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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 4, 1997
BEAR STEARNS ASSET BACKED SECURITIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-26051 13-3836437
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
245 Park Avenue
New York, New York 10167
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 272-4095
No Change
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Mortgage Loans
BEAR STEARNS ASSET BACKED SECURITIES, INC. (the "Registrant") registered
issuances of up to $700,000,000 principal amount of Asset Backed Securities on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Act"), by a Registration Statement on Form S-3
(Registration File No. 333-26051) (as amended, the "Registration Statement").
Pursuant to the Registration Statement, Life Financial Home Loan Owner Trust
1997-2 (the "Trust") issued $123,750,000 in aggregate principal amount of its
Asset Backed Notes, Series 1997-2 (the "Notes"), on September 4, 1997. This
Current Report on Form 8-K is being filed to satisfy an undertaking to file
copies of certain agreements executed in connection with the issuance of the
Notes, the forms of which were filed as Exhibits to the Registration Statement.
The Notes were issued pursuant to an Indenture (the "Indenture") attached
hereto as Exhibit 4.1, dated as of September 1, 1997, between the Trust and
Norwest Bank Minnesota, National Association, as Indenture Trustee (the
"Indenture Trustee"). The Notes consist of four classes of senior notes, the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes
(collectively, the "Class A Notes"), and three classes of subordinate notes, the
Class M-1 Notes, the Class M-2 Notes and the Class B Notes (collectively with
the Class A Notes, the "Notes"). In addition to the Notes, the Trust also issued
Residual Interests representing the entire residual interests in the assets of
the Trust.
The assets of the Trust consist primarily of a pool of home loans which are
secured by second liens on residential properties (the "Loans"). As of the
Closing Date, the Loans possessed the characteristics described in the
Prospectus dated June 24, 1997 and the Prospectus Supplement dated August 25,
1997, filed pursuant to Rule 424(b)(2) of the Act on August 29, 1997.
Interest distributions on the Notes are based on the Note Principal Balance
thereof and the then applicable Note Interest Rate thereof. The Note Interest
Rates and Original Principal Balances of the Notes are set forth below:
Original Principal Balance Note Interest Rate
Class A-1 Notes $ 29,390,000 6.71%
Class A-2 Notes 32,110,000 6.74
Class A-3 Notes 11,710,000 6.96
Class A-4 Notes 16,510,000 7.45
Class M-1 Notes 13,610,000 7.58
Class M-2 Notes 11,140,000 7.73
Class B Notes 9,280,000 7.98
TOTAL $123,750,000
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated August 25, 1997, between Bear Stearns
Asset Backed Securities, Inc. and Bear, Stearns & Co. Inc.
1.2 Indemnification and Contribution Agreement, dated August 25, 1997,
between Bear Stearns Asset Backed Securities, Inc. and Bear, Stearns & Co. Inc.
4.1 Indenture, dated as of September 1, 1997, between Life Financial Home
Loan Owner Trust 1997-2 and Norwest Bank Minnesota, National Association.
99.1 Form T-1 of Norwest Bank Minnesota, National Association.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BEAR STEARNS ASSET BACKED SECURITIES, INC.
as Registrant and on behalf of LIFE
FINANCIAL HOME LOAN OWNER TRUST 1997-2
By: /s/ JONATHAN LIEBERMAN
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Name: Jonathan Lieberman
Title: Vice President
Dated: September 16, 1997
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Underwriting Agreement, dated August 25, 1997, between Bear
Stearns Asset Backed Securities, Inc. and Bear Stearns & Co.
Inc.
1.2 Indemnification and Contribution Agreement, dated August 25,
1997, between Bear Stearns Asset Backed Securities, Inc. and
Bear Stearns & Co. Inc.
4.1 Indenture, dated as of September 1, 1997, between Life
Financial Home Loan Owner Trust 1997-2 and Norwest Bank
Minnesota, National Association.
99.1 Form T-1 of Norwest Bank Minnesota, National Association.
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EXECUTION COPY
BEAR STEARNS ASSET BACKED SECURITIES, INC.
LIFE FINANCIAL HOME LOAN OWNER TRUST 1997-2
HOME LOAN ASSET BACKED NOTES, SERIES 1997-2
Class A-1, Class A-2, Class A-3, Class A-4,
Class M-1, Class M-2 and Class B Notes
UNDERWRITING AGREEMENT
August 25, 1997
BEAR, STEARNS & CO. INC.
As Underwriter
245 Park Avenue
New York, New York 10167
Dear Sirs:
Bear Stearns Asset Backed Securities, Inc. (the "Depositor"), a
Delaware corporation, has authorized the issuance and sale of Life Financial
Home Loan Owner Trust 1997-2, Home Loan Asset Backed Notes in the series and
classes, in the respective original principal amounts and with the designations
set forth in Schedule A hereto (the Class A-1, Class A-2, Class A-3, Class A-4,
Class M-1, Class M-2 and Class B Notes, collectively, the "Notes"). Bear,
Stearns & Co. Inc. (the "Underwriter") is purchasing all of the Notes at the
prices set forth on Schedule A hereto.
The Notes will be issued pursuant to an indenture, to be dated as of
September 1, 1997 (the "Indenture"), between Life Financial Home Loan Owner
Trust 1997-2 (the "Trust") and Norwest Bank Minnesota, National Association, as
indenture trustee (the "Indenture Trustee"). The Depositor has also entered
into a trust agreement, dated as of September 4, 1997 (the "Trust Agreement"),
among the Depositor, as depositor, Life Investments Holdings, Inc., as the
company ("Life Investments"), Wilmington Trust Company, as owner trustee (the
"Owner Trustee"), and Norwest Bank Minnesota, National Association, as co-owner
trustee (the "Co-Owner Trustee"). The Notes will be secured by the assets of
the Trust pursuant to the Indenture. The Notes are described more fully in
Schedule A hereto and in a prospectus supplement furnished to you by the
Depositor. The assets of the Trust will initially include, among other things,
home loans to be transferred on the Closing Date (as defined herein) (the
"Initial Loans") in an amount of approximately $95,000,000 as of
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the close of business on August 31, 1997 (the "Cut-Off Date") (the actual
aggregate unpaid principal balance of the Initial Loans as of the Cut-Off Date,
the "Original Pool Principal Balance") and such amounts as may be held by the
Indenture Trustee in the Pre-Funding Account (the "Pre-Funding Account"), the
Capitalized Interest Account (the "Capitalized Interest Account") and any other
accounts held by the Indenture Trustee for the benefit of the Noteholders, all
pursuant to a sale and servicing agreement, dated as of September 1, 1997 (the
"Sale and Servicing Agreement") among the Trust, as issuer, the Depositor, as
depositor, Life Savings Bank, Federal Savings Bank ("Life Bank"), as servicer,
Life Investments, as transferor, and Norwest Bank Minnesota, National
Association, as indenture trustee and co-owner trustee. On the Closing Date,
approximately $30,000,000 (as adjusted pursuant to the immediately following
sentence, the "Original Pre-Funded Amount") will be deposited in the name of
the Indenture Trustee in the Pre-Funding Account. To the extent that the
Original Pool Principal Balance is more or less than the amount set forth in
the second preceding sentence, the Original Pre-Funded Amount will be decreased
or increased by a corresponding amount provided that the amount of any such
adjustment shall not exceed $6,250,000. It is intended that additional home
loans satisfying the criteria specified in the Sale and Servicing Agreement
(the "Subsequent Loans") will be purchased by the Trust for inclusion in the
Trust from time to time on or before November 30, 1997 from funds on deposit in
the Pre-Funding Account at the time of execution and delivery of each
subsequent transfer agreement (each, a "Subsequent Transfer Agreement"). Funds
in the Capitalized Interest Account will be applied by the Indenture Trustee
and Co-Owner Trustee to cover shortfalls in interest during the Pre-Funding
Period. Forms of the Indenture and the Sale and Servicing Agreement have been
filed as exhibits to the Registration Statement (as hereinafter defined).
The Notes are more fully described in the Registration Statement which
the Depositor has furnished to the Underwriter. Capitalized terms used but not
defined herein shall have the meanings given to them in the Sale and Servicing
Agreement.
Pursuant to a loan sale agreement, dated as of September 1, 1997 (the
"Loan Sale Agreement") by and between Life Bank, as seller and servicer, and
Life Investments, as purchaser, Life Bank will transfer to Life Investments all
of Life Bank's right, title and interest in and to the unpaid principal
balances of the Initial Loans as of the Cut-Off Date and the collateral
securing each Initial Loan. Pursuant to a loan purchase agreement, dated as of
September 1, 1997 (the "Loan Purchase Agreement" and together with the Loan
Sale Agreement, the "Loan Sale and Purchase Agreements") by and between the
Depositor, as depositor, and Life Investments, as transferor, Life Investments
will transfer to the Depositor all of Life Investments' right, title
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and interest in and to the unpaid principal balances of the Initial Loans as of
the Cut-Off Date and the collateral securing each Initial Loan. Pursuant to the
Sale and Servicing Agreement, the Depositor will transfer to the Trust all such
right, title and interest in and to the unpaid principal balances of the
Initial Loans as of the Cut-Off Date and the collateral securing each Initial
Loan.
SECTION 1. Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with you that:
(a) A Registration Statement on Form S-3 (No. 333-26051) has (i) been
prepared by the Depositor in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations (the "Rules and Regulations") of the United
States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities
Act and (iii) become effective under the Securities Act. Copies of such
Registration Statement have been delivered by the Depositor to the
Underwriter. As used in this Agreement, "Effective Time" means the date
and the time as of which such Registration Statement, or the most
recent post-effective amendment thereto, if any, was declared effective
by the Commission; "Effective Date" means the date of the Effective
Time; "Registration Statement" means such registration statement, at
the Effective Time, including any documents incorporated by reference
therein at such time; "Preliminary Prospectus" means each prospectus
included in such Registration Statement, or amendments thereof,
including a preliminary prospectus supplement which, as completed, is
proposed to be used in connection with the sale of the Notes and any
prospectus filed with the Commission by the Depositor with the consent
of the Underwriter pursuant to Rule 424(a) of the Rules and
Regulations; and "Prospectus" means the final prospectus dated June 24,
1997, as first supplemented by a prospectus supplement (the "Prospectus
Supplement") relating to the Notes, to be filed with the Commission
pursuant to paragraphs (2), (3) or (5) of Rule 424(b) of the Rules and
Regulations. Reference made herein to the Prospectus shall be deemed to
refer to and include any documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act as of the date
of the Prospectus and any reference to any amendment or supplement to
the Prospectus shall be deemed to refer to and include any document
filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and incorporated by reference in such
Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any
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amendment to the Registration Statement shall be deemed to include any
report of the Depositor filed with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act after the Effective Time that is
incorporated by reference in the Registration Statement. The Commission
has not issued any order preventing or suspending the use of the
Preliminary Prospectus or Prospectus. There are no contracts or
documents of the Depositor which are required to be filed as exhibits
to the Registration Statement pursuant to the Securities Act or the
Rules and Regulations which have not been so filed or incorporated by
reference therein on or prior to the Effective Date of the Registration
Statement other than such documents or materials, if any, as the
Underwriter delivers to the Depositor pursuant to Section 8(d) hereof
for filing on an Additional Materials 8-K (as defined below). The
conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations. The
Registration Statement, as of the Effective Date thereof and of any
amendment thereto, did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus
as of its date, and as amended or supplemented as of the Closing Date,
does not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein not misleading; provided, however, that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the
Depositor in writing by the Underwriter expressly for use therein. The
only information furnished by the Underwriter or on behalf of the
Underwriter for use in connection with the preparation of the
Registration Statement or the Prospectus is described in Section 8(i)
hereof.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case
may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated
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therein or necessary to make the statements therein not misleading; and
any further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that no
representation is made as to Computational Materials, Structural Term
Sheets and Collateral Term Sheets (each as defined herein) deemed to be
incorporated by reference in the Prospectus as the result of filing an
Additional Materials 8-K (as defined below) pursuant to the terms
hereof except to the extent such Computational Materials, Structural
Term Sheets and Collateral Term Sheets reflect information furnished by
the Depositor to the Underwriter.
(d) Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the
general affairs, management, financial condition, or results of
operations of the Depositor, otherwise than as set forth or
contemplated in the Prospectus as supplemented or amended as of the
Closing Date.
(e) The Depositor has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its
properties, to conduct the business in which it is engaged and to enter
into and perform its obligations under this Agreement, the Loan
Purchase Agreement, the Sale and Servicing Agreement and the Trust
Agreement or any Subsequent Transfer Agreement and to cause the Notes
to be issued.
(f) There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before,
or threatened by, any court, administrative agency or other tribunal to
which the Depositor is a party or of which any of its properties is the
subject (a) which if determined adversely to the Depositor would have a
material adverse effect on the business or financial condition of the
Depositor, (b) which assert the invalidity of this Agreement, the Loan
Purchase Agreement, the Sale and Servicing Agreement, the Trust
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Agreement, the Notes, or any Subsequent Transfer Agreement, (c) which
seek to prevent the issuance of the Notes or the consummation by the
Depositor of any of the transactions contemplated by the Sale and
Servicing Agreement, the Loan Purchase Agreement, the Trust Agreement,
this Agreement or any Subsequent Transfer Agreement, as the case may
be, or (d) which might materially and adversely affect the performance
by the Depositor of its obligations under, or the validity or
enforceability of, the Sale and Servicing Agreement, the Loan Purchase
Agreement, this Agreement, the Trust Agreement, the Notes or any
Subsequent Transfer Agreement.
(g) This Agreement has been, and the Sale and Servicing Agreement, the
Loan Purchase Agreement, the Trust Agreement and each Subsequent
Transfer Agreement, when executed and delivered as contemplated hereby
and thereby, will have been, duly authorized, executed and delivered by
the Depositor, and this Agreement constitutes, and the Sale and
Servicing Agreement, the Loan Purchase Agreement, the Trust Agreement
and each Subsequent Transfer Agreement when executed and delivered as
contemplated herein, will constitute, legal, valid and binding
instruments enforceable against the Depositor in accordance with their
respective terms, subject as to enforceability to (x) applicable
bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and (z) with respect to rights of indemnity under
this Agreement, limitations of public policy under applicable
securities laws.
(h) The execution, delivery and performance of this Agreement, the Sale
and Servicing Agreement, the Loan Purchase Agreement, the Trust
Agreement and any Subsequent Transfer Agreement by the Depositor and
the consummation of the transactions contemplated hereby and thereby,
and the issuance and delivery of the Notes do not and will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Depositor is a party, by which the Depositor is bound or to which
any of the properties or assets of the Depositor or any of its
subsidiaries is subject, which breach or violation would have a
material adverse effect on the business, operations or financial
condition of the Depositor, nor will such actions result in any
violation of the provisions of the certificate of incorporation or
by-laws of the Depositor or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the
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Depositor or any of its properties or assets, which breach or violation
would have a material adverse effect on the business, operations or
financial condition of the Depositor.
(i) The Depositor has no reason to believe that Deloitte & Touche LLP
are not independent public accountants with respect to the Depositor as
required by the Securities Act and the Rules and Regulations.
(j) As of the Closing Date, the Notes, the Indenture and the Trust
Agreement will conform in all material respects to the respective
descriptions thereof contained in the Prospectus. As of the Closing
Date, the Notes will be duly and validly authorized and, when duly and
validly executed, authenticated and delivered in accordance with the
Indenture, and delivered to you against payment therefor as provided
herein, will be duly and validly issued and outstanding and entitled to
the benefits of the Sale and Servicing Agreement. The Notes will not be
"mortgage related securities," as such term is defined in the singular
in the Exchange Act.
(k) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of
the United States is required for the issuance and the sale of the
Notes to the Underwriter, or the consummation by the Depositor of the
other transactions contemplated by this Agreement, the Sale and
Servicing Agreement, the Loan Purchase Agreement, the Trust Agreement
and any Subsequent Transfer Agreement, except such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or blue sky laws in connection with the purchase
and distribution of the Notes by the Underwriter or as have been
obtained.
(l) The Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business
now conducted by it and as described in the Prospectus, and the
Depositor has not received notice of any proceedings relating to the
revocation or modification of any such license, certificate, authority
or permit which if decided adversely to the Depositor would, singly or
in the aggregate, materially and adversely affect the conduct of its
business, operations or financial condition.
(m) At the time of execution and delivery of the Sale and
Servicing Agreement, the Depositor will: (i) be the sole
beneficial owner of the Initial Loans conveyed by the
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Transferor, free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively,
"Liens"); (ii) not have assigned to any Person any of its right or
title in the Initial Loans, in the Sale and Servicing Agreement or in
the Notes being issued pursuant to the Indenture; and (iii) have the
power and authority to sell its interest in the Initial Loans to the
Trust and to sell the Notes to the Underwriter. Upon execution and
delivery of the Sale and Servicing Agreement by the Trust, the Trust
will have acquired beneficial ownership of all of the Depositor's
right, title and interest in and to the Loans. Upon delivery to the
Underwriter of the Notes, the Underwriter will have good title to the
Notes, free and clear of any Liens.
(n) At the time of execution and delivery of any Subsequent Transfer
Agreement, the Depositor will: (i) be the sole beneficial owner of the
Subsequent Loans conveyed by the Transferor, free and clear of any
Liens; (ii) not have assigned to any Person any of its right or title
in the Subsequent Loans, in the Sale and Servicing Agreement or in the
Subsequent Transfer Agreement; and (iii) have the power and authority
to sell the Subsequent Loans to the Trust. Upon execution and delivery
of each Subsequent Transfer Agreement by the Trust, the Trust will have
acquired beneficial ownership of all of the Depositor's right, title
and interest in and to the related Subsequent Loans.
(o) As of the Cut-Off Date, each of the Initial Loans will meet the
eligibility criteria described in the Prospectus and will conform in
all material respects to the descriptions thereof contained in the
Prospectus.
(p) As of any Subsequent Transfer Date, each of the Subsequent Loans
will meet the eligibility criteria described in the Prospectus and will
conform in all material respects to the descriptions thereof contained
in the Prospectus.
(q) Neither the Depositor nor the Trust created by the Trust Agreement
is an "investment company" within the meaning of such term under the
Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
(r) At the Closing Date, the Notes, the Sale and Servicing Agreement
and the Indenture will conform in all material respects to the
descriptions thereof contained in the Prospectus.
(s) At the Closing Date, each of the Senior Notes will have been rated
"AAA" by Standard & Poor's Ratings Services, a
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division of The McGraw-Hill Companies, Inc. ("S&P"), and Fitch
Investors Service, L.P. ("Fitch"), and "Aaa" by Moody's Investor
Service ("Moody's"); the Class M-1 Notes "AA" by S&P and Fitch and "A"
by Moody's; the Class M-2 Notes rated "A" by S&P and Fitch and "A2" by
Moody's; and the Class B Notes rated "BBB+" by S&P and Fitch and "Baa2"
by Moody's.
(t) Any taxes, fees and other governmental charges in connection with
the execution, delivery and issuance of this Agreement, the Sale and
Servicing Agreement, the Loan Purchase Agreement, the Trust Agreement
and the Notes have been paid or will be paid at or prior to the Closing
Date.
(u) At the Closing Date, each of the representations and warranties of
the Depositor set forth in the Sale and Servicing Agreement and the
Loan Purchase Agreement will be true and correct in all material
respects.
Any certificate signed by an officer of the Depositor and delivered to
the Underwriter or counsel for the Underwriter in connection with an offering
of the Notes shall be deemed to be a representation and warranty as to the
matters covered thereby to each person to whom the representations and
warranties in this Section 1 are made.
SECTION 2. Purchase and Sale. The commitment of the Underwriter to
purchase the Notes pursuant to this Agreement shall be deemed to have been made
on the basis of the representations and warranties herein contained and shall
be subject to the terms and conditions herein set forth. The Depositor agrees
to instruct the Indenture Trustee to issue the Notes and agrees to sell to the
Underwriter, and the Underwriter agrees (except as provided in Section 10) to
purchase from the Depositor the aggregate principal amount of the Class A-1,
Class A-2, Class A-3, Class A-4, Class M-1, Class M-2 and Class B Notes at the
purchase price or prices set forth in Schedule A. The Underwriter may offer the
Notes to certain dealers at such prices less a concession not in excess of the
respective amounts set forth in Schedule A. The Underwriter may allow and such
dealers may reallow a discount to certain dealers not in excess of the
respective amounts set forth in Schedule A.
SECTION 3. Delivery and Payment. Delivery of and payment for the Notes
to be purchased by the Underwriter shall be made at the offices of Dewey
Ballantine, 333 S. Hope Street, 33rd Floor, Los Angeles, California, or at such
other place as shall be agreed upon by the Underwriter and the Depositor at
10:00 a.m. New York time on September 4, 1997 or at such other time or date as
shall be agreed upon in writing by the Underwriter and the Depositor (such date
being referred to as the "Closing Date"). Payment shall be made to the
Depositor by wire transfer of same
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day funds payable to the account of the Depositor. Delivery of the Notes shall
be made to the Underwriter for the accounts of the Underwriter against payment
of the purchase price thereof. The Notes shall be in such authorized
denominations and registered in such names as the Underwriter may request in
writing at least two business days prior to the Closing Date. The Notes will be
made available for examination by the Underwriter no later than 2:00 p.m. New
York time on the first business day prior to the Closing Date.
SECTION 4. Offering by the Underwriter. It is understood that, subject
to the terms and conditions hereof, the Underwriter proposes to offer the Notes
for sale to the public as set forth in the Prospectus.
SECTION 5. Covenants of the Depositor. The Depositor
agrees as follows:
(a) To prepare the Prospectus in a form approved by the Underwriter and
to file such Prospectus pursuant to Rule 424(b) under the Securities
Act not later than the Commission's close of business on the second
business day following the availability of the Prospectus to the
Underwriter and to make no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the Closing Date
except as permitted herein; to advise the Underwriter, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the
Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the Closing Date and to furnish the
Underwriter with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Depositor with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus and,
for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Notes to advise the Underwriter
promptly of its receipt of notice of the issuance by the Commission of
any stop order or of: (i) any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus; (ii) the suspension of
the qualification of the Notes for offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for
any such purpose; (iv) any request by the Commission for the amending
or supplementing of the Registration Statement or the Prospectus or for
additional information. In the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, the
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Depositor promptly shall use its best efforts to obtain the withdrawal
of such order by the Commission.
(b) To furnish promptly to the Underwriter and to counsel for the
Underwriter a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
(c) To deliver promptly to the Underwriter such number of the following
documents as the Underwriter shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including
exhibits); (ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus; and (iii) any document incorporated
by reference in the Prospectus (including exhibits thereto). If the
delivery of a prospectus is required at any time in connection with the
offering or sale of the Notes, and if at such time any events shall
have occurred as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, the Depositor shall notify
the Underwriter and, upon the Underwriter's request, shall file such
document and prepare and furnish without charge to the Underwriter and
to any dealer in securities as many copies as the Underwriter may from
time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which corrects such statement or omission
or effects such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Depositor or the
Underwriter, be required by the Securities Act or requested by the
Commission.
(e) The Depositor will (i) cause any Computational Materials or any
Structural Term Sheet (each as defined below in this subsection) with
respect to the Class A-1, Class A-2, Class A-3, Class A-4, Class M-1,
Class M-2 and Class B Notes which are delivered by the Underwriter to
the Depositor to be filed with the Commission on Additional Materials
8-K (as defined below) at or before the time of filing of the
Prospectus pursuant to Rule 424(b) under the
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Securities Act and (ii) cause any Collateral Term Sheet (as defined
below in this subsection) with respect to the Class A-1, Class A-2,
Class A-3, Class A-4, Class M-1, Class M-2 and Class B Notes which are
delivered by the Underwriter to the Depositor to be filed with the
Commission on an Additional Materials 8-K within two business days
after the date on which the Underwriter advises the Depositor that such
Collateral Term Sheet was first used; provided, however, that the
Depositor shall have no obligation to file any materials which, in the
reasonable determination of the Depositor after consultation with the
Underwriter, (x) are not required to be filed pursuant to the Kidder
Letters and/or the PSA Letter (each as defined below) or (y) contain
any erroneous information or untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; it being
understood, however, that the Depositor shall have no obligation to
review or pass upon the accuracy or adequacy of, or to correct, any
Computational Materials, Structural Term Sheets or Collateral Term
Sheets provided by the Underwriter to the Depositor as aforesaid. For
purposes of this subsection (e), (1) the term "Computational Materials"
shall mean those materials delivered by the Underwriter to the
Depositor within the meaning of the no-action letter dated May 20, 1994
issued by the Division of Corporation Finance of the Commission to
Kidder, Peabody Acceptance Corporation I and certain affiliates and the
no-action letter dated May 27, 1994 issued by the Division of
Corporation Finance of the Commission to the Public Securities
Association (together, the "Kidder Letters") for which the filing of
such material is a condition of the relief granted in such letters, (2)
the terms "Structural Term Sheet" and "Collateral Term Sheet" shall
mean those materials delivered by the Underwriter to the Depositor
within the meaning of the no-action letter dated February 13, 1995
issued by the Division of Corporation Finance of the Commission to the
Public Securities Association (the "PSA Letter") for which the filing
of such material on an Additional Materials 8-K is a condition of the
relief granted in such letter and (3) the term "Additional Materials
8-K" shall mean a Current Report on Form 8-K used to file Computational
Materials, Structural Term Sheets and/or Collateral Term Sheets.
(f) To furnish the Underwriter and counsel for the Underwriter, prior
to filing with the Commission, and to obtain the consent of the
Underwriter for the filing of the following documents relating to the
Notes: any (i) Preliminary Prospectus, (ii) amendment to the
Registration Statement or supplement to the Prospectus, or document
incorporated by reference in the Prospectus, or
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(iii) Prospectus pursuant to Rule 424 of the Rules and
Regulations.
(g) To make generally available to holders of the Notes as soon as
practicable, but in any event not later than ninety (90) days after the
close of the period covered thereby, a statement of earnings of the
Trust (which need not be audited) complying with Section 11(a) of the
Securities Act and the Rules and Regulations (including, at the option
of the Depositor, Rule 158) and covering a period of at least twelve
consecutive months beginning not later than the first day of the first
fiscal quarter following the Closing Date.
(h) To use its best efforts, in cooperation with the Underwriter, to
qualify the Notes for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States or
elsewhere as the Underwriter may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required
for the distribution of the Notes; provided, however, that in
connection therewith, the Depositor shall not be required to qualify as
a foreign corporation or to file a general consent to service of
process in any jurisdiction. The Depositor will file or cause the
filing of such statements and reports as may be required by the laws of
each jurisdiction in which the Notes have been so qualified.
(i) Unless the Underwriter shall otherwise have given its written
consent, no notes or pass-through certificates backed by home equity
loans or other similar securities representing interest in or secured
by other mortgage-related assets originated or owned by the Depositor,
Life Bank or the Transferor shall be publicly offered or sold nor shall
the Depositor, Life Bank or the Transferor enter into any contractual
arrangements that contemplate the public offering or sale of such
securities for a period of seven (7) business days following the
commencement of the offering of the Notes to the public.
(j) So long as the Notes shall be outstanding the Depositor shall
furnish, or cause to be furnished to the Underwriter as soon as such
statements are furnished to the Depositor; (i) the annual statement as
to compliance delivered by the Servicer to the Depositor pursuant to
Section 7.4 of the Sale and Servicing Agreement; (ii) the annual
statement of a firm of independent public accountants furnished to the
Depositor pursuant to Section 7.5 of the Sale and Servicing Agreement;
and (iii) the monthly statements furnished by the Indenture Trustee
pursuant to Section 6.1 of the Sale and Servicing Agreement.
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(k) To apply the net proceeds from the sale of the Notes in
the manner set forth in the Prospectus.
SECTION 6. Conditions to the Underwriter's Obligations. The obligations
of the Underwriter to purchase the Notes pursuant to this Agreement are subject
to: (i) the accuracy on and as of the Closing Date of the representations and
warranties on the part of the Depositor herein contained; (ii) the performance
by the Depositor of all of its obligations hereunder; and (iii) the following
conditions as of the Closing Date:
(a) The Underwriter shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission. Any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus shall have been complied with.
(b) The Underwriter shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact or omits to state a fact which,
in the opinion of the Underwriter and its counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Sale and
Servicing Agreement, the Loan Purchase Agreement, the Trust Agreement,
the Notes, the Registration Statement and the Prospectus, and all other
legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to the
Underwriter and its counsel, and the Depositor shall have furnished to
the Underwriter and its counsel all documents and information that they
may reasonably request to enable them to pass upon such matters.
(d) You shall have received from in-house counsel of the Depositor or
an affiliate of the Depositor, a favorable opinion, dated the Closing
Date, in form and substance satisfactory to the Underwriter, to the
effect that:
(i) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and has all corporate power and authority
necessary to own or hold its properties and to conduct the
business in which it is engaged and to enter into and perform its
obligations
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under this Agreement, the Loan Purchase Agreement, the
Sale and Servicing Agreement and the Trust Agreement, and
to cause the Notes to be issued.
(ii) The Depositor is not in violation of its certificate of
incorporation or by-laws or to such counsel's knowledge in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Depositor is a party or by which it
or its properties may be bound, which default might result in any
material adverse changes in the financial condition, earnings,
affairs or business of the Depositor or which might materially
and adversely affect the properties or assets, taken as a whole,
of the Depositor.
(iii) This Agreement, the Sale and Servicing Agreement, the Loan
Purchase Agreement and the Trust Agreement have been duly
authorized, executed and delivered by the Depositor and the
Subsequent Transfer Agreements have been duly authorized, and
when duly executed and delivered by the Depositor and, assuming
the due authorization, execution and delivery of such agreements
by the other parties thereto, such agreements constitute, and in
the case of any Subsequent Transfer Agreement will constitute,
valid and binding obligations, enforceable against the Depositor
in accordance with their respective terms, subject as to
enforceability to (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, (y) general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (z) with respect to rights of
indemnity under this Agreement, limitations of public policy
under applicable securities laws.
(iv) The execution, delivery and performance of this Agreement,
the Loan Purchase Agreement, the Sale and Servicing Agreement,
the Trust Agreement and each Subsequent Transfer Agreement by the
Depositor, the consummation of the transactions contemplated
hereby and thereby, and the issuance and delivery of the Notes to
such counsel's knowledge do not and will not conflict with or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to
which the Depositor is a party or by which the Depositor is bound
or to which any of the property or assets of the Depositor or any
of its subsidiaries is subject, which breach or violation would
have a material adverse effect on the business,
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operations or financial condition of the Depositor, nor will such
actions result in a violation of the provisions of the
certificate of incorporation or by-laws of the Depositor or to
such counsel's knowledge any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or
assets, which breach or violation would have a material adverse
effect on the business, operations or financial condition of the
Depositor.
(v) The direction by the Depositor to the Owner Trustee or to
Co-Owner Trustee to execute and direct the Indenture Trustee to
authenticate and deliver the Notes have been duly authorized by
the Depositor.
(vi) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
of the United States is required for the issuance of the Notes,
the sale of the Notes to the Underwriter, or the consummation by
the Depositor of the other transactions contemplated by this
Agreement, the Loan Purchase Agreement, the Sale and Servicing
Agreement and the Trust Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may
be required under the Securities Act or state securities or "blue
sky" laws in connection with the purchase and distribution of the
Notes by the Underwriter or as have been previously obtained.
(vii) There are not, to such counsel's knowledge, any actions,
proceedings or investigations pending with respect to which the
Depositor has received service of process before, or threatened
by any court, administrative agency or other tribunal to which
the Depositor is a party or of which any of its properties is the
subject: (a) which, if determined adversely to the Depositor,
would have a material adverse effect on the business, results of
operations or financial condition of the Depositor; (b) which
assert the invalidity of the Sale and Servicing Agreement, the
Loan Purchase Agreement, the Trust Agreement or the Notes; (c)
seeking to prevent the issuance of the Notes or the consummation
by the Depositor of any of the transactions contemplated by the
Sale and Servicing Agreement, the Loan Purchase Agreement, the
Trust Agreement or this Agreement, as the case may be; or (d)
which might materially and adversely affect the performance by
the Depositor of its obligations under, or the validity or
enforceability of, the Sale and Servicing Agreement, the Loan
Purchase Agreement, the Trust Agreement, this Agreement or the
Notes.
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(viii) The statements set forth in the Basic Prospectus under the
captions "Summary of Terms -- Depositor" and "The Depositor"
provide a fair and accurate summary of the matters addressed
therein.
(e) Dewey Ballantine shall have furnished to the Underwriter their
written opinion, as special counsel to the Depositor, addressed to the
Underwriter and dated the Closing Date, in form and substance
satisfactory to the Underwriter, to the effect that:
(i) The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth in
the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus.
(ii) The Registration Statement and any amendments thereto have
become effective under the Securities Act; to the best of such
counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and not withdrawn
and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement,
the Prospectus and each amendment or supplement thereto, as of
their respective effective or issue dates (other than the
financial and statistical information contained therein, as to
which such counsel need express no opinion), complied as to form
in all material respects with the applicable requirements of the
Securities Act and the Rules and Regulations.
(iii) To the best of such counsel's knowledge, there are no
material contracts, indentures or other documents of a character
required to be described or referred to in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement other than those described or referred to
therein or filed or incorporated by reference as exhibits
thereto.
(iv) The statements set forth in the Basic Prospectus under the
captions "Description of the Securities" and "The Agreements" and
in the Prospectus Supplement under the captions "Description of
the Notes" to the extent such statements purport to summarize
certain provisions of the Notes, the Sale and Servicing
Agreement, the Indenture, and the Trust Agreement are fair and
accurate in all material respects.
(v) The statements set forth in the Prospectus under the captions
"ERISA Considerations" and "Certain Material Federal Income Tax
Consequences" and in the Prospectus
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Supplement under the captions "ERISA Considerations" and "Certain
Federal Income Tax Consequences," to the extent that they
constitute matters of federal law, provide a fair and accurate
summary of such law or conclusions.
(vi) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and neither the Depositor nor
the Trust is required to be registered under the 1940 Act, as
amended.
(vii) Neither the Depositor nor the Trust is an "investment
company" or under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
(viii) The Notes, when executed, authenticated and delivered in
accordance with the Trust Agreement and the Indenture, will be
validly issued, will be entitled to the benefits of the Indenture
and will conform to the description thereof contained in the
Prospectus.
Such counsel shall also have furnished to the Underwriter a written
statement, addressed to the Underwriter and dated the Closing Date, in
form and substance satisfactory to the Underwriter, to the effect that
no facts have come to the attention of such counsel which lead them to
believe that: (a) the Registration Statement, at the time such
Registration Statement became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained in the
Registration Statement); or (b) the Prospectus, as of its date and as
of the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to
be stated therein or necessary in order to make the statements therein
not misleading.
(f) The Underwriter shall have received the favorable opinion, dated
the Closing Date, of Dewey Ballantine, special counsel to the
Depositor, addressed to the Depositor and satisfactory to Moody's
Investors Service ("Moody's"), Fitch Investors Service, L.P. ("Fitch")
and the Underwriter, with respect to certain matters relating to the
transfer of the Initial Loans, together with amounts on deposit in the
Pre-Funding Account and the Capitalized Interest Account, from the
Depositor to the Trust, and such counsel shall have consented to the
reliance on such opinion by Moody's, Fitch and the Underwriter as
though such opinion had been addressed to each such party.
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(g) Muldoon, Murphy & Faucette, special counsel to the Transferor and
Life Bank, shall have furnished to the Underwriter their written
opinion, addressed to the Underwriter and the Depositor and dated the
Closing Date, in form and substance satisfactory to the Underwriter, to
the effect that:
(i) The Transferor has been duly incorporated and is validly
existing and in good standing as a corporation under the laws of
the State of Delaware and has duly authorized all actions
contemplated hereby to be taken by it.
(ii) The Transferor has full power and authority to serve in the
capacity of transferor of the Loans and to transfer the Loans to
the Depositor as contemplated in the Loan Purchase Agreement.
(iii) Life Bank has been duly chartered and is validly existing
and in good standing as a federal savings bank under the laws of
the United States and has duly authorized all actions
contemplated hereby to be taken by it.
(iv) Life Bank has full power and authority to transfer the Loans
to the Transferor as contemplated in the Loan Sale Agreement and
to serve in its capacity as servicer of the Loans as contemplated
in the Sale and Servicing Agreement.
(v) The Sale and Servicing Agreement, the Sale Agreement, the
Loan Purchase Agreement and the Trust Agreement have been duly
authorized, executed and delivered by the Transferor or Life
Bank, as applicable, and, assuming the due authorization,
execution and delivery of such agreements by the other parties
thereto, constitute the legal, valid and binding agreements of
the Transferor or Life Bank, as applicable, enforceable against
the Transferor or Life Bank, as applicable, in accordance with
their terms respective, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium, receivership
or other similar laws now or hereafter in effect relating to
creditors' rights generally and (y) the qualification that the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion, with respect to such remedies, of the court before
which any proceedings with respect thereto may be brought.
(vi) No consent, approval, authorization, order,
registration or qualification of or with any court or
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governmental agency or body having jurisdiction over the
Transferor or Life Bank is required for the consummation by the
Transferor or Life Bank, as applicable, of the transactions
contemplated by the Sale and Servicing Agreement, the Loan Sale
Agreement, the Loan Purchase Agreement and the Trust Agreement,
except such consents, approvals, authorizations, registrations
and qualifications as have been obtained.
(vii) Neither (A) the execution, delivery or performance by the
Transferor of the Sale and Servicing Agreement, the Loan Purchase
Agreement or the Trust Agreement and the transactions
contemplated therein including the transfer of the Initial Loans
by the Transferor to the Depositor pursuant to the Loan Purchase
Agreement, nor (B) the execution, delivery or performance by Life
Bank of the Sale and Servicing Agreement or the Loan Sale
Agreement and the transactions contemplated therein, including
the transfer of the Initial Loans by Life Bank to the Transferor
(1) conflict with or result in a breach of, or constitute a
default under, (a) any term or provision of the formation
documents of the Transferor or Life Bank, as applicable; (b) any
term or provision of any material agreement, deed of trust,
mortgage loan agreement, contract, instrument or indenture, or
other agreement to which the Transferor or Life Bank, as
applicable, is a party or is bound or to which any of the
property or assets of the Transferor or Life Bank, as applicable,
or any of its subsidiaries is subject; (c) to the best of such
firm's knowledge without independent investigation any order,
judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Transferor or Life Bank,
as applicable; or (d) any law, rule or regulations applicable to
the Transferor or Life Bank, or (B) to the best of such firm's
knowledge without independent investigation, results in the
creation or imposition of any lien, charge or encumbrance upon
the Trust Estate.
(viii) Each Subsequent Transfer Agreement at the time of its
execution and delivery will be sufficient to convey all of the
Transferor's right, title and interest in the Subsequent Loans to
the Trust and following the consummation of the transaction
contemplated by each Subsequent Transfer Agreement, the transfer
of the Subsequent Loans by the Transferor to the Trust will be a
sale thereof.
(ix) There are, to the best of such counsel's knowledge without
independent investigation, no actions, proceedings or
investigations pending with respect to which the Transferor or
Life Bank, as applicable, has
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received service of process before, or threatened against the
Transferor or Life Bank, as applicable, by any court,
administrative agency or other tribunal (a) contesting the
validity of the Sale and Servicing Agreement, the Loan Sale
Agreement, the Loan Purchase Agreement, the Trust Agreement or
the Notes, (b) seeking to prevent the consummation of any of the
transactions contemplated by the Sale and Servicing Agreement or
(c) which would materially and adversely affect the performance
by the Transferor or Life Bank, as applicable, of its obligations
under, or the validity or enforceability of, the Sale and
Servicing Agreement, the Loan Sale Agreement, the Loan Purchase
Agreement, or the Trust Agreement.
Such counsel shall also have furnished to the Underwriter a written statement,
addressed to the Underwriter and dated the Closing Date, in form and substance
satisfactory to the Underwriter, to the effect that facts have come to the
attention on such counsel which had thereto believe that the information
contained in the Prospectus Supplement under the headings "SUMMARY--Servicer,"
"--Company", "Life Financial Corp." and "Life Savings Bank, Federal Savings
Bank", as of its date and on the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(h) The Underwriter shall have received the favorable opinion, dated
the Closing Date, of Muldoon, Murphy & Faucette, special counsel to the
Transferor and Life Bank, addressed to the Transferor and satisfactory
to Moody's, Fitch and the Underwriter, with respect to certain matters
relating to (i) the transfer of the Initial Loans from Life Bank to the
Transferor and (ii) the transfer of the Initial Loans, together with
amounts on deposit in the Pre-Funding Account and the Capitalized
Interest Account, from the Transferor to the Depositor, and such
counsel shall have consented to the reliance on such opinion by
Moody's, Fitch and the Underwriter as though such opinion had been
addressed to each such party.
(i) The Underwriter shall have received the favorable opinion of
counsel to the Trust and the Owner Trustee, dated the Closing Date,
addressed to the Underwriter and in form and scope satisfactory to the
Underwriter and counsel to the Underwriter, to the effect that:
(i) The Owner Trustee is a banking corporation, duly incorporated
and validly existing under the laws of the State of Delaware and
has the power and authority to
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enter into, and to take all action required of it under,
the Trust Agreement and the Indenture.
(ii) Each of the Trust Agreement, the Sale and Servicing
Agreement and the Indenture Agreement has been duly authorized,
executed and delivered by the Trust or the Owner Trustee, as
applicable, and, assuming due authorization, execution and
delivery thereof by the other parties thereto, constitutes a
valid and binding obligation of the Trust or the Owner Trustee,
as the case may be, enforceable against the Trust or the Owner
Trustee, as the case may be, in accordance with their respective
terms, subject, as to enforceability, to limitations of
bankruptcy, insolvency, moratorium, fraudulent conveyance and
other laws relating to or affecting creditors' rights generally
and court decisions with respect thereto, and to general
principles of equity.
(iii) The Notes have been duly authorized and executed by the
Trust, and when duly authenticated pursuant to the Indenture and
delivered to and paid for by the purchasers thereof, will be
legal, valid and binding obligations of the Trust, enforceable
against the Trust, in accordance with their terms, and will be
entitled to the benefits of the Indenture.
(iv) The execution and delivery by the Owner Trustee of the Sale
and Servicing Agreement and the performance by the Owner Trustee
of its terms do not conflict with or result in a violation of (A)
any law or regulation of the United States of America or the
State of Delaware governing the banking or trust powers of the
Trustee or (B) the charter or by-laws of the Trustee.
(v) No approval, authorization, or other action by, or filing
with, any governmental authority of the United States of America
or the State of Delaware having jurisdiction over the banking or
trust powers of the Trustee is required in connection with the
execution and delivery by the Owner Trustee of the Sale and
Servicing Agreement, or the performance by the Owner Trustee of
the transactions contemplated by the Sale and Servicing
Agreement.
(j) The Underwriter shall have received the favorable opinion of
counsel to the Indenture Trustee and Co-Owner Trustee, dated the
Closing Date, addressed to the Underwriter and in form and scope
satisfactory to the Underwriter and counsel to the Underwriter, to the
effect that:
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(i) The Indenture Trustee and Co-Owner Trustee is a national
banking association duly organized, validly existing and in good
standing under the laws of the United States.
(ii) The Indenture Trustee is duly eligible and qualified to act
as Indenture Trustee under the Indenture and the applicable
provisions of the Trust Indenture Act of 1934, as amended.
(iii) The Co-Owner Trustee is duly eligible and qualified to act
as Co-Owner Trustee under the Trust Agreement.
(iv) Each of the Trust Agreement, the Sale and Servicing
Agreement and the Indenture has been authorized, executed and
delivered by the Indenture Trustee or the Co-Owner Trustee, as
applicable, and assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitutes a
legal, valid and binding agreement of the Indenture Trustee or
Co-Owner Trustee, as applicable, enforceable against the
Indenture Trustee or Co-Owner Trustee, as applicable, in
accordance with their respective terms.
(v) The Notes have been duly and validly authenticated by the
Indenture Trustee and delivered upon the order of the Trust.
(vi) Neither the execution and authentication of the Notes by the
Indenture Trustee nor the execution, delivery and performance of
the Indenture and the Sale and Servicing Agreement by the
Indenture Trustee or Co-Owner Trustee, as applicable, conflict
with or result in a violation of (A) any law or regulation of the
United States of America giving the banking or trust powers of
the Indenture Trustee and Co-Owner Trustee, or (B) the articles
of association of the Indenture and Co-Owner Trustee.
(vii) No approval, authorization or other action by, or filing
with, any governmental authority of the United States of America
having jurisdiction over the banking or trust powers of the
Indenture Trustee and Co-Owner Trustee is required in connection
with the authentication and delivery of the Notes by the
Indenture Trustee and the execution and delivery by the Indenture
Trustee or Co-Owner Trustee, as applicable, of the Indenture and
the Sale and Servicing Agreement or the performance by the
Indenture Trustee or Owner Trustee, as applicable, of the
transactions contemplated by the Indenture or the Sale and
Servicing Agreement.
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(k) The Underwriter shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of counsel for the
Underwriter, with respect to the enforceability of this Agreement and
such other related matters as the Underwriter may reasonably require.
(l) Each of the Depositor and the Transferor shall have furnished to
the Underwriter a certificate, dated the Closing Date and signed by the
Chairman of the Board, the President or a Vice President of the
Depositor and the Transferor, respectively, stating as it relates to
each such entity:
(i) The representations and warranties made by the Depositor and
the Transferor, as applicable, in this Agreement, the Sale and
Servicing Agreement (excluding the representations and warranties
relating to the Home Loans) and the Loan Purchase Agreement, as
applicable, are true and correct as of the Closing Date; and each
of the Depositor and the Transferor has complied with all
agreements contained herein which are to have been complied with
on or prior to the Closing Date.
(ii) Nothing has come to his or her attention that would lead
such officer to believe that the Registration Statement or the
Prospectus includes any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
therein not misleading.
(iii) There has been no amendment or other document filed
affecting the Certificate of Incorporation or by-laws of the
Depositor since ____________ or the Certificate of Incorporation
or by-laws of the Transferor since September 2, 1997 and no such
amendment has been authorized. No event has occurred since August
29, 1997 which has affected the good standing of such entities
under the laws of the State of Delaware.
(iv) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings,
business or operations of such entities from June 30, 1997.
In addition to the foregoing, the certificate of the Transferor shall
state that the representations and warranties set forth in Sections
1(d), (e), (f), (g), (h), (l), (m), (p) and (q) hereof are made by the
Transferor (modified where applicable to refer to the Transferor)
instead of the Depositor and are true as to the Transferor as though
such representations and warranties were fully set forth in such
certificate.
24
<PAGE>
(m) The Owner Trustee and the Indenture Trustee and Co-Owner Trustee,
as applicable, shall have furnished to the Underwriter a certificate of
the Trustee, signed by one or more duly authorized officers of such
entities, dated the Closing Date, as to the due authorization,
execution and delivery of the Sale and Servicing Agreement by the Owner
Trustee and the Indenture Trustee and Co-Owner Trustee and the
Indenture by the Indenture Trustee and the acceptance by the Owner
Trustee and Co-Owner Trustee and by the Indenture Trustee, as
applicable, of the respective trusts created thereby and the due
authentication and delivery of the Notes by the Trustee thereunder and
such other matters as the Underwriter shall reasonably request.
(n) The Depositor shall have furnished to the Underwriter such further
information, certificates and documents as the Underwriter may
reasonably have requested not less than three full business days prior
to the Closing Date.
(o) Prior to the Closing Date, Dewey Ballantine shall have been
furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and
sale of the Notes as herein contemplated and related proceedings or in
order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the
conditions, herein contained, and all proceedings taken by the
Depositor in connection with the issuance and sale of the Notes as
herein contemplated shall be satisfactory in form and substance to the
Underwriter and counsel for the Underwriter.
(p) Subsequent to the execution and delivery of this Agreement none of
the following shall have occurred: (i) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or minimum prices
shall have been established on either of such exchanges or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium
shall have been declared by federal or state authorities; (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation of hostilities involving the United States or
there shall have been a declaration of a national emergency or war by
the United States; or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets of
the United States shall be such) as to make it in each of the instances
set forth in clauses (i), (ii), (iii) and (iv) herein, in the
reasonable judgment of the Underwriter,
25
<PAGE>
impractical or inadvisable to proceed with the public offering or
delivery of the Notes on the terms and in the manner contemplated in
the Prospectus.
(q) The Underwriter shall have received from Deloitte & Touche LLP, a
letter dated the date hereof and satisfactory in form and substance to
the Underwriter and its counsel, to the effect that they have performed
certain specified procedures, all of which have been agreed to by the
Underwriter, as a result of which they determined that certain
information of an accounting, financial or statistical nature set forth
in the Prospectus Supplement agrees with the records of the Transferor
and Life Bank excluding any questions of legal interpretation. The
Underwriter shall have received from Deloitte & Touche, LLP, a letter
dated the Closing Date and satisfactory in form and substance to the
Underwriter and its counsel, confirming as of such date the information
set forth in the letter provided pursuant to this clause (q).
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to the Depositor at any time at or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriter.
SECTION 7. Payment of Expenses. The Depositor agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the Notes
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), the Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by reference therein,
all as provided in this Agreement; (d) the costs of reproducing and
distributing this Agreement; (e) the fees and expenses of qualifying the Notes
under the securities laws of the several jurisdictions as provided in Section
5(h) hereof and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the Underwriter); (f) any
fees charged by securities rating services for rating the Notes; and (g) all
other costs and expenses
26
<PAGE>
incident to the performance of the obligations of the Depositor (including
costs and expenses of your counsel); provided that, except as provided in this
Section 7, the Underwriter shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Notes which
they may sell and the expenses of advertising any offering of the Notes made by
the Underwriter, and the Underwriter shall pay the cost of any accountants'
comfort letters relating to any Computational Materials, Structural Term Sheets
or Collateral Term Sheets (each as defined in Section 5(e) hereof).
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 6 or Section 10, the Depositor shall cause the
Underwriter to be reimbursed for all reasonable out-of-pocket expenses,
including fees and disbursements of Brown & Wood LLP, counsel for the
Underwriter.
SECTION 8. Indemnification and Contribution. (a) The Depositor agrees
to indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of the
Notes), to which the Underwriter or any such controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus, or any amendment thereof or supplement thereto, or
(iv) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading and shall
reimburse the Underwriter and each such controlling person promptly upon demand
for any legal or other expenses reasonably incurred by the Underwriter or such
controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Depositor shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Prospectus, or any amendment thereof or supplement thereto, or the Registration
Statement, or any amendment thereof or supplement thereto, in reliance upon and
in conformity with written information furnished to the Depositor by
27
<PAGE>
or on behalf of the Underwriter specifically for inclusion therein. The
foregoing indemnity agreement is in addition to any liability which the
Depositor may otherwise have to the Underwriter or any controlling person of
the Underwriter. The only information furnished by the Underwriter or on behalf
of the Underwriter for use in connection with the preparation of the
Registration Statement or the Prospectus is described in Section 8(i) hereof.
(b) The Underwriter agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act against any and all
loss, claim, damage or liability, or any action in respect thereof, to which
the Depositor or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus, or any amendment thereof or supplement thereto, or
(iv) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Depositor by or on behalf of the
Underwriter specifically for inclusion therein, and shall reimburse the
Depositor and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Depositor or any director, officer or
controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which the Underwriter may otherwise have to the Depositor or any such
director, officer or controlling person. The only information furnished by the
Underwriter or on behalf of the Underwriter for use in connection with the
preparation of the Registration Statement or the Prospectus is described in
Section 8(i) hereof.
(c) Promptly after receipt by any indemnified party under this Section
8 of notice of any claim or the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim
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<PAGE>
or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify
any indemnifying party shall not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except to the extent
provided in the next following paragraph, the indemnifying party shall not be
liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if
such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the
Underwriter, if the indemnified parties under this Section 8 consist of the
Underwriter or any of its controlling persons, or the Depositor, if the
indemnified
29
<PAGE>
parties under this Section 8 consist of the Depositor or any of the Depositor's
directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(a) and (b), shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than thirty (30)
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
(d) The Underwriter agrees to provide the Depositor for filing with the
Commission on an Additional Materials 8-K (i) no later than two (2) Business
Days prior to the day on which the Prospectus Supplement is required to be
filed pursuant to Rule 424 with a copy of any Computational Materials and
Structural Term Sheets (each as defined in Section 5(e) hereof) distributed by
the Underwriter and (ii) no later than one (1) business day after first use
with a copy of any Collateral Term Sheets (as defined in Section 5(e) hereof)
distributed by the Underwriter.
(e) The Underwriter agrees, assuming all Transferor-Provided
Information (as defined in Section 8(g)) is accurate and complete in all
material respects, to indemnify and hold harmless the Depositor, each of the
Depositor's officers and directors and each person who controls the Depositor
within the meaning of Section 15 of the Securities Act against any and all
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement of a material fact contained in the
Computational Materials, Structural Term Sheets and Collateral Term Sheets
provided by the Underwriter and agrees to reimburse each such indemnified party
for any legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any such
loss, claim, damage,
30
<PAGE>
liability or action as such expenses are incurred. The obligations of the
Underwriter under this Section 8(e) shall be in addition to any liability which
the Underwriter may otherwise have.
The procedures set forth in Section 8(c) shall be equally applicable to
this Section 8(e).
(f) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a), (b) or (e) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the Underwriter on the other from
the offering of the related Notes or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or if the indemnified party failed
to give the notice required under Section 8(c), in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Depositor on the one hand and the
Underwriter on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations.
The relative benefits of the Underwriter and the Depositor shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by the Depositor bear to the total
underwriting discounts and commissions received by the related Underwriter from
time to time in negotiated sales of the related Notes.
The relative fault of the Underwriter and the Depositor shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Depositor or by the Underwriter, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this Section 8(f) were to be determined
by pro rata allocation (even if the Underwriter were treated as one entity for
such purposes) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid
31
<PAGE>
or payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(f)
shall be deemed to include, for purposes of this Section 8(f), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
For purposes of this Section 8, in no case shall the Underwriter be
responsible for any amount in excess of (x) the amount received by the
Underwriter in connection with its resale of the Notes over (y) the amount paid
by the Underwriter to the Depositor for the Notes by the Underwriter hereunder.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(g) For purposes of this Section 8 the terms "Computational Materials",
"Structural Term Sheets" and "Collateral Term Sheets" mean such portion, if
any, of the information delivered to the Depositor by the Underwriter pursuant
to Section 8(d) for filing with the Commission on an Additional Materials 8-K
as:
(i) is not contained in the Prospectus without taking into
account information incorporated therein by reference through an
Additional Materials 8-K; and
(ii) does not constitute Transferor-Provided
Information.
"Transferor-Provided Information" means the information and data set forth on
any computer tape (or other electronic or printed medium) furnished to the
Underwriter by or on behalf of the Transferor concerning the assets comprising
the Trust.
(h) The Transferor agrees to indemnify each indemnified party referred
to in Section 8(a) hereof with respect to Transferor-Provided Information to
the same extent as the indemnity granted under such section. The procedures set
forth in Section 8(c) shall be equally applicable to this Section 8(h).
(i) The Underwriter confirms that the information set forth in the
fourth and sixth paragraphs of page i of the Prospectus Supplement, the
information regarding the Underwriter set forth under the caption "Method of
Distribution" in the Prospectus Supplement and the Computational Materials,
Structural Term Sheets and Collateral Term Sheets (excluding in each case
Transferor-Provided Information) are correct, and the parties hereto
acknowledge that such information constitutes the only information furnished in
writing by or on behalf of the
32
<PAGE>
Underwriter for use in connection with the preparation of the Registration
Statement or the Prospectus.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Depositor submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Underwriter or controlling
persons thereof, or by or on behalf of the Depositor and shall survive delivery
of any Notes to the Underwriter.
SECTION 10. Termination of Agreement. The Underwriter may terminate
this Agreement immediately upon notice to the Depositor, at any time at or
prior to the Closing Date if any of the events or conditions described in
Section 6(r) of this Agreement shall occur and be continuing. In the event of
any such termination, the covenant set forth in Section 5(g), the provisions of
Section 7, the indemnity agreement set forth in Section 8, and the provisions
of Sections 9 and 15 shall remain in effect.
SECTION 11. Notices. All statements, requests, notices and
agreements hereunder shall be in writing, and:
A. if to the Underwriter, shall be delivered or sent by
mail, telex or facsimile transmission to Bear, Stearns & Co.
Inc., 245 Park Avenue, New York, New York 10167 Attention:
Asset Backed Securities Group (Fax: 212-272-7294);
B. if to the Depositor, shall be delivered or sent by mail,
telex or facsimile transmission to care of Bear Stearns
Asset Backed Securities, Inc., 245 Park Avenue, 4th Floor,
New York, New York 10167, Attention: Chief Counsel (Fax:
212-272-4095);
SECTION 12. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriter and
the Depositor and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control the Underwriter within the meaning of Section 15 of the
Securities Act, and for the benefit of directors of the Depositor, officers of
the Depositor who have signed the Registration Statement and any person
controlling the Depositor within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 12, any legal or
equitable
33
<PAGE>
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
SECTION 13. Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriter contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to the
shall survive the delivery of and payment for the Notes and shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any of them or any person controlling any of them.
SECTION 14. Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange is
open for trading.
SECTION 15. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United
States District Court for the Southern District of New York and any court in
the State of New York located in the City and County of New York, and appellate
court from any thereof, in any action, suit or proceeding brought against it or
in connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court
or, to the extent permitted by law, in such federal court.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
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<PAGE>
SECTION 17. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between the
Depositor and the Underwriter, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
BEAR STEARNS ASSET BACKED
SECURITIES, INC.
By: /s/ Jonathan Lieberman
-----------------------------
Name: Jonathan Lieberman
Title: Vice President
CONFIRMED AND ACCEPTED, as
of the date first above written:
BEAR, STEARNS & CO. INC.
Acting on its own behalf and
the Underwriter referred to in
the foregoing Agreement
By: /s/ Jonathan Lieberman
------------------------------
Name: Jonathan Lieberman
Title: Vice President
35
<PAGE>
SCHEDULE A
Home Loan Asset Backed Notes, 1997-2
Class A-1 6.71% Loan Asset Backed Notes
Principal Price to Public Underwriting Discount
- --------- --------------- ---------------------
$29,390,000 99.99519% 0.2000%
Class A-2 6.74% Loan Asset Backed Notes
Principal Purchase Price Underwriting Discount
- --------- --------------- ---------------------
$32,110,000 99.99242% 0.3000%
Class A-3 6.96% Loan Asset Backed
Principal Purchase Price Underwriting Discount
- --------- --------------- ---------------------
$11,710,000 99.99162% 0.3500%
Class A-4 7.45% Loan Asset Backed Notes
Principal Purchase Price Underwriting Agreement
- --------- --------------- ---------------------
$16,510,000 99.96272% 0.4500%
Class M-1 7.58% Loan Asset Backed Notes
Principal Purchase Price Underwriting Agreement
- --------- --------------- ---------------------
$13,610,000 99.95129% 0.5500%
Class M-2 7.73% Loan Asset Backed Notes
Principal Purchase Price Underwriting Agreement
- --------- --------------- ---------------------
$11,140,000 99.96949% 0.6500%
Class B 7.98% Loan Asset Backed Notes
Principal Purchase Price
- --------- ---------------
$ 9,280,000 99.99991% 0.8250%
Selling Reallowance
Class Concession Discount
- ----- ---------- --------
A-1 0.1000% 0.0700%
A-2 0.1500% 0.1250%
A-3 0.1750% 0.1250%
A-4 0.2250% 0.1250%
M-1 0.2750% 0.2000%
M-2 0.3250% 0.2500%
B 0.4125% 0.3000%
<PAGE>
EXECUTION COPY
INDEMNIFICATION AND CONTRIBUTION AGREEMENT
THIS INDEMNIFICATION AND CONTRIBUTION AGREEMENT dated August 25, 1997
(the "Agreement") among Bear Stearns Asset Backed Securities, Inc., a Delaware
corporation ("BSABS"), Bear, Stearns & Co. Inc., a Delaware corporation
("Bear") and Life Savings Bank, Federal Savings Bank ("Life").
W I T N E S E T H:
- - - - - - - - -
WHEREAS, Life and BSABS are parties to the Sale and Servicing
Agreement;
WHEREAS, Life stands to receive substantial financial benefits in its
capacity as servicer and parent of Life Investments Holdings, Inc., the
transferor, under the Sale and Servicing Agreement;
WHEREAS, Bear and BSABS have entered into an Underwriting Agreement
pursuant to which Bear has agreed to purchase the Life Financial Loan Owner
Trust 1997-2, Loan Asset Backed Notes (the "Notes");
WHEREAS, Bear intends to offer the Notes to the public
pursuant to the Prospectus Supplement; and
WHEREAS, as an inducement to BSABS to enter into the Sale and
Servicing Agreement and the Purchase Agreement and the Home Loan Purchase
Agreement and to Bear to enter into the Underwriting Agreement, Life wishes to
provide for indemnification and contribution on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms.
The following terms shall have the meanings set forth below, unless
the context clearly indicates otherwise:
1933 Act: The Securities Act of 1933, as amended.
Agreement: This Indemnification and Contribution Agreement, as
the same may be amended in accordance with the terms hereof.
Bear: Bear Stearns & Co. Inc., a Delaware corporation.
BSABS: Bear, Stearns Asset Backed Securities, Inc., a
Delaware corporation.
Life: Life Savings Bank, Federal Savings Bank.
Life Information: All information contained in the Prospectus
Supplement other than (i) the statements on page i of the Prospectus Supplement
relating to Bear (ii) the statements under the following captions: "SUMMARY -
Depositor" "- the Notes", "Priority of Distributions", "- Final Maturity
Dates", "- Tax Status", "- ERISA", "- Legal Investment", "DESCRIPTION OF THE
NOTES", "CERTAIN FEDERAL INCOME TAX CONSEQUENCES", "STATE TAX CONSEQUENCES",
"ERISA CONSIDERATIONS", "LEGAL INVESTMENT MATTERS" and "METHOD OF
DISTRIBUTION".
Notes: The Life Financial Loan Owner Trust 1997-2, Loan Asset Backed
Notes, Class A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2 and
Class B.
Prospectus: The prospectus dated June 24, 1997 of BSABS.
Prospectus Supplement: The prospectus supplement dated August
25, 1997 relating to the public offering by Bear of the Notes.
Sale and Servicing Agreement: The Sale and Servicing Agreement dated
as of September 1, 1997, by and among Life Financial Loan Owner Trust 1997-2,
as issuer, BSABS, as depositor, Life, as servicer, Life Investments Holdings,
Inc., as transferor, and First Bank National Association, as indenture trustee
and co-owner trustee, relating to the Notes and the Certificates.
2
<PAGE>
1.2 Other Terms.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Sale and Servicing Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each party hereto represents that:
(a) it has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement;
(b) the execution, performance and delivery of this Agreement has been
duly authorized by such party;
(c) this Agreement has been duly executed and delivered by such party;
and
(d) this Agreement constitutes the legal, valid and binding obligation
of such party.
ARTICLE III
INDEMNIFICATION
3.1 Indemnification by Life, BSABS and Bear.
(a) Life shall indemnify and hold harmless each of BSABS and
Bear, each of their respective directors, each of their respective officers and
each person, if any, that controls BSABS or Bear, as the case may be, within
the meaning of the 1933 Act, against any and all losses, claims, damages or
liabilities to which BSABS or Bear or any such director, officer or controlling
person may become subject, under the 1933 Act or otherwise, to the extent that
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Prospectus Supplement or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading to the extent that such untrue statement
or alleged untrue statement or omission or alleged omission relates to the Life
Information in the Prospectus Supplement, and Life shall in each case reimburse
BSABS, Bear, and each such director, officer or
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controlling person for any legal or other expenses reasonably incurred by BSABS
or Bear and each such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. Life's liability under this Section 3.1 shall be in addition to any
other liability Life may otherwise have.
(b) BSABS shall indemnify and hold harmless Life, each of its
directors, each of its officers and each person, if any, that controls Life
within the meaning of the 1933 Act, against any losses, claims, damages or
liabilities to which Life or any such director, officer or controlling person
may become subject, under the 1933 Act or otherwise, to the extent that such
losses, claims, damage or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus Supplement or the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission does not relate to the information
covered by subsection (a) above or subsection (c) below, and BSABS shall
reimburse Life and each such director, officer or controlling person for any
legal or other expenses reasonably incurred by Life and any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. BSABS's liability under this
Section 3.1 shall be in addition to any liability that BSABS may otherwise
have.
(c) Bear shall indemnify and hold harmless Life, each of its
directors, each of its officers and each person, if any, that controls Life
within the meaning of the 1933 Act, against any losses, claims, damages or
liabilities to which Life or any such director, officer or controlling person
may become subject, under the 1933 Act or otherwise, to the extent that such
losses, claims, damage or liabilities (or actions in respect thereof) arise out
of or are based upon any written information provided by Bear specifically for
use in connection with the preparation of the Prospectus Supplement or the
Prospectus and Bear shall reimburse Life and each such director, officer or
controlling person for any legal or other expenses reasonably incurred by Life
and any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action.
Bear's liability under this Section 3.1 shall be in addition to any liability
that Bear may otherwise have. Life and Bear acknowledge that (i) the statements
set forth in the fourth paragraph on page i of the Prospectus Supplement and
(ii) the statements under the caption: "METHOD OF DISTRIBUTION" in the
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Prospectus Supplement constitute the only information furnished in writing by
Bear for inclusion in the Prospectus Supplement, and Bear confirms that such
information is correct.
(d) If the indemnification provided for in this Section 3.1
shall for any reason be unavailable to an indemnified party under this Section
3.1, then Life, on the one hand, and BSABS and Bear, on the other, shall
contribute to the aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated herein and incurred by Life and BSABS and Bear in
such proportions that BSABS and Bear, in the aggregate, are responsible for the
lesser of (i) 0.5% thereof and (ii) 0.5% of the aggregate proceeds to BSABS
from the sale of the Loans and Life is responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 3.1, (i) each director of BSABS and of Bear, each
officer of BSABS and of Bear and each person, if any, that controls BSABS or
Bear within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as BSABS and Bear and (ii) each director of Life, each
officer of Life, and each person, if any, that controls Life within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as
Life.
3.2 Notification; Procedural Matters.
(a) Promptly after receipt by an indemnified party under Section 3.1
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party (or if a
claim for contribution is to be made against another party) under Section 3.1,
notify the indemnifying party (or other contributing party) in writing of the
commencement thereof; but the omission so to notify the indemnifying party (or
other contributing party) shall not relieve it from any liability it may have
to any indemnified party (or to the party requesting contribution) otherwise
than under Section 3.1. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and,
to the extent that, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, the
indemnifying party elects to assume the defense thereof, it may participate
(jointly with any other indemnifying party similarly notified) with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
indemnified parties that are different from or addi-
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tional to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of such counsel,
the indemnifying party shall not be liable to such indemnified party under this
paragraph for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel (plus any local counsel)
in connection with the assertion of legal defenses in accordance with the
proviso to the immediately preceding sentence, (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. No party shall be liable for contribution with respect to
any action or claim settled without its consent, which shall not be
unreasonably withheld.
ARTICLE IV
GENERAL
4.1 Survival.
This Agreement and the obligations of the parties hereunder shall
survive the purchase and sale of the Notes.
4.2 Successors.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors and
controlling persons referred to in Article III hereof and their respective
successors and assigns, and no other person shall have any right or obligation
hereunder.
4.3 Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to principles of
conflict of laws.
4.4 Miscellaneous.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated except by a writing signed by the
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party against whom enforcement of such change, waiver, discharge or termination
is sought. This Agreement may be signed in any number of counterparts, each of
which shall be deemed an original, which taken together shall constitute one
and the same instrument.
4.5 Notices.
All communications hereunder shall be in writing and shall be deemed
to have been duly given when delivered to (a) in the case of BSABS, Bear
Stearns Asset Backed Securities, Inc., 245 Park Avenue, 4th Floor, New York,
New York 10167, Attention: Chief Counsel, (b) in the case of Life, Life Bank,
10540 Magnolia Avenue, Riverside, California 92505, Attention: Chief Financial
Officer and (c) in the case of Bear, Bear Stearns & Co. Inc., 245 Park Avenue,
New York, New York 10167, Attention: Jonathan Lieberman, Vice President.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers as of the date first above written.
BEAR STEARNS ASSET BACKED SECURITIES, INC.
By: /s/ Jonathan Lieberman
----------------------------------
Name: Jonathan Lieberman
Title: Vice President
LIFE SAVINGS BANK, FEDERAL SAVINGS BANK
By: /s/ L. Bruce Mills, Jr.
----------------------------------
Name: L. Bruce Mills, Jr.
Title: Executive Vice President,
Treasurer and Secretary
BEAR, STEARNS & CO. INC.
By: /s/ Jonathan Lieberman
----------------------------------
Name: Jonathan Lieberman
Title: Vice President
<PAGE>
EXECUTION COPY
INDENTURE
between
LIFE FINANCIAL HOME LOAN OWNER TRUST 1997-2,
as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
Dated as of September 1, 1997
LIFE FINANCIAL HOME LOAN OWNER TRUST 1997-2
Asset Backed Notes
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.................................. 3
Section 1.01. Definitions.................................................. 3
Section 1.02. Incorporation by Reference of Trust
Indenture Act................................................10
Section 1.03. Rules of Construction........................................11
ARTICLE II
THE NOTES...................................12
Section 2.01. Form.........................................................12
Section 2.02. Execution, Authentication, Delivery
and Dating...................................................12
Section 2.03. Registration; Registration of Transfer
and Exchange.................................................13
Section 2.04. Mutilated, Destroyed, Lost or Stolen
Notes........................................................14
Section 2.05. Persons Deemed Owner.........................................15
Section 2.06. Payment of Principal and Interest;
Defaulted Interest...........................................16
Section 2.07. Cancellation.................................................16
Section 2.08. Conditions Precedent to the
Authentication...............................................17
Section 2.09. Release of Collateral........................................19
Section 2.10. Registration of Notes........................................20
Section 2.11. Notices to Clearing Agency...................................21
Section 2.12. Definitive Notes.............................................21
Section 2.13. Tax Treatment................................................22
ARTICLE III
COVENANTS...................................23
Section 3.01. Payment of Principal and Interest............................23
Section 3.02. Maintenance of Office or Agency..............................23
Section 3.03. Money for Payments to Be Held in Trust.......................23
Section 3.04. Existence....................................................25
Section 3.05. Protection of Collateral.....................................26
Section 3.06. Annual Opinions as to Collateral.............................26
Section 3.07. Performance of Obligations; Servicing of
Loans........................................................27
Section 3.08. Negative Covenants...........................................29
Section 3.09. Annual Statement as to Compliance............................31
Section 3.10. Covenants of the Issuer......................................31
Section 3.11. Servicer's Obligations.......................................31
Section 3.12. Restricted Payments..........................................31
Section 3.13. Treatment of Notes as Debt for Tax
Purposes.....................................................32
Section 3.14. Notice of Events of Default..................................32
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Section 3.15. Further Instruments and Acts.................................32
ARTICLE IV
SATISFACTION AND DISCHARGE...........................33
Section 4.01. Satisfaction and Discharge of Indenture......................33
Section 4.02. Application of Trust Money...................................34
Section 4.03. Repayment of Moneys Held by Paying
Agent........................................................34
ARTICLE V
REMEDIES....................................35
Section 5.01. Events of Default............................................35
Section 5.02. Acceleration of Maturity; Rescission and
Annulment....................................................36
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee.............................37
Section 5.04. Remedies; Priorities.........................................40
Section 5.05. Optional Preservation of the Collateral......................41
Section 5.06. Limitation of Suits..........................................42
Section 5.07. Unconditional Rights of Noteholders to
Receive Principal and Interest...............................42
Section 5.08. Restoration of Rights and Remedies...........................43
Section 5.09. Rights and Remedies Cumulative...............................43
Section 5.10. Delay or Omission Not a Waiver...............................43
Section 5.11. Control by Noteholders.......................................43
Section 5.12. Waiver of Past Defaults......................................44
Section 5.13. Undertaking for Costs........................................44
Section 5.14. Waiver of Stay or Extension Laws.............................45
Section 5.15. Action on Notes..............................................45
Section 5.16. Performance and Enforcement of Certain
Obligations..................................................45
ARTICLE VI
THE INDENTURE TRUSTEE.............................47
Section 6.01. Duties of Indenture Trustee..................................47
Section 6.02. Rights of Indenture Trustee..................................48
Section 6.03. Individual Rights of Indenture Trustee.......................49
Section 6.04. Indenture Trustee's Disclaimer...............................49
Section 6.05. Notice of Defaults...........................................49
Section 6.06. Reports by Indenture Trustee to Holders......................49
Section 6.07. Compensation and Indemnity...................................49
Section 6.08. Replacement of Indenture Trustee.............................51
Section 6.09. Successor Indenture Trustee by Merger........................52
Section 6.10. Appointment of Co-Indenture Trustee or
Separate Indenture Trustee...................................52
Section 6.11. Eligibility; Disqualification................................54
Section 6.12. Preferential Collection of Claims
Against Issuer...............................................54
Section 6.13. No Conflict with Administrator...............................54
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS.........................55
Section 7.01. Issuer to Furnish Indenture Trustee
Names and Addresses of Noteholders...........................55
Section 7.02. Preservation of Information;
Communications to Noteholders................................55
Section 7.03. Reports by Issuer............................................55
Section 7.04. Reports by Indenture Trustee.................................56
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES......................57
Section 8.01. Collection of Money..........................................57
Section 8.02. Trust Accounts; Distributions................................57
Section 8.03. General Provisions Regarding Accounts........................58
Section 8.04. Distribution Statement.......................................59
Section 8.05. Release of Collateral........................................59
Section 8.06. Opinion of Counsel...........................................60
ARTICLE IX
SUPPLEMENTAL INDENTURES............................61
Section 9.01. Supplemental Indentures Without Consent
of Noteholders...............................................61
Section 9.02. Supplemental Indentures with Consent of
Noteholders..................................................62
Section 9.03. Execution of Supplemental Indentures.........................64
Section 9.04. Effect of Supplemental Indentures............................64
Section 9.05. Conformity with Trust Indenture Act..........................64
Section 9.06. Reference in Notes to Supplemental
Indentures...................................................64
Section 9.07. Amendments to Trust Agreement................................64
ARTICLE X
REDEMPTION OF NOTES..............................66
Section 10.01. Redemption...................................................66
Section 10.02. Form of Redemption Notice....................................66
Section 10.03. Notes Payable on Redemption Date.............................67
ARTICLE XI
MISCELLANEOUS.................................68
Section 11.01. Compliance Certificates and Opinions,
etc..........................................................68
Section 11.02. Form of Documents Delivered to Indenture
Trustee......................................................69
Section 11.03. Acts of Noteholders..........................................70
Section 11.04. Notices, etc., to Indenture Trustee,
Issuer and Rating Agencies...................................71
Section 11.05. Notices to Noteholders; Waiver...............................72
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Section 11.06. Conflict with Trust Indenture Act............................72
Section 11.07. Effect of Headings and Table of
Contents.....................................................73
Section 11.08. Successors and Assigns.......................................73
Section 11.09. Separability.................................................73
Section 11.10. Benefits of Indenture........................................73
Section 11.11. Legal Holidays...............................................73
Section 11.12. GOVERNING LAW................................................73
Section 11.13. Counterparts.................................................73
Section 11.14. Recording of Indenture.......................................73
Section 11.15. Trust Obligation.............................................74
Section 11.16. No Petition..................................................74
Section 11.17. Inspection...................................................74
EXHIBITS
SCHEDULE A - Schedule of Loans
EXHIBIT A - Form of Notes
iv
<PAGE>
This Indenture, dated as of September 1, 1997, between LIFE FINANCIAL HOME
LOAN OWNER TRUST 1997-2, a Delaware business trust, as Issuer (the "Issuer"),
and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not in its individual capacity
but solely 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 Class A-1 6.71%
Asset Backed Notes (the "Class A-1 Notes"), Class A-2 6.74% Asset Backed Notes
(the "Class A-2 Notes"), Class A-3 6.96% Asset Backed Notes (the "Class A-3
Notes"), Class A-4 7.45% Asset Backed Notes (the "Class A-4 Notes"), Class M-1
7.58% Asset Backed Notes (the "Class M-1 Notes"), Class M-2 7.73% Asset Backed
Notes (the "Class M-2 Notes") and Class B 7.98% Asset Backed Notes (the "Class B
Notes" and, together with the Class A-1, Class A-2, Class A-3, Class A-4, Class
M-1 and Class M-2 Notes, the "Notes"):
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants to the
Indenture Trustee at the Closing Date, as Indenture Trustee for the benefit of
the holders of the Notes, all of the Issuer's right, title and interest in and
to: (i) the Trust Estate (as defined in the Sale and Servicing Agreement); (ii)
all right, title and interest of the Issuer in the Sale and Servicing Agreement
(including the Issuer's right to cause the Transferor to repurchase Loans from
the Issuer under certain circumstances described therein); (iii) all present and
future claims, demands, causes of action 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, including
all proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, 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; (iv) all funds on deposit from time to time in the Trust Accounts
(including the Certificate Distribution Account); and (v) all other property of
the Trust from time to time (collectively, 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, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
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The Indenture Trustee, as Indenture Trustee on behalf of the holders of the
Notes, acknowledges such Grant, accepts the trusts hereunder and agrees to
perform its duties required in this Indenture to the best of its ability to the
end that the interests of the holders of the Notes may be adequately and
effectively protected. The Indenture Trustee agrees and acknowledges that the
Indenture Trustee's Loan Files will be held by the Custodian for the benefit of
the Indenture Trustee in Minneapolis, Minnesota. The Indenture Trustee further
agrees and acknowledges that each other item of Collateral that is physically
delivered to the Indenture Trustee will be held by the Indenture Trustee in
Minneapolis, Minnesota.
2
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) 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 Sale and Servicing Agreement. All other capitalized terms
used herein shall have the meanings specified herein.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement dated as of
September 1, 1997, among the Administrator, the Issuer and Life Investments
Holdings, Inc.
"Administrator" means Norwest Bank Minnesota, National Association, a
national banking association, or any successor Administrator under the
Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of the
Owner Trustee or Co-Owner Trustee who is authorized to act for the Owner Trustee
or Co-Owner Trustee, as applicable, in matters relating to the Issuer and who is
identified on the list of Authorized Officers delivered by the Owner Trustee or
Co-Owner Trustee, as applicable, to the Indenture Trustee on the Closing Date
(as such list may be modified or supplemented from time to time thereafter) and,
so long as the Administration Agreement is in effect, any Vice President, any
Assistant Vice President or more senior officer of the Administrator who is
authorized to act for the Administrator in matters relating to the Issuer and to
be acted upon by the Administrator pursuant to the Administration Agreement and
who is identified on the list of Authorized Officers delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust Agreement, this
Indenture, the Sale and Servicing Agreement, the Administration Agreement, the
Custodial Agreement, the Loan Purchase Agreement, the Loan Sale Agreement, the
Note Depository
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Agreement and other documents and certificates delivered in connection
therewith.
"Book-Entry Notes" means a beneficial interest in the Class A-1, Class A-2,
Class A-3, Class A-4, Class M-1, Class M-2 or Class B Notes, ownership and
transfers of which, after delivery of the final Prospectus Supplement, shall be
made through book entries by a Clearing Agency as described in Section 2.10.
"Business Day" means any day other than (i) a Saturday or a Sunday, or (ii)
a day on which banking institutions in New York City or the city in which the
Corporate Trust Office of the Indenture Trustee is located are authorized or
obligated by law or executive order to be closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit C to the Trust Agreement.
"Class A-1 Notes", "Class A-2 Notes", "Class A-3 Notes", "Class A-4 Notes",
"Class M-1 Notes", "Class M-2 Notes" and "Class B Notes" shall each have the
meaning assigned thereto in the "WITNESSETH THAT" Clause on the first page of
this Indenture.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means September 4, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Company" means Life Investments Holdings, Inc., a California corporation
or any successor in interest thereto.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located at
Sixth and Marquette Streets, Minneapolis, Minnesota 55479; Attention:
Corporate Trust Services--Asset-Backed Administration, or at such other
address as the Indenture Trustee may designate from time to time by notice to
the Noteholders and the Issuer, or the principal corporate trust office of
any successor Indenture
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Trustee at the address designated by such successor Indenture Trustee by notice
to the Noteholders and the Issuer.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.12.
"Depositor" shall mean Bear Stearns Asset Backed Securities Inc., a
Delaware corporation, in its capacity as depositor under the Sale and Servicing
Agreement, and its successors in interest.
"Depository Institution" means any depository institution or trust company,
including the Indenture Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated P-1 by Moody's and A-1 by Fitch.
"Distribution Date" means the 25th day of any month or if such 25th day is
not a Business Day, the first Business Day immediately following such day,
commencing in October 1997.
"Due Period" means, with respect to any Distribution Date and any Class of
Notes, the calendar month immediately preceding the month of such Distribution
Date.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"Fitch" means Fitch Investors Service, L.P. or any successor thereto.
"Grant" means mortgage, 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 this 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 party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and
5
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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" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture Trustee" means Norwest Bank Minnesota, National Association, a
national banking corporation, as Indenture Trustee under this Indenture, or any
successor Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor on the
Notes, the Transferor and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Transferor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Transferor 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" means 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 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable 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 of
Section 11.01.
"Issuer" means Life Financial Home Loan Owner Trust 1997-2 until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" mean 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.
"Maturity Date" means with respect to the Class A-1 Notes the Distribution
Date in April 2008, with respect to the Class A-2 Notes the Distribution Date in
June 2012, with respect to the Class A-3 Notes the Distribution Date in June
2015 and with respect to any other Class of Notes, the Distribution Date in
September 2023.
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"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
"Note" means a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4
Note, Class M-1 Note, Class M-2 Note or Class B Note, as applicable.
"Note Depository Agreement" means the agreement among the Issuer, the
Administrator, the Indenture Trustee and The Depository Trust Company, as the
initial Clearing Agency, relating to the Book-Entry Notes.
"Note Interest Rate" means, with respect to any Class of Notes, the
applicable per annum rate specified below (computed on the basis of a 360-day
year assumed to consist of twelve 30-day months):
Class A-1: 6.71%
Class A-2: 6.74%
Class A-3: 6.96%
Class A-4: 7.45%
Class M-1: 7.58%
Class M-2: 7.73%
Class B: 7.98%
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.03.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer or the Administrator, under the circumstances described
in, and otherwise complying with, the applicable requirements of Section 11.01,
and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer or the Administrator.
"Opinion of Counsel" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be satisfactory to the Indenture Trustee,
and which opinion or opinions shall be addressed to the Indenture Trustee, as
Indenture Trustee, and shall comply with any applicable requirements of Section
11.01 and shall be in form and substance satisfactory to the Indenture Trustee.
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"Outstanding" means, with respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision for such notice
has been made, satisfactory to the Indenture Trustee);
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser; provided, that in determining whether the
Holders of the requisite Outstanding Amount of the Notes have given any
request, demand, authorization, direction, notice, consent, or waiver
hereunder or under any Basic Document, Notes owned by the Issuer, any other
obligor upon the Notes, the Transferor or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Notes that the Indenture
Trustee knows to be so owned shall be so disregarded. Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee
is not the Issuer, any other obligor upon the Notes, the Transferor or any
Affiliate of any of the foregoing Persons; and
(iv) Notes for which the related Maturity Date has occurred.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
Class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee
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specified in Section 6.11 and is authorized by the Issuer to make payments to
and distributions from the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, limited liability company, limited
liability partnership, or government or any agency or political subdivision
thereof.
"Predecessor Note" means, 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 purpose of this definition, any Note
authenticated and delivered under Section 2.04 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.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency Condition" means, with respect to any applicable action,
that each Rating Agency shall have been given 10 days (or such shorter period as
is acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Depositor, the Servicer and the Issuer
in writing that such action will not result in a reduction or withdrawal of the
then current rating of the Notes.
"Rating Agency" means any or all of (i) Moody's or (ii) Fitch. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
rating the Notes.
"Record Date" means, as to each Distribution Date, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs.
"Redemption Date" means in the case of a redemption of the Notes pursuant
to Section 10.01 or a payment to Noteholders pursuant to Section 10.03, the
Distribution Date specified by the Servicer or the Issuer pursuant to Section
10.01 or Section 10.03, as applicable.
"Registered Holder" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other
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officer of the Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement dated
as of September 1, 1997, among the Issuer, Life Investments Holdings, Inc., as
Transferor, Life Savings Bank as Servicer, and Norwest Bank Minnesota, National
Association, as Indenture Trustee and Co-Owner Trustee.
"Schedule of Loans" means the listing of the Loans set forth in Schedule A,
as supplemented as of any date on which a Defective Loan has been repurchased
from the Trust or substituted with a Qualified Loan pursuant to Section 3.5 of
the Sale and Servicing Agreement or after any Subsequent Transfer Date pursuant
to Section 2.07.
"Securities Act" means the Securities Act of 1933, as amended.
"Servicer" shall mean Life Savings Bank, Federal Savings Bank in its
capacity as servicer under the Sale and Servicing Agreement, and any Successor
Servicer thereunder.
"State" means any one of the States of the United States of America or the
District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
"Transferor" means Life Investments Holdings, Inc. and any successor
thereto under the Sale and Servicing Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
"Underwriter" means Bear, Stearns & Co. Inc.
(b) Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined herein have the
respective meanings set forth in the Sale and Servicing Agreement for all
purposes of this Indenture.
Section 1.02. Incorporation by Reference of Trust Indenture Act. (a)
Whenever this Indenture refers to a provision of the
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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:
"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.
(b) All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. Rules 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
(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 (as provided in such agreements) 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.
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ARTICLE II
THE NOTES
Section 2.01. Form. The Notes shall be designated as the "Life Financial
Home Loan Owner Trust 1997-2 Asset Backed Notes." Each Class of Notes shall be
in substantially the form set forth in Exhibit A hereto, 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 thereof. 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 Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes are set forth in Exhibit A. The terms of each Class of Notes are part of
the terms of this Indenture.
Section 2.02. Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee or the Co-Owner Trustee. 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 Owner Trustee or the Co-Owner Trustee 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.
Subject to the satisfaction of the conditions set forth in Section 2.08,
the Indenture Trustee shall upon Issuer Order authenticate and deliver the seven
Classes of Notes for original issue in the following principal amounts: Class
A-1, $29,390,000; Class A-2, $32,110,000; Class A-3, $11,710,000; Class A-4,
$16,510,000; Class M-1, $13,610,000; Class M-2, $11,140,000; and Class B,
$9,280,000. The aggregate principal amounts of such Classes of Notes outstanding
at any time may not exceed such respective amounts.
The Notes that are authenticated and delivered by the Indenture Trustee to
or upon the order of the Issuer on the Closing Date shall be dated September 4,
1997. All other Notes that are
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authenticated after the Closing Date for any other purpose under the Indenture
shall be dated the date of their authentication. The Notes shall be issuable as
registered Notes in the minimum denomination of $100,000 and integral multiples
of $1,000 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.
Section 2.03. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee initially shall be the "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written notice
of the appointment of such Note Registrar and of the location, and any change in
the location, of the Note Register, and the Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Owner
Trustee or the Co-Owner Trustee on behalf of the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, in the name of the designated transferee or transferees, one
or more new Notes of the same Class in any authorized denominations, of a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Owner Trustee or the
Co-Owner Trustee
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on behalf of the Issuer shall execute, and the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof 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 Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.04 or Section 9.06 not involving any transfer.
The preceding provisions of this Section 2.03 notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to such Note.
Section 2.04. Mutilated, 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 reasonably required by it to hold the Issuer and, Indenture
Trustee, the Administrator, the Owner Trustee and the Co-Owner 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, an
Authorized Officer of the Owner Trustee, the Co-Owner Trustee or the
Administrator on behalf of 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
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replacement Note of the same Class; 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, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date 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 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 2.04, 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 2.04 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 2.04 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 2.05. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Owner Trustee, the Co-Owner Trustee, the Administrator and any agent of the
Issuer, the Indenture Trustee, the Owner Trustee, the Co-Owner Trustee or the
Administrator 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.
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Section 2.06. Payment of Principal and Interest; Defaulted Interest. (a)
Each Class of Notes shall accrue interest at the related Note Interest Rate, and
such interest shall be due and payable on each Distribution Date as specified in
Exhibit A hereto, subject to Section 3.01. 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 Distribution Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date by check mailed first-class postage prepaid to such Person's
address as it appears on the Note Register on such Record Date, except that,
unless Definitive Notes have been issued pursuant to Section 2.12, with respect
to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made
by wire transfer in immediately available funds to the account designated by
such nominee and except for the final installment of principal payable with
respect to such Note on a Distribution Date or on the applicable Maturity Date
for such Class of Notes (and except for the Termination Price for any Note
called for redemption pursuant to Section 10.01), which shall be payable as
provided in Section 2.06(b). The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Distribution Date as provided in the forms of the Notes set forth in Exhibit A
hereto. Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes of a Class of Notes shall be due and payable, if not previously paid, on
the earlier of (i) the Maturity Date, (ii) the Redemption Date or (iii) the date
on which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee or the Holders of Notes representing not less than a majority
of the Outstanding Amount of the Notes have declared the Notes to be immediately
due and payable in the manner provided in Section 5.02. All principal payments
on each Class of Notes shall be made pro rata to the Noteholders of such Class
entitled thereto. The Indenture Trustee shall notify the Person in whose name a
Note is registered at the close of business on the Record Date preceding the
Distribution Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such Distribution Date and shall specify
that such final installment 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 payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02.
Section 2.07. Cancellation. 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
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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 2.07, 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 Order that they
be destroyed or returned to it; provided, that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
Section 2.08. Conditions Precedent to the Authentication. The Notes may be
authenticated by the Indenture Trustee, upon Issuer Request and upon receipt by
the Indenture Trustee of the following:
(a) An Issuer Order authorizing the execution and authentication of such
Notes by the Issuer.
(b) All of the items of Collateral which shall be delivered to the
Indenture Trustee or its designee.
(c) An executed counterpart of the Trust Agreement.
(d) An Opinion of Counsel addressed to the Indenture Trustee to the effect
that:
(i) all instruments furnished to the Indenture Trustee as conditions
precedent to the authentication of the Notes by the Indenture Trustee
pursuant to the Indenture conform to the requirements of this Indenture and
constitute all the documents required to be delivered hereunder for the
Indenture Trustee to authenticate the Notes;
(ii) all conditions precedent provided for in this Indenture relating
to the authentication of the Notes have been complied with;
(iii) the Owner Trustee and Co-Owner Trustee have power and authority
to execute, deliver and perform their respective obligations under the
Trust Agreement;
(iv) the Issuer has been duly formed, is validly existing as a
business trust under the laws of the State of Delaware, 12 Del. C. ss.
3801, et seq., and has power, authority and legal right to execute and
deliver this Indenture, the Administration Agreement and the Sale and
Servicing Agreement;
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(v) assuming due authorization, execution and delivery thereof by the
Indenture Trustee, the Indenture is the valid, legal and binding obligation
of the Issuer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent
or preferential conveyance and other similar laws of general application
affecting the rights of creditors generally and to general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(vi) the Notes, when executed and authenticated as provided herein and
delivered against payment therefor, will be the valid, legal and binding
obligations of the Issuer pursuant to the terms of this Indenture, entitled
to the benefits of this Indenture, and will be enforceable in accordance
with their terms, subject to bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent or preferential conveyance and other
similar laws of general application affecting the rights of creditors
generally and to general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(vii) the Trust Agreement authorizes the Issuer to Grant the
Collateral to the Indenture Trustee as security for the Notes and the Owner
Trustee has taken all necessary action under the Trust Agreement to Grant
the Collateral to the Indenture Trustee;
(viii) this Indenture has been duly qualified under the Trust
Indenture Act;
(ix) this Indenture, together with the Grant of the Collateral to the
Indenture Trustee, creates a valid security interest in the Collateral in
favor of the Indenture Trustee for the benefit of the Noteholders;
(x) such action has been taken with respect to delivery of possession
of the Collateral, and with respect to the execution and filing of this
Indenture and any financing statements as are necessary to make effective
and to perfect a first priority security interest created by this Indenture
in the Collateral in favor of the Indenture Trustee, except that with
respect to the Debt Instruments, possession of such Debt Instruments must
be maintained by the Indenture Trustee or an agent of the Indenture Trustee
(other than the Issuer), an Affiliate of the Issuer, or a "securities
intermediary," as defined in Section 8-102 of the UCC, an agent of the
Indenture Trustee; and
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(xi) no authorization, approval or consent of any governmental body
having jurisdiction in the premises which has not been obtained by the
Issuer is required to be obtained by the Issuer for the valid issuance and
delivery of the Notes, except that no opinion need be expressed with
respect to any such authorizations, approvals or consents as may be
required under any state securities "blue sky" laws.
(e) An Officer's Certificate complying with the requirements of Section
11.01 and stating that:
(i) the Issuer is not in Default under this Indenture and the issuance
of the Notes applied for will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Trust
Agreement, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it is bound, or any
order of any court or administrative agency entered in any proceeding to
which the Issuer is a party or by which it may be bound or to which it may
be subject, and that all conditions precedent provided in this Indenture
relating to the authentication and delivery of the Notes applied for have
been complied with;
(ii) the Issuer is the owner of all of the Loans, has not assigned any
interest or participation in the Loans (or, if any such interest or
participation has been assigned, it has been released) and has the right to
Grant all of the Loans to the Indenture Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of its
right, title, and interest in the Collateral, and has delivered or caused
the same to be delivered to the Indenture Trustee;
(iv) attached thereto are true and correct copies of letters signed by
Moody's and Fitch confirming that the Class A-1, Class A-2, Class A-3,
Class A-4, have been rated "Aaa" and "AAA" by Moody's and Fitch,
respectively, and letters signed by Moody's and Fitch confirming that the
Class M-1 Notes have been rated "A2" and "AA" by Moody's and Fitch,
respectively, the Class M-2 Notes have been rated "A2" and "A" by Moody's
and Fitch, respectively, and the Class B Notes have been rated "Baa3" and
"BBB" by Moody's and Fitch, respectively; and
(v) all conditions precedent provided for in this Indenture relating
to the authentication of the Notes have been complied with.
Section 2.09. Release of Collateral. (a) Except as otherwise provided in
subsections (b) and (c) of this Section 2.09
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and Section 11.01 and the terms of the Basic Documents, the Indenture Trustee
shall release property from the lien of this Indenture only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
(b) The Servicer in accordance with Accepted Servicing Procedures, on
behalf of the Issuer, shall be entitled to obtain a release from the lien of
this Indenture for any Loan and the related Mortgaged Property at any time (i)
after a payment by the Transferor or the Issuer of the Purchase Price of the
Loan, (ii) after a Qualified Substitute Loan is substituted for such Loan and
payment of the Substitution Adjustment, if any, (iii) after liquidation of the
Loan in accordance with Section 4.2 of the Sale and Servicing Agreement and the
deposit of all proceeds received thereon in the Collection Account, or (iv) upon
the termination of a Loan (due to, among other causes, a prepayment in full of
the Loan and sale or other disposition of the related Mortgaged Property), if
the Issuer delivers to the Indenture Trustee an Issuer Request (A) identifying
the Loan and the related Mortgaged Property to be released, (B) requesting the
release thereof, (C) setting forth the amount deposited in the Collection
Account with respect thereto, and (D) certifying that the amount deposited in
the Collection Account (x) equals the Purchase Price of the Loan, in the event a
Loan and the related Mortgaged Property are being released from the lien of this
Indenture pursuant to item (i) above, (y) equals the Substitution Adjustment
related to the Qualified Substitute Loan and the Defective Loan released from
the lien of the Indenture pursuant to item (ii) above, or (z) equals the entire
amount of Recoveries received with respect to such Loan and the related
Mortgaged Property in the event of a release from the lien of this Indenture
pursuant to items (iii) or (iv) above.
(c) The Indenture Trustee shall, if requested by the Servicer, temporarily
release or cause the Custodian to temporarily release to the Servicer the
Indenture Trustee's Loan File pursuant to the provisions of Section 7.2 of the
Sale and Servicing Agreement upon compliance by the Servicer of the provisions
thereof provided that the Indenture Trustee's Loan File shall have been stamped
to signify the Issuer's pledge to the Indenture Trustee under the Indenture.
Section 2.10. Registration of Notes. Upon original issuance, the Notes will
be issued in definitive, fully-registered form. The Notes will be issued in the
form of typewritten Notes representing the Book-Entry Notes, to be delivered to
The Depository Trust Company, the initial Clearing Agency, by, or on behalf of,
the Issuer. The Book-Entry Notes shall be registered initially on the Note
Register in the name of Cede & Co., the nominee of the initial
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Clearing Agency, and no Owner thereof will receive a definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to such Note Owners pursuant to Section
2.12:
(i) the provisions of this Section 2.10 shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Clearing Agency 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 Note Owners;
(iii) to the extent that the provisions of this Section 2.10 conflict
with any other provisions of this Indenture, the provisions of this Section
2.10 shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency 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 Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Note Owners and/or
Clearing Agency 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 2.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to such Note Owners.
Section 2.12. Definitive Notes. If (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency
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is no longer willing or able to properly discharge its responsibilities with
respect to the Book-Entry Notes and the Administrator is unable to locate a
qualified successor, (ii) the Administrator at its option advises the Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, Owners of
the Book-Entry Notes representing beneficial interests aggregating at least a
majority of the Outstanding Amount of such Notes advise the Clearing Agency in
writing that the continuation of a book-entry system through the Clearing Agency
is no longer in the best interests of such Note Owners, then the Clearing Agency
shall notify all Note Owners and the Indenture Trustee of the occurrence of such
event and of the availability of Definitive Notes to Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. 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 2.13. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for all purposes
including federal, State and local income, single business and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer secured by the
Collateral. The Issuer, by entering into this Indenture, and each Noteholder, by
its acceptance of a Note (and each Note Owner by its acceptance of an interest
in the applicable Book-Entry Note), agree to treat the Notes for all purposes
including federal, State and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
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ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly and
punctually pay (or will cause to be duly and punctually paid) the principal of
and interest, if any, on the Notes in accordance with the terms of the Notes,
the Sale and Servicing Agreement and this Indenture including Section 8.02(c).
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Collateral, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be deemed
to conflict with the provisions of this Section 3.01, the provisions of this
Section 3.01 shall control.
Section 3.02. Maintenance of Office or Agency. The Issuer will or will
cause the Administrator to maintain in Minneapolis, Minnesota an office or
agency where 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
Administrator to serve as its agent for the foregoing purposes and to serve as
Paying Agent with respect to the Notes and the Certificates. The Issuer will
give prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
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 3.03. Money for Payments to Be Held in Trust. As provided in
Section 8.02(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.02(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by the Paying Agent, and no
amounts so withdrawn from the Collection Account and the Note Distribution
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03.
On or before the Business Day preceding each Distribution Date and
Redemption Date, the Paying Agent shall deposit or cause to be
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deposited in the Note Distribution Account an aggregate sum sufficient to pay
the amounts due on such Distribution Date or Redemption Date under the Notes,
such sum to be held in trust for the benefit of the Persons entitled thereto,
and (unless the Paying Agent is the Indenture Trustee) shall promptly notify the
Indenture Trustee of its action or failure so to act.
Any Paying Agent shall be appointed by Issuer Order with written notice
thereof to the Indenture Trustee. Any Paying Agent appointed by the Issuer shall
be a Person who would be eligible to be Indenture Trustee hereunder as provided
in Section 6.11. The Issuer shall not appoint any Paying Agent (other than the
Indenture Trustee) which is not, at the time of such appointment, a Depository
Institution.
The Issuer will cause each Paying Agent other than the Administrator 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 notice of any default by the Issuer
(or any other obligor upon the Notes) 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;
(iv) immediately resign as a 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; and
(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; provided, however, that
with respect to withholding and reporting requirements applicable to
original issue discount (if any) on the Notes, the Issuer shall have
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first provided the calculations pertaining thereto to the Indenture
Trustee.
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 Order 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 or abandoned
property, 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 two years 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 a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, 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 shall 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 moneys 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 3.04. Existence. (a) Subject to Section 3.04(b), 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 and the
Collateral.
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(b) Any successor to the Owner Trustee or Co-Owner Trustee appointed
pursuant to Section 10.2 of the Trust Agreement shall be the successor Owner
Trustee or Co-Owner Trustee, respectively, under this Indenture without the
execution or filing of any paper, instrument or further act to be done on the
part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the Owner
Trustee or Co-Owner Trustee, the Person succeeding to the Owner Trustee or
Co-Owner Trustee under the Trust Agreement may exercise every right and power of
the Owner Trustee under this Indenture with the same effect as if such Person
had been named as the Owner Trustee or Co-Owner Trustee herein.
Section 3.05. Protection of Collateral. 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) provide further assurance with respect to the Grant of all or any
portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the rights of the
Indenture Trustee and the Noteholders in such Collateral against the claims
of all persons and parties.
The Issuer hereby designates the Administrator its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.05.
Section 3.06. Annual Opinions as to Collateral.
On or before September 4 in each calendar year, beginning in 1998, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and 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
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security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe 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 of this Indenture until September 4 of the
following calendar year.
Section 3.07. Performance of Obligations; Servicing of Loans. (a) The
Issuer will not take any action and will use its best efforts not to permit any
action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Collateral or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or agreement, except as expressly provided
in this Indenture, the Sale and Servicing Agreement or such other instrument or
agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) 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. Initially, the Issuer has contracted with the
Servicer and the Administrator to assist the Issuer in performing its duties
under this Indenture. The Administrator must at all times be the same Person as
the Indenture Trustee.
(c) 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 Collateral, including but not limited
to (i) filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement and (ii) recording or causing to be recorded
all Mortgages, Assignments of Mortgage, all intervening Assignments of Mortgage
and all assumption and modification agreements required to be recorded by the
terms of the Sale and Servicing Agreement, in accordance with and within the
time periods provided for in this Indenture and/or the Sale and Servicing
Agreement, as applicable. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Indenture Trustee
and the Holders of at least a majority of the Outstanding Amount of the Notes.
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(d) If the Issuer shall have knowledge of the occurrence of an Event of
Default under the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee and the Rating Agencies thereof, and shall specify in such
notice the action, if any, the Issuer is taking with respect to such default. If
such an Event of Default shall arise from the failure of the Servicer to perform
any of its duties or obligations under the Sale and Servicing Agreement with
respect to the Loans, the Issuer shall take all reasonable steps available to it
to remedy such failure.
(e) As promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 10.1 of the
Sale and Servicing Agreement, the Indenture Trustee shall appoint a successor
servicer (the "Successor Servicer"), and such Successor Servicer shall accept
its appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Servicer has not been appointed and
accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer. The Indenture Trustee may resign as the
Servicer by giving written notice of such resignation to the Issuer and in such
event will be released from such duties and obligations, such release not to be
effective until the date a new servicer enters into a servicing agreement with
the Issuer as provided below. Upon delivery of any such notice to the Issuer,
the Issuer shall obtain a new servicer as the Successor Servicer under the Sale
and Servicing Agreement. Any Successor Servicer other than the Indenture Trustee
shall (i) satisfy the criteria specified in Section 9.4(b) of the Sale and
Servicing Agreement and (ii) enter into a servicing agreement with the Issuer
having substantially the same provisions as the provisions of the Sale and
Servicing Agreement applicable to the Servicer. If within 30 days after the
delivery of the notice referred to above, the Issuer shall not have obtained
such a new servicer, the Indenture Trustee may appoint, or may petition a court
of competent jurisdiction to appoint, a Successor Servicer. In connection with
any such appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the Sale and Servicing Agreement, and in
accordance with Section 10.2 of the Sale and Servicing Agreement, the Issuer
shall enter into an agreement with such successor for the servicing of the Loans
(such agreement to be in form and substance satisfactory to the Indenture
Trustee). The servicing fee paid to any Successor Servicer shall not be in
excess of the Servicing Fee being paid to the initial Servicer. If the Indenture
Trustee shall succeed to the Servicer's duties as servicer of the Loans as
provided herein, it shall do so in its individual capacity and not in its
capacity as Indenture Trustee and, accordingly, the provisions of Article VI
shall be inapplicable to the Indenture Trustee in its duties as Successor
Servicer and the servicing of the Loans. In case the Indenture
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Trustee shall become Successor Servicer under the Sale and Servicing Agreement,
the Indenture Trustee shall be entitled to appoint as Servicer any one of its
Affiliates, provided that it shall be fully liable for the actions and omissions
of such Affiliate in such capacity as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee. As soon as a Successor Servicer is appointed, the Issuer shall notify
the Indenture Trustee of such appointment, specifying in such notice the name
and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees (i) that it will not, without the prior
written consent of the Indenture Trustee, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral (except to the
extent otherwise provided in the Sale and Servicing Agreement) or the Basic
Documents, or waive timely performance or observance by the Servicer or the
Depositor under the Sale and Servicing Agreement; and (ii) that any such
amendment shall not (A) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders without the consent of 100% of the affected
Noteholders or (B) reduce the aforesaid percentage of the Notes that is required
to consent to any such amendment, without the consent of 100% of the affected
Noteholders. If any such amendment, modification, supplement or waiver shall be
so consented to by the Indenture Trustee, the Issuer agrees, promptly following
a request by the Indenture Trustee to do so, to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may deem necessary or appropriate in the
circumstances.
Section 3.08. Negative Covenants. So long as any Notes are Outstanding, the
Issuer shall not:
(i) except as expressly permitted by this Indenture or the Sale
and Servicing Agreement (including but not limited to the Servicer's
rights as set forth therein), sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer, including those
included in the Collateral, 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
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Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Collateral;
(iii) engage in any business or activity other than as permitted
by the Trust Agreement or other than in connection with, or relating to,
the issuance of Notes pursuant to this Indenture, or amend the Trust
Agreement as in effect on the Closing Date other than in accordance with
Section 11.1 of the Trust Agreement,
(iv) issue debt obligations under any other indenture;
(v) incur or assume any indebtedness or guaranty any indebtedness
of any Person, except for such indebtedness as may be incurred by the
Issuer in connection with the issuance of the Notes pursuant to this
Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (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
Collateral or any part thereof or any interest therein or the proceeds
thereof (other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on any of the Mortgaged
Properties and arising solely as a result of an action or omission of the
related Obligor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Collateral;
(viii) remove the Administrator without cause unless the Rating
Agency Condition shall have been satisfied in connection with such
removal; or
(ix) take any other action or fail to take any action which may
cause the Issuer to be taxable as (a) an association pursuant to Section
7701 of the Code and the corresponding regulations or (b) as a taxable
mortgage pool pursuant to Section 7701(i) of the Code and the
corresponding regulations.
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Section 3.09. Annual 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 1998 covering the activities for fiscal
year 1997), 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 has been made under such
Authorized Officer's supervision; and
(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 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 3.10. Covenants of the Issuer. All covenants of the Issuer in this
Indenture are covenants of the Issuer and are not covenants of the Owner
Trustee. The Owner Trustee is, and any successor Owner Trustee under the Trust
Agreement will be, entering into this Indenture solely as Owner Trustee under
the Trust Agreement and not in its respective individual capacity, and in no
case whatsoever shall the Owner Trustee or any such successor Owner Trustee be
personally liable on, or for any loss in respect of, any of the statements,
representations, warranties or obligations of the Issuer hereunder, as to all of
which the parties hereto agree to look solely to the property of the Issuer.
Section 3.11. Servicer's Obligations. The Issuer shall cause the Servicer
to comply with the Sale and Servicing Agreement.
Section 3.12. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, (x)
distributions to the Servicer, the Indenture Trustee, the Owner Trustee, the
Noteholders and the holders of the Residual Interests as contemplated by, and to
the extent funds are available for such purpose under, the Sale and Servicing
Agreement or the Trust Agreement and (y) payments to the Indenture Trustee
pursuant to Section 1(a)(ii) of the Administration Agreement. The Issuer will
not, directly or indirectly, make or cause to be made payments to or
distributions
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from the Collection Account except in accordance with this Indenture and the
Basic Documents.
Section 3.13. Treatment of Notes as Debt for Tax Purposes. The Issuer
shall, and shall cause the Administrator to, treat the Notes as indebtedness for
all purposes.
Section 3.14. Notice of Events of Default. The Issuer shall give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder, each default on the part of the Servicer or the Transferor of
its obligations under the Sale and Servicing Agreement and each default on the
part of the Transferor of its obligations under the Loan Purchase Agreement.
Section 3.15. Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction 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) Section 3.03, Section 3.04,
Section 3.05, Section 3.08 and Section 3.10, (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 4.02) 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 all
of the following have occurred:
(A) either
(1) all 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 2.04 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
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. have become due and payable,
b. are to be called for redemption within one year under arrangements
satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense,
of the Issuer,
c. and the Issuer, in the case of a. 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 not theretofore
delivered to the Indenture Trustee for cancellation when due to the
applicable
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Maturity Date of such Class of Notes or Redemption Date (if Notes
shall have been called for redemption pursuant to Section 10.01), as
the case may be; and
(B) the later of (a) eighteen months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all unpaid
Trust Fees and Expenses and (c) the date on which the Issuer has paid or caused
to be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.01(i) and, subject to
Section 11.02, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture with respect to the
Notes have been complied with.
Section 4.02. Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 3.03 and Section 4.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes, the
Sale and Servicing Agreement and this Indenture, to the payment, either directly
or through any Paying Agent, as the Indenture Trustee may determine, to the
Holders of the particular Notes for the payment or redemption of which such
moneys have been deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
moneys then held by any Paying Agent 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 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
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ARTICLE V
REMEDIES
Section 5.01. Events of Default. "Event of Default," wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Note when the same
becomes due and payable, and continuance of such default for a period of five
(5) days; or
(b) 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 continuance of
such default for a period of five (5) days; or
(c) default in the observance or performance of any covenant or agreement
of the Issuer made in this Indenture (other than a covenant or agreement, a
default in the observance or performance of which is elsewhere in this Section
5.01 specifically dealt with), or any representation or warranty of the Issuer
made in this Indenture, the Sale and Servicing Agreement 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, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation 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 Amount of the Notes, 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
(d) default in the observance or performance of any covenant or agreement
of the Company made in the Trust Agreement or any representation or warranty of
the Company made in the Trust Agreement, proving to have been incorrect in any
material respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or condition in
respect of which such misrepresentation 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
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the Outstanding Amount of the Notes, 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;
(e) 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 Collateral 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 Collateral, 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
(f) 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 Collateral, 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.
The Issuer shall deliver to the Indenture Trustee, within five days after
the occurrence thereof, written notice in the form of an Officer's Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clauses (c) and (d) above, its status and what action
the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee, at the direction or upon the prior written consent of the
Holders of Notes representing not less than a majority of the Outstanding Amount
of the Notes may declare all 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 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
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majority of the Outstanding Amount of the Notes, by written notice to the Issuer
and the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
1. all payments of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
2. 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
(b) 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.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such
default continues for a period of five days, or (ii) default is made 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 continues for a
period of five days, the Issuer will, upon demand of the Indenture Trustee,
pay to the Indenture Trustee, for the benefit of the Holders of the Notes,
the whole amount then due and payable on such 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 may, and shall at the direction of the
majority of the Holders of the Notes, 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 such Notes and collect in the manner
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provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may and shall at the direction of the majority of the Holders of
the Notes, 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 Collateral, 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 5.03, 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, each
predecessor Indenture Trustee, and its agents, attorneys and counsel,
and for reimbursement of all expenses and liabilities incurred, and
all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee, except as a result of negligence 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
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election of a trustee, a standby trustee or Person performing similar
functions in any such Proceedings;
(iii) to collect and receive any moneys 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 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 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
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shall be a party), the Indenture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any Noteholder a party
to any such Proceedings.
Section 5.04. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee may and at the direction of a majority of the Holders of
the Notes shall 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, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(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 or the Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner, 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 Collateral as permitted under this Section 5.04 following an
Event of Default, unless (A) the Holders of 100% of the Outstanding Amount
of the Notes consent thereto, (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon such Notes for principal and interest or
(C) the Indenture Trustee determines that the Collateral 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 Holders
of 66-2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C) above, 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
Collateral for such purpose.
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(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 the Indenture Trustee Fee then due
and any costs or expenses incurred by it in connection with the enforcement
of the remedies provided for in this Article V and to the Owner Trustee for
the Owner Trustee Fee then due;
SECOND: to the Servicer for the Servicing Fee then due and unpaid;
THIRD: to the Custodian for the Custodian Fee then due and unpaid;
FOURTH: to the Servicer for any amounts then due and payable as
Servicing Advances under the Sale and Servicing Agreement;
FIFTH: to Noteholders for amounts due and unpaid on the Notes for
interest, pro rata, according to the amounts due and payable on the Notes
for interest;
SIXTH: to Noteholders for amounts due and unpaid on the Notes for
principal, according to the amounts due and payable and in the order and
priorities set forth in Section 5.1(d) and Section 5.1(e) of the Sale and
Servicing Agreement, until the Class Principal Balance of each such Class
is reduced to zero;
SEVENTH: to the Owner Trustee or Co-Owner Trustee, as applicable, for
any amounts to be distributed, pro rata, to the holders of the Residual
Interests.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section 5.04. At least 15
days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment date
and the amount to be paid.
Section 5.05. Optional Preservation of the Collateral. 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, elect to maintain possession
of the Collateral. 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 the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the
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Collateral. In determining whether to maintain possession of the Collateral, 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
Collateral for such purpose.
Section 5.06. Limitation 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:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% of the Outstanding Amount 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;
(c) 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;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(e) 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 Outstanding Amount of the Notes.
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 Outstanding Amount 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 5.07. Unconditional 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
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is absolute and unconditional, to receive payment of the principal of and
interest, if any, on such Note on or after the applicable Maturity Date thereof
expressed in such Note or in this Indenture (or, in the case of redemption, on
or after the Redemption Date) 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 5.08. Restoration 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 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 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee 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.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or 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 5.11. Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes 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:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
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(b) subject to the express terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Collateral shall be by Holders
of Notes representing not less than 100% of the Outstanding Amount of the
Notes;
(c) if the conditions set forth in Section 5.05 have been satisfied
and the Indenture Trustee elects to retain the Collateral pursuant to such
Section 5.05, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Collateral shall be of no force and effect; and
(d) 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 the Noteholders set forth in this Section
5.11, 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 5.12. Waiver 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 representing not less than a majority of the Outstanding Amount
of the Notes may waive any past Default or Event of Default and its consequences
except a Default (a) in the payment of principal of or interest on any of the
Notes or (b) in respect of a covenant or provision hereof that 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 Default
or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and 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 Default or Event of Default or impair any right consequent thereto.
Section 5.13. Undertaking 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
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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 Outstanding Amount 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 (or, in the case of redemption, on or after the Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, 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 will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 5.15. Action 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 Collateral 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 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so and at
the Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Transferor and the Servicer, as applicable, of each of their obligations
to the Issuer under or in connection with the Sale and Servicing Agreement, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale and Servicing
Agreement to the extent and in the manner directed by the Indenture Trustee,
including the transmission of notices of default on the part of the Transferor
or the Servicer thereunder and the institution of legal or
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administrative actions or proceedings to compel or secure performance by the
Transferor or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee 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 Outstanding Amount of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Transferor or the
Servicer under or in connection with the Sale and Servicing Agreement, including
the right or power to take any action to compel or secure performance or
observance by the Transferor or the 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 Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise 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 pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section
6.01.
(e) 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.
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(f) Money held in trust by the Indenture Trustee shall be segregated from
other funds except to the extent permitted by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(g) 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; provided, however, that the Indenture Trustee shall
not refuse or fail to perform any of its duties hereunder solely as a result of
nonpayment of its normal fees and expenses and further provided that nothing in
this Section 6.01(g) shall be construed to limit the exercise by the Indenture
Trustee of any right or remedy permitted under this Indenture or otherwise in
the event of the Issuer's failure to pay the Indenture Trustee's fees and
expenses pursuant to Section 6.07. In determining that such repayment or
indemnity is not reasonably assured to it, the Indenture Trustee must consider
not only the likelihood of repayment or indemnity by or on behalf of the Issuer
but also the likelihood of repayment or indemnity from amounts payable to it
from the Collateral pursuant to Section 6.07.
(h) 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 6.01 and to the provisions of the TIA.
Section 6.02. Rights 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.
(d) The Indenture Trustee shall not be liable for (i) 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 such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith; or (ii) any willful misconduct or negligence on the part of the
Custodian.
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(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 6.03. Individual 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 Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Indenture Trustee must comply with Section 6.11 and Section 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, shall not be accountable for the
Issuer's use of the proceeds from the Notes, or 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 6.05. Notice of Defaults. If a Default occurs and is continuing and
if it is known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption
provisions of such 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.
Section 6.06. Reports 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.
Section 6.07. Compensation and Indemnity. As compensation for its services
hereunder, the Indenture Trustee shall be entitled to receive, on each
Distribution Date, the Indenture Trustee's Fee pursuant to Section 8.02(c)
(which compensation shall not be limited by any law on compensation of a trustee
of an express trust) and shall be entitled to reimbursement 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 agrees
to cause the
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Transferor to 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, except for the Indenture Trustee's gross negligence or bad faith. The
Indenture Trustee shall notify the Issuer and the Transferor promptly of any
action or claim for which the Indenture Trustee (the "Indemnified Party") may
seek indemnity. In case any such action is brought against the Indemnified Party
and it notifies the Transferor (the "Indemnifying Party"), of the commencement
thereof, the Indemnifying Party shall be entitled to participate therein and, to
the extent that, by written notice delivered to the Indemnified Party promptly
after receiving the aforesaid notice from such Indemnified Party, the
Indemnifying Party elects to assume the defense thereof, it may participate with
counsel satisfactory to such Indemnified Party; provided, however, that if the
defendants in any such action include both the Indemnified Party and the
Indemnifying Party and the Indemnified Party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
Indemnified Parties that are different from or additional to those available to
the Indemnifying Party, the Indemnified Party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Party or
parties. Upon receipt of notice from the Indemnifying Party to such Indemnified
Party of its election so to assume the defense of such action and approval by
the Indemnified Party of such counsel, the Indemnifying Party shall not be
liable to such Indemnified Party under this paragraph for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof, unless (i) the Indemnified Party shall have employed separate
counsel (plus any local counsel) in connection with the assertion of legal
defenses in accordance with the proviso to the immediately preceding sentence,
(ii) the Indemnifying Party shall not have employed counsel satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of commencement of the action or (iii) the Indemnifying Party has
authorized the employment of counsel for the Indemnified Party at the expense of
the Indemnifying Party. No party shall be liable for contribution with respect
to any action or claim settled without its consent, which shall not be
unreasonably withheld. Failure by the Indenture Trustee to so notify the Issuer
and the Servicer shall not relieve the Issuer of its obligations hereunder. The
Issuer shall or shall cause the Servicer to defend any such claim, and the
Indenture Trustee may have separate counsel and the Issuer shall or shall cause
the Servicer to pay the fees and expenses of such counsel. Neither the Issuer
nor the Servicer need 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.
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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 a Default specified in Section
5.01(e) or Section 5.01(f) 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 6.08. Replacement 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. The Holders of a majority in
Outstanding Amount of the Notes may remove the Indenture Trustee by so notifying
the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer
shall remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) 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 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.
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
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majority in Outstanding Amount 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 6.08, the Issuer's and the Administrator's obligations under Section
6.07 shall continue for the benefit of the retiring Indenture Trustee.
Section 6.09. Successor 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.
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 force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment 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 Collateral 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 Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Collateral, or any part hereof, and, subject to the other provisions of
this Section 6.10, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may
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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.
(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 Collateral 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, jointly with the Indenture
Trustee, 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.
(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
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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 6.11. Eligibility; Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA Section 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. The Indenture Trustee
shall comply with TIA Section 310(b), including the optional provision permitted
by the second sentence of TIA Section 310(b)(9); provided, however, that there
shall be excluded from the operation of TIA Section 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 Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. No Conflict with Administrator. In performing its duties as
Administrator pursuant to the Administration Agreement, the Indenture Trustee
shall not be liable for any potential conflict of interest related to its
performance as Indenture Trustee hereunder.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer 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 the earlier of (i) each Record Date
and (ii) three months after the last 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, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
Section 7.02. Preservation 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 Section 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 Section 312(c).
Section 7.03. Reports 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 of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) that the Issuer may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with the rules and regulations prescribed from
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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 Section 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.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA Section
313(a), within 60 days after each September 4, beginning with September 4, 1998,
the Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 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 securities 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 securities exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money.
General. 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
Collateral, 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 8.02. Trust Accounts; Distributions.
(a) On or prior to the Closing Date, the Issuer shall cause the Servicer to
establish and maintain, in the name of the Indenture Trustee for the benefit of
the Noteholders, or the Co-Owner Trustee for the benefit of the Residual
Interestholders, the Trust Accounts as provided in Article V of the Sale and
Servicing Agreement. The Indenture Trustee or Co-Owner Trustee shall deposit
amounts into each of the Trust Accounts in accordance with the terms hereof, the
Sale and Servicing Agreement and the Servicer's Monthly Remittance Report.
(b) On the Remittance Date of each month the Servicer shall instruct the
Indenture Trustee to withdraw from the Collection Account the Available
Collection Amount pursuant to Section 5.1(b)(2) of the Sale and Servicing
Agreement and deposit such amount into the Note Distribution Account. Prior to
each Distribution Date, to the extent funds are available in the Note
Distribution Account, the Indenture Trustee shall either retain funds in the
Note Distribution Account or make the withdrawals from the Note Distribution
Account and deposits into the other Trust Accounts for distribution on such
Distribution Date as required pursuant to Section 5.1(c) of the Sale and
Servicing Agreement.
(c) On each Distribution Date and Redemption Date, to the extent funds are
available in the Note Distribution Account, the Indenture Trustee shall make the
following distributions from the amounts on deposit in the Note Distribution
Account in the
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following order of priority (except as otherwise provided in Section 5.04(b)):
(i) (A) to the Servicer, an amount equal to the Servicing Compensation
(net of any amounts retained prior to deposit into the Collection Account
pursuant to Section 5.1(b)(1) of the Sale and Servicing Agreement) and all
unpaid Servicing Compensation from prior due periods, (B) to the Indenture
Trustee, an amount equal to the Indenture Trustee Fee and all unpaid
Indenture Trustee Fees from prior Due Periods, (C) to the Company, an
amount equal to the Owner Trustee Fee and all unpaid Owner Trustee Fees
from prior Due Periods, and (D) to the Custodian, an amount equal to the
Custodian Fee and all unpaid Custodian Fees from prior Due Periods; and
(ii) to the Noteholders, the amounts set forth in Section 5.1(d) and
Section 5.1(e) of the Sale and Servicing Agreement.
(d) On each Distribution Date and each Redemption Date, to the extent of
the interest of the Indenture Trustee in the Certificate Distribution Account
(as described in Section 5.2 of the Sale and Servicing Agreement), the Indenture
Trustee hereby authorizes the Owner Trustee, the Co-Owner Trustee or the Paying
Agent, as applicable, to make the distributions from the Certificate
Distribution Account as required pursuant to Section 5.1(d) and Section 5.1(e)
of the Sale and Servicing Agreement.
Section 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Trust Accounts shall be
invested in Permitted Investments and reinvested by the Indenture Trustee at the
direction of the Servicer in accordance with the provisions of Article V of the
Sale and Servicing Agreement. All income or other gain from investments of
moneys deposited in the Trust Accounts shall be paid by the Indenture Trustee to
the Servicer, and any loss resulting from such investments shall be deposited by
the Servicer into the Trust Account experiencing such loss. The Servicer will
not direct the Indenture Trustee to make any investment of any funds or to sell
any investment held in any of the Trust Accounts unless the security interest
Granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Indenture
Trustee to make any such investment or sale, if requested by the Indenture
Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of
Counsel, acceptable to the Indenture Trustee, to such effect.
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(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as trustee, in accordance with their terms.
(c) If (i) the Servicer shall have failed to give investment directions for
any funds on deposit in the Trust Accounts to the Indenture Trustee by 11:00
a.m. Eastern Time (or such other time as may be agreed by the Issuer and
Indenture Trustee) on any Business Day or (ii) a Default or Event of Default
shall have occurred and be continuing with respect to the Notes but the Notes
shall not have been declared due and payable pursuant to Section 5.02 or (iii)
if such Notes shall have been declared due and payable following an Event of
Default, amounts collected or receivable from the Collateral are being applied
in accordance with Section 5.05 as if there had not been such a declaration,
then the Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Trust Accounts in one or more Eligible Investments.
Section 8.04. Distribution Statement.
On each Distribution Date, the Indenture Trustee shall deliver the
Distribution Statement (as defined in the Sale and Servicing Agreement) with
respect to such Distribution Date to the Clearing Agencies and the Rating
Agencies.
Section 8.05. Release of Collateral.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, 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 this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Residual Interestholder, the Servicer
pursuant to Section 8.02(c)(i)(A), the Indenture Trustee pursuant to Section
8.02(c)(i)(B), the Owner Trustee pursuant to Section 8.02(c)(i)(C) and the
Custodian pursuant to Section 8.02(c)(i)(D) have been paid, release any
remaining portion of the Collateral that secured the Notes from the lien of this
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Indenture and release to the Issuer or any other Person entitled thereto any
funds then on deposit in the Trust Accounts. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.05(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Section 314(c) and TIA Section 314(d)(1) meeting the
applicable requirements of Section 11.01.
Section 8.06. Opinion of Counsel. The Indenture Trustee shall receive at
least seven days notice (or such shorter period of time as may be agreed upon by
the parties hereto) when requested by the Issuer to take any action pursuant to
Section 8.05(a), accompanied by copies of any instruments involved, and the
Indenture Trustee shall also require, as a condition to such action, an Opinion
of Counsel, 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 and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Collateral. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by
an Issuer Order, 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 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 or 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 adversely affect the interests of the Holders of the Notes;
(vi) 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
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(vii) 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.
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
Order, may, also without the consent of any of the Holders of the Notes but with
prior consent of the Rating Agencies, 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 (i) an
Opinion of Counsel or (ii) satisfaction of the Rating Agency Condition,
adversely affect in any material respect the interests of any Noteholder.
Section 9.02. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior consent of the Rating Agencies, and with the consent of the Holders
of not less than a majority of the Outstanding Amount of the Notes, 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 under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest rate
thereon or the Termination Price with respect thereto, change the provisions of
this Indenture relating to the application of collections on, or the proceeds of
the sale of, the Collateral 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 (or, in the
case of redemption, on or after the Redemption Date);
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(b) reduce the percentage of the Outstanding Amount of the 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;
(c) modify or alter the provisions of the proviso to the definition of the
term "Outstanding";
(d) reduce the percentage of the Outstanding Amount of the Notes required
to direct the Indenture Trustee to direct the Issuer to sell or liquidate the
Collateral pursuant to Section 5.04;
(e) 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 Outstanding Note affected thereby;
(f) 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 Distribution Date (including the calculation of any of the
individual components of such calculation) or to affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory redemption
of the Notes contained herein; or
(g) 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 Collateral 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.
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 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.
In connection with requesting the consent of the Noteholders 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. It shall not be
necessary for any Act of Noteholders 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.
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Section 9.03. Execution 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 Section 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 9.04. Effect of Supplemental Indentures. 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 9.05. Conformity 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 9.06. Reference 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.
Section 9.07. Amendments to Trust Agreement.
Subject to Section 11.1 of the Trust Agreement, the Indenture Trustee
shall, upon Issuer Order, consent to any proposed amendment to the Trust
Agreement or an amendment to or waiver of any provision of any other document
relating to the Trust Agreement, such consent to be given without the necessity
of obtaining the
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consent of the Holders of any Notes upon satisfaction of the requirements under
Section 11.1 of the Trust Agreement.
Nothing in this Section 9.07 shall be construed to require that any Person
obtain the consent of the Indenture Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the subject
of the proposed amendment or waiver.
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ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
The Majority Residual Interest Holders (as defined in the Trust Agreement)
may, at their option, effect an early redemption of the Notes on or after any
Distribution Date on which the Pool Principal Balance declines to 10% or less of
the Maximum Collateral Amount. The Majority Residual Interest Holders shall
effect such early redemption by purchasing all of the Loans at a price not less
than the Termination Price. In connection with any such optional termination, to
the extent that sufficient proceeds are not available from the sale of the Loans
or the termination of the Trust, the Majority Residual Interest Holders will pay
the outstanding fees and expenses, if any, of the Indenture Trustee, the Owner
Trustee, the Co-Owner Trustee, the Issuer, the Custodian and the Servicer.
Any such early redemption by the Majority Residual Interestholders shall be
accomplished by depositing into the Collection Account on the Determination Date
immediately preceding the Distribution Date on which the purchase is to occur
the amount of the Termination Price to be paid. The Termination Price and any
amounts then on deposit in the Collection Account (other than any amounts not
required to have been deposited therein pursuant to Section 5.1(b)(1) of the
Sale and Servicing Agreement and any amounts withdrawable therefrom by the
Indenture Trustee pursuant to Section 5.1(b)(3) of the Sale and Servicing
Agreement) shall be transferred to the Note Distribution Account pursuant to
Section 5.1(b)(2) of the Sale and Servicing Agreement for distribution to
Noteholders on the succeeding Distribution Date; and any amounts received with
respect to the Loans and Foreclosure Properties subsequent to the Due Period
immediately preceding such final Distribution Date shall belong to the purchaser
thereof. For purposes of calculating the Available Distribution Amount for such
final Distribution Date, amounts transferred to the Note Distribution Account
immediately preceding such final Distribution Date shall in all cases be deemed
to have been received during the related Due Period, and amounts so transferred
shall be applied pursuant to Section 5.1(c) and 5.1(d) of the Sale and Servicing
Agreement.
The Servicer or the Issuer shall furnish the Rating Agencies notice of any
such redemption in accordance with Section 10.02.
Section 10.02. Form of Redemption Notice.
(a) Notice of redemption under Section 10.01 shall be given by the
Indenture Trustee by first-class mail, postage prepaid, or by facsimile mailed
or transmitted not later than 10 days prior to
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the applicable Redemption Date to each Holder of Notes, as of the close of
business on the Record Date preceding the applicable Redemption Date, at such
Holder's address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Termination Price; and
(iii) the place where such Notes are to be surrendered for payment
of the Termination Price (which shall be the office or agency of the
Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name of the Issuer and at the expense of the Servicer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Note shall not
impair or affect the validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date; Provision for Payment of
Indenture Trustee. The Notes or portions thereof to be redeemed shall, following
notice of redemption as required by Section 10.02 (in the case of redemption
pursuant to Section 10.01), on the Redemption Date become due and payable at a
price equal to the outstanding Class Principal Amount of each class of Notes
plus accrued and unpaid interest thereon provided that no interest shall accrue
on such price for any period after the date to which accrued interest is
calculated for purposes of calculating the such price. The Issuer may not redeem
the Notes unless, (i) all outstanding obligations under the Notes have been paid
in full and (ii) the Indenture Trustee has been paid all amounts to which it is
entitled hereunder.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. 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 (except with respect to
the Servicer's servicing activity in the ordinary course of its business), the
Issuer shall furnish to the Indenture Trustee (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, (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section 11.01, 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; and
(4) a statement as to whether, in the opinion of each such signatory, such
condition or covenant has been complied with.
(b) 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 11.01(a) or elsewhere in this
Indenture, furnish to the Indenture Trustee an Officer's
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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.
(c) 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 (b) 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 (b) above and this clause (c), is 10%
or more of the Outstanding Amount of the Notes, but such a 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 Outstanding Amount of the Notes.
(d) 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.
(e) 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 (d) 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
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 (d) above and this clause (e), equals 10% or more of the Outstanding
Amount 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 Outstanding Amount of the Notes.
Section 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
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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 such officer's 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 officer or officers of the
Servicer, the Transferor, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Transferor, the Issuer or the Administrator, 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 11.03. 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
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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 11.03.
(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 Register.
(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 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of 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:
(a) 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 its Corporate Trust Office, or
(b) 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: Life Financial Home Loan Owner Trust
1997-2, in care of Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890, Attention: Emmett R. Harmon, or at
any other address previously furnished in writing to the Indenture Trustee by
the Issuer or the Administrator. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
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: 99 Church Street, New York, New York 10007,
and (ii) in
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the case of Fitch at the following address: One State Street Plaza, New York,
New York 10004; or as to any of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 11.05. 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 his 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.
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 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 a Default or Event of
Default.
Section 11.06. 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 Sections 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.
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Section 11.07. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.08. 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 11.09. 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 11.10. 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, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 11.11. 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 11.12. 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 11.13. 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 11.14. 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.
73
<PAGE>
Section 11.15. Trust 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, except as expressly provided for in
Article VI, 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, Article VII and Article VIII of the Trust Agreement.
Section 11.16. 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 Transferor, the Servicer,
or the Issuer, or join in any institution against the Transferor, the Servicer,
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.
Section 11.17. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all 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.
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<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
LIFE FINANCIAL HOME LOAN OWNER TRUST
1997-2
By: Wilmington Trust Company not in its
individual capacity but solely as
Owner Trustee
By: /s/ Emmett R. Harmon
Name: Emmett R. Harmon
Title: Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Indenture Trustee
By: /s/ Patrick Bassett
Name: Patrick Bassett
Title: Vice President
75
<PAGE>
STATE OF DELAWARE
COUNTY OF NEW CASTLE
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Emmett Rl. Harmon, known to me
to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said
WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Owner
Trustee on behalf of LIFE FINANCIAL HOME LOAN OWNER TRUST 1997-2, a Delaware
business trust, and that such person executed the same as the act of said
business trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 28th day of August, 1997.
Kathleen A. Pedelini
Notary Public in and for the State of
Delaware
(Seal)
My commission expires: October 31, 1998
76
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On September 4, 1997, before me, Marlene A. Seaholm, a Notary Public in and
for said County and State, personally appeared Patrick Bassett, proved to me on
the basis of satisfactory evidence to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Marlene A. Seaholm
Notary Public
My commission expires: Novemeber 11, 1998
77
<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------------------------
__ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. National Banking Association 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank
Sixth Street and Marquette Avenue 55479
Minneapolis, Minnesota (Zip code)
(Address of principal executive
offices)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Agent for Service)
------------------------------------
LIFE FINANCIAL HOME LOAN OWNER TRUST 1997-2
(Exact name of obligor as specified in its charter)
Delaware Not Yet Received
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
C/O Wilmington Trust 19890-0001
Rodney Square North (Zip code)
1100 North Market Street
Wilmington, DE
(Address of principal executive offices)
------------------------------------
Life Financial Home Loan Owner Trust 1997-2
Home Loan Asset Backed Notes
Series 1997-2
(Title of the indenture securities)
- -------------------------------------------------------------------------------
<PAGE>
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor
is not in default as provided under Item 13.
Item 15. Foreign Trustee. Not applicable.
Item 16. List of Exhibits. List below all exhibits filed as a part of
this Statement of Eligibility. Norwest
Bank incorporates by reference into this
Form T-1 the exhibits attached hereto.
Exhibit 1. a. A copy of the Articles of Association of
the trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of
the trustee to commence business issued
June 28, 1872, by the Comptroller of the
Currency to The Northwestern National Bank
of Minneapolis.*
b. A copy of the certificate of the
Comptroller of the Currency dated January
2, 1934, approving the consolidation of The
Northwestern National Bank of Minneapolis
and The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity
being titled Northwestern National Bank and
Trust Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January
12, 1943, as to change of corporate title
of Northwestern National Bank and Trust
Company of Minneapolis to Northwestern
National Bank of Minneapolis.*
<PAGE>
d. A copy of the letter dated May 12, 1983
from the Regional Counsel, Comptroller of
the Currency, acknowledging receipt of
notice of name change effective May 1, 1983
from Northwestern National Bank of
Minneapolis to Norwest Bank Minneapolis,
National Association.*
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks
for the Comptroller of the Currency
certifying approval of consolidation and
merger effective January 1, 1988 of Norwest
Bank Minneapolis, National Association with
various other banks under the title of
"Norwest Bank Minnesota, National
Association."*
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued January 2,
1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section
321(b) of the Act.
Exhibit 7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to exhibit number 25 filed with registration
statement number 33-66026.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 16th day of June, 1997.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Randall S. Reider
-----------------------
Randall S. Reider
Officer
<PAGE>
EXHIBIT 6
September 4, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Randall S. Reider
-----------------------
Randall S. Reider
Officer
