SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
The original 8-K has been amended by this 8-K/A to replace a mistakenly
filed Indenture.
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 8, 1999
RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC. (as depositor under an Amended
and Restated Trust Agreement, dated as of March 23, 1999, and pursuant to which
an Indenture was entered into, providing for, inter alia, the issuance of Home
Loan-Backed Notes, Series 1999-HI1)
Residential Funding Mortgage Securities II, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 333-28025 41-1808858
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
8400 Normandale Lake Blvd.
Suite 600
Minneapolis, Minnesota 55437
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code, is (612) 832-7000
<PAGE>
Item 7Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
4.5 Indenture dated as of March 23, 1999 between Home Loan Trust
1999-HI1, as issuer and The Chase Manhattan Bank, as indenture trustee, and
Appendix A thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RESIDENTIAL FUNDING MORTGAGE
SECURITIES II, INC.
By: /s/ Diane S. Wold
Name: Diane S. Wold
Title: Vice President
Dated: April 9, 1999
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RESIDENTIAL FUNDING MORTGAGE
SECURITIES II, INC.
By:
Name: Diane S. Wold
Title: Vice President
Dated: April 9, 1999
<PAGE>
EXHIBIT 4.5
HOME LOAN TRUST 1999-HI1
Issuer
AND
THE CHASE MANHATTAN BANK
Indenture Trustee
INDENTURE
Dated as of March 23, 1999
------------------------------------------
HOME LOAN-BACKED NOTES
-------------
1
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
Definitions
1.01. Definitions..................................................2
1.02. Incorporation by Reference of Trust Indenture Act............2
1.03. Rules of Construction........................................2
1.04. Determination of LIBOR.......................................3
ARTICLE II
Original Issuance of Notes
2.01. Form.........................................................5
2.02. Execution, Authentication and Delivery.......................5
ARTICLE III
Covenants
3.01. Collection of Payments with respect to the Home Loans........6
3.02. Maintenance of Office or Agency..............................6
3.03. Money for Payments To Be Held in Trust; Paying Agent.........6
3.04. Existence....................................................7
3.05. Payment of Principal and Interest; Defaulted Interest........8
3.06. Protection of Trust Estate..................................10
3.07. Opinions as to Trust Estate.................................11
3.08. Performance of Obligations; Servicing Agreement.............11
3.09. Negative Covenants..........................................12
3.10. Annual Statement as to Compliance...........................12
3.11. Recording of Assignments....................................13
3.12. Representations and Warranties Concerning the Home Loans....13
3.13. Assignee of Record of the Home Loans........................13
3.14. Master Servicer as Agent and Bailee of the Indenture Trustee13
3.15. Investment Company Act......................................13
3.16. Issuer May Consolidate, etc.................................14
3.17. Successor or Transferee.....................................15
3.18. No Other Business...........................................16
3.19. No Borrowing................................................16
3.20. Guarantees, Loans, Advances and Other Liabilities...........16
3.21. Capital Expenditures........................................16
3.22. Owner Trustee Not Liable for Certificates or Related Documents16
3.23. Restricted Payments.........................................16
i
<PAGE>
3.24. Notice of Events of Default.................................17
3.25. Further Instruments and Acts................................17
3.26. Statements to Noteholders...................................17
3.27. Payments under the Credit Enhancement Instrument............17
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
4.01. The Notes...................................................18
4.02. Registration of and Limitations on Transfer and Exchang
of Notes; Appointment of Certificate Registrar..............18
4.03. Mutilated, Destroyed, Lost or Stolen Notes..................19
4.04. Persons Deemed Owners.......................................20
4.05. Cancellation................................................20
4.06. ............................................................20
4.07. Notices to Depository.......................................21
4.08. Definitive Notes............................................22
4.09. Tax Treatment...............................................22
4.10. Satisfaction and Discharge of Indenture.....................22
4.11. Application of Trust Money..................................23
4.12. Subrogation and Cooperation.................................23
4.13. Repayment of Monies Held by Paying Agent....................24
4.14. Temporary Notes.............................................24
ARTICLE V
Default and Remedies
5.01. Events of Default...........................................26
5.02. Acceleration of Maturity; Rescission and Annulment..........26
5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee............................................27
5.04. Remedies; Priorities........................................28
5.05. Optional Preservation of the Trust Estate...................30
5.06. Limitation of Suits.........................................30
5.07. Unconditional Rights of Noteholders to Receive Principal
and Interest ...........................................31
5.08. Restoration of Rights and Remedies..........................31
5.09. Rights and Remedies Cumulative..............................31
5.10. Delay or Omission Not a Waiver..............................32
5.11. Control by Noteholders......................................32
5.12. Waiver of Past Defaults.....................................32
5.13. Undertaking for Costs.......................................33
5.14. Waiver of Stay or Extension Laws............................33
5.15. Sale of Trust Estate........................................33
5.16. Action on Notes.............................................35
5.17. Performance and Enforcement of Certain Obligations..........35
ii
<PAGE>
ARTICLE VI
The Indenture Trustee
6.01. Duties of Indenture Trustee.................................37
6.02. Rights of Indenture Trustee.................................38
6.03. Individual Rights of Indenture Trustee......................38
6.04. Indenture Trustee's Disclaimer..............................38
6.05. Notice of Event of Default..................................38
6.06. Reports by Indenture Trustee to Holders.....................39
6.07. Compensation and Indemnity..................................39
6.08. Replacement of Indenture Trustee............................39
6.09. Successor Indenture Trustee by Merger.......................40
6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee ................................................41
6.11. Eligibility; Disqualification...............................42
6.12. Preferential Collection of Claims Against Issuer............42
6.13. Representations and Warranties..............................42
6.14. Directions to Indenture Trustee.............................43
6.15. Indenture Trustee May Own Securities........................43
ARTICLE VII
Noteholders' Lists and Reports
7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders..................................................44
7.02. Preservation of Information; Communications to Noteholders..44
7.03. Reports by Issuer...........................................44
7.04. Reports by Indenture Trustee................................45
ARTICLE VIII
Accounts, Disbursements and Releases
8.01. Collection of Money.........................................46
8.02. Trust Accounts..............................................46
8.03. Officer's Certificate.......................................46
8.04. Termination Upon Distribution to Noteholders................46
8.05. Release of Trust Estate.....................................47
8.06. Surrender of Notes Upon Final Payment.......................47
ARTICLE IX
Supplemental Indentures
iii
<PAGE>
9.01. Supplemental Indentures Without Consent of Noteholders......48
9.02. Supplemental Indentures With Consent of Noteholders.........49
9.03. Execution of Supplemental Indentures........................51
9.04. Effect of Supplemental Indenture............................51
9.05. Conformity with Trust Indenture Act.........................51
9.06. Reference in Notes to Supplemental Indentures...............51
ARTICLE X
Miscellaneous
10.01. Compliance Certificates and Opinions, etc...................52
10.02. Form of Documents Delivered to Indenture Trustee............53
10.03. Acts of Noteholders.........................................54
10.04. Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer
and Rating Agencies ...................................54
10.05. Notices to Noteholders; Waiver..............................55
10.06. Alternate Payment and Notice Provisions.....................56
10.07. Conflict with Trust Indenture Act...........................56
10.08. Effect of Headings..........................................56
10.09. Successors and Assigns......................................56
10.10. Separability................................................56
10.11. Benefits of Indenture.......................................56
10.12. Legal Holidays..............................................57
10.13. GOVERNING LAW...............................................57
10.14. Counterparts................................................57
10.15. Recording of Indenture......................................57
----------------------
10.16. Issuer Obligation...........................................57
-----------------
10.17. No Petition.................................................57
-----------
10.18. Inspection..................................................58
----------
Signatures and Seals .................................................... 81
Acknowledgments ......................................................... 82
iv
<PAGE>
EXHIBITS
Exhibit A Form of Notes
Appendix A Definitions
v
<PAGE>
This Indenture, dated as of March 23, 1999, between HOME LOAN TRUST
1999- HI1, a Delaware business trust, as Issuer (the "Issuer"), and The Chase
Manhattan Bank, as Indenture Trustee (the "Indenture Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
Series 1999-HI1 Home Loan-Backed Notes (the "Notes").
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing
Date, as trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to whether now existing or hereafter
created (a) the Home Loans, (b) all funds on deposit from time to time in the
Payment Account and in all proceeds thereof; (c) the Credit Enhancement
Instrument and (d) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under,
and all proceeds of every kind and nature whatsoever in respect of, any or all
of the foregoing and all payments on or under, and all proceeds of every kind
and nature whatsoever in the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing (collectively, the "Trust Estate" or the
"Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The foregoing Grant shall inure to the benefit of the Credit
Enhancer in respect of draws made on the Credit Enhancement Instrument and
amounts owing from time to time pursuant to the Insurance Agreement (regardless
of whether such amounts relate to the Notes or the Certificates), and such Grant
shall continue in full force and effect for the benefit of the Credit Enhancer
until all such amounts owing to it have been repaid in full.
The Indenture Trustee, as trustee on behalf of the Holders of the
Notes, acknowledges such Grant, accepts the trust under this Indenture in
accordance with the provisions hereof and agrees to perform its duties as
Indenture Trustee as required herein.
1
<PAGE>
ARTICLE I
Definitions
Section 1.01Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act (the "TIA"), the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
Section 1.03Rules of Construction. Unless the context otherwise requires:
(i a term has the meaning assigned to it;
(ii an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii "or" is not exclusive;
(iv "including" means including without limitation;
(v words in the singular include the plural and words in the
plural include the singular; and
2
<PAGE>
(vi any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements
or instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
Section 1.04Determination of LIBOR. LIBOR applicable to the calculation of
the Note Rate on the Class A-1 Notes for any Interest Accrual Period will be
determined on each LIBOR Rate Adjustment Date.
On each LIBOR Rate Adjustment Date, LIBOR shall be established by
the Indenture Trustee and, as to any Interest Accrual Period, will equal the
rate for one month United States dollar deposits that appears on the Telerate
Screen Page 3750 as of 11:00 a.m., London time, on such LIBOR Rate Adjustment
Date. "Telerate Screen Page 3750" means the display designated as page 3750 on
the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks). If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
LIBOR shall be so established by use of such other service for displaying LIBOR
or comparable rates as may be selected by the Indenture Trustee after
consultation with the Master Servicer and the Credit Enhancer), the rate will be
the Reference Bank Rate. The "Reference Bank Rate" will be determined on the
basis of the rates at which deposits in U.S. Dollars are offered by the
reference banks (which shall be any three major banks that are engaged in
transactions in the London interbank market, selected by the Indenture Trustee
after consultation with the Master Servicer and the Credit Enhancer) as of 11:00
a.m., London time, on the LIBOR Rate Adjustment Date to prime banks in the
London interbank market for a period of one month in amounts approximately equal
to the Note Balance of the Class A-1 Notes. The Indenture Trustee will request
the principal London office of each of the reference banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
will be the arithmetic mean of the quotations rounded up to the next multiple of
1/16%. If on such date fewer than two quotations are provided as requested, the
rate will be the arithmetic mean of the rates quoted by one or more major banks
in New York City, selected by the Indenture Trustee after consultation with the
Master Servicer and the Credit Enhancer, as of 11:00 a.m., New York City time,
on such date for loans in U.S. Dollars to leading European banks for a period of
one month in amounts approximately equal to the Note Balance of the Class A-1
Notes. If no such quotations can be obtained, the rate will be LIBOR for the
prior Payment Date; provided however, if, under the priorities described above,
LIBOR for a Payment Date would be based on LIBOR for the previous Payment Date
for the third consecutive Payment Date, the Indenture Trustee after consultation
with the Credit Enhancer shall select an alternative comparable index, used for
determining one-month Eurodollar lending rates that is calculated and published
(or otherwise made available) by an independent party.
The establishment of LIBOR by the Indenture Trustee on any LIBOR
Rate Adjustment Date and the Indenture Trustee's subsequent calculation of the
Note Rate applicable to the Class A-1 Notes for the relevant Interest Accrual
Period, in the absence of manifest error, will be final and binding.
3
<PAGE>
Promptly following each LIBOR Rate Adjustment Date the Indenture
Trustee shall supply the Master Servicer and the Credit Enhancer with the
results of its determination of LIBOR on such date. Furthermore, the Indenture
Trustee will supply to any Noteholder so requesting by telephone the Note Rate
on the Class A-1 Notes for the current and the immediately preceding Interest
Accrual Period.
4
<PAGE>
ARTICLE II
Original Issuance of Notes
Section 2.01Form. The Notes, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit A, 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, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of
this Indenture.
Section 2.02Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
Notes for original issue in an aggregate initial principal amount of $55,250,000
with respect to the Class A-1 Notes, 55,250,000 with respect to the Class A-2
Notes, $120,200,000 with respect to the Class A-3 Notes, $52,000,000 with
respect to the Class A-4 Notes, $64,900,000 with respect to the Class A-5 Notes
and $92,000,000 with respect to the Class A-6 Notes.
The Notes shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes and the Notes shall be issuable in the minimum
initial Note Balances of $25,000 and in integral multiples of $1 in excess
thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
5
<PAGE>
ARTICLE III
Covenants
Section 3.01Collection of Payments with respect to the Home Loans. The
Indenture Trustee shall establish and maintain with itself the Payment Account
in which the Indenture Trustee shall, subject to the terms of this paragraph,
deposit, on the same day as it is received from the Master Servicer, each
remittance received by the Indenture Trustee with respect to the Home Loans. The
Indenture Trustee shall make all payments of principal of and interest on the
Notes, subject to Section 3.03 as provided in Section 3.05 herein from monies on
deposit in the Payment Account.
Section 3.02Maintenance of Office or Agency. The Issuer will maintain in
the City of New York, an office or agency where, subject to satisfaction of
conditions set forth herein, Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03Money for Payments To Be Held in Trust; Paying Agent. (a) As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Payment Account
pursuant to Section 3.01 shall be made on behalf of the Issuer by the Indenture
Trustee or by the Paying Agent, and no amounts so withdrawn from the Payment
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
(i hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(ii give the Indenture Trustee and the Credit Enhancer written
notice of any default by the Issuer of which it has actual knowledge in
the making of any payment required to be made with respect to the Notes;
(iii at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
6
<PAGE>
(iv immediately resign as Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment;
(v comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; and
(vi deliver to the Indenture Trustee a copy of the report to
Noteholders prepared with respect to each Payment Date by the Master
Servicer pursuant to Section 4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Request
direct any Paying Agent to pay to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
an Authorized Newspaper, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee may also adopt and employ,
at the expense and direction of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
Section 3.04Existence. The Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Home Loans and each other
instrument or agreement included in the Trust Estate.
7
<PAGE>
Section 3.05Payment of Principal and Interest; Defaulted Interest. (a) On
each Payment Date from amounts on deposit in the Payment Account, the Paying
Agent shall pay to the Noteholders, the Certificate Paying Agent, on behalf of
the Certificateholders, and to other Persons the amounts to which they are
entitled, as set forth in the statements delivered to the Indenture Trustee
pursuant to Section 4.01 of the Servicing Agreement, as set forth below in the
following order of priority:
(i to Holders of the Notes, interest at the related Note Rate
for the related Interest Accrual Period on the related Note Balance of the
Notes immediately prior to such Payment Date;
(ii to the Noteholders, as principal on the Notes, the Principal
Collection Distribution Amount for such Payment Date, in the order
described in Section 3.05(b) below, until the Note Balances thereof have
been reduced to zero;
(iii to the Noteholders, as principal on the Notes, the
Liquidation Loss Distribution Amount for such Payment Date, in the order
described in Section 3.05(b) below, until the Note Balances thereof have
been reduced to zero;
(iv to the Credit Enhancer, in the amount of the premium for the
Credit Enhancement Instrument (with interest thereon as provided in the
Insurance Agreement) and to the designee or designees of the Credit
Enhancer, the amount of any payments for the Limited Reimbursement
Agreement, on a pro rata basis;
(v to the Credit Enhancer, to reimburse it for prior draws made
on the Credit Enhancement Instrument (with interest thereon as provided in
the Insurance Agreement) (except for draws attributable to Excess Loss
Amounts) provided, that no such reimbursement shall be made in respect of
amounts that were paid to the Indenture Trustee under the Limited
Reimbursement Agreement, or for which the Credit Enhancer is entitled to
reimbursement under the Limited Reimbursement Agreement);
(vi to the Noteholders, as principal on the Notes, the Reserve
Increase Amount for such Payment Date, in the order described in Section
3.05(b) below, until the Note Balances thereof have been reduced to zero;
(vii to the Credit Enhancer, any other amounts owed to the Credit
Enhancer pursuant to the Insurance Agreement;
(viii to the Indenture Trustee, any amounts owing to the Indenture
Trustee pursuant to Section 6.07 remaining unpaid; and
(ix any remaining amount, to the Certificate Paying Agent, on behalf
of the holders of the Certificates.
provided, however, in the event that on a Payment Date a Credit Enhancer Default
shall have occurred and be continuing, then the priorities of distributions
described above will be adjusted such
8
<PAGE>
that payments of any amounts to be paid to the Credit Enhancer will not be paid
until the full amount of interest and principal in accordance with clauses (i)
through (iii) and (vi) above that are due and required to be paid by the Credit
Enhancer on the Notes on such Payment Date have been paid and provided, further,
that on the Final Insured Payment Date or other final Payment Date, the amount
to be paid pursuant to clause (ii) above shall be equal to the aggregate Note
Balance of the related Notes immediately prior to such Payment Date. For
purposes of the foregoing, required payments of principal on the Notes on each
Payment Date will include the portion allocable to the Notes of all Liquidation
Loss Amounts for such Payment Date and for all previous Collection Periods until
paid or covered in full, to the extent not otherwise covered by a Liquidation
Loss Distribution Amount, a reduction of the Outstanding Reserve Amount or a
draw on the Credit Enhancement Instrument (up to the outstanding Note Balance
thereof).
On each Payment Date, the Certificate Paying Agent shall deposit in the
Certificate Distribution Account all amounts it received pursuant to this
Section 3.05 for the purpose of distributing such funds to the
Certificateholders.
The amounts paid to Noteholders shall be paid to the Notes in accordance
with the applicable percentage as set forth in paragraph (b) below. Interest
will accrue on the Class A-1 Notes on the basis of the number of days in the
related Interest Accrual Period and a 360-day year. Interest will accrue on the
Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Notes on the basis of a
360- day year consisting of twelve 30-day months.
Any installment of interest or principal, if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall, if such Holder holds Notes of an aggregate initial Note Balance of
at least $1,000,000, be paid to each Holder of record on the preceding Record
Date, by wire transfer to an account specified in writing by such Holder
reasonably satisfactory to the Indenture Trustee as of the preceding Record Date
or in all other cases or if no such instructions have been delivered to the
Indenture Trustee, by check or money order to such Noteholder mailed to such
Holder's address as it appears in the Note Register the amount required to be
distributed to such Holder on such Payment Date pursuant to such Holder's
Securities; provided, however, that the Indenture Trustee shall not pay to such
Holders any amount required to be withheld from a payment to such Holder by the
Code.
(b) Any payments to the Notes pursuant to clauses 3.05(a)(ii), (iii) and
(vi) above shall be made in the following order:
(i) first, concurrently, to the Class A-1 Notes and Class A-2 Notes,
on a pro rata basis, until the Note Balances thereof have been
reduced to zero;
(ii) second, to the Class A-3 Notes, until the Note Balance thereof
has been reduced to zero;
(iii) third, to the Class A-4 Notes, until the Note Balance thereof
has been reduced to zero;
9
<PAGE>
(iv) fourth, to the Class A-5 Notes, until the Note Balance thereof
has been reduced to zero; and
(v) fifth, to the Class A-6 Notes, until the Note Balance thereof
has been reduced to zero.
(c) The principal of each Note shall be due and payable in full on the
Final Insured Payment Date as provided in the related form of Note set forth in
Exhibit A. All principal payments on the Notes shall be made to the Noteholders
entitled thereto in accordance with the Percentage Interests represented by such
Notes. Upon written notice to the Indenture Trustee by the Issuer (or by the
Master Servicer on behalf of the Issuer, pursuant to Section 8.08(e) of the
Servicing Agreement) of the Final Insured Payment Date for the Notes or other
final Payment Date, the Indenture Trustee shall notify the related Noteholders
of record of the Final Insured Payment Date or other final Payment Date, by mail
or facsimile, no later than five Business Days prior to the Final Insured
Payment Date or other final Payment Date and shall specify:
(i that the Record Date otherwise applicable to such Payment Date is
not applicable;
(ii that payment of the principal amount and any interest due
with respect to such Note at the Final Insured Payment Date or other final
Payment Date will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for such final payment; and
(iii the amount of any such final payment, if known.
(d) On each Payment Date, the Outstanding Reserve Amount available to
cover Liquidation Loss Amounts on such Payment Date, if any, shall be deemed to
be reduced by an amount equal to any Liquidation Loss Amounts (other than any
Excess Loss Amounts) for such Payment Date, except to the extent that such
Liquidation Loss Amounts were covered on such Payment Date by a Liquidation Loss
Distribution Amount.
Section 3.06Protection of Trust Estate. (a) The Issuer will from time to
time execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:
(i maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii cause the Trust to enforce any of the Home Loans; or
10
<PAGE>
(iv preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee and the Noteholders in such Trust Estate against
the claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture Trustee
shall not remove any portion of the Trust Estate that consists of money or is
evidenced by an instrument, certificate or other writing from the jurisdiction
in which it was held at the date of the most recent Opinion of Counsel delivered
pursuant to Section 3.07 (or from the jurisdiction in which it was held as
described in the Opinion of Counsel delivered at the Closing Date pursuant to
Section 3.07(a), if no Opinion of Counsel has yet been delivered pursuant to
Section 3.07(b)) unless the Trustee shall have first received an Opinion of
Counsel to the effect that the lien and security interest created by this
Indenture with respect to such property will continue to be maintained after
giving effect to such action or actions.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.06.
Section 3.07Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee and the Owner Trustee an Opinion
of Counsel at the expense of the Issuer either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording and
filing of this Indenture, any indentures supplemental hereto, and any other
requisite documents, and with respect to the execution and filing of any
financing statements and continuation statements, as are necessary to perfect
and make effective the lien and security interest in the Home Loans and reciting
the details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to make such lien and security interest effective.
(b) On or before December 31st in each calendar year, beginning in 2000,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel at the
expense of the Issuer either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording, filing, rerecording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain the
lien and security interest in the Home Loans and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest in the Home Loans until December 31 in the
following calendar year.
Section 3.08Performance of Obligations; Servicing Agreement. (a) The
Issuer will punctually perform and observe all of its obligations and agreements
contained in this Indenture, the Basic Documents and in the instruments and
agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer.
11
<PAGE>
(c) The Issuer will not take any action or permit any action to be taken
by others which would release any Person from any of such Person's covenants or
obligations under any of the documents relating to the Home Loans or under any
instrument included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the documents relating to the Home Loans or
any such instrument, except such actions as the Master Servicer is expressly
permitted to take in the Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into contracts
with other Persons for the performance of the Issuer's obligations hereunder,
and performance of such obligations by such Persons shall be deemed to be
performance of such obligations by the Issuer.
Section 3.09Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i except as expressly permitted by this Indenture, sell,
transfer, exchange or otherwise dispose of the Trust Estate, unless
directed to do so by the Indenture Trustee;
(ii claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate;
(iii (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof or (C) permit
the lien of this Indenture not to constitute a valid first priority
security interest in the Trust Estate; or
(iv waive or impair, or fail to assert rights under the Home
Loans, or cause to be impaired the Home Loans or the Issuer's interest in
the Home Loans, the Home Loan Purchase Agreement or in any Basic Document,
if any such action would materially and adversely affect the interests of
the Noteholders.
Section 3.10Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1999), an Officer's Certificate stating,
as to the Authorized Officer signing such Officer's Certificate, that:
(i a review of the activities of the Issuer during such year and
of its performance under this Indenture and the Trust Agreement has been
made under such Authorized Officer's supervision; and
12
<PAGE>
(ii to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture and the provisions of the Trust Agreement throughout
such year, or, if there has been a default in its compliance with any such
condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.
Section 3.11Recording of Assignments. The Issuer shall enforce the
obligation of the Seller under the Home Loan Purchase Agreement to submit or
cause to be submitted for recording all Assignments of Mortgages within 60 days
of receipt of recording information by the Master Servicer.
Section 3.12Representations and Warranties Concerning the Home Loans. The
Indenture Trustee, as pledgee of the Home Loans, has the benefit of the
representations and warranties made by the Seller in Section 3.1(a) and Section
3.1(b) of the Home Loan Purchase Agreement concerning the Home Loans and the
right to enforce the remedies against the Seller provided in such Section 3.1(a)
or Section 3.1(b) to the same extent as though such representations and
warranties were made directly to the Indenture Trustee.
Section 3.13Assignee of Record of the Home Loans. The Issuer hereby
directs and authorizes the Indenture Trustee to hold record title to the Home
Loans by being named as payee in the endorsements of the Mortgage Notes and
assignee in the Assignments of Mortgage to be recorded under Section 2.1 of the
Home Loan Purchase Agreement. Except as expressly provided in the Home Loan
Purchase Agreement or in the Servicing Agreement with respect to any specific
Home Loan, the Indenture Trustee shall not execute any endorsement or assignment
or otherwise release or transfer such record title to any of the Home Loans
until such time as the remaining Trust Estate may be released pursuant to
Section 8.05(b). The Indenture Trustee's holding of such record title shall in
all respects be subject to its fiduciary obligations to the Noteholders
hereunder.
Section 3.14Master Servicer as Agent and Bailee of the Indenture Trustee.
Solely for purposes of perfection under Section 9-305 of the Uniform Commercial
Code or other similar applicable law, rule or regulation of the state in which
such property is held by the Master Servicer, the Issuer and the Indenture
Trustee hereby acknowledges that the Master Servicer is acting as agent and
bailee of the Indenture Trustee in holding amounts on deposit in the Custodial
Account pursuant to Section 3.02 of the Servicing Agreement that are allocable
to the Home Loans, as well as its agent and bailee in holding any Related
Documents released to the Master Servicer pursuant to Section 3.06(c) of the
Servicing Agreement, and any other items constituting a part of the Trust Estate
which from time to time come into the possession of the Master Servicer. It is
intended that, by the Master Servicer's acceptance of such agency pursuant to
Section 3.02 of the Servicing Agreement, the Indenture Trustee, as a pledgee of
the Home Loans, will be deemed to have possession of such Related Documents,
such monies and such other items for purposes of Section 9-305 of the Uniform
Commercial Code of the state in which such property is held by the Master
Servicer.
Section 3.15Investment Company Act. The Issuer shall not become an
"investment company" or "controlled by" an investment company as such terms are
defined in the Investment Company Act of 1940, as amended (or any successor or
amendatory statute), and the rules and regulations thereunder (taking into
account not only the general definition of the term "investment
13
<PAGE>
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section 3.15
if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.
Section 3.16Issuer May Consolidate, etc. (a) The Issuer shall not
consolidate or merge with or into any other Person, unless:
(i the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any state or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee, in
form reasonably satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and to the
Certificate Paying Agent, on behalf of the Certificateholders and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii immediately after giving effect to such transaction, no Event of
Default shall have occurred and be continuing;
(iii the Issuer receives consent of the Credit Enhancer and the
Rating Agencies shall have notified the Issuer that such transaction shall
not cause the rating of the Notes or the Certificates to be reduced,
suspended or withdrawn or to be considered by either Rating Agency to be
below investment grade without taking into account the Credit Enhancement
Instrument;
(iv the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee and the
Credit Enhancer) to the effect that such transaction will not have any
material adverse tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(v any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person,
unless:
(i the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of
14
<PAGE>
America or any state, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance or observance
of every agreement and covenant of this Indenture on the part of the
Issuer to be performed or observed, all as provided herein, (C) expressly
agree by means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate to
the rights of Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E) expressly
agree by means of such supplemental indenture that such Person (or if a
group of Persons, then one specified Person) shall make all filings with
the Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
(iii the Issuer receives consent of the Credit Enhancer and the
Rating Agencies shall have notified the Issuer that such transaction shall
not cause the rating of the Notes, without regard to the Credit
Enhancement Instrument, to be reduced, suspended or withdrawn;
(iv the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer or any Noteholder;
(v any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating
to such transaction have been complied with (including any filing required
by the Exchange Act).
Section 3.17Successor or Transferee. (a) Upon any consolidation or merger
of the Issuer in accordance with Section 3.16(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.16(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee of such conveyance or transfer.
15
<PAGE>
Section 3.18No Other Business. The Issuer shall not engage in any business
other than financing, purchasing, owning and selling and managing the Home Loans
and the issuance of the Notes and Certificates in the manner contemplated by
this Indenture and the Basic Documents and all activities incidental thereto.
Section 3.19No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
Section 3.20Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the Basic Documents, the Issuer shall not make
any loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any
other interest in, or make any capital contribution to, any other Person.
Section 3.21Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22Owner Trustee Not Liable for Certificates or Related
Documents. The recitals contained herein shall be taken as the statements of the
Depositor, and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Indenture, of any Basic Document or of the Certificates
(other than the signatures of the Owner Trustee on the Certificates) or the
Notes, or of any Related Documents. The Owner Trustee shall at no time have any
responsibility or liability with respect to the sufficiency of the Owner Trust
Estate or its ability to generate the payments to be distributed to
Certificateholders under the Trust Agreement or the Noteholders under this
Indenture, including, the compliance by the Depositor or the Seller with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, or any action
of the Certificate Paying Agent, the Certificate Registrar or the Indenture
Trustee taken in the name of the Owner Trustee.
Section 3.23Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (x) distributions to the Owner Trustee
and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under the Trust Agreement and (y) payments to the
Master Servicer pursuant to the terms of the Servicing Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Custodial Account except in accordance with this Indenture and the Basic
Documents.
16
<PAGE>
Section 3.24Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Credit Enhancer and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.25Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.26Statements to Noteholders. On each Payment Date, the Indenture
Trustee and the Certificate Registrar shall forward by mail to each Noteholder
and Certificateholder and the ISDA Counterparty, respectively, the Statement
delivered to it, on the Business Day following the related Determination Date
pursuant to Section 4.01 of the Servicing Agreement.
Section 3.27Payments under the Credit Enhancement Instrument. (a) On any
Payment Date, the Indenture Trustee shall make a draw on the Credit Enhancement
Instrument in an amount, if any, equal to the Credit Enhancement Draw Amount.
For purposes of the foregoing, amounts in the Payment Account available for
interest distributions on any Payment Date shall be deemed to include all
amounts distributed on the Home Loans for such Payment Date, other than the
Principal Collection Distribution Amount and the Liquidation Loss Distribution
Amount (if any) distributed thereon. On any Dissolution Payment Date, the
Indenture Trustee shall make a draw on the Credit Enhancement Instrument in an
amount, if any, equal to the Dissolution Draw; provided, that if the Indenture
Trustee receives the amount of such draw from the ISDA Counterparty on the
Limited Reimbursement Agreement, the Indenture Trustee shall not make a draw on
the Credit Enhancement Instrument. In addition, on the Final Insured Payment
Date, the Indenture Trustee shall make a draw on the Credit Enhancement
Instrument in the amount by which the aggregate Note Balance of such Notes
exceeds the payments otherwise available to be made to the Holders thereof on
the Final Insured Payment Date. Notwithstanding the foregoing, to the extent (i)
a demand is made on the Indenture Trustee for reimbursement or other payment of
such amounts paid in error or otherwise not in accordance with the terms of this
Indenture, in each case with the consent of the Credit Enhancer, which consent
shall not be unreasonably withheld, or (ii) a court of competent jurisdiction
orders the repayment by the Indenture Trustee to the ISDA Counterparty on the
Limited Reimbursement Agreement of the amount of such draw, the Indenture
Trustee shall make a draw on the Credit Enhancement Instrument pursuant to the
terms hereof as if the ISDA Counterparty on the Limited Reimbursement Agreement
had not made any payment to the Indenture Trustee.
(b) The Indenture Trustee shall submit, if a Credit Enhancement Draw
Amount or Dissolution Draw is specified in any Statement to Holders prepared by
the Master Servicer pursuant to Section 4.01 of the Servicing Agreement, the
Notice of NonPayment and Demand for Payment of Insured Amounts (in the form
attached as Exhibit A to the Credit Enhancement Instrument) in the amount of the
Credit Enhancement Draw Amount or Dissolution Draw to the Credit Enhancer no
later than 2:00 P.M., New York City time, on the second Business Day prior to
the applicable Payment Date. Upon receipt of such Credit Enhancement Draw Amount
(or payment pursuant to the Limited Reimbursement Agreement) or Dissolution Draw
in accordance with the terms of the Credit Enhancement Instrument, the Indenture
Trustee shall deposit such Credit Enhancement Draw Amount or Dissolution Draw in
the Payment Account for distribution to Noteholders pursuant to Section 3.05.
17
<PAGE>
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01The Notes. The Notes shall be registered in the name of a
nominee designated by the Depository. Beneficial Owners will hold interests in
the Notes as set forth in Section 4.06 herein in minimum initial Note Balances
of $25,000 and integral multiples of $1 in excess thereof.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Holders of Notes hereunder. Except as
provided in the next succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the
Depository and Depository Participants. Except as provided in Section 4.08,
Beneficial Owners shall not be entitled to definitive certificates for the Notes
as to which they are the Beneficial Owners. Requests and directions from, and
votes of, the Depository as Holder of the Notes shall not be deemed inconsistent
if they are made with respect to different Beneficial Owners. The Indenture
Trustee may establish a reasonable record date in connection with solicitations
of consents from or voting by Noteholders and give notice to the Depository of
such record date. Without the consent of the Issuer and the Indenture Trustee,
no Note may be transferred by the Depository except to a successor Depository
that agrees to hold such Note for the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer by
the Owner Trustee, not in its individual capacity but solely as Owner Trustee,
authenticated by the Note Registrar and delivered by the Indenture Trustee to or
upon the order of the Issuer.
Section 4.02Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar. The Issuer shall cause to be kept
at the Indenture Trustee's Corporate Trust Office a Note Register in which,
subject to such reasonable regulations as it may prescribe, the Note Registrar
shall provide for the registration of Notes and of transfers and exchanges of
Notes as herein provided.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office, the Issuer shall execute and the Note Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Notes in authorized initial Note Balances evidencing the same aggregate
Percentage Interests.
18
<PAGE>
Subject to the foregoing, at the option of the Noteholders, Notes may be
exchanged for other Notes of like tenor, in authorized initial Note Balances
evidencing the same aggregate Percentage Interests upon surrender of the Notes
to be exchanged at the Corporate Trust Office of the Note Registrar. Whenever
any Notes are so surrendered for exchange, the Indenture Trustee shall execute
and the Note Registrar shall authenticate and deliver the Notes which the
Noteholder making the exchange is entitled to receive. Each Note presented or
surrendered for registration of transfer or exchange shall (if so required by
the Note Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer in form reasonably satisfactory to the Note Registrar
duly executed by, the Holder thereof or his attorney duly authorized in writing
with such signature guaranteed by a commercial bank or trust company located or
having a correspondent located in the city of New York. Notes delivered upon any
such transfer or exchange will evidence the same obligations, and will be
entitled to the same rights and privileges, as the Notes surrendered.
No service charge shall be imposed for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
All Notes surrendered for registration of transfer and exchange shall be
cancelled by the Note Registrar and delivered to the Indenture Trustee for
subsequent destruction without liability on the part of either.
The Issuer hereby appoints the Indenture Trustee as Certificate Registrar
to keep at its Corporate Trust Office a Certificate Register pursuant to Section
3.09 of the Trust Agreement in which, subject to such reasonable regulations as
it may prescribe, the Certificate Registrar shall provide for the registration
of Certificates and of transfers and exchanges thereof pursuant to Section 3.05
of the Trust Agreement. The Indenture Trustee hereby accepts such appointment.
Section 4.03Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and provided that the requirements of Section 8-405 of the UCC are met, the
Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable without surrender thereof. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided
19
<PAGE>
therefor to the extent of any loss, damage, cost or expense incurred by the
Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 4.03 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 Notes.
Section 4.04Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 4.05Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Notes so delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section 4.05, except as expressly permitted by
this Indenture. All cancelled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Request that they
be destroyed or returned to it; provided however, that such Issuer Request is
timely and the Notes have not been previously disposed of by the Indenture
Trustee.
Section 4.06Book-Entry Notes. Each Class of Notes shall initially be
issued as one or more Notes held by the Book-Entry Custodian or, if appointed to
hold such Notes as provided below, the Depository Trust Company, the initial
Depository, and registered in the name of its nominee Cede & Co. Except as
provided below, registration of such Notes may not be transferred by the
Indenture Trustee except to another Depository that agrees to hold such Notes
for the respective Beneficial Owners. The Indenture Trustee is hereby initially
appointed as the Book-Entry Custodian and hereby agrees to act as such in
accordance herewith and in accordance with
20
<PAGE>
the agreement that it has with the Depository authorizing it to act as such. The
Book-Entry Custodian may, and, if it is no longer qualified to act as such, the
Book-Entry Custodian shall, appoint, by a written instrument delivered to the
Depositor, the Master Servicer and, if the Indenture Trustee is not the
Book-Entry Custodian, the Indenture Trustee, any other transfer agent (including
the Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any new appointment, except if the Depository is the successor to the
Book-Entry Custodian. If the Indenture Trustee resigns or is removed in
accordance with the terms hereof, the successor trustee or, if it so elects, the
Depository shall immediately succeed to its predecessor's duties as Book-Entry
Custodian. The Depositor shall have the right to inspect, and to obtain copies
of, any Notes held as Book-Entry Notes by the Book-Entry Custodian. No
Beneficial Owner will receive a Definitive Note representing such Beneficial
Owner's interest in such Note, except as provided in Section 4.08. Unless and
until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Beneficial Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Owners of Notes;
(iii) to the extent that the provisions of this Section 4.06
conflict with any other provisions of this Indenture, the provisions of this
Section 4.06 shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Depository and shall be limited to those established by law and
agreements between such Owners of Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to Section
4.08, the initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and interest on
the Notes to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the aggregate Note Balance of the Notes, the Depository
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Beneficial Owners and/or Depository
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Notes and has delivered such instructions to the
Indenture Trustee.
Section 4.07Notices to Depository. Whenever a notice or other
communication to the Note Holders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
21
<PAGE>
communications specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08Definitive Notes. If (i) the Indenture Trustee determines that
the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Notes and the Indenture Trustee is unable
to locate a qualified successor, (ii) the Indenture Trustee elects to terminate
the book-entry system through the Depository or (iii) after the occurrence of an
Event of Default, Owners of Notes representing beneficial interests aggregating
at least a majority of the aggregate Note Balance of the Notes advise the
Depository in writing that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Beneficial Owners, then the
Depository shall notify all Beneficial Owners and the Indenture Trustee of the
occurrence of any such event and of the availability of Definitive Notes to
Beneficial Owners requesting the same. Upon surrender to the Indenture Trustee
of the typewritten Notes representing the Book-Entry Notes by the Book-Entry
Custodian or the Depository, as applicable, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.
Section 4.09Tax Treatment. The Issuer has entered into this Indenture, and
the Notes will be issued, with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will qualify as
indebtedness of the Issuer. The Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of its Note (and each Beneficial Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Section 4.10Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.06, 3.09,
3.16, 3.18 and 3.19, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.11) and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
(A) either
(1) the Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
22
<PAGE>
(2) the Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. have become due and payable,
b. will become due and payable at the Final Insured Payment
Date within one year, or
c. have been declared immediately due and payable pursuant to
Section 5.02.
and the Issuer, in the case of a. or b. above, has irrevocably deposited
or caused to be irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes then outstanding not theretofore
delivered to the Indenture Trustee for cancellation when due on the Final
Insured Payment Date;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder and under the Insurance Agreement by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee and the Credit
Enhancer an Officer's Certificate and an Opinion of Counsel, each meeting
the applicable requirements of Section 10.01 and each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with and, if the Opinion of
Counsel relates to a deposit made in connection with Section 4.10(A)(2)b.
above, such opinion shall further be to the effect that such deposit will
not have any material adverse tax consequences to the Issuer, any
Noteholders or any Certificateholders.
Section 4.11Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the Holders
of Securities, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to the
extent required herein or required by law.
Section 4.12Subrogation and Cooperation. (a) The Issuer and the Indenture
Trustee acknowledge that (i) to the extent the Credit Enhancer makes payments
under the Credit Enhancement Instrument on account of principal of or interest
on the Home Loans, the Credit Enhancer will be fully subrogated to the rights of
the Noteholders to receive such principal and interest from the Home Loans, and
(ii) the Credit Enhancer shall be paid such principal and interest but only from
the sources and in the manner provided herein and in the Insurance Agreement for
the payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any reasonable
request by the Credit Enhancer for action to preserve or enforce the Credit
Enhancer's rights or interest under this Indenture or the Insurance Agreement,
consistent with this Indenture and without limiting the rights
23
<PAGE>
of the Noteholders as otherwise set forth in the Indenture, including, without
limitation, upon the occurrence and continuance of a default under the Insurance
Agreement, a request to take any one or more of the following actions:
(i institute Proceedings for the collection of all amounts then
payable on the Notes, or under this Indenture in respect to the Notes and
all amounts payable under the Insurance Agreement and to enforce any
judgment obtained and collect from the Issuer monies adjudged due;
(ii sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private Sales (as defined in
Section 5.15 hereof) called and conducted in any manner permitted by law;
(iii file or record all assignments that have not previously been
recorded;
(iv institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Credit Enhancer hereunder.
Following the payment in full of the Notes, the Credit Enhancer
shall continue to have all rights and privileges provided to it under this
Section and in all other provisions of this Indenture, until all amounts owing
to the Credit Enhancer have been paid in full.
Section 4.13Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Person other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.05 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
Section 4.14Temporary Notes. Pending the preparation of any Definitive
Notes, the Issuer may execute and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Notes that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Issuer shall execute and the Indenture Trustee
shall authenticate and make
24
<PAGE>
available for delivery, in exchange therefor, Definitive Notes of authorized
denominations and of like tenor and aggregate principal amount. Until so
exchanged, such temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
25
<PAGE>
ARTICLE V
Default and Remedies
Section 5.01Events of Default. The Issuer shall deliver to the Indenture
Trustee and the Credit Enhancer, within five days after learning of the
occurrence any event which with the giving of notice and the lapse of time would
become an Event of Default under clause (iii) of the definition of "Event of
Default" written notice in the form of an Officer's Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing or if the Master Servicer shall
purchase all of the Home Loans pursuant to Section 8.08 of the Servicing
Agreement, then and in every such case the Indenture Trustee or the Holders of
Notes representing not less than a majority of the aggregate Note Balance of all
Notes with the written consent of the Credit Enhancer, or the Credit Enhancer
may declare the Notes to be immediately due and payable, by a notice in writing
to the Issuer (and to the Indenture Trustee if given by Noteholders), and upon
any such declaration the unpaid principal amount of such Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article V provided, the Holders of Notes representing a
majority of the aggregate Note Balance of all Notes, by written notice to the
Issuer and the Indenture Trustee with the written consent of the Credit
Enhancer, or the Credit Enhancer, may in writing waive the related Event of
Default and rescind and annul such declaration and its consequences if:
(i the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(A) all payments of principal of and interest on the Notes and
all other amounts that would then be due hereunder or upon the Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel;
and
(ii all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
26
<PAGE>
Section 5.03Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee.
(a) The Issuer covenants that if default in the payment of (i) any
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) the principal of or any installment
of the principal of any Note when the same becomes due and payable, the Issuer
shall, upon demand of the Indenture Trustee, pay to it, for the benefit of the
Holders of Notes, the whole amount then due and payable on the Notes for
principal and interest, with interest upon the overdue principal, and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.17 hereof may institute a
Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon the Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor upon the Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
subject to the provisions of Section 10.17 hereof may, as more particularly
provided in Section 5.04, in its discretion, proceed to protect and enforce its
rights and the rights of the Noteholders, by such appropriate Proceedings as the
Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the
27
<PAGE>
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence, willful misconduct or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii unless prohibited by applicable law and regulations, to vote
on behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders and of the Indenture Trustee
on their behalf; and
(iv to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
Section 5.04Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing, the Indenture Trustee subject to the provisions of
Section 10.17 hereof may with the
28
<PAGE>
written consent of the Credit Enhancer, or shall at the written direction of the
Credit Enhancer do one or more of the following (subject to Section 5.05):
(i institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, and all amounts payable under the Insurance Agreement, enforce
any judgment obtained, and collect from the Issuer and any other obligor
upon such Notes monies adjudged due;
(ii institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Holders of the Notes; and
(iv sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Holders of 100% of the aggregate
Note Balance of the Notes and the Credit Enhancer, which consent will not be
unreasonably withheld, (B) the proceeds of such sale or liquidation
distributable to Holders are sufficient to discharge in full all amounts then
due and unpaid upon the Notes for principal and interest and to reimburse the
Credit Enhancer for any amounts drawn under the Credit Enhancement Instrument
and any other amounts due the Credit Enhancer under the Insurance Agreement or
(C) the Indenture Trustee determines that the Home Loans will not continue to
provide sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of the Credit Enhancer,
which consent will not be unreasonably withheld, and of the Holders of 66 2/3%
of the aggregate Note Balance of the Notes. In determining such sufficiency or
insufficiency with respect to clause (B) and (C), the Indenture Trustee may, but
need not, obtain and rely upon an opinion of an Independent investment banking
or accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
Notwithstanding the foregoing, so long as a Servicing Default has not occurred,
any Sale of the Trust Estate shall be made subject to the continued servicing of
the Home Loans by the Master Servicer as provided in the Servicing Agreement.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section 6.07;
SECOND: to the Holders of the Notes for amounts due and unpaid on the
Notes for interest, according to the amounts due and payable on such
Notes for interest from amounts available in the Trust Estate for such
Noteholders;
29
<PAGE>
THIRD: to Holders of the Notes for amounts due and unpaid on the Notes
for principal, from amounts available in the Trust Estate for such
Noteholders, according to the amounts due and payable on the Notes for
principal, until the related Note Balances of the Notes are reduced to
zero;
FOURTH: [reserved];
FIFTH: to the payment of all amounts due and owing to the Credit
Enhancer under the Insurance Agreement;
SIXTH: to the Certificate Paying Agent for amounts due under Article
VIII of the Trust Agreement; and
SEVENTH: to the payment of the remainder, if any, to the Issuer or any
other person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder a notice
that states the record date, the payment date and the amount to be paid.
Section 5.05Optional Preservation of the Trust Estate. If the Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, (but shall at the written
direction of the Credit Enhancer) elect to take and maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes and other obligations of the Issuer including payment to
the Credit Enhancer, and the Indenture Trustee shall take such desire into
account when determining whether or not to take and maintain possession of the
Trust Estate. In determining whether to take and maintain possession of the
Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
Section 5.06Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless and subject to the provisions of Section 10.17 hereof:
(i such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii the Holders of not less than 25% of the aggregate Note
Balance of the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own
name as Indenture Trustee hereunder;
30
<PAGE>
(iii such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority of the aggregate Note Balance of the Notes or by the Credit
Enhancer.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the aggregate Note Balance of the
Notes, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.07Unconditional Rights of Noteholders to Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 5.08Restoration of Rights and Remedies. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their respective former positions
hereunder, and thereafter all rights and remedies of the Indenture Trustee and
the Noteholders shall continue as though no such Proceeding had been instituted.
Section 5.09Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Credit Enhancer or to
the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
31
<PAGE>
Section 5.10Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Credit Enhancer or any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
Section 5.11Control by Noteholders. The Holders of a majority of the
aggregate Note Balance of Notes with the consent of the Credit Enhancer, or the
Credit Enhancer (so long as no Credit Enhancer Default exists) shall have the
right to direct the time, method and place of conducting any Proceeding for any
remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee; provided that:
(i such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii subject to the express terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be by
Holders of Notes representing not less than 100% of the aggregate Note
Balance of Notes with the consent of the Credit Enhancer, or the Credit
Enhancer (so long as no Credit Enhancer Default exists);
(iii if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the aggregate Note Balance
of Notes to sell or liquidate the Trust Estate shall be of no force and
effect; and
(iv the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially adversely affect the rights of
any Noteholders not consenting to such action.
Section 5.12Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Holders of Notes of not less than a majority of the aggregate Note Balance of
the Notes with the consent of the Credit Enhancer, or the Credit Enhancer (so
long as no Credit Enhancer Default exists) may waive any past Event of Default
and its consequences except an Event of Default (a) with respect to payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer, the Indenture
Trustee and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereto.
32
<PAGE>
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
aggregate Note Balance of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture.
Section 5.14Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it shall not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
Section 5.15Sale of Trust Estate. (a) The power to effect any sale or
other disposition (a "Sale") of any portion of the Trust Estate pursuant to
Section 5.04 is expressly subject to the provisions of Section 5.05 and this
Section 5.15. The power to effect any such Sale shall not be exhausted by any
one or more Sales as to any portion of the Trust Estate remaining unsold, but
shall continue unimpaired until the entire Trust Estate shall have been sold or
all amounts payable on the Notes and under this Indenture and under the
Insurance Agreement shall have been paid. The Indenture Trustee may from time to
time postpone any public Sale by public announcement made at the time and place
of such Sale. The Indenture Trustee hereby expressly waives its right to any
amount fixed by law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless:
(1) the Holders of all Notes and the Credit Enhancer consent to, or
direct the Indenture Trustee to make, such Sale, or
(2) the proceeds of such Sale would be not less than the entire
amount which would be payable to the Noteholders under the Notes, the
Certificateholders under the Certificates and the Credit Enhancer in respect of
amounts drawn under the Credit Enhancement Instrument and
33
<PAGE>
any other amounts due the Credit Enhancer under the Insurance Agreement, in full
payment thereof in accordance with Section 5.02, on the Payment Date next
succeeding the date of such Sale, or
(3) the Indenture Trustee determines, in its sole discretion, that
the conditions for retention of the Trust Estate set forth in Section 5.05
cannot be satisfied (in making any such determination, the Indenture Trustee may
rely upon an opinion of an Independent investment banking firm obtained and
delivered as provided in Section 5.05), and the Credit Enhancer consents to such
Sale, which consent will not be unreasonably withheld and the Holders
representing at least 66-2/3% of the aggregate Note Balance of the Notes consent
to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the Holders and the Credit Enhancer have otherwise consented or
directed the Indenture Trustee, at any public Sale of all or any portion of the
Trust Estate at which a minimum bid equal to or greater than the amount
described in paragraph (2) of subsection (b) of this Section 5.15 has not been
established by the Indenture Trustee and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee shall bid an amount at least
$1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust Estate:
(1) any Holder or Holders of Notes may bid for and with the consent
of the Credit Enhancer purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose of
such property, without further accountability, and may, in paying the purchase
money therefor, deliver any Notes or claims for interest thereon in lieu of cash
up to the amount which shall, upon distribution of the net proceeds of such
sale, be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Holders
thereof after being appropriately stamped to show such partial payment;
(2) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any Sale thereof, and, subject to any
requirements of, and to the extent permitted by, applicable law in connection
therewith, may purchase all or any portion of the Trust Estate in a private
sale, and, in lieu of paying cash therefor, may make settlement for the purchase
price by crediting the gross Sale price against the sum of (A) the amount which
would be distributable to the Holders of the Notes and Holders of Certificates
and amounts owing to the Credit Enhancer as a result of such Sale in accordance
with Section 5.04(b) on the Payment Date next succeeding the date of such Sale
and (B) the expenses of the Sale and of any Proceedings in connection therewith
which are reimbursable to it, without being required to produce the Notes in
order to complete any such Sale or in order for the net Sale price to be
credited against such Notes, and any property so acquired by the Indenture
Trustee shall be held and dealt with by it in accordance with the provisions of
this Indenture;
34
<PAGE>
(3) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the Trust
Estate in connection with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Issuer to transfer and convey its interest in any
portion of the Trust Estate in connection with a Sale thereof, and to take all
action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
Section 5.16Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17Performance and Enforcement of Certain Obligations. (a)
Promptly following a written request from the Credit Enhancer or the Indenture
Trustee with the written consent of the Credit Enhancer to do so, the Issuer, in
its capacity as holder of the Home Loans, shall, with the written consent of the
Credit Enhancer, take all such lawful action as the Indenture Trustee may
request to cause the Issuer to compel or secure the performance and observance
by the Seller and the Master Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Home Loan Purchase
Agreement and the Servicing Agreement, and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Home Loan Purchase Agreement and the Servicing Agreement to
the extent and in the manner directed by the Indenture Trustee, as pledgee of
the Home Loans, including the transmission of notices of default on the part of
the Seller or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Master Servicer of each of their obligations under the Home Loan
Purchase Agreement and the Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee, as pledgee of the Home Loans, subject to the rights of the Credit
Enhancer under the Servicing Agreement may, and at the direction (which
direction shall be in writing or by telephone (confirmed in writing promptly
thereafter)) of the Holders of 66-2/3% of the aggregate Note Balance of the
Notes shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller or the Master Servicer under or in connection with the
Home Loan Purchase Agreement and the Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Seller or the Master Servicer, as the case may be, of each of their obligations
to the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Home Loan Purchase Agreement and the
Servicing Agreement, as the case may be, and any right of the Issuer to take
such action shall not be suspended. In connection
35
<PAGE>
therewith, as determined by the Indenture Trustee, the Issuer shall take all
actions necessary to effect the transfer of the Home Loans to the Indenture
Trustee.
36
<PAGE>
ARTICLE VI
The Indenture Trustee
Section 6.01Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise 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 such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
(ii the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it (A) pursuant to Section 5.11 or (B) from the
Credit Enhancer, which it is entitled to give under any of the Basic
Documents.
(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
37
<PAGE>
(g) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
Section 6.02Rights of Indenture Trustee. (a) The Indenture Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
Section 6.03Individual Rights of Indenture Trustee. The Indenture Trustee
in its individual or any other capacity may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Note Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Indenture Trustee
must comply with Sections 6.11 and 6.12.
Section 6.04Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be (i) responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, (ii) accountable for the Issuer's use
of the proceeds from the Notes or (iii) responsible for any statement of the
Issuer in the Indenture or in any document issued in connection with the sale of
the Notes or in the Notes other than the Indenture Trustee's certificate of
authentication.
Section 6.05Notice of Event of Default. If an Event of Default occurs and
is continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall give notice thereof to the Credit Enhancer.
The Indenture Trustee shall mail to each Noteholder notice of the Event of
Default within 90 days after it occurs. Except in the case of an Event of
Default in payment of principal of or interest on any Note, the Indenture
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
38
<PAGE>
Section 6.06Reports by Indenture Trustee to Holders. The Indenture Trustee
shall deliver to each Noteholder such information as may be required to enable
such holder to prepare its federal and state income tax returns. In addition,
upon the Issuer's written request, the Indenture Trustee shall promptly furnish
information reasonably requested by the Issuer that is reasonably available to
the Indenture Trustee to enable the Issuer to perform its federal and state
income tax reporting obligations.
Section 6.07Compensation and Indemnity. The Issuer shall pay to the
Indenture Trustee on each Payment Date reasonable compensation for its services.
The Indenture Trustee shall be compensated and indemnified by the Master
Servicer in accordance with Section 6.06 of the Servicing Agreement, and all
amounts owing to the Indenture Trustee hereunder in excess of such amount shall
be paid solely as provided in Section 3.05 hereof (subject to the priorities set
forth therein). The Indenture Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall reimburse
the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall indemnify the Indenture Trustee
against any and all loss, liability or expense (including attorneys' fees)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder. The Issuer shall defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall pay the fees and expenses
of such counsel. The Issuer is not obligated to reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section 6.07 shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of an Event of Default specified in
clause (iv) or (v) of the definition thereof with respect to the Issuer, the
expenses are intended to constitute expenses of administration under Title 11 of
the United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
Section 6.08Replacement of Indenture Trustee. No resignation or removal of
the Indenture Trustee and no appointment of a successor Indenture Trustee shall
become effective until the acceptance of appointment by the successor Indenture
Trustee pursuant to this Section 6.08. The Indenture Trustee may resign at any
time by so notifying the Issuer and the Credit Enhancer. The Holders of a
majority of the aggregate Note Balance of the Notes or the Credit Enhancer may
remove the Indenture Trustee by so notifying the Indenture Trustee and the
Credit Enhancer and may appoint a successor Indenture Trustee. The Issuer shall
remove the Indenture Trustee if:
(i the Indenture Trustee fails to comply with Section 6.11;
(ii the Indenture Trustee is adjudged a bankrupt or insolvent;
39
<PAGE>
(iii a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee with the consent of
the Credit Enhancer which consent will not be unreasonably withheld. In
addition, the Indenture Trustee will resign to avoid being directly or
indirectly controlled by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Holders of a majority of the aggregate Note Balance
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
Section 6.09Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Rating
Agencies written notice of any such transaction after the Closing Date.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full
40
<PAGE>
force which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have.
Section 6.10Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. (a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Owner Trust, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Trust Estate, or any part thereof, and, subject
to the other provisions of this Section, such powers, duties, obligations,
rights and trusts as the Indenture Trustee may consider necessary or desirable.
No co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 6.11 and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee.
Every such instrument shall be filed with the Indenture Trustee.
41
<PAGE>
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11Eligibility; Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and it or its parent
shall have a long-term debt rating of A or better by Moody's. The Indenture
Trustee shall comply with TIA ss. 310(b), including the optional provision
permitted by the second sentence of TIA ss. 310(b)(9); provided, however, that
there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
Section 6.12Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13Representations and Warranties. The Indenture Trustee hereby
represents that:
(i) The Indenture Trustee is duly organized, validly existing and
in good standing under the laws of the State of New York with power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(ii) The Indenture Trustee has the power and authority to execute
and deliver this Indenture and to carry out its terms; and the execution,
delivery and performance of this Indenture have been duly authorized by
the Indenture Trustee by all necessary corporate action.
(iii) The consummation of the transactions contemplated by this
Indenture and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the articles of
organization or bylaws of the Indenture Trustee or any agreement or other
instrument to which the Indenture Trustee is a party or by which it is
bound.
(iv) To the Indenture Trustee's best knowledge, there are no
proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Indenture Trustee or its
properties: (A) asserting the invalidity of this Indenture (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Indenture or (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Indenture Trustee of its
obligations under, or the validity or enforceability of, this Indenture.
42
<PAGE>
(v) The Indenture Trustee does not have notice of any adverse claim
(as such terms are used in Delaware UCC Section 8-302) with respect to the
Home Loans.
Section 6.14Directions to Indenture Trustee. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Home Loans and hold the assets of the
Trust in trust for the Noteholders and the Credit Enhancer;
(b) to authenticate and deliver the Notes substantially in the form
prescribed by Exhibit A in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
Section 6.15Indenture Trustee May Own Securities. The Indenture Trustee,
in its individual or any other capacity may become the owner or pledgee of
Securities with the same rights it would have if it were not Indenture Trustee.
43
<PAGE>
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably require, of the names and addresses of
the Holders of Notes as of such Record Date and, (b) at such other times as the
Indenture Trustee and the Credit Enhancer may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished.
Section 7.02Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01
and the names and addresses of Holders of Notes received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
Section 7.03Reports by Issuer. (a) The Issuer shall:
(i file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and 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) that the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii file with the Indenture 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; and
(iii supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA ss. 313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.03(a) and by rules and regulations prescribed from time to time by the
Commission.
44
<PAGE>
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04Reports by Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each January 1 beginning with January 1, 2000, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss. 313(c)
and to the Credit Enhancer a brief report dated as of such date that complies
with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss.
313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
45
<PAGE>
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
Section 8.02Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Indenture Trustee to establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Noteholders and the Certificate
Paying Agent, on behalf of the Certificateholders and the Credit Enhancer, the
Payment Account as provided in Section 3.01 of this Indenture.
(b) All monies deposited from time to time in the Payment Account pursuant
to the Servicing Agreement and all deposits therein pursuant to this Indenture
are for the benefit of the Noteholders and the Certificate Paying Agent, on
behalf of the Certificateholders and all investments made with such monies
including all income or other gain from such investments are for the benefit of
the Master Servicer as provided by the Servicing Agreement.
On each Payment Date, the Indenture Trustee shall distribute all amounts
on deposit in the Payment Account to Noteholders in respect of the Notes and in
its capacity as Certificate Paying Agent to Certificateholders in the order of
priority set forth in Section 3.05 (except as otherwise provided in Section
5.04(b).
The Master Servicer shall direct the Indenture Trustee in writing to
invest any funds in the Payment Account in Permitted Investments maturing no
later than the Business Day preceding each Payment Date and shall not be sold or
disposed of prior to the maturity.
Section 8.03Officer's Certificate. The Indenture Trustee shall receive at
least seven days notice when requested by the Issuer to take any action pursuant
to Section 8.05(a), accompanied by copies of any instruments to be executed, and
the Indenture Trustee shall also require, as a condition to such action, an
Officer's Certificate, in form and substance satisfactory to the Indenture
Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with.
Section 8.04Termination Upon Distribution to Noteholders. This Indenture
and the respective obligations and responsibilities of the Issuer and the
Indenture Trustee created hereby shall terminate upon the distribution to the
Noteholders, the Certificate Paying Agent (on behalf of
46
<PAGE>
the Certificateholders) and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in no event shall
the trust created hereby continue beyond the expiration of 21 years from the
death of the survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James, living on the date
hereof.
Section 8.05Release of Trust Estate. (a) Subject to the payment of its
fees and expenses, the Indenture Trustee may, and when required by the
provisions of this Indenture shall, execute instruments to release property from
the lien of this Indenture, or convey the Indenture Trustee's interest in the
same, in a manner and under circumstances that are not inconsistent with the
provisions of this Indenture. No party relying upon an instrument executed by
the Indenture Trustee as provided in Article VIII hereunder shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent, or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no Notes
Outstanding, (ii) all sums due the Indenture Trustee pursuant to this Indenture
have been paid, and (iii) all sums due the Credit Enhancer have been paid,
release any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.05 only upon receipt of a request from the
Issuer accompanied by an Officers' Certificate and a letter from the Credit
Enhancer, stating that the Credit Enhancer has no objection to such request from
the Issuer.
(d) The Indenture Trustee shall, at the request of the Issuer or the
Depositor, surrender the Credit Enhancement Instrument to the Credit Enhancer
for cancellation, upon final payment on the Notes.
Section 8.06Surrender of Notes Upon Final Payment. By acceptance of any
Note, the Holder thereof agrees to surrender such Note to the Indenture Trustee
promptly, prior to such Noteholder's receipt of the final payment thereon.
47
<PAGE>
ARTICLE IX
Supplemental Indentures
Section 9.01Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies and the Credit Enhancer, the Issuer and the Indenture Trustee,
when authorized by an Issuer Request, at any time and from time to time, may
enter into one or more indentures supplemental hereto (which shall conform to
the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(i to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(ii to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes or the Credit Enhancer, or to surrender any right or
power herein conferred upon the Issuer;
(iv to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture;
(vi to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture;
provided, that such action shall not materially and adversely affect the
interests of the Holders of the Notes or the Credit Enhancer;
(vii to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(viii to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA;
48
<PAGE>
provided, however, that no such indenture supplements shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel that
entering into such indenture supplement will not have any material adverse tax
consequences to the Noteholders.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Request, may, also without the consent of any of the Holders of the Notes but
with prior notice to the Rating Agencies and the Credit Enhancer, 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 Notes under this Indenture; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, (i) adversely affect in any material
respect the interests of any Noteholder or the Credit Enhancer or (ii) cause the
Issuer to be subject to an entity level tax.
(c) The Issuer and the Indenture Trustee shall, as directed by the Holders
of Certificates which represent not less than 100% of the Certificate Percentage
Interests thereof, enter into an indenture or indentures supplemental hereto for
the purpose of providing for the issuance of one or more additional classes of
Notes entitled to payments derived solely from all or a portion of the payments
to which the Certificates issued on the Closing Date pursuant to the Trust
Agreement are entitled; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, (i) adversely affect in any material respect
the interests of any Noteholder or the Credit Enhancer or (ii) cause the Issuer
to be subject to an entity level tax. Each such class of Notes shall be a
non-recourse obligation of the Issuer and shall be entitled to interest and
principal in such amounts, and to such security for the repayment thereof, as
shall be specified in such amendment or amendments. Promptly after the execution
by the Issuer and the Indenture Trustee of any amendments pursuant to this
Section or the creation of a new indenture and the issuance of the related class
or classes of Notes, the Issuer shall require the Indenture Trustee to give
notice to the Holders of the Notes and the Rating Agencies setting forth in
general terms the substance of the provisions of such amendment. Any failure of
the Indenture Trustee to provide such notice as is required under this
paragraph, or any defect therein, shall not, however, in any way impair or
affect the validity of such amendment or any class of Notes issued pursuant
thereto. Unless the Credit Enhancer agrees in writing, (i) any classes of Notes
issued pursuant to a supplemental indenture shall not be entitled to the
insurance provided by the Credit Enhancement Instrument and (ii) the Holders of
any such classes of Notes shall be entitled only to such distributions or a
portion of such distributions as the Holders would have received as Holders of
Certificates.
Section 9.02Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, also
may, with prior notice to the Rating Agencies and with the consent of the
Holders of not less than a majority of the aggregate Note Balance of the Notes
affected thereby and the Credit Enhancer, by Act of such Holders delivered to
the Issuer and the Indenture Trustee, 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 Notes
49
<PAGE>
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Note affected thereby:
(i change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof or the
interest rate thereon, change the provisions of this Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Trust Estate to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which, any
Note or the interest thereon is payable, or impair the right to institute
suit for the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or after the respective due
dates thereof;
(ii reduce the percentage of the related Note Balance of any
Class of Notes, the consent of the Holders of which is required for any
such supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii modify or alter the provisions of the proviso to the
definition of the term "Outstanding" or modify or alter the exception in
the definition of the term "Holder";
(iv reduce the percentage of the aggregate Note Balance of the
Notes required to direct the Indenture Trustee to direct the Issuer to
sell or liquidate the Trust Estate pursuant to Section 5.04;
(v modify any provision of this Section 9.02 except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Note affected thereby;
(vi modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation
of any of the individual components of such calculation); or
(vii permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Note of the security provided by the
lien of this Indenture; and provided, further, that such action shall not,
as evidenced by an Opinion of Counsel, cause the Issuer to be subject to
an entity level tax.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the
50
<PAGE>
Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders (as defined in
Section 10.03) under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 9.03Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 9.05Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
Section 9.06Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
51
<PAGE>
ARTICLE X
Miscellaneous
Section 10.01. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee and to the Credit Enhancer (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and (ii) 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, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with;
(4) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(5) if the Signer of such Certificate or Opinion is required to be
Independent, the Statement required by the definition of the term
"Independent".
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for 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 10.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
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 Collateral or other property or securities to be so deposited.
(ii Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall also
deliver to the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such 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 (i) above and this
clause (ii), is 10% or more of the aggregate Note Balance of the Notes, but such
a
52
<PAGE>
certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the aggregate Note
Balance of the Notes.
(iii Whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's 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.
(iv Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than property as contemplated by clause (v) below 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
(iii) above and this clause (iv), equals 10% or more of the aggregate Note
Balance of the Notes, 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 Officer's Certificate is less than $25,000 or less than one percent
of the then aggregate Note Balance of the Notes.
(v Notwithstanding any provision of this Indenture, the Issuer
may, without compliance with the requirements of the other provisions of this
Section 10.01, (A) collect, sell or otherwise dispose of the Home Loans as and
to the extent permitted or required by the Basic Documents or (B) make cash
payments out of the Payment Account as and to the extent permitted or required
by the Basic Documents, so long as the Issuer shall deliver to the Indenture
Trustee every six months, commencing November 30, 1999, an Officer's Certificate
of the Issuer stating that all the dispositions of Collateral described in
clauses (A) or (B) above that occurred during the preceding six calendar months
were in the ordinary course of the Issuer's business and that the proceeds
thereof were applied in accordance with the Basic Documents.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized 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 certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an
53
<PAGE>
officer or officers of the Seller or the Issuer, stating that the information
with respect to such factual matters is in the possession of the Seller or the
Issuer, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit Enhancer
and Rating Agencies. Any request, demand, authorization, direction, notice,
consent, waiver or Act of
54
<PAGE>
Noteholders or other documents provided or permitted by this Indenture shall be
in writing and if such request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders is to be made upon, given or furnished to
or filed with:
(i the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Indenture Trustee at the Corporate
Trust Office. The Indenture Trustee shall promptly transmit any notice
received by it from the Noteholders to the Issuer, or
(ii the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to: Home Loan Trust
1999-HI1, in care of Wilmington Trust Company, or at any other address
previously furnished in writing to the Indenture Trustee by the Issuer.
The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee, or
(iii the Credit Enhancer by the Issuer, the Indenture Trustee or
by any Noteholders shall be sufficient for every purpose hereunder to in
writing and mailed, first-class postage pre-paid, or personally delivered
or telecopied to: Ambac Assurance Corporation, One State Street Plaza,
17th Floor, New York, New York 10004, Attention: Structured Finance --
Mortgage Backed Securities, telecopier number (212) 363-1459. The Credit
Enhancer shall promptly transmit any notice received by it from the
Issuer, the Indenture Trustee or the Noteholders to the Issuer or
Indenture Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007 and (ii) in
the case of Standard & Poor's, at the following address: Standard & Poor's, A
Division of the McGraw-Hill Companies, Inc., 25 Broadway, New York, New York
10004-1064, Attention of Asset Backed Surveillance Department; or as to each of
the foregoing, at such other address as shall be designated by written notice to
the other parties.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Person's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given regardless of
whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the
55
<PAGE>
Indenture Trustee but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.
Section 10.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee to such Holder, that is different
from the methods provided for in this Indenture for such payments or notices.
The Issuer shall furnish to the Indenture Trustee a copy of each such agreement
and the Indenture Trustee shall cause payments to be made and notices to be
given in accordance with such agreements.
Section 10.07. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 10.08. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 10.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
Section 10.10. Separability. In case any provision in this Indenture or in
the Notes 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 10.11. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, the Credit Enhancer,
and any other party secured hereunder, and any other Person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
56
<PAGE>
Section 10.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 10.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.14. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 10.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
Section 10.16. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
Section 10.17. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Depositor or the Issuer, or
join in any institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Basic Documents.
57
<PAGE>
Section 10.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
58
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
HOME LOAN TRUST 1999-HI1,
as Issuer
Wilmington Trust Company
not in its individual capacity
but solely as Owner Trustee
By:
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By:
Name: Regina Bergeland
Title: Vice President
THE CHASE MANHATTAN BANK hereby accepts the appointment as Paying Agent pursuant
to Section 3.03 hereof and as Note Registrar pursuant to Section 4.02 hereof.
By:
Name: Regina Bergeland
Title: Vice President
59
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 23rd day of March, 1999, before me personally appeared R.
Bergeland, to me known, who being by me duly sworn, did depose and say, that she
resides at Red Bank, NJ, that she is the Vice President of the Indenture
Trustee, one of the corporations described in and which executed the above
instrument; that she knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation; and that she signed her name thereto
by like order.
Notary Public
60
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 23rd day of March, 1999, before me personally appeared
_________________, to me known, who being by me duly sworn, did depose and say,
that ____ resides at Wilmington, DE, that ___ is the ___________________ of
Wilmington Trust Company, as Owner Trustee, one of the corporations described in
and which executed the above instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that she signed her name thereto by like order.
Notary Public
NOTARIAL SEAL
61
<PAGE>
Exhibit A
FORM OF NOTES
CLASS A-__ NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS
NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
SELLER, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE OWNER
TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES,
EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE BASIC DOCUMENTS.
HOME LOAN TRUST 1999-HI1
Home Loan-Backed Note
Registered Principal Amount: $___________
Class A-__
No. __ Percentage Interest: _____%
CUSIP No. ___________ Note Rate: _____%
Home Loan Trust 1999-HI1, a business trust duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $___________, payable on each Payment
Date in an amount equal to the Percentage Interest specified above of the
aggregate amount, if any, payable from the Payment Account in respect of
principal on the Class A-__ Notes pursuant
1
<PAGE>
to Section 3.05 of the Indenture dated as of March 23, 1999 (the "Indenture")
between the Issuer, as Issuer, and The Chase Manhattan Bank, as Indenture
Trustee (the "Indenture Trustee"); provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the Payment Date in
__________ 20__, to the extent not previously paid on a prior Payment Date.
Capitalized terms used but not defined herein are defined in Appendix A of the
Indenture.
Interest on the Class A-__ Notes will be paid monthly on each
Payment Date at the Note Rate. The Note Rate for the Class A-__ Notes will be
[_____% per annum][the per annum rate equal to the lesser of (i) LIBOR plus
____% and (ii) _____%]. [Interest will be computed on the basis of a 30-day
month and a 360-day year] [Interest will accrue on the Class A-__ Notes on the
basis of the number of days in the related Interest Accrual Period and a 360-day
year]. Principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
Principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Home Loan-Backed Notes (herein called the "Notes"), all issued
under the Indenture, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the holders of
the Notes. The Notes are subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and
unconditional financial guaranty insurance policy issued by Ambac Assurance
Corporation.
Principal of and interest on this Note will be payable on each
Payment Date, commencing on April 26, 1999, as described in the Indenture.
"Payment Date" means the twenty-fifth day of each month, or, if any such date is
not a Business Day, then the next Business Day.
The entire unpaid principal amount of this Note shall be due and
payable in full on the Payment Date in ____________, 20__ pursuant to the
Indenture, to the extent not previously paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing, then the Indenture Trustee or the holders of Notes representing not
less than a majority of the aggregate Note Balance of all Notes with the consent
of the Credit Enhancer, or the
2
<PAGE>
Credit Enhancer may declare the Notes to be immediately due and payable in the
manner provided in Section 5.02 of the Indenture. All principal payments on the
Notes shall be made pro rata to the holders of Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the address specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the Corporate Trust
Office, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Indenture Trustee duly executed by, the holder hereof
or such holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new Notes
in authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Note.
Each holder or Beneficial Owner of a Note, by acceptance of a Note,
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Master Servicer, the Depositor or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of
3
<PAGE>
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each holder or Beneficial Owner of a Note, by acceptance of a Note
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
holder or Beneficial Owner of a Note will not at any time institute against the
Depositor, the Seller, the Master Servicer, GMAC Mortgage Group, Inc. or the
Issuer, or join in any institution against the Depositor, the Seller, the Master
Servicer, GMAC Mortgage Group, Inc. or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each holder of a Note, by acceptance of a Note (and each Beneficial
Owner of a Note by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note is registered (as
of the day of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the Indenture Trustee and the rights of the holders of the Notes
under the Indenture at any time by the Issuer and the Indenture Trustee with the
consent of the holders of Notes representing a majority of the aggregate Note
Balance of all Notes at the time Outstanding and the Credit Enhancer and with
prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the holders of Notes representing specified percentages of the
aggregate Note Balance of all Notes, on behalf of the holders of all the Notes,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the holder of this Note (or any one of more Predecessor
Notes) shall be conclusive and binding upon such holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note. The Indenture also permits the Issuer
and the Indenture Trustee to amend or waive certain terms and conditions set
forth in the Indenture without the consent of holders of the Notes issued
thereunder but with prior notice to the Rating Agencies and the Credit Enhancer.
4
<PAGE>
The term "Issuer" as used in this Note includes any successor or the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair, the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Wilmington Trust Company in its
individual capacity, The Chase Manhattan Bank, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The holder of this Note by its acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case of
an Event of Default under the Indenture, the holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however, that nothing contained herein shall be taken to prevent recourse to,
and enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
5
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and
not in its individual capacity, has caused this Note to be duly executed.
HOME LOAN TRUST 1999-HI1
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Owner
Trustee
Dated: March 23, 1999
By
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-__ Notes referred to in the within mentioned
Indenture.
THE CHASE MANHATTAN BANK, not in
its individual capacity but solely as Indenture
Trustee
Dated: March 23, 1999
By
Authorized Signatory
6
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee:__________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
==============================================================================
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints___________________________, attorney, to transfer said Note
on the books kept for registration thereof, with full power of substitution
in the premises.
Dated: */
Signature Guaranteed:
*/
- -------- * NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within Note
in every particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in STAMP or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
7
<PAGE>
APPENDIX A
DEFINITIONS
Administrative Fees: The Servicing Fees and the fees payable to the Owner
Trustee and the Indenture Trustee.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Appraised Value: For any Home Loan the value of the related
Mortgaged Property determined in the appraisal used in the origination of such
Home Loan (which may have been obtained at an earlier time); provided that if
such Home Loan was originated simultaneously with or not more than 12 months
after a senior lien on the related Mortgaged Property, the appraised value shall
be the lesser of the appraised value at the origination of the senior lien and
the sales price for such Mortgaged Property.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same jurisdiction.
Authorized Officer: With respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basic Documents: The Trust Agreement, the Indenture, the Home Loan
Purchase Agreement, the Insurance Agreement, the Credit Enhancement Instrument,
the Servicing Agreement, the Custodial Agreement and the other documents and
certificates delivered in connection with any of the above.
Beneficial Owner: With respect to any Note, the Person who is the
beneficial owner of such Note as reflected on the books of the Depository or on
the books of a Person maintaining an account with such Depository (directly as a
Depository Participant or indirectly through a Depository Participant, in
accordance with the rules of such Depository).
Book-Entry Custodian: The custodian appointed pursuant to Section 4.06 of
the Indenture.
-1-
<PAGE>
Book-Entry Notes: Beneficial interests in the Notes, ownership and
transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in the States of New York, California,
Minnesota, Illinois or Delaware are required or authorized by law to be closed.
Business Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss.ss.3801 et seq., as the same may be amended from time to time.
Certificate Distribution Account: The account or accounts created
and maintained by the Certificate Paying Agent pursuant to Section 3.10(c) of
the Trust Agreement. The Certificate Paying Agent will make all distributions on
the Certificates from money on deposit in the Certificate Distribution Account.
The Certificate Distribution Account shall be an Eligible Account.
Certificate Distribution Amount: The amount payable to the
Certificate Paying Agent under Section 3.05(ix) of the Indenture for payment to
the Certificates under the Trust Agreement.
Certificate Paying Agent: The meaning specified in Section 3.10 of the
Trust Agreement.
Certificate Percentage Interest: With respect to any Certificate and
any date of determination, the percentage interest as stated on the face of such
Certificate, which percentage may be recalculated in accordance with Section
3.03 of the Trust Agreement.
Certificate Principal Balance: As of any Payment Date, with respect
to any Certificate; an amount equal to the then applicable percentage
Certificate Percentage Interest of such Certificate multiplied by the
Outstanding Reserve Amount.
Certificate Register: The register maintained by the Certificate Registrar
in which the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates.
Certificate Registrar: Initially, the Indenture Trustee, in its capacity as
Certificate
Registrar, or any successor to the Indenture Trustee in such capacity.
Certificate of Trust: The Certificate of Trust filed for the Trust
pursuant to Section 3810(a) of the Business Trust Statute, including all
amendments and restatements.
Certificateholder: The Person in whose name a Certificate is
registered in the Certificate Register except that, any Certificate registered
in the name of the Issuer, the Owner Trustee or the Indenture Trustee or any
Affiliate of any of them shall be deemed not to be outstanding and the
registered holder will not be considered a Certificateholder or a holder for
purposes of giving any request, demand, authorization, direction, notice,
consent or waiver under the
-2-
<PAGE>
Indenture or the Trust Agreement provided that, in determining whether the
Indenture Trustee or the Owner Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Certificates that the Indenture Trustee or the Owner Trustee knows to be so
owned shall be so disregarded. Owners of Certificates that have been pledged in
good faith may be regarded as Holders if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Owner Trustee, as the case may be,
the pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Issuer, any other obligor upon the Certificates or any
Affiliate of any of the foregoing Persons.
Certificates: The Certificates in substantially the form set forth in
Exhibit A to the Trust Agreement.
Class: Collectively, all of the Notes bearing the same designation.
Closing Date: March 23, 1999.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Collateral: The meaning specified in the Granting Clause of the
Indenture.
Collection Period: With respect to any Payment Date, the calendar
month immediately preceding the month of such Payment Date.
Combined Loan-to-Value Ratio: With respect to each Home Loan, the
ratio, expressed as a percentage, of (i) (A) the original principal balance of
such Home Loan, and (B) any outstanding principal balance, at origination of
such Home Loan, of all other mortgage loans, if any, secured by senior or
subordinate liens on the related Mortgaged Property, to (ii) the Appraised
Value, or, if permitted by the Program Guide, the Stated Value.
Corporate Trust Office: With respect to the Indenture Trustee,
Certificate Registrar, Certificate Paying Agent and Paying Agent, the principal
corporate trust office of the Indenture Trustee and Note Registrar at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this instrument is located at 450 West
33rd Street, New York, New York 10007, Attention: Structured Finance Services.
With respect to the Owner Trustee, the principal corporate trust office of the
Owner Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this Trust
Agreement is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration.
Credit Enhancement Draw Amount: With respect to any Payment Date, an
amount, if any, equal to (1) the sum of (x) the amount by which the aggregate
amount of accrued interest on the Notes at the respective Note Rates on such
Payment Date exceeds the amount on deposit in the Payment Account available for
interest distributions on such Payment Date, (y) any Liquidation Loss Amount
(other than any Excess Loss Amount) not currently covered by a Liquidation Loss
-3-
<PAGE>
Distribution Amount or a reduction in the Outstanding Reserve Amount and (z) any
Excess Loss Amount; reduced by (2) the amount of any payments made to the
Indenture Trustee with respect to that date under the Limited Reimbursement
Agreement.
Credit Enhancement Instrument: The Certificate Guarantee Insurance
Policy number AB0243BE, dated as of the Closing Date, issued by the Credit
Enhancer to the Indenture Trustee.
Credit Enhancer: Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation or any successor thereto.
Credit Enhancer Default: If the Credit Enhancer fails to make a payment
required under the Credit Enhancement Instrument in accordance with its terms.
Credit Scores: The figure assigned to a Home Loan that is designed
to assess the Mortgagor's credit history which is obtained from credit reports
provided by various credit reporting organizations and obtained by many lenders
in connection with Home Loan applications to help assess a Mortgagor's
creditworthiness.
Custodial Account: The account or accounts created and maintained by
the Master Servicer pursuant to Section 3.02(b) of the Servicing Agreement, in
which the Master Servicer shall deposit or cause to be deposited certain amounts
in respect of the Home Loans.
Custodial Agreement: Any Custodial Agreement among the Custodian,
the Indenture Trustee, the Issuer and the Master Servicer relating to the
custody of the Home Loans and the Related Documents.
Custodian: Norwest Bank Minnesota, N.A., a national association, and its
successors and assigns.
Cut-off Date: March 1, 1999.
Cut-off Date Loan Balance: With respect to any Home Loan, the unpaid
principal balance thereof as of the close of business on the Business Day
immediately prior to the Cut-off Date.
Default: Any occurrence which is or with notice or the lapse of time or
both would become an Event of Default.
Deficient Valuation: With respect to any Home Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Home Loan, or any reduction in the
amount of principal to be paid in connection with any scheduled payment that
constitutes a permanent forgiveness of principal, which valuation or reduction
results from a proceeding under the Bankruptcy Code.
Definitive Notes: The meaning specified in Section 4.06 of the Indenture.
-4-
<PAGE>
Deleted Loan: A Home Loan replaced or to be replaced with an Eligible
Substitute Loan.
Delinquent: As used herein, a Home Loan is considered to be "30 to
59 days" or "30 or more days" delinquent when a payment due on any due date
remains unpaid as of the close of business on the next following monthly due
date. Since the determination as to whether a Home Loan falls into these
categories is made as of the close of business on the last business day of each
month, a Home Loan with a payment due on July 1 that remained unpaid as of the
close of business on July 31 would still be considered current as of July 31. If
that payment remained unpaid as of the close of business on August 31, the Home
Loan would then be considered 30-59 days delinquent. Delinquency information as
of the Cut-off Date is determined and prepared as of the close of business on
the last business day immediately prior to the Cut-off Date.
Depositor: Residential Funding Mortgage Securities II, Inc., a Delaware
corporation, or its successor in interest.
Depository or Depository Agency: The Depository Trust Company or a
successor appointed by the Indenture Trustee with the approval of the Depositor.
Any successor to the Depository shall be an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act and the
regulations of the Securities and Exchange Commission thereunder.
Depository Participant: A Person for whom, from time to time, the
Depository effects book-entry transfers and pledges of securities deposited with
the Depository.
Determination Date: With respect to any Payment Date, the 20th day
of the month in which such Payment Date occurs or if such day is not a Business
Day, the next succeeding Business Day.
Dissolution Draw: Following an Event of Liquidation, on the Business
Day following the date on which the proceeds of the sale or liquidation of the
Trust Estate are to be distributed to the Noteholders, the amount, if any, by
which the aggregate amount available for distribution to the Noteholders is less
than the sum of (1) an amount equal to the aggregate of all accrued and unpaid
interest on the Notes at the respective Note Rates through such Payment Date and
(2) 100% of the aggregate Note Balance of the Notes outstanding immediately
prior to such Payment Date.
Dissolution Payment Date: Following an Event of Liquidation, the Business
Day following the date on which the proceeds of the sale of the Trust Estate are
paid to the Securityholders.
Due Date: The date on which the Monthly Payment on the related Home Loan is
due in accordance with the terms of the related Mortgage Note.
Eligible Account: An account that is any of the following: (i) maintained
with a depository institution the short-term debt obligations of which have been
rated by each Rating Agency in its highest rating category available, or (ii) an
account or accounts in a depository
-5-
<PAGE>
institution in which such accounts are fully insured to the limits established
by the FDIC, provided that any deposits not so insured shall, to the extent
acceptable to each Rating Agency, as evidenced in writing, be maintained such
that (as evidenced by an Opinion of Counsel delivered to the Indenture Trustee
and each Rating Agency) the Indenture Trustee have a claim with respect to the
funds in such account or a perfected first security interest against any
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, or (iii) in the
case of the Custodial Account, either (A) a trust account or accounts maintained
at the corporate trust department of the Indenture Trustee or (B) an account or
accounts maintained at the corporate trust department of the Indenture Trustee,
as long as its short term debt obligations are rated P-1 by Moody's and A-1 by
Standard & Poor's (or the equivalent) or better by each Rating Agency and its
long term debt obligations are rated A2 by Moody's and A by Standard & Poor's
(or the equivalent) or better, by each Rating Agency, or (iv) in the case of the
Custodial Account and the Payment Account, a trust account or accounts
maintained in the corporate trust division of the Indenture Trustee, or (v) an
account or accounts of a depository institution acceptable to each Rating Agency
(as evidenced in writing by each Rating Agency that use of any such account as
the Custodial Account or the Payment Account will not reduce the rating assigned
to any of the Securities by such Rating Agency (if determined without regard to
the Credit Enhancement Instrument) below the lower of the then-current rating or
the rating assigned to such Securities (if determined without regard to the
Credit Enhancement Instrument) as of the Closing Date by such Rating Agency).
Eligible Substitute Loan: A Home Loan substituted by the Seller for
a Deleted Home Loan which must, on the date of such substitution, as confirmed
in an Officers' Certificate delivered to the Indenture Trustee, (i) have an
outstanding principal balance, after deduction of the principal portion of the
monthly payment due in the month of substitution (or in the case of a
substitution of more than one Home Loan for a Deleted Home Loan, an aggregate
outstanding principal balance, after such deduction), not in excess of the
outstanding principal balance of the Deleted Home Loan (the amount of any
shortfall to be deposited by the Seller in the Custodial Account in the month of
substitution); (ii) comply with each representation and warranty set forth in
clauses (ii) through (xxxiii) of Section 3.1(b) of the Home Loan Purchase
Agreement other than clauses (viii), (xiii), (xiv), (xxiv)(B), (xxv)(B) and
(xxvi) as of the date of substitution; (iii) have a Loan Rate no lower than and
not more than 1% in excess of the Loan Rate of such Deleted Loan; (iv) have a
Combined Loan-to-Value Ratio at the time of substitution no higher than that of
the Deleted Loan at the time of substitution; (v) have, at the time of
substitution, a remaining term to stated maturity not greater than (and not more
than one year less than) that of the Deleted Loan; (vi) be ineligible for
inclusion in a real estate mortgage investment conduit ("REMIC") (a "REMIC
Ineligible Loan") if the Deleted Loan was a REMIC Ineligible Loan (because (a)
the value of the real property securing the Deleted Loan was not at least equal
to eighty percent of the adjusted issue price of such loan at the time of
origination, calculated by subtracting the amount of any liens that are senior
to such loan and a proportionate amount of any lien of equal priority from the
value of such property when the Deleted Loan was originated and (b)
substantially all of the proceeds of the Deleted Loan were not used to acquire,
improve or protect an interest in the real property securing such loan and such
real property was the only security for such Deleted Loan); and (vii) not be 30
days or more delinquent.
-6-
<PAGE>
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: With respect to the Indenture, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) a default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) a default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable, and such default shall continue for a period of five days; or
(iii) there occurs a default in the observance or performance of
any covenant or agreement of the Issuer made in the Indenture, or any
representation or warranty of the Issuer made in the Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the
time when the same shall have been made which has a material adverse
effect on Securityholders, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
representation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been
given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Holders of at
least 25% of the outstanding Security Balance of the Notes or the Credit
Enhancer, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a notice of default hereunder; or
(iv) there occurs the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(v) there occurs the commencement by the Issuer of a voluntary
case under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer to
the entry of an order for relief in an involuntary case under any such
law, or the consent by the Issuer to the appointment or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the assets
of the Trust Estate, or the making by the Issuer of any general assignment
for the benefit of creditors, or the failure by the Issuer generally to
pay its debts as such debts become due, or the taking of any action by the
Issuer in furtherance of any of the foregoing.
-7-
<PAGE>
Event of Liquidation: Following the occurrence of an Event of
Default under the Indenture, the determination by the Indenture Trustee, as
evidenced by a written notice provided to the Owner Trustee, the Depositor, the
Issuer and the Credit Enhancer, that all conditions precedent to the sale or
other liquidation of the Trust Estate pursuant to Section 5.04 of the Indenture
have been satisfied.
Event of Servicer Termination: With respect to the Servicing Agreement, a
Servicing Default as defined in Section 7.01 of the Servicing Agreement.
Excess Loss Amount: On any Payment Date, the "Excess Loss Amount"
will be equal to the sum of (i) any Liquidation Loss Amounts (other than as
described in clauses (ii)-(iv) below) for the related Collection Period which,
when added to the aggregate of such Liquidation Loss Amounts for all preceding
Collection Periods exceed $140,700,401, (ii) any Special Hazard Losses in excess
of the Special Hazard Amount, (iii) any Fraud Losses in excess of the Fraud Loss
Amount, and (iv) certain losses occasioned by war, civil insurrection, certain
governmental actions, nuclear reaction and certain other risks as described in
the Indenture.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Expenses: The meaning specified in Section 7.02 of the Trust Agreement.
Extraordinary Event: Any of the following conditions with respect to
a Mortgaged Property or Home Loan causing or resulting in a loss which causes
the liquidation of such Home Loan:
(a) losses that are of a type that would be covered by the fidelity
bond and the errors and omissions insurance policy required to be
maintained pursuant to Section 3.13 of the Servicing Agreement but are in
excess of the coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether such
loss be direct or indirect, proximate or remote or be in whole or in part
caused by, contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war, including
action in hindering, combating or defending against an actual, impending
or expected attack:
1. by any government or sovereign power, de jure or de facto, or by any
authority maintaining or using military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or forces;
-8-
<PAGE>
(d) any weapon of war employing atomic fission or radioactive force
whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or
defending against such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by order of any government
or public authority; or risks of contraband or illegal transportation or
trade.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Final Insured Payment Date: The Payment Date in September 2029.
FNMA: The Federal National Mortgage Association, or any successor thereto.
Foreclosure Profit: With respect to a Liquidated Home Loan, the
amount, if any, by which (i) the aggregate of Net Liquidation Proceeds exceeds
(ii) the related Loan Balance (plus accrued and unpaid interest thereon at the
applicable Mortgage Rate from the date interest was last paid through the date
of receipt of the final Liquidation Proceeds) of such Liquidated Home Loan
immediately prior to the final recovery of its Liquidation Proceeds.
Fraud Loss Amount: As of any date of determination after the Cut-off
Date, the Fraud Loss Amount shall equal (X) prior to the first anniversary of
the Cut-off Date an amount equal to 5% of the Cut-off Date Loan Balance minus
the aggregate of any Liquidation Loss Amounts on the Home Loans due to Fraud
Losses up to such date of determination; (Y) from the first to the second
anniversary of the Cut-off Date, an amount equal to (1) the lesser of (a) the
Fraud Loss Amount as of the most recent anniversary of the Cut-off Date and (b)
3% of the Pool Balance of the Home Loans as of the most recent anniversary of
the Cut-off Date minus (2) the aggregate of any Liquidation Loss Amounts on the
Home Loans due to Fraud Losses since the most recent anniversary of the Cut-off
Date up to such date of determination; and (Z) from the second to the fifth
anniversary of the Cut-off Date, an amount equal to (1) the lesser of (a) the
Fraud Loss Amount as of the most recent anniversary of the Cut-off Date and (b)
2% of the Pool Balance as of the most recent anniversary of the Cut-off Date
minus (2) the aggregate of any Liquidation Loss Amounts on the Home Loans due to
Fraud Losses since the most recent anniversary of the Cut-off Date up to such
date of determination. On and after the fifth anniversary of the Cut-off Date
the Fraud Loss Amount shall be zero. The initial Fraud Loss Amount shall be
equal to $13,190,663.
Fraud Losses: Losses on Home Loans as to which there was fraud in the
origination of such Home Loan.
Grant: Pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, create, and grant a lien upon and a security interest
in and right of set-off against, deposit, set over and confirm pursuant to the
Indenture. A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the granting
-9-
<PAGE>
party thereunder, including the immediate and continuing right to claim for,
collect, receive and give receipt for principal and interest payments in respect
of such collateral or other agreement or instrument and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
Holder: Any of the Noteholders or Certificateholders.
Home Loans: At any time, the Home Loans that have been sold by the
Seller under the Home Loan Purchase Agreement, together with the Related
Documents, and that remain subject to the terms thereof.
Home Loan Purchase Agreement: The Home Loan Purchase Agreement,
dated as of the Cut-off Date, between the Seller, as seller, and the Depositor,
as purchaser, with respect to the Home Loans, dated as of March 23, 1999.
Home Loan Schedule: The initial schedule of Home Loans as of the
Cut-off Date set forth in Exhibit A of the Servicing Agreement, which schedule
sets forth as to each Home Loan, among other things:
(i) the Home Loan identifying number ("RFC LOAN #");
(ii) the street address of the Mortgaged Property including state, city
and zip code ("ADDRESS");
(iii) the maturity of the Mortgage Note ("MATURITY DATE");
(iv) the Loan Rate ("CUR RATE");
(v) the Principal Balance at origination ("ORG AMT");
(vi) the type of property securing the Mortgage Note ("PROPERTY TYPE");
(vii) the appraised value ("APPRSL");
(viii)the initial scheduled monthly payment of principal, if any, and
interest ("ORIGINAL P & I");
(ix) the Cut-off Date Loan Balance ("CUT-OFF BAL");
(x) the Combined Loan-to-Value Ratio at origination ("CLTV");
(xi) the date of the Mortgage Note ("NOTE DATE");
-10-
<PAGE>
(xii) the original term to maturity of the Home Loan ("ORIGINAL TERM");
(xiii)under the column "OCCP CODE," a code indicating whether the Home Loan
is secured by a non-owner occupied residence;
(xiv) the Principal Balance of any Home Loan senior thereto ("SR BAL");
(xv) the Credit Score ("CR SCORE");
(xvi) the debt to income ratio ("DTI");
(xvii)product code ("PRODUCT CODE");
(xviiiloan purpose ("PURPOSE");
(xix) the lien position of the related Mortgage ("LIEN"); (xx) the Master
Servicer loan number (SERVICER LOAN #); and
(xxi) the remaining term of the Home Loan (REMAINING TERM).
Such schedule may consist of multiple reports that collectively set forth all of
the information required.
Indemnified Party: The meaning specified in Section 7.02 of the Trust
Agreement.
Indenture: The indenture dated as of March 23, 1999 between the Issuer, as
debtor, and the Indenture Trustee, as indenture trustee.
Indenture Trustee: The Chase Manhattan Bank, and its successors and assigns
or any successor indenture trustee appointed pursuant to the terms of the
Indenture.
Independent: When used with respect to any specified Person, the
Person (i) is in fact independent of the Issuer, any other obligor on the Notes,
the Seller, the Issuer, the Depositor and any Affiliate of any of the foregoing
Persons, (ii) does not have any direct financial or any material indirect
financial interest in the Issuer, any such other obligor, the Seller, the
Issuer, the Depositor or any Affiliate of any of the foregoing Persons and (iii)
is not connected with the Issuer, any such other obligor, the Seller, the
Issuer, the Depositor or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Independent Certificate: A certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable
-11-
<PAGE>
care, and such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
Initial Certificates: The Home Loan-Backed Certificates, Series
1999-HS1, issued on the Closing Date, each evidencing undivided beneficial
interests in the Issuer and executed by the Owner Trustee.
Initial Note Balance: With respect to the Class A-1 Notes,
$55,250,000, with respect to the Class A-2 Notes, $55,250,000, with respect to
the Class A-3 Notes, $120,200,000, with respect to the Class A-4 Notes,
$52,000,000, with respect to the Class A-5 Notes, $64,900,000 and with respect
to the Class A-6 Notes, $92,000,000.
Initial Outstanding Reserve Amount: An amount equal to 3.50% of the Cut-off
Date Loan Balance of the Home Loans.
Insolvency Event: With respect to a specified Person, (a) the filing
of a decree or order for relief by a court having jurisdiction in the premises
in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due or the admission
by such Person in writing (as to which the Indenture Trustee shall have notice)
of its inability to pay its debts generally, or the adoption by the Board of
Directors or managing member of such Person of a resolution which authorizes
action by such Person in furtherance of any of the foregoing.
Insurance Agreement: The Insurance and Indemnity Agreement dated as
of March 23, 1999, among the Master Servicer, the Seller, the Depositor, the
Issuer, the Indenture Trustee and the Credit Enhancer, including any amendments
and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Credit Enhancer) pursuant to any insurance policy covering a Home Loan which are
required to be remitted to the Master Servicer, or amounts required to be paid
by the Master Servicer pursuant to the next to last sentence of Section 3.04 of
the Servicing Agreement, net of any component thereof (i) covering any expenses
incurred by or on behalf of the Master Servicer in connection with obtaining
such proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Master Servicer's normal servicing procedures or (iv) required to be paid to any
holder of a mortgage senior to such Home Loan.
-12-
<PAGE>
Interest Accrual Period: With respect to any Payment Date and with
respect to the Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Notes,
will be the calendar month preceding the month in which the related Payment Date
occurs (or in the case of the first Payment Date beginning on the Closing Date
and ending the last day of the month in which the Closing Date occurs). With
respect to the Class A-1 Notes, (i) with respect to the Payment Date in April
1999, the period commencing the Closing Date and ending on the day preceding the
Payment Date in April 1999, and (ii) with respect to any Payment Date after the
Payment Date in April 1999, the period commencing on the Payment Date in the
month immediately preceding the month in which such Payment Date occurs and
ending on the day preceding such Payment Date.
Interest Collections: With respect to any Payment Date, the sum of
(i) the portion allocable to interest of all scheduled monthly payments on the
Home Loans received during the related Collection Period, minus the
Administrative Fees, (ii) the interest portion of all Net Liquidation Proceeds
allocated to interest pursuant to the terms of the Mortgage Notes, reduced by
the Administrative Fees for such Collection Period and (iii) the interest
portion of the Repurchase Price for any Deleted Loans and the cash purchase
price paid in connection with any optional purchase of the Home Loans by the
Master Servicer; provided, however, that on the first Payment Date, the Excluded
Interest Amount will be excluded from Interest Collections.
ISDA Counterparty: The counterparty named in the Limited
Reimbursement Agreement, a copy of which shall be provided to the Indenture
Trustee by the Credit Enhancer on the Closing Date.
Issuer or Trust: The Home Loan Trust 1999-HI1, a Delaware business trust,
or its successor in interest.
Issuer Request: A written order or request signed in the name of the Issuer
by any one of its Authorized Officers and delivered to the Indenture Trustee.
LIBOR: With respect to any Payment Date, the arithmetic mean of the
London interbank offered rate quotations for one-month U.S. Dollar deposits,
expressed on a per annum basis, determined in accordance with Section 1.04 of
the Indenture.
LIBOR Business Day: Any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in London, England are required or
authorized to by law to be closed.
LIBOR Rate Adjustment Date: With respect to each Payment Date, the
second LIBOR Business Day immediately preceding the commencement of the related
Interest Accrual Period.
Lien: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any
-13-
<PAGE>
financing statement under the UCC (other than any such financing statement filed
for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing; provided, however, that any assignment pursuant
to Section 6.02 of the Servicing Agreement shall not be deemed to constitute a
Lien.
Limited Reimbursement Agreement: The ISDA Master Agreement dated March 23,
1999, between the Credit Enhancer and the ISDA Counterparty.
Liquidated Home Loan: With respect to any Payment Date, any Home
Loan in respect of which the Master Servicer has determined, in accordance with
the servicing procedures specified in the Servicing Agreement, as of the end of
the related Collection Period that substantially all Liquidation Proceeds which
it reasonably expects to recover, if any, with respect to the disposition of the
related Mortgaged Property have been recovered. In addition, the Master Servicer
will treat any Home Loan that is 180 days or more delinquent as having been
finally liquidated.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead)
which are incurred by or on behalf of the Master Servicer in connection with the
liquidation of any Home Loan and not recovered under any insurance policy, such
expenses including, without limitation, legal fees and expenses, any
unreimbursed amount expended (including, without limitation, amounts advanced to
correct defaults on any Home Loan which is senior to such Home Loan and amounts
advanced to keep current or pay off a Home Loan that is senior to such Home
Loan) respecting the related Home Loan and any related and unreimbursed
expenditures for real estate property taxes or for property restoration,
preservation or insurance against casualty loss or damage.
Liquidation Loss Amounts: With respect to any Payment Date and any
Home Loan that became a Liquidated Home Loan during the related Collection
Period, the unrecovered portion of the related Loan Balance thereof and any
unpaid accrued interest thereon at the end of such Collection Period, after
giving effect to the Net Liquidation Proceeds applied in reduction of the Loan
Balance.
Liquidation Loss Distribution Amount: With respect to any Payment
Date, the aggregate of (A) 100% of the Liquidation Loss Amounts (other than any
Excess Loss Amounts) on such Payment Date, plus (B) any such Liquidation Loss
Amounts (other than any Excess Loss Amounts) remaining undistributed from any
preceding Payment Date (with interest thereon at a rate specified in the
Insurance Agreement for amounts owing to the Credit Enhancer), provided that any
such Liquidation Loss Amount pursuant to this clause (B) shall not be
distributed to the extent that the Liquidation Loss Amount was paid by means of
a draw on the Credit Enhancement Instrument or was reflected in the reduction of
the Outstanding Reserve Amount.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
including amounts drawn under the Credit Enhancement Instrument) if any received
in connection with the liquidation of any Home Loan or related REO, whether
through trustee's sale, foreclosure sale or otherwise.
-14-
<PAGE>
Loan Balance: With respect to any Home Loan, other than a Liquidated
Home Loan, and as of any day, the related Cut-off Date Loan Balance, minus all
collections in respect of principal in accordance with the related Mortgage Note
and applied in reduction of the Loan Balance thereof. For purposes of this
definition, a Liquidated Home Loan shall be deemed to have a Loan Balance equal
to zero.
Loan Rate or Mortgage Rate: With respect to any Home Loan and any
day, the per annum rate of interest set forth in the related Mortgage Note.
Lost Note Affidavit: With respect to any Home Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Mortgage
Note has been lost, misplaced or destroyed (together with a copy of the related
Mortgage Note).
Master Servicer: Residential Funding Corporation, a Delaware corporation,
and its successors and assigns.
Master Servicing Fee: With respect to any Home Loan and any
Collection Period, the product of (i) the Master Servicing Fee Rate divided by
12 and (ii) the Loan Balance of such Home Loan as of the first day of such
Collection Period.
Master Servicing Fee Rate: With respect to any Home Loan, 0.08% per annum.
Monthly Payment: With respect to any Home Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon in
accordance with the amortization schedule at the time applicable thereto (after
adjustment, if any, for partial Prepayments and for Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than a Deficient Valuation, or
similar proceeding or any moratorium or similar waiver or grace period).
Moody's: Moody's Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Home Loan.
Mortgage File: The file containing the Related Documents pertaining
to a particular Home Loan and any additional documents required to be added to
the Mortgage File pursuant to the Home Loan Purchase Agreement or the Servicing
Agreement.
Mortgage Note: With respect to a Home Loan, the mortgage note
pursuant to which the related mortgagor agrees to pay the indebtedness evidenced
thereby and secured by the related Mortgage as modified or amended.
-15-
<PAGE>
Mortgaged Property: The underlying property, including real property and
improvements thereon, securing a Home Loan.
Mortgagor: The obligor or obligors under a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Home Loan,
Liquidation Proceeds net of Liquidation Expenses (but not including the portion,
if any, of such amount that exceeds the Loan Balance of the Home Loan at the end
of the Collection Period immediately preceding the Collection Period in which
such Home Loan became a Liquidated Home Loan).
Note Balance: With respect to any Payment Date and any Class of
Notes, the Initial Note Balance thereof reduced by all payments of principal
thereon prior to and as of such Payment Date.
Note Owner: The Beneficial Owner of a Note.
Note Rate: With respect to the Class A-1 Notes and any Payment Date,
the per annum rate equal to the lesser of (i) LIBOR plus 0.18% and (ii) 11.00%.
With respect to the Class A-2 Notes, 6.05% per annum, with respect to the Class
A-3 Notes, 6.31% per annum, with respect to the Class A-4 Notes, 6.51% per
annum, and with respect to the Class A-5 Notes, 6.84% per annum. With respect to
the Class A-6 Notes, 7.08% per annum; provided, that on the Step-Up Date, the
Note Rate on the Class A-6 Notes shall increase to 7.58% per annum.
Note Register: The register maintained by the Note Registrar in which the
Note Registrar shall provide for the registration of Notes and of transfers and
exchanges of Notes.
Note Registrar: The Indenture Trustee, in its capacity as Note Registrar.
Noteholder: The Person in whose name a Note is registered in the
Note Register, except that, any Note registered in the name of the Depositor,
the Issuer or the Indenture Trustee or any Affiliate of any of them shall be
deemed not to be outstanding and the registered holder will not be considered a
Noteholder or holder for purposes of giving any request, demand, authorization,
direction, notice, consent or waiver under the Indenture or the Trust Agreement
provided that, in determining whether the Indenture Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Indenture Trustee or the Owner Trustee
knows to be so owned shall be so disregarded. Owners of Notes that have been
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes or any Affiliate of any of the
foregoing Persons. Any Notes on which payments are made under the Credit
Enhancement Instrument shall be deemed Outstanding until the Credit Enhancer has
been reimbursed with respect thereto and the Credit Enhancer shall be deemed the
Noteholder thereof to the extent of such unreimbursed payment.
-16-
<PAGE>
Notes: Any one of the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 or Class A-6 Notes issued and outstanding at any time pursuant to the
Indenture.
Officer's Certificate: With respect to the Master Servicer, a
certificate signed by the President, Managing Director, a Director, a Vice
President or an Assistant Vice President, of the Master Servicer and delivered
to the Indenture Trustee. With respect to the Issuer, a certificate signed by
any Authorized Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 10.01 of the
Indenture, and delivered to the Indenture Trustee. Unless otherwise specified,
any reference in the Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer.
Opinion of Counsel: A written opinion of counsel. Any Opinion of
Counsel for the Master Servicer may be provided by in-house counsel for the
Master Servicer if reasonably acceptable to the Indenture Trustee, the Credit
Enhancer and the Rating Agencies or counsel for the Depositor, as the case may
be.
Original Trust Agreement: The Trust Agreement, dated as of March 15, 1999,
between the Owner Trustee and the Depositor.
Outstanding: With respect to the Notes, as of the date of determination,
all Notes theretofore executed, authenticated and delivered under this Indenture
except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to
the Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other Notes have
been executed, authenticated and delivered pursuant to the Indenture
unless proof satisfactory to the Indenture Trustee is presented that any
such Notes are held by a holder in due course;
provided, however, that for purposes of effectuating the Credit Enhancer's right
of subrogation as set forth in Section 4.12 of the Indenture only, all Notes
that have been paid with funds provided under the Credit Enhancement Instrument
shall be deemed to be Outstanding until the Credit Enhancer has been reimbursed
with respect thereto.
Outstanding Reserve Amount: With respect to any Payment Date, the
Outstanding Reserve Amount available to cover Liquidation Loss Amounts shall be
equal to the amount, if any, by which (i) the Pool Balance after applying
payments received in the related Collection Period (but without further
reduction due to any Home Loan becoming a Liquidated Home Loan during such
Collection Period) exceeds (ii) the aggregate Note Balance of the Notes on such
Payment Date (after application of Principal Collections for such date). The
Outstanding Reserve Amount is subject to reduction on any Payment Date as
described in Section 3.05(d) of the Indenture.
Owner Trust: Home Loan Trust 1999-HI1, created by the Certificate of
Trust pursuant to the Trust Agreement and the Original Trust Agreement.
-17-
<PAGE>
Owner Trust Estate: The corpus of the Issuer created by the Trust
Agreement which consists of the Home Loans and the Credit Enhancement
Instrument.
Owner Trustee: Wilmington Trust Company not in its individual
capacity but solely as Owner Trustee of the Trust, and its successors and
assigns or any successor owner trustee appointed pursuant to the terms of the
Trust Agreement.
Paying Agent: Any paying agent or co-paying agent appointed pursuant
to Section 3.03 of the Indenture, which initially shall be the Indenture
Trustee.
Payment Account: The account established by the Indenture Trustee
pursuant to Section 8.02 of the Indenture and Section 5.01 of the Servicing
Agreement. Amounts deposited in the Payment Account will be distributed by the
Indenture Trustee in accordance with Section 3.05 of the Indenture.
Payment Date: The 25th day of each month, or if such day is not a Business
Day, then the next Business Day.
Percentage Interest: With respect to any Note and any date of
determination, the percentage obtained by dividing the Note Balance of such Note
by the aggregate of the Note Balances of all Notes of the same Class.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by
the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of acquisition thereof,
provided that the unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by each Rating Agency in
its highest short-term rating category available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an original
maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than 365
days or a remaining maturity of more than 30 days) denominated in United
States dollars of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof or
of any domestic branch of a foreign depository institution or trust
company; provided that the debt obligations of such depository institution
or trust company (or, if the only Rating Agency is Standard & Poor's, in
the case of the principal depository institution in a depository
institution holding company, debt obligations of the depository
institution holding company) at the date of acquisition thereof have been
rated by each Rating Agency in its highest short-term rating category
available; and provided further that, if the only Rating Agency is
Standard & Poor's and if the depository or trust
-18-
<PAGE>
company is a principal subsidiary of a bank holding company and the debt
obligations of such subsidiary are not separately rated, the applicable
rating shall be that of the bank holding company; and, provided further
that, if the original maturity of such short-term obligations of a
domestic branch of a foreign depository institution or trust company shall
exceed 30 days, the short-term rating of such institution shall be A-1+ in
the case of Standard & Poor's if Standard & Poor's is the Rating Agency;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each Rating Agency in its highest short-term rating category
available; provided that such commercial paper shall have a remaining
maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest long-term rating category available; and
(vi) other obligations or securities that are acceptable to each
Rating Agency as an Permitted Investment hereunder and will not reduce the
rating assigned to any Securities by such Rating Agency below the lower of
the then-current rating or the rating assigned to such Securities as of
the Closing Date by such Rating Agency, and which are acceptable to the
Credit Enhancer, as evidenced in writing, provided that if the Master
Servicer or any other Person controlled by the Master Servicer is the
issuer or the obligor of any obligation or security described in this
clause (vi) such obligation or security must have an interest rate or
yield that is fixed or is variable based on an objective index that is not
affected by the rate or amount of losses on the Home Loans;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations References herein to the highest rating available on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Aaa in the
case of Moody's, and references herein to the highest rating available on
unsecured commercial paper and short-term debt obligations shall mean A-1 in the
case of Standard & Poor's and P-1 in the case of Moody's.
Person: Any legal individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: With respect to any date, the aggregate of the Loan Balances
of all Home Loans as of such date.
Predecessor Note: With respect to any particular Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the
-19-
<PAGE>
purpose of this definition, any Note authenticated and delivered under Section
4.03 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note
shall be deemed to evidence the same debt as the mutilated, lost, destroyed or
stolen Note.
Premium Amount: The amount of premium due to the Credit Enhancer in
accordance with the terms of the Insurance Agreement.
Premium Percentage: As set forth in the Insurance Agreement.
Prepayment Assumption: A 100% Prepayment Assumption used solely for
determining the accrual of original issue discount, market discount and premium,
if any, on the Notes for federal income tax purposes. A 100% Prepayment
Assumption assumes a constant prepayment rate of 2% per annum for the first
month, increasing each month by an additional 0.9286% until the fifteenth month.
Beginning in the fifteenth month and in each month thereafter during the life of
the Home Loans, a 100% Prepayment Assumption assumes a constant prepayment rate
of 15% per annum each month.
Principal Collection Distribution Amount: For any Payment Date, the
Principal Collections for such Payment Date; provided, however, on any Payment
Date with respect to which the Outstanding Reserve Amount that would result, if
determined without regard to this proviso exceeds the Reserve Amount Target, the
Principal Collection Distribution Amount will be reduced by the amount of such
excess, but not below zero, until the Outstanding Reserve Amount equals the
Reserve Amount Target.
Principal Collections: An amount equal to the sum of (i) the
principal portion of all scheduled Monthly Payments on the Home Loans received
during the related Collection Period; (ii) the principal portion of all proceeds
of the repurchase of any Home Loans (or, in the case of a substitution, any
Substitution Adjustment Amounts) as required by the Servicing Agreement during
the related Collection Period; and (iii) the principal portion of all other
unscheduled collections received on the Home Loans during the related Collection
Period (or deemed to be received during the related Collection Period)
(including, without limitation, full and partial Principal Prepayments made by
the respective Mortgagors, Insurance Proceeds and Net Liquidation Proceeds), to
the extent not previously distributed.
Principal Prepayment: Any payment of principal made by the Mortgagor
on a Home Loan which is received in advance of its scheduled Due Date and which
is not accompanied by an amount of interest representing scheduled interest due
on any date or dates in any month or months subsequent to the month of
prepayment.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Program Guide: Together, the Seller's Seller Guide and Servicing Guide, as
in effect from time to time.
-20-
<PAGE>
Purchase Price: The meaning specified in Section 2.2(a) of the Home Loan
Purchase Agreement.
Purchaser: Residential Funding Mortgage Securities II, Inc., a Delaware
corporation, and its successors and assigns.
Qualified Insurer: A mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of business
and each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and to
write the insurance provided by the insurance policy issued by it, approved as
an insurer by the Master Servicer and as a FNMA-approved mortgage insurer.
Rating Agency: Any nationally recognized statistical rating
organization, or its successor, that rated the Securities at the request of the
Depositor at the time of the initial issuance of the Securities, which initially
shall be Moody's or Standard & Poor's. If such organization or a successor is no
longer in existence, "Rating Agency" shall be such nationally recognized
statistical rating organization, or other comparable Person, designated by the
Depositor, notice of which designation shall be given to the Indenture Trustee.
References herein to the highest short term unsecured rating category of a
Rating Agency shall mean A-1 or better in the case of Standard & Poor's and P-1
or better in the case of Moody's and in the case of any other Rating Agency
shall mean such equivalent ratings. References herein to the highest long-term
rating category of a Rating Agency shall mean "AAA" in the case of Standard &
Poor's and "Aaa" in the case of Moody's and in the case of any other Rating
Agency, such equivalent rating.
Record Date: With respect to the Notes and any Payment Date, the
Business Day next preceding such Payment Date and with respect to the
Certificates and any Payment Date, the last Business Day of the month preceding
the month of such Payment Date.
Registered Holder: The Person in whose name a Note is registered in the
Note Register on the applicable Record Date.
Related Documents: With respect to each Home Loan, the documents
specified in Section 2.1(c) of the Home Loan Purchase Agreement and any
documents required to be added to such documents pursuant to the Home Loan
Purchase Agreement, the Trust Agreement or the Servicing Agreement.
Release Agreement: A Release Agreement as defined in Section 3.02 of the
Servicing Agreement.
REO: A Mortgaged Property that is acquired by the Issuer in foreclosure or
by deed in lieu of foreclosure.
Repurchase Event: With respect to any Home Loan, either (i) a discovery
that, as of the Closing Date, the related Mortgage was not a valid lien on the
related Mortgaged Property
-21-
<PAGE>
subject only to (A) the lien of any prior mortgage indicated on the Home Loan
Schedule, (B) the lien of real property taxes and assessments not yet due and
payable, (C) covenants, conditions, and restrictions, rights of way, easements
and other matters of public record as of the date of recording of such Mortgage
and such other permissible title exceptions as are listed in the Program Guide
and (D) other matters to which like properties are commonly subject which do not
materially adversely affect the value, use, enjoyment or marketability of the
related Mortgaged Property or (ii) with respect to any Home Loan as to which the
Seller delivers an affidavit certifying that the original Mortgage Note has been
lost or destroyed, a subsequent default on such Home Loan if the enforcement
thereof or of the related Mortgage is materially and adversely affected by the
absence of such original Mortgage Note.
Repurchase Price: With respect to any Home Loan required to be
repurchased on any date pursuant to the Home Loan Purchase Agreement or
purchased by the Master Servicer pursuant to the Servicing Agreement, an amount
equal to the sum of (i) 100% of the Loan Balance thereof (without reduction for
any amounts charged off) and (ii) unpaid accrued interest at the Loan Rate (or
with respect to the last day of the month in the month of repurchase, the Loan
Rate will be the Loan Rate in effect as to the second to last day in such month)
on the outstanding principal balance thereof from the Due Date to which interest
was last paid by the Mortgagor to the first day of the month following the month
of purchase.
Reserve Amount Target: As to any Payment Date prior to the Stepdown
Date, the Reserve Amount Target will be 2.00% of the Cut-off Date Loan Balance.
On or after the Stepdown Date, the Reserve Amount Target will be equal to the
lesser of (a) the Reserve Amount Target as of the Cut-off Date and (b) 4.00% of
the Pool Balance before applying payments received in the related Collection
Period (but not lower than $2,198,444 (0.50% of the aggregate of the Cut-off
Date Balance)); provided however that any scheduled reduction to the Reserve
Amount Target described above shall not be made as of any Payment Date unless
(i)(a) the aggregate cumulative Liquidation Loss Amounts on the Home Loans prior
to any such Payment Date occurring during the first year, the second year or the
third year (or any year thereafter) after the Stepdown Date are less than 7.0%,
8.5% and 10.0% respectively, of the Cut-off Date Pool Balance or [(b) the
average Liquidation Loss Amount on the Home Loans for the current and five
previous Payment Dates is less than half of the amount remaining in the Payment
Account on such Payment Date following distributions pursuant to clauses (i)-(v)
of Section 3.05 of the Indenture (other than clause (iii)] and (ii) there has
been no draw on the Credit Enhancement Instrument on such Payment Date that
remains unreimbursed. In addition, the Reserve Amount Target may be reduced with
the prior written consent of the Credit Enhancer and the Rating Agencies.
Reserve Increase Amount: On each Payment Date, an amount equal to
the lesser of (i) the amount remaining in the Payment Account following
distributions pursuant to Section 3.05(v) of the Indenture and (ii) the amount
necessary to bring the Outstanding Reserve Amount up to the Reserve Amount
Target.
Responsible Officer: With respect to the Indenture Trustee, any officer of
the Indenture Trustee with direct responsibility for the administration of the
Trust Agreement and also,
-22-
<PAGE>
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Security: Any of the Certificates or Notes.
Securityholder or Holder: Any Noteholder or a Certificateholder.
Security Instrument: A written instrument creating a valid first
lien on a Mortgaged Property securing a Mortgage Note, which may be any
applicable form of mortgage, deed of trust, deed to secure debt or security
deed, including any riders or addenda thereto.
Seller: Residential Funding Corporation, a Delaware corporation, and its
successors and assigns.
Servicing Agreement: The Servicing Agreement dated as of March 23, 1999
among the Indenture Trustee, the Issuer and the Master Servicer, as master
servicer.
Servicing Certificate: A certificate prepared by a Servicing Officer on
behalf of the Master Servicer in accordance with Section 4.01 of the Servicing
Agreement.
Servicing Default: The meaning specified in Section 7.01 of the Servicing
Agreement.
Servicing Fee: With respect to any Home Loan, the sum of the related Master
Servicing Fee and the related Subservicing Fee.
Servicing Fee Rate: With respect to any Home Loan, the sum of the related
Master Servicing Fee Rate and the related Subservicing Fee Rate.
Servicing Officer: Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Home Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Credit Enhancer) by the Master
Servicer, as such list may be amended from time to time.
Special Hazard Amount: As of any date of determination following the
Cut-off Date, the Special Hazard Amount shall equal $4,396,888 less the sum of
(A) the aggregate of any Liquidation Loss Amounts on the Home Loans due to
Special Hazard Losses and (B) the Adjustment Amount (as defined below) as most
recently calculated. For each anniversary of the Cut-off Date, the Adjustment
Amount shall be equal to the amount, if any, by which the amount calculated in
accordance with the preceding sentence (without giving effect to the deduction
of the Adjustment Amount for such anniversary) exceeds the greatest of (i) twice
the outstanding principal balance of the Home Loan which has the largest
outstanding principal balance on the Payment Date
-23-
<PAGE>
immediately preceding such anniversary, (ii) the product of 1.00% multiplied by
the outstanding aggregate credit limits of all Home Loans on the Payment Date
immediately preceding such anniversary and (iii) the aggregate outstanding
principal balance (as of the immediately preceding Payment Date) of the Home
Loans in any single five-digit California zip code area with the largest amount
of Home Loans by aggregate principal balance as of such anniversary.
Special Hazard Loss: Any Liquidation Loss Amount not in excess of
the cost of the lesser of repair or replacement of a Mortgaged Property suffered
by such Mortgaged Property on account of direct physical loss, exclusive of (i)
any loss of a type covered by a hazard policy or a flood insurance policy
required to be maintained in respect of such Mortgaged Property pursuant to
Section 3.04 of the Servicing Agreement, except to the extent of the portion of
such loss not covered as a result of any coinsurance provision and (ii) any
losses resulting from an Extraordinary Event.
Standard & Poor's: Standard & Poor's, a Division of The McGraw-Hill
Companies, Inc. or its successor in interest.
Step-Up Date: The first Payment Date immediately following the
Payment Date on which the Master Servicer can purchase all or some of the Home
Loans from the Trust pursuant to Section 8.08 of the Servicing Agreement.
Stated Value: The value of the Mortgaged Property as stated by the related
Mortgagor in his or her application.
Stepdown Date: The later of (i) the Payment Date in March 2002 and
(ii) the Payment Date on which the Pool Balance after applying payments received
in the related Collection Period as of such Payment Date is less than 50% of the
Cut-off Date Balance.
Subservicer: Any Person with whom the Master Servicer has entered into a
Subservicing Agreement as a Subservicer by the Master Servicer.
Subservicing Account: An Eligible Account established or maintained by a
Subservicer as provided for in Section 3.02(c) of the Servicing Agreement.
Subservicing Agreement: The written contract between the Master
Servicer and any Subservicer relating to servicing and administration of certain
Home Loans as provided in Section 3.01 of the Servicing Agreement.
Subservicing Fee: With respect to any Collection Period, the fee
retained monthly by the Subservicer (or, in the case of a nonsubserviced Home
Loan, by the Master Servicer) equal to the product of (i) the Subservicing Fee
Rate divided by 12 and (ii) the Pool Balance as of the first day of such
Collection Period.
Subservicing Fee Rate: With respect to 88.36% of the Home Loans, 0.50% per
annum, and with respect to 11.64% of the Home Loans, 0.100% per annum.
-24-
<PAGE>
Substitution Adjustment Amounts: With respect to any Eligible
Substitute Loan, the amount as defined in Section 3.1(b) of the Home Loan
Purchase Agreement and any Deleted Loan, the amount, if any, as determined by
the Master Servicer, by which the aggregate principal balance of all such
Eligible Substitute Loans as of the date of substitution is less than the
aggregate principal balance of all such Deleted Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution that
are to be distributed to the Payment Account in the month of substitution).
Termination Price: In the event that all of the Home Loans are
purchased by the Master Servicer, the Termination Price will be an amount equal
to 100% of the unpaid Loan Balance of each Home Loan so purchased, plus accrued
and unpaid interest thereon at the weighted average of the Loan Rates through
the day preceding the Payment Date on which such purchase occurs, plus any
amounts due and owing to the Credit Enhancer under the Insurance Agreement.
Treasury Regulations: Regulations, including proposed or temporary
Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
Trust Agreement: The Amended and Restated Trust Agreement, dated as of
March 23, 1999, between the Owner Trustee and the Depositor.
Trust Estate: The meaning specified in the Granting Clause of the
Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as
amended from time to time, as in effect on any relevant date.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Underwriters: Bear, Stearns & Co. Inc. and Merrill, Lynch, Pierce, Fenner &
Smith Incorporated.
Uniform Single Attestation Program for Mortgage Bankers: The Uniform
Single Attestation Program for Mortgage Bankers, as published by the Mortgage
Bankers Association of America and effective with respect to fiscal periods
ending on or after December 15, 1995.
-25-
<PAGE>
<PAGE>
