supplement for that series, the servicer will be
required to maintain for each eligible mortgage loan a hazard insurance policy
providing coverage against loss by fire and other hazards which are covered
under the standard extended coverage endorsement customary in the state in which
the mortgaged property is located. The coverage will be in an amount at least
equal to the lesser of the outstanding principal balance of the eligible
mortgage loan or the replacement cost of the related mortgaged property.
As set forth above, all amounts collected by the servicer under any hazard
policy will be deposited in the collection account, except for amounts to be
applied to the restoration or repair of the mortgaged property or released to
the mortgagor in accordance with the servicer's normal servicing procedures.
In the event that the servicer maintains a blanket policy insuring against
hazard losses for those eligible mortgage loans, it shall conclusively be deemed
to have satisfied its obligation relating to the maintenance of hazard
insurance. The servicer is required to maintain a fidelity bond and errors and
omissions policy, or their equivalent, with respect to officers and employees.
This bond or policy must provide coverage against losses which may be sustained
as a result of an officer's or employee's misappropriation of funds or errors
and omissions in failing to maintain insurance. The bond or policy will be
subject to
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limitations as to amount of coverage, deductible amounts, conditions, exclusions
and exceptions in the form and amount specified in the servicing agreement.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements on the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions particularized in each
policy. Because policies relating to the eligible mortgage loans will be
underwritten by different insurers, under different state laws, in accordance
with different applicable state forms and laws, they will not contain identical
terms and conditions. But most policies typically do not cover, among other
things, any physical damage resulting from the following: war, revolution,
governmental actions, floods and other water-related causes, earth movement,
including earthquakes, landslides and mud flows, nuclear reactions, wet or dry
rot, vermin, rodents, insects or domestic animals, theft and, in some cases,
vandalism.
If, however, any mortgaged property is located in an area identified by the
Federal Emergency Management Agency as having special flood hazards and flood
insurance has been made available, then the servicer will maintain a flood
insurance policy with a generally acceptable insurance carrier. This policy will
meet the requirements of the current guidelines of the Federal Insurance
Administration. The flood insurance policy will provide coverage in an amount
not less than the least of:
- the unpaid principal balance of the eligible mortgage note;
- the insurable value of the mortgaged property; or
- the maximum amount of insurance available under the Flood Disaster
Protection Act of 1973, as amended.
The hazard insurance policies covering the mortgaged properties typically
contain a clause which, in effect, requires the insured at all times to carry
insurance of a specified percentage, generally 80% to 90%, of the full
replacement value of the improvements on the property in order to recover the
full amount of any partial loss. If the insured's coverage falls below this
specified percentage, that clause provides that the insurer's liability in the
event of partial loss does not exceed the larger of: (1) the replacement cost of
the improvements less physical depreciation; or (2) the proportion of the loss
as the amount of insurance carried bears to the specified percentage of the full
replacement cost of these improvements. To the extent residential properties
appreciate in value over time, in the event of partial loss, hazard insurance
proceeds may be insufficient to restore fully the damaged property.
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PRIVATE MORTGAGE INSURANCE
Unless otherwise specified by the prospectus supplement for a series, an
eligible mortgage loan secured by a mortgaged property having an original loan-
to-value ratio in excess of 80% must have a private mortgage insurance policy.
This policy must insure against default of all, or a specified portion, of the
principal amount which is in excess of a percentage of the appraised value of
the mortgaged property as specified under Fannie Mae and Freddie Mac guidelines.
If applicable, evidence of each private mortgage insurance policy will be
provided to the trustee simultaneously with the pledge to the trustee of the
related eligible mortgage loan.
MAINTENANCE OF INSURANCE POLICIES; CLAIMS THEREUNDER AND OTHER REALIZATION UPON
DEFAULTED ELIGIBLE MORTGAGE LOANS
The servicer will exercise its best reasonable efforts to keep each private
mortgage insurance policy, if any, in full force and effect at least until the
outstanding principal balance of the related mortgage loan is equal to 80% or
less of the appraised value of the mortgaged property or such other percentage
required by applicable law. The servicer has agreed or will agree to pay the
premium for each private mortgage insurance policy on a timely basis in the
event that the mortgagor does not make these payments.
The servicer, on behalf of the trustee and the holders, will present claims
to the insurer under an applicable private mortgage insurance policy and will
take reasonable steps necessary to permit recovery under the insurance policy
for the defaulted eligible mortgage loans. All collections by the servicer under
the policies that are not applied to the restoration of the related mortgaged
property are to be deposited in the collection account subject to withdrawals as
described in the servicing agreement for each series of bonds.
If any property securing a defaulted eligible mortgage loan is damaged and
the proceeds, if any, from the hazard insurance policy are insufficient to
restore the damaged property to a condition sufficient to permit recovery under
any applicable private mortgage insurance policy, the servicer will not be
required to expend its own funds to restore the damaged property unless the
servicer determines:
(1) that the restoration will increase the proceeds to holders upon
liquidation of the eligible mortgage loan after reimbursement of
the servicer for its expenses; and
(2) that the expenses will be recoverable to it through liquidation
proceeds.
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SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's primary compensation for its activities as servicer will
come from the payment to it, with respect to each interest payment on an
eligible mortgage loan, of an amount equal to the servicing fee. As principal
payments are made on the eligible mortgage loans, the portion of each monthly
payment which represents interest will decline, and, as a result, servicing
compensation to the servicer will decrease as the eligible mortgage loans
amortize. Prepayments and liquidations of eligible mortgage loans prior to
maturity will also cause servicing compensation to the servicer to decrease.
In addition, the servicer will be entitled to retain late payment charges
and other fees and expenses related to loan assumptions, delinquencies,
modifications, partial releases of security and releases for payment in full, if
any, to the extent collected from mortgagors and investment income earned on
funds in the collection account.
The servicer will pay all expenses incurred in connection with its
activities as servicer, subject to limited reimbursement as described above,
including payment of expenses incurred in connection with distributions and
reports to the trustee for each series of bonds.
EVIDENCE AS TO COMPLIANCE
The servicing agreement relating to a series of bonds secured in whole or
in part by eligible mortgage loans will provide that the servicer, at its
expense, will have a firm of independent public accountants furnish a report
annually to the trustee. The report will state that the firm has examined
certain documents relating to the servicing of the eligible mortgage loans and
that this review has disclosed no items of material noncompliance with the
provisions of the servicing agreement, except for the items of material
noncompliance as will be described in the report.
The trustee will provide an annual statement, signed by an officer of the
servicer, stating the servicer has fulfilled its obligations under the servicing
agreement throughout the preceding year.
RESIGNATION OF THE SERVICER; SUCCESSOR SERVICER
The servicer may not resign from its obligations and duties as servicer,
except upon:
(1) the appointment of a successor servicer and receipt by the trustee
of a letter from each rating agency that the resignation and
appointment will not result in the withdrawal, qualification or
downgrading of the ratings not assigned to the bonds for that
series; or
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(2) the determination that its duties thereunder are no longer
permissible under applicable law and this incapacity cannot be
cured by the servicer.
No resignation under (2) above will become effective until the trustee or a
successor has assumed the servicer's obligations and duties under the servicing
agreement.
An entity which executes an agreement to assume and to perform every
obligation of the servicer will be the successor to the servicer under the
servicing agreement. The entity may be one:
- into which the servicer may be merged or consolidated;
- which may result from any merger or consolidation to which the servicer
is a party; or
- which may succeed to the properties and assets of the servicer
substantially as a whole.
This succession will not require the execution or filing of any paper or
any further act on the part of any of the parties to the servicing agreement.
EVENTS OF DEFAULT UNDER THE SERVICING AGREEMENT
Events of default by the servicer under the servicing agreement for each
series of bonds secured in whole or in part by eligible mortgage loans will
consist of:
- any failure by the servicer to distribute to the trustee on behalf of
holders any required payment which continues unremedied for five days;
- any failure by the servicer to observe or perform, in any material
respects, any other of its covenants or agreements in the servicing
agreement and which continues unremedied for 60 days after the giving
of written notice of the failure to the servicer by the trustee, or to
the servicer by the holders of not less than 25% in aggregate
principal amount of the outstanding bonds; and
- events of insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings and actions by the servicer
indicating insolvency, reorganization or inability to pay its
obligations.
RIGHTS UPON EVENT OF DEFAULT
As long as an event of default under the servicing agreement for a series
of bonds secured in whole or in part by eligible mortgage loans remains
unremedied, the trustee or holders of not less than 50% in aggregate principal
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amount of the outstanding bonds may terminate all of the rights and obligations
of the servicer under the servicing agreement. Then the trustee will succeed to
all the responsibilities, duties and liabilities of the servicer under the
servicing agreement and will be entitled to similar compensation arrangements
and limitations on liability.
In the event that the trustee is unwilling or unable to so act, it may
appoint or petition a court of competent jurisdiction for the appointment of a
successor. The successor will be:
- a housing and home finance institution with a net worth of at least
$50,000,000;
- which is an approved seller-servicer of conventional residential mortgage
loans for Fannie Mae or Freddie Mac;
- an FHA approved mortgagee;
- a VA approved lender; and
- will act under the servicing agreement.
Pending an appointment of a successor, the trustee is obligated to act in
this capacity. The trustee and the successor may agree upon the servicing
compensation to be paid, which in no event may be greater than the compensation
to the servicer under the servicing agreement.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
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GENERAL
This section summarizes the United States federal income tax issues that
you, as a bondholder, may consider relevant. Hunton & Williams and Cadwalader,
Wickersham & Taft, Main Place's counsel, have reviewed this section and have
given us an opinion that this section correctly describes the relevant law and
fairly summarizes the federal income tax issues that may be material to you in
connection with your acquisition, ownership, and disposition of the bonds of any
series, except as otherwise set forth in an applicable prospectus supplement.
Because this section is a summary, it does not address all of the tax issues
that may be important to you. In addition, this section does not address all of
the tax issues that may be important to particular categories of investors, some
of which may be subject to special treatment under the federal income tax laws.
The statements in this section and the opinions of Hunton & Williams and
Cadwalader, Wickersham & Taft are based on current federal income tax laws
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and judicial and administrative interpretations thereof. We cannot assure you
that new laws, interpretations thereof, or court decisions, any of which may
take effect retroactively, will not cause any statement in this section to
become inaccurate.
WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF INVESTING IN THE BONDS. SPECIFICALLY, YOU SHOULD CONSULT
YOUR OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX
CONSEQUENCES OF YOUR INVESTMENT, AND REGARDING POTENTIAL CHANGES IN APPLICABLE
TAX LAWS.
TAX STATUS OF THE BONDS
In the opinion of Hunton & Williams and Cadwalader, Wickersham & Taft, the
bonds will be treated as indebtedness of Main Place for federal income tax
purposes.
An entity that is treated as a "taxable mortgage pool" for federal income
tax purposes will be taxed as a corporation. An entity will be treated as a
taxable mortgage pool for federal income tax purposes if:
- substantially all of the entity's assets are debt obligations, more than
50% of which are real estate mortgages;
- the entity has issued debt obligations with two or more maturities; and
- the payments that the entity makes as a debtor are related to the
payments that the entity receives as a creditor.
To the extent that Main Place issues a single-class series of bonds, Main Place
will not be treated as a taxable mortgage pool for federal income tax purposes
because that series of bonds will not have two or more maturities. To the extent
that Main Place issues a multi-class series of bonds, Main Place will not be
treated as a taxable mortgage pool for federal income tax purposes because the
payments Main Place makes on the bonds will not bear a relationship to the
payments Main Place receives on the underlying mortgage loans. Instead, the
entire principal balance of the bonds will be paid at their stated maturity.
INTEREST, DISCOUNT, AND PREMIUM
If you are a U.S. person, you will take into account interest paid on the
bonds as ordinary income from U.S. sources as it is paid or accrues, depending
on your method of accounting. The term "U.S. PERSON" means:
- a citizen or resident of the United States;
- a corporation or partnership organized in or under the laws of the United
States, any State, or the District of Columbia (including an entity
treated as a corporation or partnership for tax purposes);
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- an estate the income of which is includible in gross income for U.S. tax
purposes, regardless of its connection with the conduct of a trade or
business within the United States; or
- any trust with respect to which: (1) a U.S. court is able to exercise
primary supervision over the administration of the trust; and (2) one
or more U.S. persons have the authority to control all substantial
decisions of the trust.
Unless otherwise provided in the prospectus supplement for a series, we expect
that initial bond owners of each series or class will acquire the bonds at par
or at a discount to par that is considered de minimis under the federal income
tax laws. As a result, if you are an initial bond owner, you will have neither
original issue discount, market discount, nor premium amortization with respect
to the bonds.
If you acquire a bond after its issuance, you will be treated as purchasing
an interest in the bond at a price determined by allocating the purchase price
paid for the bond as follows:
- first, to accrued interest from the preceding interest payment date to
the day prior to the date of purchase; and
- second, to the principal amount of the bond.
To the extent that you purchase a bond for an amount that is less than its
stated principal amount, you will be deemed to have acquired the bond at a
discount. To the extent that you purchase a bond for an amount that is greater
than its stated principal amount, you will be deemed to have acquired the bond
at a premium.
MARKET DISCOUNT
If you acquire a bond after its issuance for an amount that is less than
its stated principal amount, the excess of the stated principal amount over your
purchase price will be treated as "MARKET DISCOUNT" under the federal income tax
laws, unless the excess is less than a specified de minimis amount. You will be
required to treat any gain recognized upon the maturity or sale of the bond as
ordinary income to the extent of the accrued, but not previously taxed, market
discount on the bond, unless you elect to report this market discount over the
life of the bond using either a ratable accrual or a constant yield method, as
described below. In addition, you generally will be required to defer interest
deductions attributable to any debt you incur to purchase or carry the bond to
the extent that your interest deductions for any year exceed your interest
income on the bond for that year. The amount of deferred interest expense is
limited to the amount of market discount income that accrues, but is not
recognized currently. You generally will be allowed to deduct the deferred
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<PAGE> 170
interest expense no later than the year in which you recognize the related
market discount income, the bond matures, or you sell the bond.
Market discount generally will accrue ratably over the life of a bond
unless you elect to accrue it on a constant interest basis. In addition, you may
elect to include market discount in income currently as it accrues. If you make
the current inclusion election, you will not be subject to the interest deferral
rule described above. Once made, the current inclusion election will apply to
all market discount debt instruments that you acquire during or after the
taxable year of the election and may be revoked only with the consent of the
Internal Revenue Service. You should consult your own tax advisor as to the
application of the market discount rules to you.
A provision in the Clinton Administration's budget proposal for fiscal year
2000 would require you, if you use the accrual method of accounting, to include
market discount in your income as it accrues. That proposal would be effective
for debt instruments acquired on or after the date of enactment of the
provision. It is unclear whether that provision will be enacted into law in its
currently proposed form and, if so, when such enactment will occur. That
proposal does not appear in tax legislation passed by the U.S. House of
Representatives and Senate in August, 1999.
PREMIUM
If you acquire a bond after its issuance for an amount that is greater than
its stated principal amount, the excess of your purchase price over the stated
principal amount will be treated as "PREMIUM" under the federal income tax laws.
If you hold the bond as a capital asset, you may elect under the federal income
tax laws to amortize the premium over the remaining term of the bond on the
basis of a constant interest rate, based on the applicable compounding period.
The premium amortized in any year will not be a separate deduction item, but
instead will offset your interest income on the bond. An election to amortize
bond premium will apply to all taxable debt instruments that you acquire at a
premium during or after the taxable year of the election and may be revoked only
with the consent of the Internal Revenue Service.
SALE, EXCHANGE, AND RETIREMENT OF BONDS
Upon the sale, exchange, retirement, or other disposition of a bond, you
generally will recognize gain or loss equal to the difference between the amount
realized in the transaction and your adjusted tax basis in the bond. In general,
your adjusted tax basis will equal:
- the amount you paid for the bond;
- plus any market discount that you previously included in your income with
respect to the bond; and
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- minus any amortized premium that you previously deducted from your income
with respect to the bond.
Any gain or loss generally will be capital gain or loss if you held the bond as
a capital asset, except in the following situations:
- to the extent of accrued market discount on the bond that you have not
previously included in income;
- if you are a bank or other financial institution that is subject to
special provisions of the federal income tax laws; or
- if you hold a bond as part of a "conversion transaction," as defined in
the federal income tax laws, in which case a portion of the gain will
be treated as ordinary income.
The highest marginal individual income tax rate is 39.6%. The maximum tax rate
on long-term capital gain applicable to non-corporate taxpayers is 20% for sales
and exchanges of assets held for more than one year. Thus, the tax rate
differential between capital gain and ordinary income for non-corporate
taxpayers may be significant. The maximum tax rate for corporations is the same
with respect to both ordinary income and capital gains.
BACKUP WITHHOLDING
You may be subject to backup withholding under the federal income tax laws
at the rate of 31% on payments on the bonds and proceeds from the sale of the
bonds to or through some brokers unless you either:
- are a corporation or come within another exempt category and, when
required, demonstrate this fact; or
- provide us or our paying agent with a taxpayer identification number,
certify as to no loss of exemption from backup withholding, and
otherwise comply with the applicable requirements of the backup
withholding rules.
Any amounts we withhold from payments on the bonds will be creditable against
your federal income tax liability.
The Treasury Department has issued final regulations regarding the backup
withholding rules as applied to non-U.S. persons. Those regulations alter the
current system of backup withholding compliance and are effective for payments
made after December 31, 2000.
TAX TREATMENT OF NON-U.S. INVESTORS
This section does not address all aspects of U.S. federal income tax
taxation that may be relevant to you in connection with your acquisition,
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ownership, and disposition of the bonds if you are not a U.S. person, as defined
above. YOU ARE ADVISED TO CONSULT YOUR OWN TAX ADVISOR FOR SPECIFIC TAX ADVICE
CONCERNING THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE BONDS.
As a non-U.S. bond owner, if payments that you receive on the bonds are not
effectively connected with your conduct of a U.S. trade or business, you will
not be subject to the 30% U.S. withholding tax that generally applies to
payments of interest to non-U.S. persons on registered debt issued by U.S.
persons, as long as:
- you provide us with appropriate documentation of your foreign status on
Internal Revenue Service Form W-8;
- you do not actually or constructively own more than 10% of the capital or
profits interests in Main Place;
- you are not a "controlled foreign corporation," within the meaning of the
federal income tax laws, that is related, directly or indirectly, to
Main Place; and
- you are not a bank receiving interest on a loan made in the ordinary
course of your business.
If you do not meet the requirements set forth in the previous paragraph, we
will withhold U.S. income tax at the rate of 30% on the gross amount of any
interest payments made to you on the bonds unless either:
- a lower treaty rate applies and you file the required form evidencing
eligibility for that reduced rate with us or our paying agent; or
- you file Internal Revenue Service Form 4224 with us or our paying agent
claiming that the interest is effectively connected with your conduct
of a U.S. trade or business.
The U.S. Treasury Department has issued final regulations that modify the
manner in which we will comply with the withholding requirements. Those
regulations are effective for payments made after December 31, 2000.
If payments that we make to you on the bonds are treated as effectively
connected with your conduct of a U.S. trade or business, you generally will be
subject to federal income tax on the payments at graduated rates, in the same
manner as U.S. bond owners are taxed with respect to these payments and also may
be subject to the 30% branch profits tax in the case of a non-U.S. bond owner
that is a corporation.
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You generally will not be subject to U.S. federal income taxation,
including U.S. withholding tax, on any gain or income that you realize upon the
sale, exchange, retirement, or other disposition of the bonds unless:
- the gain or income is effectively connected with your conduct of a U.S.
trade or business, in which case you will be subject to the same
treatment as U.S. bond owners with respect to the gain or income; or
- you are a nonresident alien individual who was present in the United
States for 183 days or more during the taxable year and some other tax
requirements are met, in which case you will incur a 30% tax on your
gain.
- --------------------------------------------------------------------------------
ERISA CONSIDERATIONS
- --------------------------------------------------------------------------------
This section summarizes the material issues arising under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the prohibited
transaction provisions of the federal income tax laws. Because this section is a
summary, it does not address all of the issues that may be important to you
under ERISA and the federal income tax laws. It also does not address all of the
issues that may be important to you under state law, to the extent state law is
not preempted, if you are:
- a pension, profit sharing, or other employee benefit plan or a tax-
qualified retirement plan (collectively, "PLANS") subject to Title I
of ERISA;
- an individual retirement account or annuity ("IRA") subject to the
prohibited transaction provisions of the federal income tax laws; or
- a governmental plan or church plan that is exempt from ERISA and the
prohibited transaction provisions of the federal income tax laws but
that may be subject to similar state law requirements.
A FIDUCIARY DECIDING WHETHER TO BUY BONDS ON BEHALF OF A PLAN OR IRA SHOULD
CONSULT ITS OWN LEGAL ADVISOR REGARDING THE SPECIFIC CONSIDERATIONS ARISING
UNDER ERISA, THE FEDERAL INCOME TAX LAWS, AND STATE LAW WITH RESPECT TO AN
INVESTMENT IN THE BONDS BY THE PLAN OR IRA. A FIDUCIARY ALSO SHOULD CONSIDER THE
ENTIRE DISCUSSION UNDER THE HEADING "UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES," BECAUSE THE DISCUSSION IN THAT SECTION IS RELEVANT TO A PLAN OR
IRA'S DECISION TO PURCHASE THE BONDS.
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FIDUCIARY STANDARDS
In accordance with ERISA's general fiduciary standards, before investing in
a bond of any class or series, a plan fiduciary should determine whether the
investment is:
- prudent and in the best interests of the plan, its participants, and its
beneficiaries;
- diversified in order to minimize the risk of large losses, unless it is
clearly prudent not to do so; and
- authorized under the terms of the plan's governing documents, provided
the documents are consistent with ERISA.
PROHIBITED TRANSACTION RULES
ERISA and the federal income tax laws forbid "prohibited" transactions
involving:
- the assets of a plan or IRA; and
- "parties in interest" or "disqualified persons" with respect to the plan
or IRA.
In order to avoid engaging in a transaction that is a prohibited
transaction, plans and IRAs first should identify the parties to the transaction
that could be considered "parties in interest" or "disqualified persons" with
respect to the plan or IRA. "PARTIES IN INTEREST" and "DISQUALIFIED PERSONS"
generally include the following:
- a fiduciary, or its affiliate, of a plan or IRA;
- the IRA owner and beneficiaries;
- a person providing services to a plan or IRA; and/or
- an employer whose employees are covered by a plan or IRA.
Main Place, the underwriter, the trustee, and the loan servicer might each
be considered a party in interest or disqualified person with respect to a plan
or IRA that purchases the bonds. In this case, the acquisition or holding of
bonds by or on behalf of the plan or IRA could be considered to give rise to a
prohibited transaction.
A "party in interest" or "disqualified person" with respect to a plan or
IRA will incur the following taxes:
- an initial 15% excise tax on the amount involved in any prohibited
transaction involving the assets of the plan or IRA; and
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- an excise tax equal to 100% of the amount involved if any prohibited
transaction is not corrected.
If the disqualified person who engages in the transaction is the individual
on behalf of whom an IRA is maintained, or his beneficiary, the IRA will lose
its tax-exempt status. In addition, the assets in the IRA will be deemed to have
been distributed to the individual in a taxable distribution, and no excise tax
will be imposed, on account of the prohibited transaction. Furthermore, a
fiduciary who permits a plan to engage in a transaction that the fiduciary knows
or should know is a prohibited transaction may be liable to the plan for any
loss the plan incurs as a result of the transaction or for any profits earned by
the fiduciary in the transaction. The Department of Labor has exempted specified
categories of transactions from the prohibited transaction rules.
When you purchase a bond, you will be deemed to represent either that:
- you are not a plan and are not purchasing the bond for, or on behalf of,
a plan; or
- your acquisition and holding of the bond qualify for an exemption from
the prohibited transaction rules.
PLAN ASSET REGULATIONS
Department of Labor Regulations defining "plan assets" (the "PLAN ASSET
REGULATIONS") generally provide that when an "ERISA INVESTOR" acquires an equity
interest in an entity, the ERISA Investor's assets include both the equity
interest and an undivided interest in each of the underlying assets of the
issuer of the equity interest, unless one or more exceptions specified in the
plan asset regulations are satisfied. The plan asset regulations define an
equity interest as a security other than a security that is treated as debt for
state law purposes and that has no substantial equity features. Main Place
believes that the bonds will be treated as debt obligations without substantial
equity features for purposes of the plan asset regulations. Accordingly, a plan
that acquires a bond should not be treated as having acquired a direct interest
in the assets of Main Place.
- --------------------------------------------------------------------------------
PLAN OF DISTRIBUTION
- --------------------------------------------------------------------------------
Main Place may sell a series of bonds through one or more of the following
methods:
- by negotiated firm commitment underwriting and public re-offering by
underwriters specified in the prospectus supplement;
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- by placements by Main Place with investors through dealers; and/or
- by direct placements by Main Place with investors.
The prospectus supplement for a series will describe the method of offering
used for the offered classes of bonds and will state the initial public offering
price of the offered classes of bonds, the discounts and commissions to the
underwriters and any discounts or concessions allowed or reallowed to dealers,
or the method by which that price will be determined. It also will disclose the
net proceeds to Main Place from the offering and Main Place's use of those
proceeds.
The underwriters will be obligated to purchase all of the bonds described
in the prospectus supplement if any bonds are purchased. The underwriters may
acquire bonds for their own account and may resell them from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Main Place
will indemnify the underwriters against liabilities under the securities laws.
Banc of America Securities LLC, an affiliate of Main Place, may act as
underwriter of a series of bonds, or may represent an underwriting syndicate.
Banc of America's participation in any offering will comply with the
requirements of National Association of Securities Dealers, Inc.
The place and time of delivery for each series of bonds will be set forth
in the prospectus supplement for that series.
To the extent required by law, this prospectus will be used by Banc of
America Securities in connection with offers and sales related to market-making
transactions. Banc of America Securities may act as principal or agent in these
transactions. Sales may be made at negotiated prices determined at the time of
sale.
- --------------------------------------------------------------------------------
USE OF THE PROCEEDS
- --------------------------------------------------------------------------------
Main Place intends to use all or most of the net proceeds from the sale of
a series of bonds to purchase additional mortgage loans, and/or pay dividends to
its members and/or reduce certain subordinated indebtedness of Main Place.
- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------
Some legal matters, including the legality of the bonds and the federal
income tax consequences of an investment in the bonds, will be passed upon for
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Main Place and the underwriters by Hunton & Williams, Charlotte, North Carolina
or Cadwalader, Wickersham & Taft, New York, New York and Charlotte, North
Carolina, as specified in the prospectus supplement. Certain other legal matters
with respect to the issuance of the bonds will be passed upon by Andrea
Goldenberg, counsel of Bank of America Corporation, Charlotte, North Carolina.
- --------------------------------------------------------------------------------
EXPERTS
- --------------------------------------------------------------------------------
The financial statements of Main Place, which are incorporated in this
prospectus by reference to the Main Place Annual Report on Form 10-K for the
year ended December 31, 1998, have been incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
- --------------------------------------------------------------------------------
LEGAL INVESTMENT
- --------------------------------------------------------------------------------
Unless otherwise provided in the prospectus supplement, no bonds in any
series will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended.
No representation is made as to the proper characterization of the bonds
for legal investment purposes, financial institution regulatory purposes, or
other purposes, or as to the ability of particular investors to purchase
certificates under applicable legal investment restrictions. The uncertainties
described above and any unfavorable future determinations concerning legal
investment or financial institution regulatory characteristics of the
certificates may adversely affect the liquidity of the bonds.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their legal advisors in determining
whether and to what extent the certificates of any class constitute legal
investments or are subject to investment, capital or other restrictions.
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- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows Main Place to "incorporate by reference" information it
files with the SEC, which means that Main Place can disclose important
information to you by referring you to those documents filed separately with
SEC. The information incorporated by reference is considered to be part of this
prospectus. Information that Main Place files later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information rather than on any different information
included in this prospectus or the accompanying prospectus supplement.
This prospectus incorporates by reference the documents listed below that
Main Place has previously filed with the SEC. These documents contain important
information about Main Place.
- The Annual Report on Form 10-K for the year ended December 31, 1998.
- The Quarterly Report on Form 10-Q for the quarters ended March 31, 1999
and June 30, 1999.
We incorporate by reference any additional documents that we may file with
the SEC under Section 13(a), 13(c), 14 or 15 of the Securities Exchange Act
between the date of this prospectus and the termination of the offering of the
bonds. These documents may include periodic reports, like annual reports on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any
material that we subsequently file with the SEC will automatically update and
replace the information previously filed with the SEC.
You can obtain any of the documents incorporated by reference in this
prospectus from the SEC on its web site which is located at http://www.sec.gov.
You can also obtain these documents from Main Place, without charge, by
requesting them in writing or by telephone at the following address:
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Telephone: (704) 388-7436
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WHERE YOU CAN FIND MORE INFORMATION
Main Place has filed with the SEC a registration statement under the
Securities Act that registers the distribution of bonds. The registration
statement, including the attached exhibits, contains additional relevant
information about Main Place and the bonds. The rules and regulations of the SEC
allow us to omit certain information included in the registration statement from
this prospectus.
In addition, we file annual, quarterly and special reports and other
information with the SEC. You may read and copy this information and the
registration statement at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room Chicago Regional Office
450 Fifth Street, N.W. New York Regional Office Citicorp Center
Room 1024 7 World Trade Center 500 West Madison Street
Washington, DC 20549 Suite 1300 Suite 1400
New York, New York 10048 Chicago, Illinois 60661
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the public reference room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is http://www.sec.gov at
which you can view and download copies of reports, proxy and information
statements and other information filed electronically through the electronic
data gathering, analysis and retrieval ("EDGAR") system. The depositor has filed
the registration statement, including all exhibits, through the EDGAR system and
therefore these materials should be available by logging onto the SEC's web
site. The commission maintains computer terminals providing access to the EDGAR
system at each of the offices referred to above.
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- --------------------------------------------------------------------------------
INDEX OF SIGNIFICANT DEFINITIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
actuarial mortgage loans........... 22
advance............................ 28
affiliated servicer................ 8
balloon mortgage loans............. 22
balloon payment.................... 22
basic maintenance amount........... 11
book-entry bonds................... 11
buy-down fund...................... 24
buy-down loan...................... 24
Cede............................... 7
Cedel.............................. 7
Cedel participants................. 14
Citibank........................... 12
COFI............................... 23
collection account................. 20
condominium loans.................. 26
conventional mortgage loans........ 21
custodian.......................... 44
cut-off date....................... 44
deferred interest.................. 23
definitive bonds................... 17
deposit securities................. 44
determination date................. 31
discount factors................... 31
discounted value................... 31
disqualified persons............... 72
distribution account............... 20
DTC................................ 7
EDGAR.............................. 77
eligible adjustable-rate mortgage
loans............................ 23
eligible collateral................ 11
eligible fixed-rate mortgage
loans............................ 21
eligible mortgage loans............ 21
eligible mortgage pass-through
certificates..................... 27
ERISA.............................. 71
ERISA Investor..................... 73
Euroclear.......................... 7
Euroclear operator................. 15
Euroclear participants............. 15
event of default................... 51
Fannie Mae......................... 29
Fannie Mae certificates............ 29
FHA insured mortgage loans......... 21
Freddie Mac........................ 28
Freddie Mac certificates........... 28
fully amortizing mortgage loan..... 21
Ginnie Mae......................... 30
Ginnie Mae certificates............ 30
government securities.............. 28
GPMs............................... 24
graduated pay mortgage loans....... 24
growing equity mortgage loans...... 24
high balance loans................. 26
indenture.......................... 44
indices............................ 23
IRA................................ 71
jumbo mortgage loans............... 34
LIBOR.............................. 23
lifetime cap....................... 23
manufactured home contracts........ 26
manufactured homes................. 27
margin............................. 23
market discount.................... 67
market value....................... 31
market value rate.................. 34
MERS............................... 44
minimum mortgage interest rate..... 23
Morgan Guaranty.................... 12
mortgage interest rate............. 22
mortgaged properties............... 21
NationsBanc Mortgage............... 36
negative amortization.............. 23
one month treasury................. 23
outstanding........................ 11
over 80% loans..................... 26
parties in interest................ 72
payment caps....................... 23
periodic caps...................... 23
plan asset regulations............. 73
plans.............................. 71
pledged asset mortgage loans....... 25
pledged property................... 11
premium............................ 68
prime.............................. 23
</TABLE>
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<TABLE>
<S> <C>
rapid processing program........... 40
rating agencies.................... 21
redemption......................... 18
reserve fund....................... 20
short-term money market
instruments...................... 30
simple interest mortgage loan...... 22
subsidy account.................... 24
subsidy loans...................... 24
subsidy payment.................... 24
tiered payment mortgage loans...... 24
U.S. person........................ 66
VA guaranteed mortgage loans....... 21
</TABLE>
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$[ ]
MAIN PLACE FUNDING, LLC
MORTGAGE-BACKED BONDS, SERIES [1999- ]
DUE [ ]
---------------------
PROSPECTUS SUPPLEMENT
---------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. No one
has been authorized to provide you with different information.
The offered bonds are not being offered in any state where the offer is not
permitted.
Main Place does not claim the accuracy of the information in this
prospectus supplement and the accompanying prospectus as of any date other than
the dates stated on their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the offered bonds and with respect to their unsold allotments or
subscriptions. In addition, all dealers selling the offered bonds will deliver a
prospectus supplement and prospectus until ninety days following the date of
this prospectus supplement.
[NAME OF UNDERWRITERS]
[date]
<PAGE> 183
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Item 14 is hereby incorporated by reference to Pre-Effective Amendment No.
1 to Form S-3 Registration Statement (No. 333-74817) of Main Place Funding, LLC
filed with the SEC on April 21, 1999.
ITEM 15. INDEMNIFICATION OF MEMBERS.
Item 15 is hereby incorporated by reference to Pre-Effective Amendment No.
1 to Form S-3 Registration Statement (No. 333-74817) of Main Place Funding, LLC
filed with the SEC on April 21, 1999.
ITEM 16. EXHIBITS.
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.
1.2 -- Underwriting Agreement dated May 19, 1999, by and among Main
Place Funding LLC and Banc of America Securities LLC, as
representative of the Underwriters.(7)
2.1 -- Agreement of Merger merging Main Place Holdings Corporation
into Main Place Holdings, LLC, dated as of October 15,
1998.(1)
2.2 -- Agreement and Plan of Merger between Main Place Real Estate
Investment Trust and Main Place Funding, LLC, dated as of
December 22, 1998.(1)
3.1 -- Limited Liability Company Agreement of Main Place Holdings,
LLC, dated as of October 15, 1998.(1)
3.2 -- Amended and Restated Limited Liability Company Agreement of
Main Place Funding, LLC dated as of December 14, 1998.(1)
4.1 -- Form of Indenture.
4.2 -- Indenture dated as of October 31, 1995 between Main Place
Funding Corporation and First National Trust Association, as
Trustee.(2)
4.3 -- Indenture dated as of March 18, 1997 between Main Place
Funding Corporation and First National Trust Association, as
Trustee.(3)
4.4 -- First Supplemental Indenture dated as of November 1, 1996
between Main Place Funding Corporation and First Trust
National Association, as Trustee, in connection with the
Indenture dated October 31, 1995.(4)
4.5 -- Second Supplemental Indenture, dated as of December 23,
1998, between Main Place Funding, LLC and U.S. Bank National
Association, as Trustee, in connection with the Indenture
dated October 31, 1995.(1)
4.6 -- First Supplemental Indenture, dated as of December 23, 1998,
between Main Place Funding, LLC and U.S. Bank National
Association, as Trustee, in connection with the Indenture
dated March 18, 1997.(1)
4.7 -- Indenture dated as of May 25, 1999, between Main Place
Funding, LLC and U.S. Bank National Association, as
Trustee.(7)
</TABLE>
II-1
<PAGE> 184
<TABLE>
<C> <C> <S>
4.8 -- Assignment and Assumption Agreement between NationsBank,
N.A. and Main Place Trust, dated as of December 14, 1998.(1)
4.9 -- Trust Agreement of Main Place Trust, dated as of December
14, 1998.(1)
5.1 -- Opinion of Hunton & Williams with respect to the legality of
the Bonds.
5.2 -- Opinion of Cadwalader, Wickersham & Taft with respect to the
legality of the Bonds.
8.1 -- Opinion of Hunton & Williams with respect to certain of tax
matters.
8.2 -- Opinion of Cadwalader, Wickersham & Taft with respect to
certain of tax matters.
10.1 -- Form of Servicing Agreement.(6)
10.2 -- Servicing Agreement dated as of May 25, 1999, by and between
Main Place Funding LLC and NationsBanc Mortgage
Corporation.(7)
23.1 -- Consent of Hunton & Williams (included as part of Exhibit
5.1 and Exhibit 8.1).
23.2 -- Consent of Cadwalader, Wickersham & Taft (included as part
of Exhibit 5.2 and Exhibit 8.2).
23.3 -- Consent of PricewaterhouseCoopers LLP.
24.1 -- Power of Attorney.(5)
25.1 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 (Form T-1) of U.S. Bank Trust National
Association.(6)
</TABLE>
- -------------------------
(1) Previously filed as an Exhibit to Form 10-K Annual Report of Main Place
Funding, LLC, filed on March 31, 1999.
(2) Previously filed as an Exhibit to the Form 8-K Current Report of Main Place
Funding Corporation filed on October 31, 1995.
(3) Previously filed as an Exhibit to Form 10-Q Quarterly Report of Main Place
Funding Corporation filed on May 15, 1997.
(4) Previously filed as an Exhibit to Form 10-Q Quarterly Report of Main Place
Real Estate Investment Trust filed on November 14, 1996.
(5) Previously filed as an Exhibit to Form S-3 Registration Statement (No.
333-74817) of Main Place Funding, LLC filed on March 22, 1999.
(6) Previously filed as an Exhibit to Pre-Effective Amendment No. 1 to Form S-3
Registration Statement (No. 333-74817) of Main Place Funding, LLC filed on
April 21, 1999.
(7) Previously filed as an Exhibit to the Form 8-K Current Report of Main Place
Funding, LLC, filed on May 25, 1999.
ITEM 17. UNDERTAKINGS.
Item 17 is hereby incorporated by reference to Pre-Effective Amendment No.
1 to Form S-3 Registration Statement (No. 333-74817) of Main Place Funding, LLC
filed with the SEC on April 21, 1999.
II-2
<PAGE> 185
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 1 to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Charlotte, State of North Carolina, on August 27,
1999.
MAIN PLACE FUNDING, LLC
(Registrant)
By: /s/ JOHN E. MACK
-----------------------------------
John E. Mack
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN E. MACK President August 27, 1999
- ----------------------------------------------------- (Principal
John E. Mack Executive Officer)
/s/ NEIL A. COTTY Treasurer and Senior August 27, 1999
- ----------------------------------------------------- Vice President/
Neil A. Cotty Principal Financial
and Accounting
Officer (Principal
Financial and
Accounting Officer)
BANK OF AMERICA, N.A.
By: /s/ JOHN E. MACK Managing Member August 27, 1999
-------------------------------------------------
John E. Mack
MAIN PLACE TRUST
By: /s/ JOHN E. MACK Special Managing August 27, 1999
------------------------------------------------- Member
John E. Mack
Business Trustee
</TABLE>
II-3
<PAGE> 1
EXHIBIT 1.1
UNDERWRITING AGREEMENT
MAIN PLACE FUNDING, LLC
UNDERWRITING AGREEMENT
_________, 1999
To the Representatives
named in Schedule I
hereto of the Underwriters
named in Schedule II hereto
Dear Sirs:
Main Place Funding, LLC, a Delaware limited liability company (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 "Bonds"), to be issued under an indenture (the
"Indenture") dated as of __________, 1999 between the Company and
_____________________ 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 Bonds. 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 Bonds 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
1
<PAGE> 2
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).
2
<PAGE> 3
(c) The Company has been duly organized and is validly
existing as a limited liability company under the laws of the State of
Delaware and has 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 Bonds set forth opposite such
Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the Bonds
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 Bonds being herein called the "Closing
Date"). Delivery of the Bonds 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 a class of
Bonds are to be issued in book-entry form, delivery of those classes of Bonds
shall be made through the facilities of the depository or depositories set forth
on Schedule I. Alternatively, certificates for the Bonds 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 Bonds available for inspection,
checking and packaging by the Representatives in Charlotte, North Carolina, not
later than 1:00 p.m., Charlotte 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 Bonds to persons in the
3
<PAGE> 4
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 Bonds, 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 Bonds, 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
Bonds, 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 filed via the Commission's Electronic Data
Gathering Analysis and Retrieval System pursuant to Rule 424. The
Company will advise the Representatives promptly (i) when the Final
Prospectus shall have been filed with the Commission for filing
pursuant to Rule 424, (ii) when any amendment to the Registration
Statement relating to the Bonds 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 Bonds 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 Bonds 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
4
<PAGE> 5
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
Bonds 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
5
<PAGE> 6
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 Banc of America Securities LLC.
(f) The Company will arrange for the qualification of
the Bonds 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 Bonds and will arrange for the determination of the legality of
the Bonds 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 one or more classes
of the Bonds 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 class or classes of Bonds 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 Bonds but shall have no obligation to list the Bonds on
an alternative exchange.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Bonds 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.
6
<PAGE> 7
(b) The Company shall have furnished to the
Representatives the opinion of [Hunton & Williams] [Cadwalader,
Wickersham & Taft], counsel for the Company, dated the Closing Date,
to the effect of paragraphs (iii), (iv), (vi), (vii), (ix) and (x)
below, and the opinion of Andrea Goldenberg or other special counsel
to the Company, dated the Closing Date, to the effect of paragraphs
(i), (ii), (v) and (viii) below:
(i) the Company is a duly organized and validly
existing limited liability company in good standing under the
laws of the State of Delaware, has the 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 Bonds 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
Bank of America, N.A. ("Bank of America, N.A."), its indirect
parent, in the event that Bank of America, 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 Bonds 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 Bank of America, N.A., its indirect parent,
in the event that Bank of America, N.A. is placed into a
conservatorship or receivership pursuant to the Federal
Deposit Insurance Act, as amended, or the consequences flowing
therefrom;
7
<PAGE> 8
(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 Bank of America,
N.A., its indirect parent, in the event that Bank of America,
N.A. is placed into a conservatorship or receivership
pursuant to the Federal Deposit Insurance Act, as amended, or
the consequences flowing therefrom;
8
<PAGE> 9
(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 Bonds
by the Underwriters and such other approvals (specified in
such opinion) as have been obtained;
(ix) neither the issue and sale of the Bonds,
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 certificate of formation or limited liability
company agreement 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 Representative shall have received from [Hunton
& Williams] [Cadwalader, Wickersham & Taft], counsel for the
Underwriters, such opinion or opinions, dated the Closing Date, with
respect to the issuance and sale of the Securities, the Indenture, the
Registration Statement, the Final Prospectus, the non-consolidation of
the Company and [___________] in the event of a conservatorship or
receivership of [____________] and such other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(d) 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 Bonds 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 Bonds or
alternatively, an opinion with respect to such matters may be included
in the opinion provided under Section 6(b), and (ii)
9
<PAGE> 10
certain matters relating to the Company and Bank of America, N.A. in
the event of a conservatorship or receivership of Bank of America, N.A.
(e) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Managing
Member 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.
(f) (i) On the date hereof, PricewaterhouseCoopers
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 PricewaterhouseCoopers 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.
10
<PAGE> 11
(ii) On the Closing Date, PricewaterhouseCoopers
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 PricewaterhouseCoopers LLP,
relating, to the extent such information is not covered in the letter
or letters provided pursuant to clause (f)(i), to a portion of the
information set forth on the Mortgage Loan 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.
(g) The Bonds shall have received the rating or ratings
from the rating agency or rating agencies set forth in Schedule I
hereto.
(h) 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 one or more classes of the Bonds.
(i) 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
Bonds 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 Bonds.
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
11
<PAGE> 12
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 Bonds 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 Loans 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
Bonds 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 Bonds 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 Bonds 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
12
<PAGE> 13
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 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
13
<PAGE> 14
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 Bonds 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 Bonds) be responsible under this subparagraph
(i) for any amount in excess of the underwriting discount
applicable to the Bonds 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
14
<PAGE> 15
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 Bonds 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 Bonds set forth
opposite their names in Schedule II hereto bear to the aggregate amount of
Bonds set forth opposite the names of all the remaining Underwriters) the Bonds
which the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the aggregate amount of Bonds which
the defaulting Underwriter or Underwriters agreed but failed to purchase shall
exceed 10% of the aggregate amount of Bonds 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 Bonds, and if such
nondefaulting Underwriters do not purchase all the Bonds, 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 Bonds which constitute
15
<PAGE> 16
"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 Bonds 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 Bonds (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 Bonds 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
16
<PAGE> 17
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 Bonds 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
Bonds 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.
17
<PAGE> 18
(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 Bonds, 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 Bonds.
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 Bonds. 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: [Hunton & Williams, Bank of America Plaza,
Suite 3500, 101 South Tryon Street, Charlotte, North Carolina 28280, Attn:
Michael Nedzbala, Esq.] [Cadwalader, Wickersham & Taft, 100 Maiden Lane, New
York, New York 10038, Attn: Jordan M. Schwartz, 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: [Hunton & Williams, Bank of America Plaza, Suite
3500, 101 South Tryon Street, Charlotte, North Carolina 28280, Attn: Michael
Nedzbala, Esq.] [Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New
York 10038, Attn: Jordan M. Schwartz, 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.
18
<PAGE> 19
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 FUNDING, LLC
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
- ----------------------------------
- ----------------------------------
- ----------------------------------
- ----------------------------------
By:
--------------------------------------
By:
--------------------------------------
For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
19
<PAGE> 20
SCHEDULE I
Underwriting Agreement dated ____________, 1999
Registration Statement No. 333-71489
Representatives:
---------------------------------
Title, Purchase Price and Description of Bonds:
Title: Mortgage-Backed Bonds, Series ______ due _____
Aggregate amount: $
-----------------
Principal Interest Stated Purchase
Amount Rate Maturity Price(1)
--------- -------- -------- --------
Class A1
Class A2
(1) (type of funds and accrued interest or amortization, if applicable)
Bond Ratings: (indicate rating level and name of each rating agency)
Form of Bonds: (indicate physical or book-entry)
Depository: The Depository Trust Company
Stock Exchange listing: Luxembourg Stock Exchange
Other provisions: None.
Closing Date, Time and Location: ________, 1999, ____ a.m., New York City time,
office of _________________.
20
<PAGE> 21
SCHEDULE II
<TABLE>
<CAPTION>
Principal Amount
of Bonds to
be Purchased
------------------
Underwriters Class A1 Class A2
- ------------ -------- --------
<S> <C> <C>
</TABLE>
21
<PAGE> 1
EXHIBIT 4.1
INDENTURE OF TRUST
MAIN PLACE FUNDING, LLC
ISSUER
AND
[ ]
TRUSTEE
--------------
INDENTURE OF TRUST
DATED AS OF [ ]
--------------
$[ ]
MORTGAGE-BACKED BONDS, SERIES [ ], DUE [ ]
<PAGE> 2
TABLE OF CONTENTS
GRANTING CLAUSES
CLAUSE FIRST
CLAUSE SECOND
CLAUSE THIRD
CLAUSE FOURTH
CLAUSE FIFTH
CLAUSE SIXTH
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<TABLE>
<S> <C>
Section 1.01. Definitions................................................................................6
Accountant......................................................................................7
Accountants' Letter.............................................................................7
Act.............................................................................................7
Adjustable-Rate Mortgage Loan...................................................................7
Affiliate.......................................................................................7
Approved Luxembourg Newspaper...................................................................8
Approved Servicer...............................................................................8
Authenticating Agent............................................................................8
Available Amount................................................................................8
Banc of America Securities......................................................................8
Bank of America, N.A............................................................................9
Basic Maintenance Amount........................................................................9
Beneficial Owner................................................................................9
Bond Register and Bond Registrar................................................................9
Bonds...........................................................................................9
Business Day....................................................................................9
Cash...........................................................................................10
Class..........................................................................................10
Clearing Agency................................................................................10
Clearing Agency Participant....................................................................10
Closing Date...................................................................................10
Collateral.....................................................................................10
Collateral Report..............................................................................10
Collection Account.............................................................................10
Collection Period..............................................................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Commission.....................................................................................11
Condominium Loan...............................................................................11
Conforming 3/1 Eligible Adjustable-Rate Mortgage Loans.........................................11
Conforming 5/1 Eligible Adjustable-Rate Mortgage Loans.........................................11
Conventional Mortgage Loan.....................................................................11
Corporate Trust Office of the Trustee..........................................................12
Corporation....................................................................................12
Cure Date......................................................................................12
Cure Valuation Date............................................................................12
Custodian......................................................................................12
Defaulted Interest.............................................................................12
Definitive Certificate.........................................................................12
Delinquent Mortgage Loan.......................................................................12
Delivery.......................................................................................12
Deposit Security...............................................................................14
Determination Date.............................................................................15
Discounted Value...............................................................................15
Discount Factors...............................................................................17
Distribution Account...........................................................................19
Eligible Account...............................................................................19
Eligible Adjustable-Rate Mortgage Loans........................................................20
Eligible Collateral............................................................................21
Eligible Conventional Fixed-Rate Mortgage Loans................................................22
Eligible Fixed-Rate Mortgage Loans.............................................................22
Eligible Investments...........................................................................23
Eligible Mortgage Loans........................................................................25
Eligible Mortgages.............................................................................26
Event of Default...............................................................................26
Exchange Act...................................................................................27
FDIC...........................................................................................27
FHA............................................................................................27
FHA Insured....................................................................................27
FHLMC..........................................................................................27
FHLMC Certificates.............................................................................27
Fixed-Rate Mortgage Loan.......................................................................28
FNMA...........................................................................................28
FNMA Certificates..............................................................................28
GNMA...........................................................................................28
GNMA Certificates..............................................................................28
Government Securities..........................................................................29
High Balance Loan..............................................................................29
Holder or Bondholder...........................................................................29
HUD............................................................................................29
Indenture......................................................................................29
Independent....................................................................................29
</TABLE>
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<TABLE>
<S> <C>
Initial Collateral.............................................................................30
Interest Payment Date..........................................................................30
Interest Period................................................................................30
Issue Date.....................................................................................31
Issuer.........................................................................................31
Jumbo Loan.....................................................................................31
Jumbo 1/1 Eligible Adjustable-Rate Mortgage Loans..............................................31
Jumbo 3/1 Eligible Adjustable-Rate Mortgage Loans..............................................31
Jumbo 5/1 Eligible Adjustable-Rate Mortgage Loans..............................................31
Jumbo 7/1 Eligible Adjustable-Rate Mortgage Loans..............................................32
Jumbo 10/1 Eligible Adjustable-Rate Mortgage Loans.............................................32
Jumbo 15-Year Eligible Fixed-Rate Mortgage Loans...............................................32
Jumbo 30-Year Eligible Fixed-Rate Mortgage Loans...............................................33
Late Payment...................................................................................33
Latest Collateral Report.......................................................................33
LIBOR..........................................................................................33
LIBOR Business Day.............................................................................33
LIBOR Determination Date.......................................................................34
Lien of this Indenture or lien hereof..........................................................34
Liquidity Date.................................................................................34
Listing Agent..................................................................................34
Loan-to-Value Ratio............................................................................34
Managing Member................................................................................34
Managing Member Resolution.....................................................................35
Market Value...................................................................................35
Market Value Rate..............................................................................38
Material Defect................................................................................40
Maximum Interest Rate..........................................................................40
Mortgage Collateral............................................................................40
Mortgage Documentation.........................................................................40
Mortgage Loans.................................................................................41
Mortgage Notes.................................................................................41
Mortgaged Property.............................................................................41
Mortgages......................................................................................41
NationsBanc Mortgage...........................................................................41
New Eligible Collateral........................................................................41
The New York Times.............................................................................42
Non-Mortgage Collateral........................................................................42
Officer's Certificate..........................................................................42
Opinion of Counsel.............................................................................42
Order..........................................................................................42
Outstanding....................................................................................42
Over 80% Loan..................................................................................44
Paying Agent...................................................................................44
Permitted Index................................................................................44
</TABLE>
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<TABLE>
<S> <C>
Person.........................................................................................45
Pledged Property...............................................................................45
Predecessor Bond...............................................................................45
Prime Rate.....................................................................................45
Prime Rate Determination Date..................................................................46
Prior Valuation Date...........................................................................46
Private Mortgage Insurance.....................................................................46
Rating Agency..................................................................................46
Redemption Date................................................................................47
Redemption Price...............................................................................47
Reference Banks................................................................................47
Regular Record Date............................................................................47
Regular Valuation Date.........................................................................48
Request or Order...............................................................................48
Required Interest Payment Amount...............................................................48
Reserve Fund...................................................................................48
Residential Real Estate........................................................................48
Responsible Officer............................................................................48
Reuters Page LIBO..............................................................................49
Selected Amount................................................................................49
Servicer.......................................................................................49
Servicer Remittance Date.......................................................................49
Servicing Agreement............................................................................50
Special Record Date............................................................................50
State..........................................................................................50
Stated Maturity................................................................................50
Subsidiary.....................................................................................50
Telerate Page 3750.............................................................................50
TIA............................................................................................51
Treasury Index.................................................................................51
Treasury Index Determination Date..............................................................51
Trustee........................................................................................51
UCC51
VA 51
VA Guaranteed..................................................................................52
Vice President.................................................................................52
The Wall Street Journal........................................................................52
Section 1.02. Compliance Certificates and Opinions......................................................52
Section 1.03. Form of Documents Delivered to Trustee....................................................56
Section 1.04. Acts of Holders of Bonds..................................................................57
Section 1.05. Notices, Etc., to Trustee and the Issuer..................................................59
Section 1.06. Notices to Holders of Bonds; Waiver.......................................................60
Section 1.07. Effect of Headings and Table of Contents..................................................61
Section 1.08. Successors and Assigns....................................................................61
Section 1.09. Separability Clause.......................................................................61
</TABLE>
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<TABLE>
<S> <C>
Section 1.10. Benefits of Indenture.....................................................................61
Section 1.11. Governing Law.............................................................................62
Section 1.12. Legal Holidays............................................................................62
Section 1.13. Execution in Counterparts.................................................................62
Section 1.14. The Issuer's Obligations..................................................................63
Section 1.15. Conflict with Trust Indenture Act.........................................................63
ARTICLE II
THE BONDS
Section 2.01. Form, Title and Terms of the Bonds........................................................64
Section 2.02. Denominations of Bonds....................................................................67
Section 2.03. Execution, Authentication, Delivery and Dating............................................67
Section 2.04. Book-Entry Requirements...................................................................69
Section 2.05. Definitive Certificates...................................................................71
Section 2.06. Notices to Clearing Agency................................................................72
Section 2.07. Temporary Bonds...........................................................................73
Section 2.08. Registration; Registration of Transfer and Exchange.......................................74
Section 2.09. Mutilated, Destroyed, Lost or Stolen Bonds................................................75
Section 2.10. Interest Payments; Interest Rights Preserved..............................................77
Section 2.11. Persons Deemed Owners.....................................................................79
Section 2.12. Cancellation..............................................................................80
ARTICLE III
ADMINISTRATION OF ACCOUNTS AND PAYMENTS TO BONDHOLDER
Section 3.01. Establishment and Administration of Distribution Account and Reserve Fund.................80
Section 3.02. Collections and Allocations...............................................................99
Section 3.03. Payments to Bondholders..................................................................100
Section 3.04. Determination of [LIBOR] [Treasury Index] [Prime Rate]...................................102
ARTICLE IV
PROVISIONS AS TO COLLATERAL
Section 4.01. Pledging of Collateral...................................................................109
Section 4.02. Disposition of Payments on Pledged Property..............................................115
Section 4.03. Consents, Waivers and Modifications......................................................116
Section 4.04. Rights of Trustee and the Issuer after Event of Default..................................119
Section 4.05. Delivery of Initial Collateral and Reporting Requirements on Issuance of Bonds...........119
</TABLE>
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<TABLE>
<S> <C>
Section 4.06. Collateral Reports.......................................................................122
Section 4.07. Maintenance of Eligible Collateral.......................................................123
Section 4.08. Withdrawal of Collateral Subject to Maintenance Requirements.............................126
Section 4.09. Additions to Eligible Collateral.........................................................131
Section 4.10. Sales of Bonds Reacquired by the Issuer and Affiliates...................................131
Section 4.11. Investment Company Act Limitation........................................................133
Section 4.12. New Eligible Collateral..................................................................133
Section 4.13. Servicing of Mortgage Loans..............................................................137
ARTICLE V
REMEDIES UPON DEFAULT
Section 5.01. Events of Default........................................................................139
Section 5.02. Acceleration of Maturity; Rescission and Annulment.......................................142
Section 5.03. Trustee's Power in Regard to Pledged Property............................................144
Section 5.04. Incidents of Sale of Pledged Property....................................................149
Section 5.05. Judicial Proceedings.....................................................................151
Section 5.06. Control by Holders of Bonds..............................................................154
Section 5.07. Waiver of Past Defaults..................................................................155
Section 5.08. Limitations on Suits by Holders..........................................................156
Section 5.09. Undertaking to Pay Court Costs...........................................................158
Section 5.10. Application of Moneys Collected by Trustee...............................................159
Section 5.11. Right to Receive Payment Not to Be Impaired..............................................162
Section 5.12. Notice of Defaults to Holders of Bonds...................................................162
Section 5.13. Bonds Held by the Issuer or Affiliate Not to Share in Distribution.......................163
Section 5.14. Waiver of Appraisement, Valuation, Stay and Right to Marshalling.........................163
Section 5.15. Remedies Cumulative; Delay or Omission Not a Waiver......................................164
ARTICLE VI
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities......................................................165
Section 6.02. Certain Rights of Trustee................................................................168
Section 6.03. Not Responsible for Recitals.............................................................171
Section 6.04. May Hold Bonds...........................................................................171
Section 6.05. Money Held in Trust......................................................................171
Section 6.06. Compensation and Reimbursement...........................................................172
Section 6.07. Corporate Trustee Required; Eligibility..................................................174
Section 6.08. Appointment of Custodian.................................................................176
Section 6.09. Resignation and Removal; Appointment of Successor........................................177
Section 6.10. Acceptance of Appointment by Successor to Trustee........................................180
Section 6.11. Merger, Conversion, Consolidation or Succession to Business..............................181
</TABLE>
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<TABLE>
<S> <C>
Section 6.12. Appointment of Co-Trustees...............................................................182
Section 6.13. Authenticating Agent.....................................................................184
Section 6.14. Manner in Which Certain Collateral Held..................................................187
ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER, LEASE OR ASSUMPTION
Section 7.01. The Issuer May Consolidate, Etc., Only on Certain Terms..................................188
Section 7.02. Successor Entity Substituted.............................................................190
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01. Supplemental Indentures Without Consent of Holders of Bonds..............................190
Section 8.02. Supplemental Indentures With Consent of Holders of Bonds.................................193
Section 8.03. Execution of Supplemental Indentures.....................................................195
Section 8.04. Effect of Supplemental Indentures........................................................196
Section 8.05. Reference in Bonds to Supplemental Indenture.............................................196
Section 8.06. Notice of Supplemental Indenture.........................................................196
ARTICLE IX
MEETINGS OF HOLDERS OF BONDS
Section 9.01. Purposes for Which Meetings May Be Called................................................197
Section 9.02. Call, Notice and Place of Meetings.......................................................197
Section 9.03. Persons Entitled to Vote at Meetings.....................................................199
Section 9.04. Quorum; Action...........................................................................199
Section 9.05. Determination of Voting Rights; Conduct and Adjournment of Meetings......................201
Section 9.06. Counting Votes and Recording Action of Meetings..........................................203
ARTICLE X
COVENANTS
Section 10.01. Payment of Principal and Interest; Maintenance of Offices or Agencies...................204
Section 10.02. Paying Agent............................................................................206
Section 10.03. Money for Bond Payments to Be Held in Trust.............................................207
Section 10.04. Warranty of Title and Authority to Pledge...............................................212
Section 10.05. Protection of Lien......................................................................213
Section 10.06. Filing; Opinion of Counsel..............................................................215
Section 10.07. Further Assurances......................................................................216
</TABLE>
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<S> <C>
Section 10.08. Advances by Trustee....................................................................217
Section 10.09. Restriction on Amendment of Certain Instruments........................................217
Section 10.10. Maintenance of Books of Record and Account; Financial Statements of the Issuer.........218
Section 10.11. Statement as to Compliance and Audit of Collateral.....................................219
Section 10.12. Title Insurance........................................................................220
Section 10.13. Fire and Extended Coverage Insurance...................................................221
Section 10.14. Selection of Eligible Mortgage Loans...................................................221
Section 10.15. Notice to Trustee of Change in Regulations.............................................222
Section 10.16. Notices and Copies of Supplemental Indentures, Collateral Reports and Accountants'
Letters to Rating Agencies............................................................222
Section 10.17. Covenants Regarding Issuer's Business..................................................223
Section 10.18. Treatment of Bonds as Debt for Tax Purposes............................................223
ARTICLE XI
REDEMPTION OF BONDS
Section 11.01. Mandatory Redemption Due to Failure to Meet Basic Maintenance Amount...................224
Section 11.02. Selection of Bonds to Be Redeemed......................................................226
Section 11.03. Notice of Redemption...................................................................227
Section 11.04. Bonds Payable on Redemption Date.......................................................229
Section 11.05. Liquidation of Collateral in Respect of Redemption.....................................230
ARTICLE XII
BONDHOLDERS' LISTS AND REPORTING REQUIREMENTS
Section 12.01. Issuer To Furnish Trustee Names and Addresses of Bondholders...........................231
Section 12.02. Preservation of Information; Communications to Bondholders.............................231
Section 12.03. Reports by Trustee.....................................................................234
Section 12.04. Reports by Issuer......................................................................238
Section 12.05. Provisions of this Article Superseded By Trust Indenture Act...........................241
Section 12.06. Luxembourg Reports and Notices.........................................................241
ARTICLE XIII
SATISFACTION AND DISCHARGE
Section 13.01. Satisfaction and Discharge of Indenture................................................243
Section 13.02. Application of Trust...................................................................246
Section 13.03. Termination of Lien....................................................................247
Section 13.04. Repayment of Moneys Held by Paying Agent...............................................247
</TABLE>
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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 BONDS
EXHIBIT I FORM OF ACCOUNTANTS' LETTER
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<PAGE> 11
INDENTURE OF TRUST (the "Indenture"), dated as of the [ ] day of [ ],
[ ] between Main Place Funding, LLC, a Delaware limited liability company (the
"Issuer"), and [ ] (the "Trustee"):
WITNESSETH:
WHEREAS, the Issuer has duly authorized the issue of a series of its
Mortgage-Backed Bonds, Series [ ], Due [ ], Class [A1 and A2] Bonds (the
"Bonds") in the aggregate principal amount of $[ ]; and
WHEREAS, the Issuer will pledge certain property (as described in this
Indenture) to secure all payments of principal of and interest on the Bonds and
to secure the performance of the covenants herein contained; and
WHEREAS, to provide the terms and conditions upon which the Bonds 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 Bonds, 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 Bonds.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Bonds
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 Bonds,
as follows:
GRANTING CLAUSES
To secure the payment of the principal of and interest on the Bonds and
the performance of the covenants contained therein and in this Indenture, and in
consideration of the premises and of the purchase of the Bonds, 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:
<PAGE> 12
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 Loans (and related 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 relating to the Mortgage Loans 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 the related Mortgage Notes has been assumed by any Person other
than the maker thereof; (b) with respect to each Mortgage Loan for which the
related Mortgaged Property is located in the State of [ ], 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 Loan; (c) in the case of FHA Insured or VA Guaranteed
Mortgage Loans, evidence that such Mortgage Loans are FHA Insured or VA
Guaranteed; and (d) an Officers' Certificate or other evidence stating that such
Mortgage Loans are Eligible Fixed-Rate Mortgage Loans or Eligible
Adjustable-Rate Mortgage Loans, as applicable, and, in the aggregate, are
Eligible Mortgage Loans. 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 Loans, to
the extent provided in this Indenture.
In addition, any other payments with respect to, or proceeds of, such
Mortgage Loans, to the extent provided in this Indenture.
2
<PAGE> 13
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 Loans, (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 Bonds;
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 Bonds as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01.00 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
3
<PAGE> 14
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 Bond has the meaning
set forth in Section 1.04.
"ADJUSTABLE-RATE MORTGAGE LOAN" means a Mortgage Loan for which the
related Mortgage Note 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 Loans which meets similar servicing standards to the
standards met by the Issuer or Bank of America, 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).
4
<PAGE> 15
"BANC OF AMERICA SECURITIES" means Banc of America Securities LLC, an
affiliate of the Issuer.
"BANK OF AMERICA, N.A." means Bank of America, N.A., the indirect
parent corporation of the Issuer, or any successor thereto.
"BASIC MAINTENANCE AMOUNT" of the Bonds means, subject to Section 4.12,
as of any date of valuation, the sum of (a) the aggregate principal amount of
the Bonds Outstanding on such date of valuation, plus (b) 90 days' accrued
interest at a rate of [ ]% per annum on the then Outstanding Bonds.
"BENEFICIAL OWNER" means, with respect to any Bond until a Definitive
Certificate is issued therefor pursuant to Section 2.05, the Person who is the
beneficial owner of such Bond, 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.
"BOND REGISTER" and "BOND REGISTRAR" have the respective meanings
specified in Section 2.08.
"BONDS" has the meaning specified in the first recital of 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 in which the Servicer or 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.
"CLASS" when used with respect to any Bond, means the classification
for such Bond as set forth in Section 2.01 hereof.
"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.
5
<PAGE> 16
"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 LOAN" means a Mortgage Loan secured by a condominium unit
located in a building having no more than four stories.
"CONFORMING 3/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means Eligible
Adjustable-Rate Mortgage Loans 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 loan permitted to be purchased by FNMA and FHLMC, currently
$240,000.
"CONFORMING 5/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means Eligible
Adjustable-Rate Mortgage Loans having an original terms 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 loan permitted to be purchased by FNMA and FHLMC, currently
$240,000.
"CONVENTIONAL MORTGAGE LOAN" means a Mortgage Loan 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 [ ].
"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 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.
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<PAGE> 17
"DELINQUENT MORTGAGE LOAN" means an Eligible Mortgage Loan on which any
scheduled payment of principal or interest is 30 days or more contractually
delinquent.
"DELIVERY" when used with respect to Collateral, means:
(a) with respect to Mortgage Loans, subject to the provisions
of the last paragraph of Section 4.01(a), physical delivery of the
related Mortgage Notes 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 Loan for which the
related Mortgaged Property is located in the State of [ ], 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
appropriate 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 Bonds.
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<PAGE> 18
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.
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<PAGE> 19
"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:
<TABLE>
<CAPTION>
Schedule A Schedule B
<S> <C> <C>
Cash ........................................................................
Direct obligations of the United States government
Maturity of 180 days or less.............................................
Maturity more than 180 days but less than one year.......................
Maturity of one year.....................................................
Maturity more than one year but less than or equal to two years..........
Maturity more than two years but less than or equal to three years.......
Maturity more than three years but less than or equal to four years
Maturity more than four years but less than or equal to five years.......
Maturity more than five years but less than or equal to six years........
Maturity more than six years but less than or equal to seven years.......
Maturity more than seven years but less than or equal to ten years.......
Maturity more than ten years but less than or equal to fifteen years
Maturity more than fifteen years but less than or equal to twenty
years..................................................................
Maturity more than twenty years but less than or equal to thirty
years..................................................................
Eligible Fixed-Rate Mortgage Loans
Jumbo 15-Year Eligible Fixed-Rate Mortgage Loans.........................
Jumbo 30-Year Eligible Fixed-Rate Mortgage Loans.........................
Eligible Adjustable-Rate Mortgage Loans
Conforming 3/1 Eligible Adjustable-Rate Mortgage Loans...................
Conforming 5/1 Eligible Adjustable-Rate Mortgage Loans...................
Jumbo 1/1 Eligible Adjustable-Rate Mortgage Loans........................
Jumbo 3/1 Eligible Adjustable-Rate Mortgage Loans........................
Jumbo 5/1 Eligible Adjustable-Rate Mortgage Loans........................
Jumbo 7/1 Eligible Adjustable-Rate Mortgage Loans........................
Jumbo 10/1 Eligible Adjustable-Rate Mortgage Loans.......................
GNMA Certificates............................................................
FHLMC Certificates or FNMA Certificates......................................
</TABLE>
If additional types of Eligible Fixed-Rate Mortgage Loans or Eligible
Adjustable-Rate Mortgage Loans 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 [Rating Agency] and [Rating Agency].
"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
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<PAGE> 20
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
Bondholders 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 Bonds.
"ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means, subject to Section
4.12, Adjustable-Rate Mortgage Loans evidencing whole loans, serviced by an
Affiliate of the Issuer, or by an Approved Servicer, which are Conventional
Mortgage Loans, are fully amortizing, and have an original term to maturity of
not more than 30 years and which, as of the date such Mortgage Loans 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% Loan 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 Loan, 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 Loans as to which there is currently
a Late Payment;
(viii) may be convertible into Fixed-Rate Mortgage Loans;
provided, however, that any Adjustable-Rate Mortgage Loans which are so
converted may not be included in the Eligible Collateral unless they
are recharacterized as Eligible Fixed-Rate Mortgage Loans pursuant to
Section 4.01(d);
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<PAGE> 21
(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 Loan" in this Indenture.
"ELIGIBLE COLLATERAL" means, as of any date, Eligible Mortgage Loans,
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 Loans or Eligible Adjustable-Rate Mortgage Loans may be
included in the Eligible Collateral unless at least 100 Eligible Mortgage Loans
are so included.
"ELIGIBLE CONVENTIONAL FIXED-RATE MORTGAGE LOANS" means Eligible
Fixed-Rate Mortgage Loans that are Conventional Mortgage Loans.
"ELIGIBLE FIXED-RATE MORTGAGE LOANS" means, subject to Section 4.12,
Fixed-Rate Mortgage Loans evidencing whole loans, serviced by an Affiliate of
the Issuer, or by an Approved Servicer, including Conventional Mortgage Loans
and FHA Insured and VA Guaranteed Mortgage Loans, which are fully amortizing,
provide for monthly payments of principal and interest in substantially equal
installments for the contractual term of the Mortgage Loans, have an original
term to maturity of not more than 30 years and which, as of the date such
Mortgage Loans 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% Loan 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 Loan, 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 Loans as to which there is currently
a Late Payment;
(vii) as to FHA Insured or VA Guaranteed Mortgage Loans,
are secured by a Mortgage on a one- to four-family dwelling;
(viii) are not secured by a Mortgage on a mobile home; and
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<PAGE> 22
(ix) comply with the aggregate limitations contained in
the definition of "Eligible Mortgage Loan" 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 Bonds 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 [Rating Agency], such obligation or security need only
be rated by [Rating Agency].
"ELIGIBLE MORTGAGE LOANS" means Eligible Adjustable-Rate Mortgage Loans
and Eligible Fixed-Rate Mortgage Loans that conform to the following additional
limitations:
(i) not more than 25% of the aggregate unpaid principal
balance of all Eligible Mortgage Loans included in the Eligible
Collateral may be Over 80% Loans and not more than 10% of the aggregate
unpaid principal balance of all Eligible Mortgage Loans included in the
Eligible Collateral may be composed of Eligible Mortgage Loans 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 Loans included in the Eligible
Collateral may be High Balance Loans;
(iii) not more than 10% of the aggregate unpaid principal
balance of all Eligible Mortgage Loans included in the Eligible
Collateral may be Condominium Loans; provided, however, that no
investigation of compliance with clauses (i) through (iii) above shall
be required except (i) on the Closing Date with respect to the Initial
Collateral and (ii) at the time a Mortgage Loan is added to or
withdrawn from the Pledged Property
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<PAGE> 23
(provided, that with respect to Mortgage Loans 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 Loans 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 Loans, 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 Loan 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 Loan, the Mortgage Loan
has been insured by the FHA or a written commitment to insure the Mortgage Loan
has been given by the FHA.
"FHLMC" means Freddie Mac (f/k/a the Federal Home Loan Mortgage
Corporation), and includes any successor thereto.
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<PAGE> 24
"FHLMC CERTIFICATES" means single-class certificates issued by FHLMC
which represent undivided interests in specified pools of fully amortizing
Mortgage Loans, or participation interests in Mortgage Loans purchased by FHLMC,
substantially all of which Mortgage Loans 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.
"FIXED-RATE MORTGAGE LOAN" means a Mortgage Loan for which the related
Mortgage Note provides for a fixed rate of interest.
"FNMA" means Fannie Mae (f/k/a 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 Loans
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 Loans 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 LOAN" means a Mortgage Loan with an outstanding principal
balance in excess of $600,000.00.
"HOLDER" or "BONDHOLDER," when used with respect to any Bond, means the
Person in whose name the Bond is registered in the Bond 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
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<PAGE> 25
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 [ ] day of each [ ], [ ], [ ] and [ ]
(or, if any such day is not a Business Day, the next succeeding Business Day)
while the Bonds are Outstanding, commencing [ ].
"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 Bonds.
"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 LOAN" means a Conventional Mortgage Loan 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 1/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means Eligible
Adjustable-Rate Mortgage Loans having an original term to maturity of not more
than 30 years, a fixed rate of interest for an initial period of approximately
one year and an original principal amount of
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<PAGE> 26
more than the maximum amount of a mortgage loan permitted to be purchased by
FNMA and FHLMC, currently $240,000.
"JUMBO 3/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means Eligible
Adjustable-Rate Mortgage Loans 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 loan permitted to be purchased by FNMA and FHLMC, currently $240,000.
"JUMBO 5/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means Eligible
Adjustable-Rate Mortgage Loans 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 loan permitted to be purchased by FNMA and FHLMC, currently $240,000.
"JUMBO 7/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means Eligible
Adjustable-Rate Mortgage Loans having an original term to maturity of not more
than 30 years, a fixed rate of interest for an initial period of approximately
seven years and an original principal amount of more than the maximum amount of
a mortgage loan permitted to be purchased by FNMA and FHLMC, currently $240,000.
"JUMBO 10/1 ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" means Eligible
Adjustable-Rate Mortgage Loans 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 loan permitted to be purchased by FNMA and FHLMC, currently $240,000.
"JUMBO 15-YEAR ELIGIBLE FIXED-RATE MORTGAGE LOANS" means Eligible
Fixed-Rate Mortgage Loans having an original term of 15 years and an original
principal amount of more than the maximum amount of a mortgage loan permitted to
be purchased by FNMA and FHLMC, currently $240,000.
"JUMBO 30-YEAR ELIGIBLE FIXED-RATE MORTGAGE LOANS" means Eligible
Fixed-Rate Mortgage Loans having an original term of 30 years and an original
principal amount of more than the maximum amount of a mortgage loan permitted to
be purchased by FNMA and FHLMC, currently $240,000.
"LATE PAYMENT" means any scheduled payment of principal or interest on
a Mortgage Loan which is 30 days or more contractually delinquent, which payment
for purposes of this Indenture is deemed to be one installment delinquent if
such scheduled payment is not 60 days or more contractually 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).
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["LIBOR" means, for any Interest Payment Date and Interest Period, the
London interbank offered rate for [one, three, six, twelve]-month United States
dollar deposits determined by the Trustee in accordance with Section 3.04.]
["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" when used with respect to any Class of Bonds means the
date that is 15 days prior to the Stated Maturity for such Class.
"LISTING AGENT" means [Kredietbank S.A. Luxembourgeoise], and includes
any successor thereto.
"LOAN-TO-VALUE RATIO" with respect to any Eligible Mortgage Loan, means
the fraction, expressed as a percentage the numerator of which is the original
principal balance of such Eligible Mortgage Loan, 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 Loan or (b) the sales price of
the related Mortgaged Property; provided, however, that in the case of an
Eligible Mortgage Loan resulting from a refinancing, the denominator shall be
the appraised value of the related Mortgaged Property at the time of such
refinancing.
"MANAGING MEMBER" means either the managing member of the Issuer or any
duly authorized person appointed by such managing member to act on behalf of the
managing member.
"MANAGING MEMBER 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 Managing Member and to be in full force and effect on the date of such
certification, and delivered to the Trustee, as required under this Indenture.
"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;
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(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 Bonds 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 Loans (all Eligible Fixed-Rate
Mortgage Loans to constitute one group for purposes of this definition
and all Eligible Adjustable-Rate Mortgage Loans to constitute another
group for purposes of this definition and, within each such group, such
Eligible Mortgage Loans to be subgrouped based on the criteria set
forth in the Servicing Agreement), the lower of the market quotations
for such Eligible Mortgage Loans 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 Loans 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
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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 Loans shall be determined by discounting, at the Market Value
Rate, the remaining scheduled payments of principal of and interest on
such Eligible Mortgage Loans 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 Loan
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 the Late Payment is 30 days
or more (but less than 60 days) contractually delinquent past the end
of the month in which such payment was due, (ii) 50% lower than the
Market Value determined above if the Late Payment is 60 days or more
(but less than 90 days) contractually delinquent, (iii) 75% lower than
the Market Value determined above if the Late Payment is 90 days or
more (but less than 120 days) contractually delinquent, and (iv) zero
if the Late Payment is 120 days or more contractually delinquent.
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 Bonds pursuant to an indenture supplemental hereto making
appropriate provision for such change in methodology with the written
confirmation of [Rating Agency] and [Rating Agency] to the effect that such
change in methodology will not impair, or cause the Bonds to fail to retain, the
ratings then assigned to the Bonds by [Rating Agency] and [Rating Agency],
respectively.
"MARKET VALUE RATE" means:
(a) (i) as to Conventional Mortgage Loans (other than
Jumbo Loans), 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 Loans 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
Loans, 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
Loans, 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;
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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
Loans (including Jumbo Loans), in the event that, as of such date, FNMA
or FHLMC have ceased to conduct auctions or post rates with respect to
such Mortgage Loans and with respect to FHA Insured or VA Guaranteed
Mortgage Loans, 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 Loans included in the
Pledged Property.
"MATERIAL DEFECT" has the meaning set forth in Section 4.01(a).
"MAXIMUM INTEREST RATE" means [ ]% per annum.
"MORTGAGE COLLATERAL" means Eligible Mortgage Loans.
"MORTGAGE DOCUMENTATION" with respect to any Mortgage Loan, means (a)
the promissory note or other evidence of indebtedness evidencing such Mortgage
Loan 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 Loan has been assumed by any Person other
than the maker thereof; (c) with respect to each Mortgage Loan for which the
related Mortgaged Property is located in the State of [ ] 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 Loan, evidence
that such Mortgage Loan is FHA Insured or VA Guaranteed.
"MORTGAGE LOANS" means the individual mortgage loans, together with the
rights and obligations of the holder thereof, now and hereafter subject to this
Indenture, including those mortgage loans which were at any given time, but
thereafter ceased to be Eligible Mortgage Loans, whether by reason of default
thereunder or otherwise.
"MORTGAGE NOTES" means notes or other evidences of indebtedness of a
Mortgagor under a Mortgage Loan.
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"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.
"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.
"OFFICER'S CERTIFICATE" means a certificate signed by the Issuer's
President, a Vice President, or the Principal Financial and Accounting Officer
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Issuer 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 Bonds, as of the date of
determination, means all Bonds 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 Bonds 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 Bonds or
arrangements acceptable to each Rating Agency have been made, in either
case pursuant to Section 10.03; provided, however, that if such Bonds
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 Bonds have been
authenticated and delivered pursuant to this
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Indenture, other than any such Bonds in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such
Bonds are held by a bona fide purchaser in whose hands such Bonds are
valid obligations of the Issuer; provided, however, that in determining
whether the Holders of the requisite principal amount of Bonds
Outstanding are present at a meeting of Holders of Bonds for quorum
purposes or have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, (i) Bonds referred to in clause
(b) above shall be deemed to be Outstanding, and (ii) Bonds owned by
the Issuer or any Affiliate of the Issuer (other than Banc of America
Securities) 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 Bonds which the Trustee knows to be so owned
shall be so disregarded. Bonds so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect
to such Bonds and that the pledgee is not the Issuer or any Affiliate
of the Issuer (other than Banc of America Securities). In addition to
the foregoing, Bonds owned by the Issuer or an Affiliate of the Issuer
(other than Banc of America Securities) 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 Bonds which the Trustee knows to be so owned shall be
disregarded.
"OVER 80% LOAN" means a Mortgage Loan 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 [Bank of America, 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.
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"PLEDGED PROPERTY" has the meaning set forth in the Granting Clauses.
"PREDECESSOR BOND" of any particular Bond means every previous Bond
evidencing all or a portion of the same indebtedness as that evidenced by such
particular Bond; and, for the purposes of this definition, any Bond
authenticated and delivered under Section 2.09 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Bond shall be deemed to evidence the same
indebtedness as the mutilated, destroyed, lost or stolen security.
["PRIME RATE" means, for any Interest Payment Date and Interest Period,
the prime lending rate of major banks published as the "Prime Rate" in the
"Money Rates" section of The Wall Street Journal or, if not available from The
Wall Street Journal, as determined by the Trustee in accordance with Section
3.04.]
["PRIME RATE DETERMINATION DATE" with respect to any Interest Period
subsequent to the initial Interest Period, means the second Business Day
immediately preceding the first day of the Interest Period.]
"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 [Rating Agency] and [Rating Agency]. 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 [ ] or better in the case of [Rating Agency] and [ ] or better
in the case of [Rating Agency]. References herein to the third highest rating
category will mean [ ] or better in the case of [Rating Agency] and [ ] or
better in the case of [Rating Agency]. Reference herein to the second highest
rating category of a Rating Agency will mean [ ] or better in the case of
[Rating Agency] and [ ] or better in the case of [Rating Agency]. 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 [Rating
Agency], such obligation or security need only be rated by [Rating Agency].
"REDEMPTION DATE" when used with respect to any Bond to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"REDEMPTION PRICE" when used with respect to any Bond or portion
thereof to be redeemed, means 100% of the principal amount of such Bond (or
portion thereof) to be redeemed plus interest accrued at the applicable rate on
such principal amount (or portion thereof) to the Redemption Date.
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["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 Bond is due.
"REGULAR VALUATION DATE" means, subject to Section 8.01(7), the [ ]
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 Bond is Outstanding,
commencing [ ].
"REQUEST" or "ORDER" means a written request or order signed by the
Managing Member, the President, a Vice President or the Principal Financial and
Accounting Officer 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.]
"SELECTED AMOUNT" when used with respect to any Class of Bonds means,
(a) as of the Liquidity Date for such Class, an amount equal to the aggregate
principal amount of such Class of Bonds, and the accrued interest thereon, which
would be due at the Stated Maturity for such Class if the Outstanding Bonds of
that Class on such Liquidity Date were Outstanding at the
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Stated Maturity for such Class; 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 that Class of Bonds on a Redemption Date on or
subsequent to such Liquidity Date but no later than the Stated Maturity for such
Class, then the amount described in clause (a) shall not include any accrued
interest or any principal which would be owed on the Class of Bonds (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 [ ] day of any month (or, if such
day is not a Business Day, the first Business Day immediately preceding [ ] such
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 Class of Bonds, means
the date identified in Section 2.01 hereof on which it is expected that a
Bondholder will receive the final payment of principal and accrued interest on a
Bond of that Class.
"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.
["TREASURY INDEX" means, for any Interest Period and Interest Payment
Date, either (i) the weekly average yield on U.S. Treasury securities adjusted
to a constant maturity of [one, three, five, seven or ten] years or (ii) the
weekly auction average (investment) yield on three-month or six-month U.S.
Treasury bills, in each case as determined by the Trustee in accordance with
Section 3.04.].
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["TREASURY INDEX DETERMINATION DATE" with respect to any Interest
Period subsequent to the initial Interest Period, means the second Business Day
immediately preceding the first day of the Interest Period.]
"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 1.02.00 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:
(i) 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;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(iii) 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
(iv) 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:
(i) 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 Bonds, (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;
(ii) 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;
(iii) 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 Bonds at the
time Outstanding, and in the case of authentication and delivery of
Bonds, 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 aggregate principal amount of the Bonds at the
time Outstanding; and
(iv) 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
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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 Bonds 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 Bonds 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 1.03.00 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 1.04.00 Acts of Holders of Bonds
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of Bonds 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
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Holders of Bonds voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders of Bonds 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 Bonds
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 Bond, 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, serial numbers and class designations of
securities held by any Person, and the date of such Holder's holding of the
same, shall be proved by the Bond 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 Bond shall bind every future Holder of
the same Bond and the Holder of every Bond issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such Bond.
(f) The record of any meeting of Holders of Bonds shall be proved in
the manner provided in Section 9.06.
Section 1.05.00 Notices, Etc., to Trustee and the Issuer
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders of Bonds or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
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<PAGE> 40
(a) the Trustee by any Holder of Bonds 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
(b) the Issuer by the Trustee or by any Holder of Bonds 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 1.06.00 Notices to Holders of Bonds; Waiver
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Bonds of any event, such notice shall be
sufficiently given to Holders of the Bonds if in writing and mailed, first-class
postage prepaid, to each Holder of a Bond affected by such event, at the address
of such Holder as it appears in the Bond 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 Bond shall affect the sufficiency of
such notice with respect to other Holders of Bonds. Any notice to a Holder of a
Bond 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 Bonds 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 1.07.00 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 1.08.00 Successors and Assigns
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and assigns, whether so expressed or not.
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Section 1.09.00 Separability Clause
In case any provisions in this Indenture or the Bonds shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 1.10.00 Benefits of Indenture
Nothing in this Indenture or the Bonds, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder and
the Holders of the Bonds, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
Section 1.11.00 Governing Law
THIS INDENTURE AND EACH OF THE BONDS 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 1.12.00 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 Bonds 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 1.13.00 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 1.14.00 The Issuer's Obligations
No recourse may be taken, directly or indirectly, against any
shareholder, officer, member, managing member 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.
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Section 1.15.00 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 II
THE BONDS
Section 2.01.00 Form, Title and Terms of the Bonds
Each Class of Bonds shall be in substantially the form set forth in
Exhibit H for such Class, 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 Class of Bonds is listed or as may, consistently herewith, be
determined by the officers executing such Bonds, as evidenced by such execution.
Any portion of the text of any Bond 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 Bonds which may be authenticated and
delivered under this Indenture is limited to $[ ]; except for Bonds
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of, other Bonds pursuant to Sections 2.07, 2.08, 2.09, 8.05 or
11.04. The Bonds may be issued in one or more Classes, which Classes may have
differing interest rates, priorities as to order of principal and interest
payments and Stated Maturities.
The Bonds shall be known and designated as the "Mortgage-Backed Bonds,
Series [ ], Due [ ]" of the Issuer. Each Class of Bonds shall
bear interest at the rate specified below 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 [ ] day of each [ ], [ ], [ ] and
[ ] (or, if any such day is not a Business Day, on the next Business
Day, commencing [ ] until the principal thereof is paid or made available
for payment.
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For each Class of Bonds, the following table sets forth the
designation, initial principal balance, interest rate and Stated Maturity for
such Class:
<TABLE>
<CAPTION>
Initial
Principal Stated
Class Balance Interest Rate(1) Maturity
<S> <C> <C> <C>
[A1] $ [ ] + [ ]%
[A2] $ [ ] + [ ]%
</TABLE>
------------------
(1) Determined for each Interest Period as set forth in Section 3.04.
Interest on the Bonds shall be computed on the basis of the actual numbers of
days in each Interest Period and a 360-day year.
Interest on the Bonds 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 Bond Register or, upon written
instructions from any such Person holding not less than $5,000,000 aggregate
principal amount of Bonds 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 Bond at the Stated Maturity shall be made upon surrender of such Bond 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 any Class of Bonds to fail to retain,
the ratings then assigned to the Bonds by such Rating Agency.
Each Class of Bonds is subject to mandatory redemption in part, prior
to its Stated Maturity as provided in Article Eleven.
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Section 2.02.00 Denominations of Bonds
The Bonds 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 2.03.00 Execution, Authentication, Delivery and Dating
The Bonds shall be executed on behalf of the Issuer by the President or
any Vice President of the Issuer. Any such signature may be manual or facsimile.
Bonds bearing the manual or facsimile signatures of the President or
any Vice President of the Issuer shall bind the Issuer, notwithstanding that any
such Person has ceased to be such an officer of the Issuer prior to the
authentication and delivery of such securities or was not such an officer of the
Issuer at the date as of which such Bonds were dated.
At any time after the execution and delivery of this Indenture, the
Issuer may deliver Bonds executed by the Issuer to the Trustee or the
Authenticating Agent for authentication, together with an Order for the
authentication and delivery of such Bonds, 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 Bond shall be dated the date of its authentication.
No Bond shall be entitled to any benefit under this Indenture, or be
valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for in Exhibit
H hereto executed by the Trustee or the Authenticating Agent by manual signature
and such certificate upon any Bond shall be conclusive evidence, and the only
evidence, that such Bond has been duly authenticated and delivered hereunder.
Section 2.04.00 Book-Entry Requirements
(a) Until such time as definitive, fully registered certificates
("Definitive Certificates") are issued pursuant to Section 2.05, each Bond shall
bear the following legend or such other legend as is required by the applicable
Clearing Agency:
"Unless this Bond 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 Bond 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 to other such entity as required by an
authorized representative of [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 Bonds shall be issued in the form of
one or more typewritten certificates, to be delivered to The Depository Trust
Company (or retained by the
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<PAGE> 45
Trustee as agent for The Depository Trust Company), the initial Clearing Agency,
by, or on behalf of, the Issuer. Such Bonds shall initially be registered on the
Bond 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 Bonds, 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 Bond Registrar and the
Trustee may deal with the Clearing Agency for all purposes (including
the making of distributions on the Bonds and the taking of actions by
the Bondholders) 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 Bondholders shall, with respect to the Bonds,
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 Bondholders shall,
with respect to the Bonds, 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 Bonds 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 Bonds 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 any Class of Bonds is listed on the [Luxembourg Stock Exchange], the
reports or statement shall be available at the office of the Listing Agent in
[Luxembourg].
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Section 2.05.00 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
Bonds held of record by its nominee, accompanied by re-registration instructions
and directions to execute and authenticate new Bonds 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 any Class of Bonds 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 2.06.00 Notices to Clearing Agency
Whenever notice or other communication to the Holders of Bonds 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 Bonds to the Clearing Agency.
Section 2.07.00 Temporary Bonds
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 Bonds 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 Bonds may determine, as evidenced by their
execution of such Bonds.
If temporary Bonds are issued, the Issuer will cause Definitive
Certificates to be prepared without unreasonable delay. After the preparation of
Definitive Certificates, the temporary Bonds shall be exchangeable for
Definitive Certificates upon surrender of the temporary Bonds at the Corporate
Trust Office of the Trustee or at the office of the Authenticating Agent, if
other
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<PAGE> 47
than the Trustee, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Bonds, 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 Bonds shall in
all respects be entitled to the same benefits under this Indenture as Definitive
Certificates.
Section 2.08.00 Registration; Registration of Transfer and Exchange
The Issuer shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the "Bond Register") in which, subject to such reasonable
regulations as it may prescribe, the Issuer shall provide for the registration
both of Bonds and of transfers of Bonds. The Trustee is hereby appointed "Bond
Registrar" for the purpose of registering both Bonds and transfers of Bonds as
herein provided.
Upon surrender for registration of transfer of any Bond 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 Bonds of any authorized denominations and of a like
aggregate principal amount, all as requested by the transferor.
At the option of the Holder, a Bond may be exchanged into one or more
Bonds of any authorized denomination and of a like aggregate principal amount,
upon surrender of the Bond to be exchanged at the Corporate Trust Office of the
Trustee or at the office of any Authenticating Agent. Whenever any Bonds are so
surrendered for exchange, the Issuer shall execute, and the Trustee or the
Authenticating Agent shall authenticate and deliver, the Bonds which the Holder
making the exchange is entitled to receive.
All Bonds issued upon any registration of transfer or exchange of Bonds
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Bonds surrendered
upon such registration of transfer or exchange. The registration by the Bond
Registrar of the transfer of a Bond shall be deemed to be the written
acknowledgment by the Issuer of such transfer.
Every Bond presented or surrendered for registration or transfer shall
(if so required by the Issuer or the Bond Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Bond Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Bonds, but the Issuer 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 Bonds, other than exchanges
pursuant to Section 2.07, 8.05 or 11.04 not involving any registration of
transfer.
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Section 2.09.00 Mutilated, Destroyed, Lost or Stolen Bonds
If any mutilated Bond is surrendered to the Trustee, the Issuer shall
execute, and the Trustee shall authenticate and deliver in exchange therefor, a
new Bond 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 Bond, 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 Bond 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 Bond, a new Bond of like tenor and principal amount
bearing a number not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Bond has become
or is about to become due and payable, the Issuer in its discretion may, instead
of issuing a new Bond, direct the Trustee or Paying Agent to pay such Bond on
its due date.
Upon the issuance of any new Bond 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 Bond issued pursuant to this Section 2.09 in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Issuer whether or not the destroyed, lost or
stolen Bond, if any, shall be at any time enforceable by anyone, and such new
Bond shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued hereunder.
The provisions of this Section 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 Bonds.
Section 2.10.00 Interest Payments; Interest Rights Preserved
Interest on any Bond that 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 Bond (or one or more Predecessor Bonds) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Bond that 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,
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<PAGE> 49
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 Bonds (or their respective
Predecessor Bonds) 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
Bond 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 Bonds at the address of such Holder as it
appears in the Bond 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
Bonds (or their respective Predecessor Bonds) 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 Bonds 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 Bond
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Bond shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Bond.
Section 2.11.00 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
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name such Bond is registered as the owner of such Bond for the purpose of
receiving payment of principal of and interest on such Bond and for all other
purposes whatsoever, whether or not such Bond 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 2.12.00 Cancellation
All Bonds 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 Bonds so delivered shall be canceled by the
Trustee and may not thereafter be reissued. The Trustee shall destroy such
canceled Bonds in accordance with its then current procedures.
ARTICLE III
ADMINISTRATION OF ACCOUNTS AND PAYMENTS TO BONDHOLDER
Section 3.01.00 Establishment and Administration of Distribution
Account and Reserve Fund
(a) On or before the Closing Date, the Trustee, for the benefit of
Bondholders, 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
Bondholders.
(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 for any Class of
Bonds, 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
Bonds 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.
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Section 3.02.00 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 Loans, 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 Bonds 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 [ ], [ ], [ ] and
[ ] 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 [ ], [ ], [ ] and [ ], 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 Bonds; and
(ii) second, for deposit into the Reserve Fund, the remaining
portion of the Available Amount.
Section 3.03.00 Payments to Bondholders
(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 Outstanding Bonds with
respect to such Interest Payment Date plus any Defaulted Interest (the
"Required Interest Payment Amount") and (B) pay to Bondholders (or
transfer to the Paying Agent for payment to Bondholders, 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 for any Class of Bonds, 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
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distribute such amounts to Bondholders 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 for any Class of Bonds, 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 3.04.00 Determination of [LIBOR] [Treasury Index] [Prime Rate]
[(a) LIBOR shall be determined as follows:
(i) LIBOR for the initial Interest Period shall be [ ]%
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.
(ii) 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").
(iii) 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%).
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(iv) 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.
(v) If on the LIBOR Determination Date only one or none
of the Reference Banks provides such offered quotations, LIBOR shall
be:
(A) 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
(B) 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, [ ]% per annum.
(vi) 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 related Bonds for
the following Interest Period.
(vii) 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 related Bonds for
the related Interest Period shall (in the absence of manifest error) be
final and binding.]
[(b) The Treasury Index shall be determined as follows:
(i) The Treasury Index for the initial Interest Period
shall be []% per annum. On each Treasury Index Determination Date, the
Trustee shall determine the Treasury Index, which
(A) in the case of the weekly average yield on U.S.
Treasury securities adjusted to a constant maturity of [one,
three, five, seven or ten] years, will be as published by the
Federal Reserve Board in the most recent edition of Federal
Reserve Board Statistical Release No. H.15 (519) that is
available to the Trustee; or
(B) in the case of the weekly auction average
(investment) yield on three-month or six-month U.S. Treasury
bills, will be as made available to the Trustee on the
Treasury Public Affairs Information Line.
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(C) The Trustee shall consider a new value for the
Treasury Index to have been made available on the day
following the date it is released by the Federal Reserve Board
or placed on the Treasury Public Affairs Information Line.
(ii) If on the Treasury Index Determination Date, the
Treasury Index is unavailable, the Trustee shall designate a new index
based upon comparable information and methodology. If at any time after
the Treasury Index becomes unavailable, it again becomes available, the
Trustee shall use the Treasury Index for subsequent Interest Periods.
(iii) On each Treasury Index Determination Date prior to 12:00
noon (Eastern Time), the Trustee shall send to the Issuer by facsimile,
notification of the Treasury Index and the interest rate for the
related Bonds for the following Interest Period.
(iv) The establishment of the Treasury Index on each Treasury
Index Determination Date and the Trustee's calculation of the rate of
interest applicable to the related Bonds for the related Interest
Period shall (in the absence of manifest error) be final and binding.]
[(c) The Prime Rate shall be determined as follows:
(i) The Prime Rate for the initial Interest Period shall be
[ ]% per annum. On each Prime Rate Determination Date, the
Trustee shall determine the Prime Rate by reference to the rate
published as the "Prime Rate" in the "Money Rates" section or other
comparable section of The Wall Street Journal on such Prime Rate
Determination Date.
(ii) If on any Prime Rate Determination Date, The Wall Street
Journal publishes a prime rate range, the average of that range, as
determined by the Trustee, shall be the Prime Rate for such Prime Rate
Determination Date.
(iii) If on any Prime Rate Determination Date, The Wall Street
Journal no longer publishes a "Prime Rate," the Trustee shall designate
a new methodology for determining the Prime Rate based on comparable
data. If at any time after the Prime Rate becomes unavailable, it again
becomes available, the Trustee shall use the Prime Rate for subsequent
Interest Periods.
(iv) On each Prime Rate Determination Date prior to 12:00
noon (Eastern Time), the Trustee shall send to the Issuer by facsimile,
notification of the Prime Rate and the interest rate for the related
Bonds for the following Interest Period.
(v) The establishment of the Prime Rate on each Prime Rate
Determination Date and the Trustee's calculation of the rate of
interest applicable to the related Bonds for the related Interest
Period shall (in the absence of manifest error) be final and binding.]
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ARTICLE IV
PROVISIONS AS TO COLLATERAL
Section 4.01.00 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 Loans) 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 Loans, 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 Loans, 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 Loans, on the basis of
the mortgagor name and loan number) to the Mortgage Loans 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
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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 Loan shall continue to constitute an
Eligible Mortgage Loan for all purposes of this Indenture. If such period shall
expire without the Issuer having corrected or cured such defect, then the
related Mortgage Loan shall no longer be an Eligible Mortgage Loan hereunder.
(b) (i) All Mortgage Notes relating to Mortgage Loans pledged
with the Trustee (and, in the case of Mortgage Loans for which the related
Mortgaged Property is located in the State of [ ], 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.
A certification (which may be in the form of a Collateral Report of
the Issuer) must be provided with respect to all Mortgage Loans included in the
Pledged Property that such Mortgage Loans reflect the characteristics listed in
the definition of Eligible Fixed-Rate Mortgage Loans, if they are Fixed-Rate
Mortgage Loans, or the definition of Eligible Adjustable-Rate Mortgage Loans,
if they are Adjustable-Rate Mortgage Loans and constitute, in the aggregate
(together with any other Eligible Mortgage Loans then subject to the Lien of
this Indenture), Eligible Mortgage Loans.
[(ii) In the event that the Trustee shall receive notice from
the Issuer or any Bondholder that the rating by [Rating Agency] or
[Rating Agency] of [Bank of America, N.A.'s] long-term deposits has
fallen below [ ] or [ ] or of its short-term deposits has fallen below
[ ] or [ ], 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 Loans
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
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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 Bonds.
(d) If, as of any date, any Eligible Adjustable-Rate Mortgage
Loans which were included in the Discounted Value of the Eligible Collateral as
of the Latest Collateral Report shall be converted into Fixed-Rate Mortgage
Loans, the Issuer shall, on the next Regular Valuation Date, recharacterize
such Mortgage Loans as Fixed-Rate Mortgage Loans 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 Loans as Fixed-Rate
Mortgage Loans.
Section 4.02.00 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 Loans 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 Loans 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 Loans or such
payments related to Eligible Mortgage Loans after an Event of Default.
Section 4.03.00 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
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and administer (directly or through agents selected by the Issuer (including
the Servicer), in its sole discretion) the Mortgage Loans 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 Loans, 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 Loans,
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 Loan, to authorize any assumption of a Mortgage Loan by any
transferee of property securing such Mortgage Loan, 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 Loan, 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 Loans 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 related Mortgages or due
recordation of assignments to the Trustee of such Mortgages, and provided,
further, that the Issuer shall not discharge Mortgage Loans 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 Loan, 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 Loan, 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 [Bank of America, N.A.] (including the
servicing, adjustment and
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refinancing of Mortgage Loans and Mortgages), or (ii) except as otherwise
permitted by the Servicing Agreement, in a manner consistent with [Bank of
America, 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 4.04.00 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 Bonds 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 4.05.00 Delivery of Initial Collateral and Reporting
Requirements on Issuance of Bonds
On or before the date of the closing of the sale of the Bonds, which
shall be [] (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 Bonds
Outstanding but shall state that such amount is assumed to be $[ ]);
(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 Bonds 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 Bonds by the Issuer,
the compliance by the Issuer with all of the provisions of the Bonds
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
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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 Bonds 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 Bonds 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 Bonds 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 4.06.00 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 [ ]
Regular Valuation Date and on a quarterly basis thereafter, a firm of
Independent Accountants selected by the Issuer shall select 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 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
[Rating Agency] and to [Rating Agency], but without any liability or
responsibility of the Trustee for any failure to do so.
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Section 4.07.00 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 Bonds, 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 Bonds, 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 Bonds 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
Bonds, 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 Bonds 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
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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 4.08.00 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
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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
Loans, unless such Mortgage Loans are being substituted for Mortgage Loans
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 4.09.00 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
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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 4.10.00 Sales of Bonds Reacquired by the Issuer and Affiliates
(a) Prior to the sale or pledge by the Issuer or any Affiliate
thereof (other than Banc of America Securities) of any Bond 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 Bonds 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 Bond owned by the
Issuer or any Affiliate thereof (other than Banc of America Securities) 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 Bonds of the same Class, 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 Bonds 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 Bond.
Section 4.11.00 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.
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Section 4.12.00 New Eligible Collateral
(a) The characteristics of, and the percentage or other
limitations on the permissible amounts of, Mortgage Loans and Mortgages
required in order to make such Mortgage Loans and Mortgages Eligible Mortgage
Loans 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 Bonds at the time of their initial issuance the highest available rating
from [Rating Agency] and [Rating Agency]. It is expressly hereby agreed by the
Issuer and the Trustee that the definitions of Eligible Mortgage Loans and
Eligible Mortgages shall be, and shall be deemed to be, amended to include
within such respective definitions, Mortgage Loans 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 Bonds to fail to retain, the ratings assigned to the Bonds by
[Rating Agency] and [Rating Agency].
(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
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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 [Rating Agency] and
[Rating Agency] 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 4.13.00 Servicing of Mortgage Loans
(a) On or before the Closing Date, an agreement relating to the
servicing of the portion of the Pledged Property consisting of Mortgage Loans
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 Loans.
(b) For so long as any Bonds 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 Bonds 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 Bondholders, (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
Bondholder and (b) such change shall not adversely affect the then-current
rating of the
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Bonds 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 Bondholder.
(c) For so long as any Bonds are Outstanding, each of the Issuer
and the Trustee covenant and agree to enforce the Servicing Agreement for the
benefit of Bondholders.
ARTICLE V
REMEDIES UPON DEFAULT
Section 5.01.00 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 to provide for the payment of the principal of any Class of Bonds, when
such principal becomes due and payable at the Stated Maturity for such Class,
in the manner required by Section 10.03, or to make other arrangements for such
payment that will not impair, or cause any Class of Bonds to fail to retain,
the ratings assigned to such Class of Bonds by each Rating Agency;
(b) default in the payment of any interest on any Class of Bonds
by the Issuer when such interest becomes due and payable, whether on any
Interest Payment Date, the Stated Maturity for such Class, or any Redemption
Date, or upon acceleration of the principal of any Class of Bonds, or
otherwise, and continuation of such default for a period of five days;
(c) default in the payment of the principal of any Class of Bonds
by the Issuer when such principal becomes due and payable, whether at the
Stated Maturity for such Class of Bonds, 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 Bonds 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
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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 Bonds Outstanding;
(f) the entry of a decree or order by a court having jurisdiction
in the premises adjudging the Issuer as 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 limited liability company action by the
Issuer in furtherance of any such action.
Section 5.02.00 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 Bonds 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 any Bonds shall have already become due and
payable, the Trustee or the Holders of not less than 25% in principal amount of
the Bonds Outstanding may declare the entire principal amount of the Bonds 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 Bonds
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 Bonds, if
in either of the foregoing cases:
(a) The Issuer has paid or deposited with the Trustee a sum
sufficient to pay
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(i) all overdue interest (through the date of payment
thereof) on all Bonds Outstanding,
(ii) the principal of any Bonds Outstanding which have
become due otherwise than by such acceleration and interest thereon at
the rate borne by such Bonds,
(iii) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by the Bonds
from the date such overdue interest was due to the date of payment
thereof, and
(iv) 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
(b) all Events of Default, other than the non-payment of the
principal of and interest on Bonds 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 5.03.00 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 Bonds 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 Bonds;
(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
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Certificates, Government Securities, Mortgage Loans 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 Loans 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 Loans 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
Bonds 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 Loans 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 Bonds 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 Bonds within 15
days (or, if Mortgage Collateral is included in the Eligible
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Collateral, within 30 days) after the date on which payment of principal of the
Bonds 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 5.04.00 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:
(a) 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;
(b) 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;
(c) the Trustee or the Holder of any Bond 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;
(d) 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;
(e) 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;
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(f) the principal of and accrued interest on the Bonds, if not
previously due, shall immediately become and be due and payable; and
(g) 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 proceedings for foreclosure or otherwise for the enforcement of
this Indenture shall be applied as provided in Section 5.10.
Section 5.05.00 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 Bonds 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 Bonds 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 Bonds, 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 Bonds, for the benefit of the
Trustee and the Holders of the Bonds.
(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 Bond, 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 Bonds, 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 Bonds, or in any one or
more of such capacities (irrespective of whether the principal of the Bonds
shall then be due and payable as expressed in the Bonds 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 Bonds 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
Bonds (whether such claims be based upon the provisions of the Bonds or of this
Indenture)
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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 Bond. 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
Bonds may be enforced by the Trustee without possession of the Bonds 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 Bonds.
(f) In case the Trustee or the Holder of any Bond 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
Bonds 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 5.06.00 Control by Holders of Bonds
The Holders of a majority in principal amount of the Outstanding Bonds
(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:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture;
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction;
(c) such direction is not unduly prejudicial to the rights of
other Holders; and
(d) such direction would not involve the Trustee in any personal
liability.
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Section 5.07.00 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 Bonds (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 Bonds 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 Bond 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 5.08.00 Limitations on Suits by Holders
(a) Subject to Section 5.11 hereof, a Holder of a Bond 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 Bonds 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 Bonds 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 Bonds shall have any right in any manner whatever hereunder or under
the Bonds 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
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thereto or the rights of the Trustee and of the Holders of the Bonds thereunder
in each case except in the manner in this Indenture provided.
Section 5.09.00 Undertaking to Pay Court Costs
All parties to this Indenture agree, and each Holder of a Bond 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 Bonds or group of Holders of Bonds 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 Bond for
the enforcement of the payment of the principal of or interest on any Bond on
or after the due date expressed therein (or, in the case of redemption, on or
after the date fixed for redemption).
Section 5.10.00 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 any Bonds 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 Bondholders of the time and place to present Bonds and presentation of the
several Bonds 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 Loans, 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 any Bonds shall not have
become due, to the payment of interest on such Bonds at the applicable
rate or rates calculated as set forth in
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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 for such Bonds
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 any Bonds shall have become
due, by acceleration or otherwise, to the payment of the whole amount
then owing and unpaid upon such Bonds 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
for such Bonds 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 such Bonds, 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 Bond in such Class over any
other Bond in such Class, 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 5.11.00 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 Bond to receive
payment of the principal of and interest on the Bond held by such Holder, on or
after the respective due dates expressed in such Bond 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 5.12.00 Notice of Defaults to Holders of Bonds
The Trustee shall, within 30 days after the occurrence of any default
becomes known to it, give the Holders of Bonds 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 Bonds 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
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intended to supersede and exclude the optional provisions contemplated by
Section 315(b) of the TIA.
Section 5.13.00 Bonds Held by the Issuer or Affiliate Not to Share in
Distribution
Any Bonds owned or held by, or for the account or benefit of, the
Issuer or any Affiliate of the Issuer (other than Banc of America Securities)
shall not be entitled to share in any payment or distribution provided for in
this Article Five until after all other Bonds and all expenses have been paid
in full.
Section 5.14.00 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:
(a) 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;
(b) waives and releases all rights to have the Pledged Property
marshalled upon any foreclosure, sale or other enforcement of this Indenture;
and
(c) 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 5.15.00 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 Bonds 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 Bond 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 Bond, or
acquiescence therein, and every right, remedy and power given by this Article
Five to the Trustee or to the Holder of any Bond may be exercised from time to
time and as often as may be deemed expedient by the Trustee or by any such
Holder.
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ARTICLE VI
THE TRUSTEE
Section 6.01.00 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 Bonds 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
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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 6.02.00 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
Managing Member of the Issuer may be sufficiently evidenced by a Managing
Member 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 Bonds 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,
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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 6.03.00 Not Responsible for Recitals
The recitals of the Issuer contained herein and in the Bonds 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 Bonds or the Collateral. The Trustee shall
not be responsible for the use or application by the Issuer of the proceeds of
the Bonds.
Section 6.04.00 May Hold Bonds
The Trustee, the Custodian, any Paying Agent, and any Bond Registrar,
in its individual or any other capacity, may become the owner or pledgee of
Bonds and may otherwise deal with the Issuer with the same rights it would have
if it were not Trustee, Custodian, Paying Agent or Bond Registrar.
Section 6.05.00 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 6.06.00 Compensation and Reimbursement
(a) The Issuer agrees:
(i) 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);
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(ii) 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
(iii) 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 Loans 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 a Stated Maturity.
Section 6.07.00 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
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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
relating to the Mortgage Loans shall be delivered to and held by the Trustee
(directly or on behalf of the Trustee by the Custodian) to the extent provided
herein.
(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 Loans and if the FHA requires that a mortgagee under a FHA Insured
Mortgage Loan 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 Loan, 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 Loans, 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 6.08.00 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 [ ] 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 Bonds to fail to retain, the
rating then assigned to the Bonds by such Rating Agency.
Section 6.09.00 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
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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 Bonds 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 Bonds 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
Bonds 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 Bonds 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 Bonds and
shall have accepted appointment in the manner provided in Section 6.10, any
Holder of a Bond 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 Bonds 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.
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Section 6.10.00 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 6.11.00 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 Bonds 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 Bonds so authenticated with the same effect as if such
successor Trustee had itself authenticated such Bonds.
Section 6.12.00 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.
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(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 Bonds, 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 Bonds to fail to retain, the rating then assigned to
the Bonds 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 Bonds 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 6.13.00 Authenticating Agent
The Trustee may appoint, with the consent of the Issuer, an
Authenticating Agent for the Bonds to act as its agent on its behalf and
subject to its direction in connection with the authentication of the Bonds 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
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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 Bonds as provided
in Section 1.06.
The Trustee hereby initially appoints the Trustee as Authenticating
Agent for the Bonds, 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 Bonds 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
predecessor 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 6.14.00 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 [ ]. 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
[ ] shall be identified on the books and records of the Trustee as trust
property held for the benefit of the Holders under this Indenture.
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ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER,
LEASE OR ASSUMPTION
Section 7.01.00 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:
(a) 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
Bonds and the Collateral and every covenant of this Indenture on the
part of the Issuer to be performed or observed;
(b) the successor entity shall, by such supplemental
indenture, confirm that the Collateral shall secure its obligations
under the Bonds and this Indenture;
(c) 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;
(d) 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
(e) 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 Bonds to fail to retain, the rating then assigned to the
Bonds by such Rating Agency.
Section 7.02.00 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 Bonds.
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ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.01.00 Supplemental Indentures Without Consent of Holders of
Bonds
Without the consent of any Holders of Bonds, the Issuer and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(a) 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 Bonds;
(b) to add to the covenants of the Issuer for the benefit of the
Holders of Bonds, or to surrender any right or power herein conferred upon the
Issuer;
(c) to secure the Bonds in any manner which is in addition to the
manner in which the Bonds are secured by this Indenture and the Collateral;
(d) 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 (d) shall not adversely affect the interests of the Holders of Bonds in
any material respect;
(e) 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 Loans, (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;
(f) 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;
(g) to increase the frequency of the Regular Valuation Dates; or
(h) 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 (g) or (h) of this Section 8.01 shall be effective unless
such
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supplemental indenture will not impair, or cause the Bonds to fail to retain,
the ratings then assigned to the Bonds by [Rating Agency] and [Rating Agency],
as confirmed in writing by [Rating Agency] and [Rating Agency].
Section 8.02.00 Supplemental Indentures With Consent of Holders of
Bonds
With the consent of the Holders of at least 66-2/3% in principal
amount of the Outstanding Bonds (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 Bonds under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Bond affected thereby,
(a) change the time of payment of the principal of any Bond from
the time when such principal is due, whether at a Stated Maturity, on any
Redemption Date, by acceleration, or otherwise, or change the time of payment
of any installment of interest on any Bond from the time when such interest is
due, whether at a Stated Maturity, upon any Interest Payment Date, on any
Redemption Date, upon acceleration of the principal of the Bonds, or otherwise,
or reduce the principal amount thereof or the interest thereon, or change the
coin or currency in which any Bond 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;
(b) reduce the requirements of Section 9.04 for quorum or voting;
(c) 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;
(d) reduce the percentage in principal amount of the Outstanding
Bonds 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 Bond
affected thereby, or reduce the percentage of Bonds 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 Bonds under any
provision hereof, including, without limitation, Section 5.07, or under
applicable law; or
(e) 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 Bonds of the security afforded by
the Lien of this Indenture and the Collateral.
It shall not be necessary for any Act of Holders of Bonds 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.
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Section 8.03.00 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 8.04.00 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 Bonds theretofore or thereafter executed and delivered
hereunder shall be bound thereby.
Section 8.05.00 Reference in Bonds to Supplemental Indenture
Bonds 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 Bonds 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 Bonds.
Section 8.06.00 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 Bonds 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 IX
MEETINGS OF HOLDERS OF BONDS
Section 9.01.00 Purposes for Which Meetings May Be Called
A meeting of Holders of Bonds 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 Bonds.
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Section 9.02.00 Call, Notice and Place of Meetings
(a) The Trustee may at any time call a meeting of Holders of
Bonds 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 Bonds, 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 Bonds Outstanding shall have requested the Trustee
to call a meeting of the Holders of Bonds 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 Bonds 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 9.03.00 Persons Entitled to Vote at Meetings
To be entitled to vote at any meeting of Holders of Bonds, a Person
shall be (1) a Holder of one or more Bonds 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 Bonds 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 9.04.00 Quorum; Action
The Persons entitled to vote a majority in principal amount of the
Bonds Outstanding shall constitute a quorum for the taking of any action at a
meeting of Holders of Bonds. 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 Bonds, 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
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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 Bonds 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 Bonds 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 Bonds 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 Bonds Outstanding represented and voting at such meeting.
Any resolution passed or decision taken at any meeting of Holders of
Bonds duly held in accordance with this Section 9.04 shall be binding on all
the Holders of Bonds, whether or not present or represented at the meeting.
Section 9.05.00 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 Bonds in regard to proof of the holding of Bonds 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 Bonds 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 Bonds as provided in Section 9.02(b), in which
case the Issuer or the Holders of Bonds 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 Bonds Outstanding
represented at the meeting.
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(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 Bonds held or
represented by such Person; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Bond 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 Bond or proxy.
(d) Any meeting of Holders of Bonds 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 Bonds
Outstanding represented at the meeting; and the meeting may be held as so
adjourned without further notice.
Section 9.06.00 Counting Votes and Recording Action of Meetings
The vote upon any resolution submitted to any meeting of Holders of
Bonds shall be by written ballots on which shall be subscribed the signatures
of the Holders of Bonds or of their representatives by proxy and the principal
amounts and identifying numbers of the Bonds 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
Bonds 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 X
COVENANTS
Section 10.01.00 Payment of Principal and Interest; Maintenance of
Offices or Agencies
The Issuer will duly and punctually pay the principal of and interest
on the Bonds at the rate or rates, at the respective times and in the manner
provided in the Bonds and in this Indenture, and will make provision for such
payments in accordance with Section 10.03. The final payment of principal on
any Bond shall be payable only upon presentation and surrender of such Bond.
The Issuer will maintain an office or agency in the city in which the
Corporate Trust Office of the Trustee is located where Bonds 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 Bonds and
this Indenture may be served. The Issuer will give prompt written
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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
Bonds and this Indenture shall be served and the Trustee as the initial Paying
Agent.
Section 10.02.00 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:
(a) allocate all sums received for payments to the
Holders of Bonds for which it is acting as Paying Agent on each
Payment Date among such Holders in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the payment of amounts
due with respect to the Bonds 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 Bonds in accordance with Section
1.06.
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Section 10.03.00 Money for Bond Payments to Be Held in Trust
(a) Not later than the Liquidity Date for any Class of Bonds, 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 for such Class 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 for such Class 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 [Rating Agency] or
[Rating Agency] of either (A) the long-term unsecured debt of [Bank America
Corporation] has fallen below [____] or [____], as the case may be, or (B) the
uninsured, unsecured and unguaranteed short-term debt of [Bank of America
Corporation] has fallen below [____] or [____], 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 at the Stated Maturity for
a Class of Bonds 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 related 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 for such Class of Bonds 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:
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(i) hold all sums held by it for the payment of the
principal of or redemption price of or interest on Bonds in trust for
the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(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 Bonds 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 Bonds is due and payable.
(e) If any payment of the principal of or interest on any Bond
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 Bond 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 10.04.00 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
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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 Bonds against the lawful claims and demands of all
Persons whomsoever.
Section 10.05.00 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 Bonds 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 Loans 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 10.06.00 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
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to preserve and protect the rights of the Holders of the Bonds 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:
(a) 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
(b) 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 10.07.00 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 10.08.00 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 Bonds. The principal amount of all sums so advanced, but not the
interest thereon, shall be secured by this Indenture and have priority to the
Bonds. No such advance shall be deemed to relieve the Issuer from any default
or Event of Default hereunder.
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Section 10.09.00 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
Loans, 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 10.10.00 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 10.11.00 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:
(i) 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
(ii) 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.
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(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 10.12.00 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 Loans included in
the Pledged Property.
Section 10.13.00 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 Loan or the principal balance owing on such Mortgage Loan,
whichever is less. All insurance relating to Mortgage Loans 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 10.14.00 Selection of Eligible Mortgage Loans
In selecting Eligible Fixed-Rate Mortgage Loans for inclusion in the
Eligible Collateral, the Issuer will use its best efforts to include Eligible
Fixed-Rate Mortgage Loans 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 Loans for inclusion in the
Eligible Collateral, the Issuer will use its best efforts to include Eligible
Adjustable-Rate Mortgage Loans 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 10.15.00 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.
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Section 10.16.00 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 Bonds; 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 10.17.00 Covenants Regarding Issuer's Business
For so long as any Bonds are Outstanding, the Issuer will not engage
in any business other than (i) issuing and selling the Bonds 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 April 22, 1999, 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.
Section 10.18.00 Treatment of Bonds as Debt for Tax Purposes
The Issuer has entered into the Indenture and the Bonds are issued
with the intention that, for federal, state and local income and franchise tax
purposes, the Bonds will qualify as indebtedness of the Issuer secured by the
Trust Estate. Each Bondholder, by acceptance of a Bond (and each Beneficial
Owner by acceptance of a beneficial interest in a Bond), agrees to treat the
Bonds for federal, state and local income and franchise tax purposes as
indebtedness of the Issuer.
ARTICLE XI
REDEMPTION OF BONDS
Section 11.01.00 Mandatory Redemption Due to Failure to Meet Basic
Maintenance Amount
(a) The Bonds 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 Bonds repurchased by the Issuer
or by one of its Affiliates in a principal amount sufficient to render the
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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 Bonds.
Any such mandatory partial redemption shall require the redemption of
Bonds in an aggregate principal amount that is the smallest principal amount
(rounded to the next higher integral multiple of $1,000) of the Bonds 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 Bonds 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 Bonds 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 11.02.00 Selection of Bonds to Be Redeemed
Selection of the Bonds to be redeemed shall be made in such manner as
the Trustee deems fair and reasonable, the particular Bonds 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 Bonds 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 Bonds for redemption in such manner that no
single Bond to be Outstanding following redemption shall be in a denomination
of less than $100,000, and provided that the aggregate number of Bonds to be
redeemed shall be allocated pro rata between the Classes of Bonds Outstanding.
The Trustee shall notify the Issuer in writing of the Bonds selected for
redemption and, in the case of any Bonds selected for partial redemption, the
principal amount to be redeemed, on the same day on which the Holders of the
Bonds are so notified.
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For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Bonds shall relate, in
the case of any Bond redeemed or to be redeemed only in part, to the portion of
the principal of such Bond which has been or is to be redeemed.
Section 11.03.00 Notice of Redemption
Notice of redemption shall be given in the manner provided in Section
1.06 to the Holders of Bonds 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:
(a) the Redemption Date;
(b) the Redemption Price;
(c) that on the Redemption Date the Redemption Price will become
due and payable upon each such Bond to be redeemed, and that interest thereon
shall cease to accrue on and after said date;
(d) the place where such Bonds are to be surrendered for payment
of the Redemption Price; and
(e) the identification (and the respective principal amounts) of
the Bonds to be redeemed.
Notice of redemption of Bonds 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 11.04.00 Bonds Payable on Redemption Date
(a) Notice of redemption having been given as aforesaid, each of
the Bonds called for redemption shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified upon surrender of any such
Bond 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 Bonds 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
Bonds 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 Bond that is to be redeemed in part only a new
Bond or Bonds, 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 Bond surrendered for redemption. Such new Bond or Bonds
shall continue to bear interest at the interest rate borne by the Bonds, until
the principal thereof shall be paid.
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(c) If any Bond 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 Bond.
Section 11.05.00 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 Bonds 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 XII
BONDHOLDERS' LISTS AND REPORTING REQUIREMENTS
The following provisions of this Article Twelve are all subject to
Section 12.05.
Section 12.01.00 Issuer To Furnish Trustee Names and Addresses of
Bondholders
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
Bonds, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of the Bonds 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 Bond
Registrar, no such list shall be required to be furnished.
Section 12.02.00 Preservation of Information; Communications to
Bondholders
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Bonds
contained in the most recent list furnished to the Trustee as provided in
Section 12.01 hereof and the names and addresses of Holders of Bonds received
by the Trustee in its capacity as Bond Registrar. The Trustee may destroy any
list furnished to it as provided in such Section 12.01 upon receipt of a new
list so furnished.
(b) If three or more Holders of Bonds ("applicants") apply in
writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Bond 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 Bonds or with the Holders of all
Bonds with respect to their rights under this Indenture or under such Bonds 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:
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(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 Bonds 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 Bondholders 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 Bondholder 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 Bonds 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 Bondholders 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 Bonds, 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 Bonds 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 12.03.00 Reports by Trustee
(a) Within 60 days after December 31 of each year commencing with
[December 31, ], the Trustee shall transmit by mail to the Bondholders, as
their names and addresses then appear in the Bond 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:
(i) 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
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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;
(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) 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 Bonds, 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 Bonds
Outstanding on the reporting date;
(iii) the amount, interest rate and maturity date of all
other indebtedness owing by the Issuer (or by any other obligor on the
Bonds) 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;
(iv) any change to the property and funds, if any,
physically in the possession of the Trustee as such on the reporting
date;
(v) 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
(vi) 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 Bonds or the Pledged Property.
(b) The Trustee shall transmit by mail to all Bondholders, as
their names and addresses appear in the Bond 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 Bonds
Outstanding at the time of such release, or such release and substitution, 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 Bonds, 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 Bonds 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)
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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 Bondholders, be filed by the Trustee with each securities
exchange upon which the Bonds are listed, and also with the Commission. The
Issuer will notify the Trustee when the Bonds 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
Bonds as the Issuer may from time to time request.
Section 12.04.00 Reports by Issuer
(a) The Issuer shall:
(i) 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;
(ii) 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;
(iii) transmit by mail to all Bondholders as their names
and addresses appear in the Bond Register, or in the list of
Bondholders 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 (i) and (ii) of
this Section as may be required by rules and regulations prescribed
from time to time by the Commission;
(iv) transmit by mail to all Holders of Bonds, as their
names and addresses appear in the Bond Register, within 120 days after
the end of each fiscal year of the Issuer commencing with the fiscal
year ending [ ], (i) an audited balance sheet of the
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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 Bonds on the last day of the preceding fiscal
year; and
(v) deliver or cause to be delivered to the Trustee, on
or before [ ] of each year, commencing with [ ], 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 [ ] 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 12.05.00 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 12.06.00 Luxembourg Reports and Notices
So long as the Bonds 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
Bonds 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 limited liability company agreement and any amendments to such document,
(ii) any report filed by the Issuer with the Commission, and (iii) the
quarterly and annual financial statements of [Bank of America Corporation]
(commencing with such statements for the period ending [ ] and the period
ending [ ], 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 Bondholders under this Indenture.
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(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 XIII
SATISFACTION AND DISCHARGE
Section 13.01.00 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 Bonds 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 Bonds theretofore authenticated and
delivered (other than (A) Bonds which have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 2.09, and (B) Bonds 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 Bonds 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 Bonds not theretofore delivered to the Trustee for
cancellation, for (x) in the case of Bonds 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 Bonds described by
(2)(B), principal and interest to the Stated Maturity at the Maximum Interest
Rate, unless such Bonds 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
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(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 13.02.00 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 Bonds
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 Bonds is due and payable.
Section 13.03.00 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 Bonds, 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.
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Section 13.04.00 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.
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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 FUNDING, LLC
By:
-----------------------
Name:
Title:
[TRUSTEE], as Trustee
By:
-----------------------
Name:
Title:
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Exhibit 5.1
August 27, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. Each series of Bonds is to be issued
pursuant to an Indenture (each, an "Indenture") between the Company and an
independent trustee (the "Trustee").
We have examined copies of the certificate of formation and limited
liability company agreement of the Company, forms of the Indenture and forms of
the Bonds included therein, and forms of the agreements and other documents
filed or to be filed as exhibits to the Registration Statement. We also have
examined the original or reproduced or certified copies of all such records of
the Company, all such agreements, certificates of officers and members of the
Company and others, and such other documents, papers, statutes and authorities
as we deemed necessary to form the basis of the opinions hereinafter expressed.
In such examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of copies of documents supplied to us by the Company and
others. As to certain matters of fact relevant to the opinions hereinafter
expressed, we have relied upon statements and certificates of officers of the
Company and others.
<PAGE> 2
August 27, 1999
Page 2
Based upon the foregoing, we are of the opinion that:
1. When each Indenture has been duly authorized by all necessary action and
has been duly executed and delivered, each will constitute the valid and binding
obligations of the Company, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity.
2. When the issuance, execution and delivery of each series of Bonds has
been authorized by all necessary action of the Company in accordance with the
provisions of the Indenture, and when such Bonds have been duly executed,
authenticated and delivered by the Trustee and sold as described in the
Registration Statement, (a) such Bonds will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, and (b) the holders of such Bonds will be entitled to the benefits
provided by the Indenture.
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the State of New York and the federal laws
of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to us in the prospectus and the related
prospectus supplement forming a part of the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by or on behalf of
the Company or any dealer in connection with the registration of the Bonds under
the securities or blue sky laws of any state or jurisdiction. In giving such
permission, we do not admit hereby that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ HUNTON & WILLIAMS
<PAGE> 1
Exhibit 5.2
August 27, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. Each series of Bonds is to be issued
pursuant to an Indenture (each, an "Indenture") between the Company and an
independent trustee (the "Trustee").
We have examined copies of the certificate of formation and limited
liability company agreement of the Company, forms of the Indenture and forms of
the Bonds included therein, and forms of the agreements and other documents
filed or to be filed as exhibits to the Registration Statement. We also have
examined the original or reproduced or certified copies of all such records of
the Company, all such agreements, certificates of officers and members of the
Company and others, and such other documents, papers, statutes and authorities
as we deemed necessary to form the basis of the opinions hereinafter expressed.
In such examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of copies of documents supplied to us by the Company and
others. As to certain matters of fact relevant to the opinions hereinafter
expressed, we have relied upon statements and certificates of officers of the
Company and others.
<PAGE> 2
August 27, 1999
Page 2
Based upon the foregoing, we are of the opinion that:
1. When each Indenture has been duly authorized by all necessary action and
has been duly executed and delivered, each will constitute the valid and binding
obligations of the Company, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity.
2. When the issuance, execution and delivery of each series of Bonds has
been authorized by all necessary action of the Company in accordance with the
provisions of the Indenture, and when such Bonds have been duly executed,
authenticated and delivered by the Trustee and sold as described in the
Registration Statement, (a) such Bonds will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, and (b) the holders of such Bonds will be entitled to the benefits
provided by the Indenture.
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the State of New York and the federal laws
of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to us in the prospectus and the related
prospectus supplement forming a part of the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by or on behalf of
the Company or any dealer in connection with the registration of the Bonds under
the securities or blue sky laws of any state or jurisdiction. In giving such
permission, we do not admit hereby that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ CADWALADER, WICKERSHAM & TAFT
<PAGE> 1
Exhibit 8.1
August 27, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. The Bonds are to be issued under and
pursuant to the provisions of an Indenture between the Company and an
independent trustee.
We have examined the prospectus and the form of prospectus supplement
contained in the Registration Statement (collectively, the "Prospectus") and
such other documents and instruments as we have considered necessary for the
purposes of this opinion.
On the basis of the foregoing, we are of the opinion that the discussion in
the Prospectus under the caption "United States Federal Income Tax
Consequences," to the extent that it constitutes matters of law or legal
conclusions, is correct in all material respects and addresses all material
United States federal income tax consequences of the acquisition, ownership and
disposition of the Bonds in each series. The discussion, however, does not
address all federal income tax consequences applicable to particular categories
of investors that may be subject to special rules under the federal tax laws. In
addition, we are of the opinion that the Bonds will be treated as indebtedness
of the Company for federal income tax purposes.
<PAGE> 2
August 27, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to Hunton & Williams in the Prospectus
and to the filing of this opinion as an exhibit to any application made by or on
behalf of the Company or any dealer in connection with the registration of the
Bonds under the securities or blue sky laws of any state or jurisdiction. In
giving such permission, we do not admit hereby that we come within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ HUNTON & WILLIAMS
<PAGE> 1
Exhibit 8.2
August 27, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. The Bonds are to be issued under and
pursuant to the provisions of an Indenture between the Company and an
independent trustee.
We have examined the prospectus and the form of prospectus supplement
contained in the Registration Statement (collectively, the "Prospectus") and
such other documents and instruments as we have considered necessary for the
purposes of this opinion.
On the basis of the foregoing, we are of the opinion that the discussion in
the Prospectus under the caption "United States Federal Income Tax
Consequences," to the extent that it constitutes matters of law or legal
conclusions, is correct in all material respects and addresses all material
United States federal income tax consequences of the acquisition, ownership and
disposition of the Bonds in each series. The discussion, however, does not
address all federal income tax consequences applicable to particular categories
of investors that may be subject to special rules under the federal tax laws. In
addition, we are of the opinion that the Bonds will be treated as indebtedness
of the Company for federal income tax purposes.
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August 27, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to Cadwalader, Wickersham & Taft in the
Prospectus and to the filing of this opinion as an exhibit to any application
made by or on behalf of the Company or any dealer in connection with the
registration of the Bonds under the securities or blue sky laws of any state or
jurisdiction. In giving such permission, we do not admit hereby that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ CADWALADER, WICKERSHAM & TAFT
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Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reports dated March 31, 1999 relating to the
financial statements and the financial statement schedule listed in Item 14(a),
which appear in Main Place Funding, LLC's Annual Report on Form 10-K for the
year ended December 31, 1998. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Charlotte, North Carolina
August 13, 1999
