INDENTURE
Execution Copy
WACHOVIA ASSET SECURITIZATION, INC. 2002-HE1 TRUST,
Issuer,
and
JPMORGAN CHASE BANK,
Indenture Trustee
________________________
INDENTURE
________________________
Dated as of September 27, 2002
WACHOVIA ASSET SECURITIZATION, INC.
ASSET-BACKED NOTES, SERIES 2002-HE1
ARTICLE I Definitions................................................................................2
Section 1.01 Definitions.......................................................................2
Section 1.02 Incorporation by Reference of Trust Indenture Act.................................2
Section 1.03 Rules of Construction.............................................................2
ARTICLE II Original Issuance of Notes.................................................................3
Section 2.01 Form..............................................................................3
Section 2.02 Execution, Authentication and Delivery............................................3
ARTICLE III Covenants..................................................................................4
Section 3.01 Collection of Payments with Respect to the Mortgage Loans.........................4
Section 3.02 Maintenance of Office or Agency...................................................4
Section 3.03 Money for Payments to Be Held in Trust; Paying Agent..............................4
Section 3.04 Existence.........................................................................5
Section 3.05 Priority of Distributions; Defaulted Interest.....................................6
Section 3.06 Protection of Trust Estate........................................................8
Section 3.07 Opinions as to Trust Estate.......................................................9
Section 3.08 Performance of Obligations; Servicing Agreement...................................9
Section 3.09 Negative Covenants................................................................9
Section 3.10 Annual Statement as to Compliance................................................10
Section 3.11 Recordation of Assignments.......................................................10
Section 3.12 Representations and Warranties Concerning the Mortgage Loans.....................10
Section 3.13 Assignee of Record of the Mortgage Loans.........................................11
Section 3.14 Servicer as Agent and Bailee of the Indenture Trustee............................11
Section 3.15 Investment Company Act...........................................................11
Section 3.16 Issuer May Consolidate, etc......................................................11
Section 3.17 Successor or Transferee..........................................................13
Section 3.18 No Other Business................................................................13
Section 3.19 No Borrowing.....................................................................13
Section 3.20 Guarantees, Loans, Advances and Other Liabilities................................13
Section 3.21 Capital Expenditures.............................................................13
Section 3.22 Owner Trustee Not Liable for Certificates or Related Documents...................13
Section 3.23 Restricted Payments..............................................................14
Section 3.24 Notice of Events of Default......................................................14
Section 3.25 Further Instruments and Acts.....................................................14
Section 3.26 Statements to Noteholders........................................................14
Section 3.27 Determination of Note Rate.......................................................14
Section 3.28 Payments under the Policy........................................................15
Section 3.29 Replacement Enhancement..........................................................15
Section 3.30 Additional Representations of Issuer.............................................15
ARTICLE IV The Notes; Satisfaction And Discharge Of Indenture........................................16
Section 4.01 The Notes........................................................................16
Section 4.02 Registration of and Limitations on Transfer and Exchange of Notes;
Appointment of Certificate Registrar.............................................17
Section 4.03 Mutilated, ▇▇▇▇▇▇▇▇▇, Lost or Stolen Notes.......................................18
Section 4.04 Persons Deemed Owners............................................................19
Section 4.05 Cancellation.....................................................................19
Section 4.06 Book-Entry Notes.................................................................19
Section 4.07 Notices to Depository............................................................20
Section 4.08 Definitive Notes.................................................................20
Section 4.09 Tax Treatment....................................................................20
Section 4.10 Satisfaction and Discharge of Indenture..........................................21
Section 4.11 Application of Trust Money.......................................................22
Section 4.12 Subrogation and Cooperation......................................................22
Section 4.13 Repayment of Monies Held by Paying Agent.........................................22
Section 4.14 Temporary Notes..................................................................23
ARTICLE V Default And Remedies......................................................................23
Section 5.01 Events of Default................................................................23
Section 5.02 Acceleration of Maturity; Rescission and Annulment...............................23
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee........24
Section 5.04 Remedies; Priorities.............................................................26
Section 5.05 Optional Preservation of the Trust Estate........................................28
Section 5.06 Limitation of Suits..............................................................28
Section 5.07 Unconditional Rights of Noteholders to Receive Principal and Interest............29
Section 5.08 Restoration of Rights and Remedies...............................................29
Section 5.09 Rights and Remedies Cumulative...................................................29
Section 5.10 Delay or Omission Not a Waiver...................................................29
Section 5.11 Control by Enhancer or Noteholders...............................................29
Section 5.12 Waiver of Past Defaults..........................................................30
Section 5.13 Undertaking for Costs............................................................30
Section 5.14 Waiver of Stay or Extension Laws.................................................30
Section 5.15 Sale of Trust Estate.............................................................31
Section 5.16 Action on Notes..................................................................32
Section 5.17 Performance and Enforcement of Certain Obligations...............................33
ARTICLE VI The Indenture Trustee.....................................................................33
Section 6.01 Duties of Indenture Trustee......................................................33
Section 6.02 Rights of Indenture Trustee......................................................35
Section 6.03 Individual Rights of Indenture Trustee...........................................36
Section 6.04 Indenture Trustee's Disclaimer...................................................36
Section 6.05 Notice of Event of Default.......................................................36
Section 6.06 Reports by Indenture Trustee to Noteholders......................................36
Section 6.07 Compensation and Indemnity.......................................................37
Section 6.08 Replacement of Indenture Trustee.................................................37
Section 6.09 Successor Indenture Trustee by Merger............................................38
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee................38
Section 6.11 Eligibility; Disqualification....................................................40
Section 6.12 Preferential Collection of Claims Against Issuer.................................40
Section 6.13 Representations and Warranties...................................................40
Section 6.14 Directions to Indenture Trustee..................................................40
Section 6.15 Indenture Trustee May Own Securities.............................................41
ARTICLE VII Noteholders' Lists and Reports............................................................41
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders...........41
Section 7.02 Preservation of Information; Communications to Noteholders.......................41
Section 7.03 Reports by Issuer................................................................41
Section 7.04 Reports by Indenture Trustee.....................................................42
ARTICLE VIII Accounts, Disbursements and Releases......................................................42
Section 8.01 Collection of Money..............................................................42
Section 8.02 Trust Accounts...................................................................42
Section 8.03 Officer's Certificate............................................................43
Section 8.04 Termination Upon Distribution to Noteholders.....................................43
Section 8.05 Release of Trust Estate..........................................................43
Section 8.06 Surrender of Notes Upon Final Payment............................................44
ARTICLE IX Supplemental Indentures...................................................................44
Section 9.01 Supplemental Indentures Without Consent of Noteholders...........................44
Section 9.02 Supplemental Indentures With Consent of Noteholders..............................45
Section 9.03 Execution of Supplemental Indentures.............................................47
Section 9.04 Effect of Supplemental Indenture.................................................47
Section 9.05 Conformity with Trust Indenture Act..............................................47
Section 9.06 Reference in Notes to Supplemental Indentures....................................47
ARTICLE X Miscellaneous.............................................................................47
Section 10.01 Compliance Certificates and Opinions, etc........................................47
Section 10.02 Form of Documents Delivered to Indenture Trustee.................................49
Section 10.03 Acts of Noteholders..............................................................50
Section 10.04 Notices, etc., to Indenture Trustee, Issuer, Enhancer and Rating Agencies........50
Section 10.05 Notices to Noteholders; Waiver...................................................51
Section 10.06 Alternate Payment and Notice Provisions..........................................52
Section 10.07 Conflict with Trust Indenture Act................................................52
Section 10.08 Effect of Headings...............................................................52
Section 10.09 Successors and Assigns...........................................................52
Section 10.10 Severability.....................................................................52
Section 10.11 Benefits of Indenture............................................................52
Section 10.12 Legal Holidays...................................................................52
Section 10.13 GOVERNING LAW....................................................................52
Section 10.14 Counterparts.....................................................................53
Section 10.15 Recording of Indenture...........................................................53
Section 10.16 Issuer Obligation................................................................53
Section 10.17 No Petition......................................................................53
Section 10.18 Inspection.......................................................................53
EXHIBITS
Exhibit A.........- Form of Notes
Appendix A .......- Definitions
This Indenture, dated as of September 27, 2002, is between Wachovia Asset Securitization, Inc. 2002-HE1
Trust, a Delaware statutory trust, as issuer (the "Issuer"), and JPMorgan Chase Bank, as indenture trustee (the
"Indenture Trustee").
WITNESSETH:
Each party hereto agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Noteholders of the Issuer's Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series
2002-HE1 (the "Notes").
GRANTING CLAUSE:
The Issuer hereby Grants to the Indenture Trustee, all of the Issuer's right, title and interest in and
to all of the following: (a) the Initial Mortgage Loans and any Subsequent Mortgage Loans (together with the
Cut-Off Date Principal Balances and any Additional Balances arising thereafter to and including the date
immediately preceding the commencement of the Rapid Amortization Period), and all monies due or to become due
thereunder; (b) the Note Payment Account, and all funds on deposit or credited thereto from time to time and all
proceeds thereof; (c) the Capitalized Interest Account, and all funds on deposit or credited thereto from time to
time (other than any income thereon), and the Pre-Funding Account and the Funding Account, and all funds on
deposit or credited thereto from time to time; (d) the Policy and all hazard insurance policies; (e) all
accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment
property, letter-of-credit rights, letters of credit, money, and oil, gas and other minerals, consisting of,
arising from, or relating to, and of the foregoing; and (f) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and all payments on or under, and all proceeds of
every kind and nature whatsoever in respect of, any or all of the foregoing and all payments on or under, and all
proceeds of every kind and nature whatsoever in the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, checks,
deposit accounts, rights to payment of any and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or are included in the proceeds of any
of the foregoing (collectively, the "Trust Estate" or the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any
other amounts owing in respect of, the Notes, equally and ratably without prejudice, priority or distinction, and
to secure compliance with the provisions of this Indenture, all as provided in this Indenture.
The foregoing Grant shall inure to the benefit of the Enhancer in respect of draws made on the Policy
and amounts owing from time to time pursuant to the Insurance Agreement (regardless of whether such amounts
relate to the Notes or the Certificates), and such Grant shall continue in full force and effect for the benefit
of the Enhancer until all such amounts owing to it have been repaid in full.
Each of the Mortgage Loan Schedules is hereby incorporated by reference and made a part of this
Indenture.
The Indenture Trustee, as trustee on behalf of the Noteholders, acknowledges such ▇▇▇▇▇, accepts the
trust under this Indenture in accordance with the provisions hereof and agrees to perform its duties as Indenture
Trustee as required herein.
ARTICLE I
Definitions
Section 1.01 Definitions. For all purposes of this Indenture, except as otherwise expressly provided herein
or unless the context otherwise requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions attached hereto as Appendix A, which is incorporated by reference
herein. All other capitalized terms used herein shall have the meanings specified herein.
Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a
provision of the Trust Indenture Act (the "TIA"), such provision is incorporated by reference in and made a part
of this Indenture. The following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other obligor on the indenture
securities.
All other TIA terms used in this Indenture that are defined by ▇▇▇, 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:
(a) a term has the meaning assigned to it;
(b) 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;
(c) "or" includes "and/or";
(d) "including" means "including without limitation";
(e) words in the singular include the plural and words in the plural include the singular;
(f) the term "proceeds" has the meaning ascribed thereto in the UCC; and
(g) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate
delivered in connection herewith means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are also to its permitted successors and
assigns.
ARTICLE II
Original Issuance of Notes
Section 2.01 Form. The Notes together with the Indenture Trustee's certificate of authentication, shall be
in substantially the form set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by
the officers executing the 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 such Note.
The Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of
these methods, all as determined by the Authorized Officers executing such Notes, as evidenced by their execution
of such Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of this Indenture.
Section 2.02 Execution, Authentication and Delivery. The Notes shall be executed on behalf of the Issuer by
any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were at any time Authorized Officers
of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold
such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of
such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver Notes for original issue in an
aggregate initial principal amount of $950,000,000. The Class A Notes shall have an initial principal amount of
$950,000,000.
Each Note shall be dated the date of its authentication. The Notes shall be issuable as registered
Notes, and the Notes shall be issuable in minimum denominations of $25,000 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.
ARTICLE III
Covenants
Section 3.01 Collection of Payments with Respect to the Mortgage Loans. The Indenture Trustee shall
establish and maintain with itself the Note Payment Account in which the Indenture Trustee shall, subject to the
terms of this paragraph, deposit, on the same day as it is received from the Servicer, each remittance received
by the Indenture Trustee with respect to the Mortgage Loans. The Indenture Trustee shall distribute all payments
of principal of and interest on the Notes, subject to Section 3.03 as provided in Section 3.05 herein from monies
on deposit in the Note Payment Account.
Section 3.02 Maintenance of Office or Agency. The Issuer will maintain in the City of New York, New York,
an office or agency where, subject to satisfaction of conditions set forth herein, Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes
and this Indenture may be served. The Issuer hereby initially appoints the Indenture Trustee to serve as its
agent for the foregoing purposes. If at any time the Issuer shall fail to maintain any such office or agency or
shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03 Money for Payments to Be Held in Trust; Paying Agent. As provided in Section 3.01, all
payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the
Note Payment Account pursuant to Section 3.01 shall be made on behalf of the Issuer by the Indenture Trustee or
by the Paying Agent, and no amounts so withdrawn from the Note Payment Account for payments of Notes shall be
paid over to the Issuer except as provided in this Section 3.03. The Issuer hereby appoints the Indenture
Trustee to act as initial Paying Agent hereunder. The Issuer will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall
agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section 3.03, that such Paying Agent will:
(a) 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;
(b) give the Indenture Trustee and the Enhancer written notice of any default by the Issuer of which it has
actual knowledge in the making of any payment required to be made with respect to the Notes;
(c) at any time during the continuance of any such default, upon the written request of the Indenture
Trustee, except in the case where the same party is both the Indenture Trustee and the Paying Agent, in which
case no such written request will be needed, forthwith pay to the Indenture Trustee all sums so held in trust by
such Paying Agent;
(d) immediately resign as Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in
trust for the payment of Notes, if at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment;
(e) comply with all requirements of the Code with respect to the withholding from any payments made by it on
any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith; and
(f) deliver to the Indenture Trustee, except in the case where the same party is both the Indenture Trustee
and the Paying Agent, in which case no such delivery is required, a copy of the statement to Noteholders prepared
with respect to each Payment Date by the Servicer pursuant to Section 4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, by Issuer Request direct any Paying Agent to pay to the Indenture Trustee all
sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the
Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or
any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for
one year after such amount has become due and payable shall be discharged from such trust and be paid to the
Issuer on Issuer Request; and the Noteholder 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 written direction of the Issuer cause to be published once, in an Authorized
Newspaper, notice that such money remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be
repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the expense and written direction of
the Issuer, any other reasonable means of notification of such repayment (including, but not limited to, mailing
notice of such repayment to Noteholders the Notes which have been called but have not been surrendered for
redemption or whose right to or interest in monies due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Noteholder).
Section 3.04 Existence. The Issuer will keep in full effect its existence, rights and franchises as a
statutory trust under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is
or becomes, organized under the laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Mortgage Loans
and each other instrument or agreement included in the Trust Estate.
Section 3.05 Priority of Distributions; Defaulted Interest.
(a) In accordance with Section 3.04(b) of the Servicing Agreement, the priority of distributions on each
Payment Date from Principal Collections and Interest Collections with respect to the Mortgage Loans, any optional
advance of delinquent principal and/or interest on the Mortgage Loans made by the Servicer in respect of the
related Collection Period, any Deficiency Amount with respect to Mortgage Loans or the Notes deposited into the
Note Payment Account (to be applied solely with respect to the payment of amounts described in clauses (ii) and
(vii) under this paragraph (a), and any amounts transferred to the Note Payment Account from the Pre-Funding
Account, the Funding Account and/or the Capitalized Interest Account pursuant to Sections 3.18, 3.19 and 3.20 of
the Servicing Agreement, is as follows:
(i) from available Interest Collections (exclusive of the pro rata portion of interest attributable to
Additional Balances represented by the Additional Balance Increase Amount that have been withdrawn from
the Custodial Account pursuant to Section 3.04(a) of the Servicing Agreement), to the Enhancer, the
amount of the premium for the Policy and any unpaid premium for the Policy, with interest thereon as
provided in the Insurance Agreement;
(ii) from any remaining Interest Collections (exclusive of the pro rata portion of interest attributable to
Additional Balances represented by the Additional Balance Increase Amount), excluding any Relief Act
Shortfalls allocated thereto pursuant to Section 3.05(e), and any Deficiency Amount with respect to the
Notes deposited into the Note Payment Account pursuant to Section 3.28(a)(ii), to the Note Payment
Account, for payment by the Paying Agent to the Noteholders, interest for the related Interest Period at
the related Note Rate on the Note Balance immediately prior to such Payment Date;
(iii) during the Revolving Period, to the Funding Account, Principal Collections, to the extent not previously
applied to purchase Additional Balances during the related Collection Period and that have been
withdrawn from the Custodial Account pursuant to Section 3.04(d) of the Servicing Agreement;
(iv) during the Revolving Period, to the Funding Account, from Excess Spread, the amount necessary to be
applied on such Payment Date so that the Overcollateralization Amount is not less than the
Overcollateralization Target Amount;
(v) during the Amortization Periods, to the Note Payment Account, from Excess Spread, the amount necessary
to be applied on such Payment Date for payment by the Paying Agent to the Noteholders, so that the
Overcollateralization Amount is not less than the Overcollateralization Target Amount;
(vi) at the request of the holders of the Certificates, from remaining Excess Spread and during the Managed
Amortization Period, from Principal Collections, to the Distribution Account, for distribution to the
holders of the Certificates, an amount equal to the Additional Balance Increase Amount;
(vii) to the Note Payment Account, the Principal Distribution Amount for payment by the Paying Agent to the
Noteholders, including any amount on deposit in the Note Payment Account on such Payment Date pursuant
to Section 3.28(a)(iii);
(viii) to the Enhancer, to reimburse it for prior draws made on the Policy, with interest thereon as provided
in the Insurance Agreement;
(ix) to the Note Payment Account from remaining Excess Spread, any Liquidation Loss Amounts (other than
amounts allocated in respect of the Excluded Amount) not otherwise covered by payments pursuant to
clauses (v) or (vii) above on such Payment Date or prior Payment Dates, for payment by the Paying Agent
to the Noteholders;
(x) to the Enhancer, any other amounts owed to the Enhancer pursuant to the Insurance Agreement;
(xi) to the Note Payment Account from any remaining Excess Spread, for payment by the Paying Agent to the
Noteholders any Interest Shortfalls, together with interest thereon at the Note Rate (as adjusted from
time to time);
(xii) to the Indenture Trustee, any amounts owing to the Indenture Trustee pursuant to Section 6.07 to the
extent remaining unpaid; and
(xiii) any remaining amount, to the Distribution Account, for distribution to the holders of the Certificates
by the Certificate Paying Agent in accordance with the Trust Agreement.
For purposes of the foregoing, the Note Balance on each Payment Date during the Amortization Periods
will be reduced (any such reduction, an "Unpaid Principal Amount") by the Liquidation Loss Amounts (other than
amounts allocated in respect of the Excluded Amount) for such Payment Date, but only to the extent that such
Liquidation Loss Amounts are not otherwise covered by payments made pursuant to clauses (v), (vii), or (ix)
above, or by a draw on the Policy, and the Overcollateralization Amount is zero.
(b) On each Payment Date, the Paying Agent shall apply, from amounts on deposit in the Note Payment Account,
and in accordance with the Servicing Certificate, the amounts set forth above in the order of priority set forth
in Section 3.05(a).
(c) Amounts paid to Noteholders shall be paid in respect of the Notes in accordance with the applicable
percentage as set forth in paragraph (d) below. Interest on the Notes will be computed on the basis of the
actual number of days in each Interest Period and a 360-day year. Any installment of interest or principal
payable on any Note that is punctually paid or duly provided for by the Issuer on the applicable Payment Date
shall be paid to the Noteholder of record thereof on the immediately preceding Record Date by wire transfer to an
account specified in writing by such Noteholder reasonably satisfactory to the Indenture Trustee, or by check or
money order mailed to such Noteholder at such Noteholder's address appearing in the Note Register, the amount
required to be distributed to such Noteholder on such Payment Date pursuant to such Noteholder's Notes; provided,
that the Indenture Trustee shall not pay to any such Noteholder any amounts required to be withheld from a
payment to such Noteholder by the Code.
(d) Principal of each Note shall be due and payable in full on the Final Payment Date as provided in the
applicable form of Note set forth in Exhibit A. All principal payments on the Notes shall be made in accordance
with the priorities set forth in paragraphs (a) and (b) above to the Noteholders entitled thereto in accordance
with the related Percentage Interests represented thereby. Upon written notice to the Indenture Trustee by the
Issuer, the Indenture Trustee shall notify the Person in the name of which a Note is registered at the close of
business on the Record Date preceding the Final Payment Date or other final Payment Date, as applicable. Such
notice shall be mailed no later than five Business Days prior to the Final Payment Date or such other final
Payment Date and, unless such Note is then a Book-Entry Note, shall specify that payment of the principal amount
and any interest due with respect to such Note at the Final Payment Date or such other final Payment Date will be
payable only upon presentation and surrender of such Note, and shall specify the place where such Note may be
presented and surrendered for such final payment.
On each Payment Date, the Overcollateralization Amount available to cover any Liquidation Loss Amounts
(other than amounts allocated in respect of the Excluded Amount) on such Payment Date shall be deemed to be
reduced by an amount equal to such Liquidation Loss Amounts (except to the extent that such Liquidation Loss
Amounts were covered on such Payment Date by a payment in respect of Liquidation Loss Amounts).
(e) With respect to any Payment Date, interest payments on the Notes will be reduced by any Relief Act
Shortfalls for the related Collection Period on a pro rata basis in accordance with the amount of interest
payable on the Notes on such Payment Date, absent such reduction.
Section 3.06 Protection of Trust Estate.
(a) The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the priority thereof) of this Indenture or
carry out more effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;
(iii) cause the Trust to enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of the Indenture Trustee and the
Noteholders in such Trust Estate against the claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture Trustee shall not remove any portion of
the Trust Estate that consists of money or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of Counsel delivered pursuant to
Section 3.07 (or from the jurisdiction in which it was held as described in the Opinion of Counsel delivered at
the Closing Date pursuant to Section 3.07, if no Opinion of Counsel has yet been delivered pursuant to
Section 3.07) unless the Indenture Trustee shall have first received an Opinion of Counsel to the effect that the
lien and security interest created by this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
Section 3.07 Opinions as to Trust Estate.
On the Closing Date, the Issuer shall furnish to the Indenture Trustee, the Enhancer and the Owner
Trustee an Opinion of Counsel at the expense of the Issuer stating that, upon delivery of the Loan Agreements
relating to the Initial Mortgage Loans to the Indenture Trustee or the Servicer, in the State of North Carolina,
the Indenture Trustee will have a perfected, first priority security interest in such Mortgage Loans.
On or before December 31st in each calendar year, beginning in 2002, the Issuer shall furnish to the
Indenture Trustee and the Enhancer an Opinion of Counsel at the expense of the Issuer either stating that, in the
opinion of such counsel, no further action is necessary to maintain a perfected, first priority security interest
in the Mortgage Loans until December 31 in the following calendar year or, if any such action is required to
maintain such security interest in the Mortgage Loans, 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 security interest in the Mortgage Loans until December 31 in
the following calendar year.
Section 3.08 Performance of Obligations; Servicing Agreement.
(a) The Issuer shall punctually perform and observe all of its obligations and agreements contained in this
Indenture, the Basic Documents and in the instruments and agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in performing its duties under this Indenture,
and any performance of such duties by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer shall not take any action or permit any action to be taken by others that would release any
Person from any of such Person's covenants or obligations under any of the documents relating to the Mortgage
Loans or under any instrument included in the Trust Estate, or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or effectiveness of, any of the documents
relating to the Mortgage Loans or any such instrument, except such actions as the Servicer is expressly permitted
to take in the Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into contracts with other Persons for the
performance of the Issuer's obligations hereunder, and performance of such obligations by such Persons shall be
deemed to be performance of such obligations by the Issuer.
Section 3.09 Negative Covenants. So long as any Notes are Outstanding, the Issuer shall not:
(a) except as expressly permitted by this Indenture, sell, transfer, exchange or otherwise dispose of the
Trust Estate, unless directed to do so by the Indenture Trustee pursuant to Section 5.04 hereof;
(b) claim any credit on, or make any deduction from the principal or interest payable in respect of, the
Notes (other than amounts properly withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Trust
Estate;
(c) (i) 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, (ii) permit any lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof or (iii) permit the
lien of this Indenture not to constitute a valid first priority security interest in the Trust Estate; or
(d) impair or cause to be impaired the Issuer's interest in the Mortgage Loans, the Purchase Agreement or in
any other Basic Document, if any such action would materially and adversely affect the interests of the
Noteholders.
Section 3.10 Annual Statement as to Compliance. The Issuer shall deliver to the Indenture Trustee and the
Enhancer, within 120 days after the end of each fiscal year of the Issuer (commencing with the fiscal year ending
on December 31, 2002), an Officer's Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(a) a review of the activities of the Issuer during such year and of its performance under this Indenture
and the Trust Agreement has been made under such Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on such review, the Issuer has complied with
all conditions and covenants under this Indenture and the provisions of the Trust Agreement throughout such year,
or, if there has been a default in its compliance with any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status thereof.
Section 3.11 Recordation of Assignments. The Issuer shall enforce the obligation, if any, of the Seller
under the Purchase Agreement to submit or cause to be submitted for recordation all Assignments of Mortgages
within 60 days of receipt of recording information by the Servicer.
Section 3.12 Representations and Warranties Concerning the Mortgage Loans. The Indenture Trustee, as
pledgee of the Mortgage Loans, shall have the benefit of the representations and warranties made by the Seller in
Sections 3.1 of the Purchase Agreement, concerning the Mortgage Loans and the right to enforce the remedies
against the Seller provided in such Section 3.1, as applicable, to the same extent as though such representations
and warranties were made directly to the Indenture Trustee.
Section 3.13 Assignee of Record of the Mortgage Loans. As pledgee of the Mortgage Loans, the Indenture
Trustee shall hold title to the Mortgage Loans by being named as payee in the endorsements or assignments of the
Loan Agreements and assignee in the Assignments of Mortgage to be delivered under Section 2.1 of the Purchase
Agreement. Except as expressly provided in the Purchase Agreement or in the Servicing Agreement with respect to
any specific Mortgage Loan, the Indenture Trustee shall not execute any endorsement or assignment or otherwise
release or transfer such title to any of the Mortgage Loans until such time as the remaining Trust Estate may be
released pursuant to Section 8.05(b). The Indenture Trustee's holding of such title shall in all respects be
subject to its fiduciary obligations to the Noteholders hereunder.
Section 3.14 Servicer as Agent and Bailee of the Indenture Trustee. Solely for purposes of perfection under
Section 9-313 or 9-314 of the UCC or other similar applicable law, rule or regulation of the state in which such
property is held by the Servicer, the Issuer and the Indenture Trustee hereby acknowledge that the Servicer is
acting as agent and bailee of the Indenture Trustee in holding amounts on deposit in the Custodial Account
pursuant to Section 3.03 of the Servicing Agreement that are allocable to the Mortgage Loans, as well as the
agent and bailee of the Indenture Trustee in holding any Related Documents released to the Servicer pursuant to
Section 3.07(b) of the Servicing Agreement, and any other items constituting a part of the Trust Estate which
from time to time come into the possession of the Servicer. It is intended that, by the Servicer's acceptance of
such agency pursuant to Section 3.03 of the Servicing Agreement, the Indenture Trustee, as a pledgee of the
Mortgage Loans, will be deemed to have possession of such Related Documents, such monies and such other items for
purposes of Section 9-313 or 9-314 of the UCC of the state in which such property is held by the Servicer.
Section 3.15 Investment Company Act. The Issuer shall not become an "investment company" or under the
"control" of an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended
(or any successor or amendatory statute), and the rules and regulations thereunder (taking into account not only
the general definition of the term "investment company" but also any available exceptions to such general
definition); provided, however, that the Issuer shall be in compliance with this Section 3.15 if it shall have
obtained an order exempting it from regulation as an "investment company" so long as it is in compliance with the
conditions imposed in such order.
Section 3.16 Issuer May Consolidate, etc.
(a) The Issuer shall not consolidate or merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall be a
Person organized and existing under the laws of the United States of America or any state or the
District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form reasonably satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and to the Certificate Paying Agent,
on behalf of the Certificateholders and the performance or observance of every agreement and covenant of
this Indenture on the part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Event of Default shall have occurred and be
continuing;
(iii) the Enhancer shall have consented thereto and each Rating Agency shall have notified the Issuer that
such transaction will not cause a Rating Event, without taking into account the Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the
Indenture Trustee and the Enhancer) to the effect that such transaction will not have any material
adverse tax consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and security interest created by this Indenture shall
have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee and the Enhancer an Officer's Certificate and
an Opinion of Counsel each stating that such consolidation or merger and such supplemental indenture
comply with this Article III and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or assets, including those included in the
Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the properties and assets of the Issuer the
conveyance or transfer of which is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or any state, (B) expressly
assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided herein, (C) expressly agrees by means of
such supplemental indenture that all right, title and interest so conveyed or transferred shall be
subject and subordinate to the rights of Noteholders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify, defend and hold harmless the Issuer against and
from any loss, liability or expense arising under or related to this Indenture and the Notes and (E)
expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons,
then one specified Person) shall make all filings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred
and be continuing;
(iii) the Enhancer shall have consented thereto, and each Rating Agency shall have notified the Issuer that
such transaction will not cause a Rating Event, if determined without regard to the Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will not have any material adverse tax
consequence to the Issuer or any Noteholder;
(v) any action that is necessary to maintain the lien and security interest created by this Indenture shall
have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to such transaction have been
complied with (including any filing required by the Exchange Act).
Section 3.17 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with Section 3.16(a), the Person formed by
or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person
had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the Issuer pursuant to
Section 3.16(b), the Issuer shall be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately upon the delivery of written notice
to the Indenture Trustee of such conveyance or transfer.
Section 3.18 No Other Business. The Issuer shall not engage in any business other than financing,
purchasing, owning and selling and managing the Mortgage Loans and the issuance of the Notes and Certificates in
the manner contemplated by this Indenture and the Basic Documents and all activities incidental thereto.
Section 3.19 No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable,
directly or indirectly, for any indebtedness except for the Notes.
Section 3.20 Guarantees, Loans, Advances and Other Liabilities. Except as contemplated by this Indenture or
the other Basic Documents, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation
or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly,
in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 3.21 Capital Expenditures. The Issuer shall not make any expenditure (by long-term or operating
lease or otherwise) for capital assets (either realty or personalty).
Section 3.22 Owner Trustee Not Liable for Certificates or Related Documents. The recitals contained herein
shall be taken as the statements of the Issuer, and the Owner Trustee and the Indenture Trustee assume no
responsibility for the correctness of the recitals contained herein. The Owner Trustee and the Indenture Trustee
make no representations as to the validity or sufficiency of this Indenture or any other Basic Document, of the
Certificates (other than the signatures of the Owner Trustee or the Indenture Trustee on the Certificates) or the
Notes, or of any Related Documents. The Owner Trustee and the Indenture Trustee shall at no time have any
responsibility or liability with respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under the Trust Agreement or the Noteholders under this
Indenture, including, the compliance by the Depositor or the Seller with any warranty or representation made
under any Basic Document or in any related document or the accuracy of any such warranty or representation, or
any action of the Certificate Paying Agent, the Certificate Registrar or any other person taken in the name of
the Owner Trustee or the Indenture Trustee.
Section 3.23 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, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer may make, or cause to be made, (x)
distributions to the Owner Trustee and the Certificateholders as contemplated by, and to the extent funds are
available for such purpose under, the Trust Agreement and (y) payments to the Servicer pursuant to the terms of
the Servicing Agreement. The Issuer will not, directly or indirectly, make payments to or distributions from the
Custodial Account except in accordance with this Indenture and the other Basic Documents.
Section 3.24 Notice of Events of Default. The Issuer shall give the Indenture Trustee, the Enhancer and the
Rating Agencies prompt written notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.25 Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer shall execute
and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry
out more effectively the purposes of this Indenture.
Section 3.26 Statements to Noteholders. On each Payment Date, each of the Indenture Trustee and the
Certificate Registrar shall make available to the Depositor, the Owner Trustee, each Rating Agency, each
Noteholder and each Certificateholder, with a copy to the Enhancer, the Servicing Certificate provided to the
Indenture Trustee by the Servicer relating to such Payment Date and delivered pursuant to Section 4.01 of the
Servicing Agreement.
The Indenture Trustee will make the Servicing Certificate (and, at its option, any additional files
containing the same information in an alternative format) available each month to Securityholders and the
Enhancer, and other parties to this Indenture via mail, courier, facsimile transmission, email, the Indenture
Trustee's internet website or other electronic means. The Indenture Trustee's internet website shall initially
be located at "▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇". Assistance in using the website can be obtained by calling the
Indenture Trustee's customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇. The Indenture Trustee shall have the right to
change the way the statement to Securityholders are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Indenture Trustee shall provide timely and
adequate notification to all above parties regarding any such changes. The Indenture Trustee may require
registration and acceptance of a disclaimer in connection with providing access to its website.
Section 3.27 Determination of Note Rate. On the second LIBOR Business Day immediately preceding (i) the
Closing Date in the case of the first Interest Period and (ii) the first day of each succeeding Interest Period,
the Indenture Trustee shall determine LIBOR and the Note Rate for such Interest Period and shall inform the
Issuer, the Servicer and the Depositor by means facsimile transmission, in writing or other electronic means.
Section 3.28 Payments under the Policy.
(a) (i) If the Servicing Certificate specifies a Deficiency Amount for any Payment Date, the Indenture
Trustee shall make a draw on the Policy in an amount specified in the Servicing Certificate for such Payment Date
or, if no amount is specified, the Indenture Trustee shall make a draw on the Policy in the amount by which the
amount on deposit in the Note Payment Account is less than interest due on the Notes on such Payment Date.
(ii) The Indenture Trustee shall deposit or cause to be deposited such draw on the Policy
into the Note Payment Account on such Payment Date to the extent such amount relates to clause (a) of the
definition of "Deficiency Amount."
(iii) To the extent such amount relates to clause (b) of the definition of "Deficiency
Amount," the Indenture Trustee shall (i) during the Revolving Period, deposit such amount into the Funding
Account as Principal Collections and (ii) during the Amortization Periods, deposit such amount into the Note
Payment Account.
(b) The Indenture Trustee shall submit, if a Deficiency Amount is specified in any statement to
Securityholders prepared pursuant to Section 4.01 of the Servicing Agreement, the Notice of Nonpayment and Demand
for Payment of Insured Amounts (in the form attached as Exhibit A to the Policy) to the Enhancer no later than
12:00 noon, New York City time, on the second (2nd) Business Day prior to the applicable Payment Date.
Section 3.29 Replacement Enhancement. The Issuer (or the Servicer on its behalf) may, at its expense, in
accordance with and upon satisfaction of the conditions set forth herein, but shall not be required to, obtain a
surety bond, letter of credit, guaranty or reserve account as a Permitted Investment for amounts on deposit in
the Capitalized Interest Account, or may arrange for any other form of additional credit enhancement; provided,
that after prior notice thereto, no Rating Agency shall have informed the Issuer that a Rating Event would occur
as a result thereof (without taking the Policy into account); and provided further, that the issuer of any such
instrument or facility and the timing and mechanism for drawing on such additional enhancement shall be
acceptable to the Indenture Trustee and the Enhancer. It shall be a condition to procurement of any such
additional credit enhancement that there be delivered to the Indenture Trustee and the Enhancer (a) an Opinion of
Counsel, acceptable in form to the Indenture Trustee and the Enhancer, from counsel to the provider of such
additional credit enhancement with respect to the enforceability thereof and such other matters as the Indenture
Trustee or the Enhancer may require and (b) an Opinion of Counsel to the effect that the procurement of such
additional enhancement would not (i) adversely affect in any material respect the tax status of the Notes or the
Certificates or (ii) cause the Issuer to be taxable as an association (or a publicly traded partnership) for
federal income tax purposes or to be classified as a taxable mortgage pool within the meaning of Section 7701(i)
of the Code.
Section 3.30 Additional Representations of Issuer.
The Issuer hereby represents and warrants to the Indenture Trustee that as of the Closing Date:
(a) This Indenture creates a valid and continuing security interest (as defined in the applicable UCC) in
the Mortgage Notes in favor of the Indenture Trustee, which security interest is prior to all other Liens (except
as expressly permitted otherwise in this Indenture), and is enforceable as such as against creditors of and
purchasers from the Issuer.
(b) The Mortgage Notes constitute "instruments" within the meaning of the applicable UCC.
(c) The Issuer owns and has good and marketable title to the Mortgage Notes free and clear of any Lien of
any Person.
(d) The original executed copy of each Loan Agreement (except for any Loan Agreement with respect to which a
Lost Note Affidavit has been delivered to the Servicer) has been delivered to the Servicer.
(e) The Issuer has received a written acknowledgment from the Servicer that the Servicer (in the capacity
described in Section 3.14 hereof) is acting solely as agent of the Indenture Trustee for the benefit of the
Noteholders.
(f) Other than the security interest granted to the Indenture Trustee pursuant to this Indenture, the Issuer
has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Mortgage Notes.
The Issuer has not authorized the filing of and is not aware of any financing statements against the Issuer that
include a description of collateral covering the Mortgage Notes other than any financing statement relating to
the security interest granted to the Indenture Trustee hereunder or any security interest that has been
terminated. The Issuer is not aware of any judgment or tax lien filings against the Issuer.
(g) None of the Mortgage Notes has any marks or notations indicating that they have been pledged, assigned
or otherwise conveyed to any Person other than the Indenture Trustee, except for (i) any endorsements that are
part of a complete chain of endorsements from the originator of the Mortgage Note to the Indenture Trustee, and
(ii) any marks or notations pertaining to Liens that have been terminated or released.
ARTICLE IV
The Notes; Satisfaction And Discharge Of Indenture
Section 4.01 The Notes.
The Notes shall be registered in the name of a nominee designated by the Depository. Beneficial Owners
will hold interests in the Notes through the book-entry facilities of the Depository in the minimum initial Note
Balance of $25,000 and integral multiples of $1,000 in excess thereof.
The Indenture Trustee may for all purposes (including the making of payments due on the Notes) deal with
the Depository as the authorized representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Noteholders hereunder. Except as provided in the next succeeding paragraph
of this Section 4.01, the rights of Beneficial Owners with respect to the Notes shall be limited to those
established by law and agreements between such Beneficial Owners and the Depository and Depository Participants.
Except as provided in Section 4.08, Beneficial Owners shall not be entitled to definitive certificates for the
Notes as to which they are the Beneficial Owners. Requests and directions from, and votes of, the Depository as
Noteholder of the Notes shall not be deemed inconsistent if they are made with respect to different Beneficial
Owners. The Indenture Trustee may establish a reasonable record date in connection with solicitations of
consents from or voting by Noteholders and give notice to the Depository of such record date. Without the
consent of the Issuer and the Indenture Trustee, no Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Note for the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as Depository, the Indenture Trustee, at
the request of the Servicer and with the approval of the Issuer may appoint a successor Depository. If no
successor Depository has been appointed within 30 days of the effective date of the Depository's resignation or
removal, each Beneficial Owner shall be entitled to certificates representing the Notes it beneficially owns in
the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer by the Owner Trustee, not in its
individual capacity but solely as Owner Trustee and upon Issuer Order, authenticated by the Note Registrar and
delivered by the Indenture Trustee to or upon the order of the Issuer.
Section 4.02 Registration of and Limitations on Transfer and Exchange of Notes; Appointment of Certificate
Registrar. The Issuer shall cause to be kept at the Indenture Trustee's Corporate Trust Office a Note Register
in which, subject to such reasonable regulations as it may prescribe, the Note Registrar shall provide for the
registration of Notes and of transfers and exchanges of Notes as herein provided. The Issuer hereby appoints the
Indenture Trustee as the initial Note Registrar.
Subject to the restrictions and limitations set forth below, upon surrender for registration of transfer
of any Note at the Corporate Trust Office, the Issuer shall execute, and the Note Registrar shall authenticate
and deliver, in the name of the designated transferee or transferees, one or more new Notes in the authorized
initial Note Balance evidencing the same aggregate Percentage Interests.
Subject to the foregoing, at the option of the Noteholders, Notes may be exchanged for other Notes of
like tenor, in each case in the authorized initial Note Balance evidencing the same aggregate Percentage
Interests, upon surrender of the Notes to be exchanged at the Corporate Trust Office of the Note Registrar.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute and the Note Registrar shall
authenticate and deliver the Notes which the Noteholder making the exchange is entitled to receive. Each Note
presented or surrendered for registration of transfer or exchange shall (if so required by the Note Registrar) be
duly endorsed by, or be accompanied by a written instrument of transfer in form reasonably satisfactory to the
Note Registrar duly executed by, the Noteholder thereof or his attorney duly authorized in writing with such
signature guaranteed by a commercial bank or trust company located or having a correspondent located in The City
of New York. Notes delivered upon any such transfer or exchange will evidence the same obligations, and will be
entitled to the same rights and privileges, as the Notes surrendered.
No service charge shall be imposed for any registration of transfer or exchange of Notes, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes.
All Notes surrendered for registration of transfer and exchange shall be cancelled by the Note Registrar
and delivered to the Indenture Trustee for subsequent destruction without liability on the part of either.
The Issuer hereby appoints the Indenture Trustee as Certificate Registrar to keep at its Corporate Trust
Office a Certificate Register pursuant to Section 3.13 of the Trust Agreement in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges thereof pursuant to Section 3.09 of the Trust Agreement. The
Indenture Trustee hereby accepts such appointment.
Each purchaser of a Note, by its acceptance of the Note, shall be deemed to have represented that the
acquisition of such Note by the purchaser does not constitute or give rise to a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code, for which no statutory, regulatory or administrative exemption
is available.
Section 4.03 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
required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and provided that the requirements of Section 8-405 of the UCC are met, the Issuer shall execute, and upon its
written request the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note 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, instead of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen Note
when so due or payable without surrender thereof. If, after the delivery of such replacement Note or payment of
a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of the
original Note in lieu of which such replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the Issuer may require the payment by
the Noteholder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee)
connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in replacement of any mutilated, destroyed,
lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not
the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled
to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude (to the extent lawful) all other
rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04 Persons Deemed Owners. Prior to due presentment for registration of transfer of any Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose
name any Note is registered (as of the day of determination) as the owner of such Note for the purpose of
receiving payments of principal of and interest, if any, on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and none of the Issuer, the Indenture Trustee or any agent of the Issuer or
the Indenture Trustee shall be affected by notice to the contrary.
Section 4.05 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 by the Indenture Trustee. The Issuer may at any time deliver to the
Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer
may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section 4.05, except as expressly permitted by this Indenture. All cancelled Notes may be held or
disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at
the time unless the Issuer shall direct by an Issuer Request that they be destroyed or returned to it; provided,
however, that such Issuer Request is timely and the Notes have not been previously disposed of by the Indenture
Trustee.
Section 4.06 Book-Entry Notes. The Notes, upon original issuance, shall be issued in the form of
typewritten Notes representing the Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Depository, by, or on behalf of, the Issuer. Such Notes shall initially be registered on the Note Register in
the name of Cede & Co., the nominee of the initial Depository, and no Beneficial Owner shall receive a Definitive
Note representing such Beneficial Owner's interest in such Note, except as provided in Section 4.08. Unless and
until definitive, fully registered Notes (the "Definitive Notes") have been issued to Beneficial Owners pursuant
to Section 4.08:
(a) the provisions of this Section 4.06 shall be in full force and effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled to deal with the Depository for all
purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and shall have no obligation to the
Beneficial Owners;
(c) to the extent that the provisions of this Section 4.06 conflict with any other provisions of this
Indenture, the provisions of this Section 4.06 shall control;
(d) the rights of Beneficial Owners shall be exercised only through the Depository and shall be limited to
those established by law and agreements between such Owners of Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to Section 4.08, the initial Depository will
make book-entry transfers among the Depository Participants and receive and transmit payments of principal of and
interest on the Notes to such Depository Participants; and
(e) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of
Noteholders of Notes evidencing a specified percentage of the Note Balance of the Notes, the Depository shall be
deemed to represent such percentage only to the extent that it has received instructions to such effect from
Beneficial Owners and/or Depository Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions to the Indenture Trustee.
Section 4.07 Notices to Depository. Whenever a notice or other communication to the Noteholders of the
Notes is required under this Indenture, unless and until Definitive Notes shall have been issued to Beneficial
Owners pursuant to Section 4.08, the Indenture Trustee shall give all such notices and communications specified
herein to be given to Noteholders of the Notes to the Depository, and shall have no obligation to the Beneficial
Owners.
Section 4.08 Definitive Notes. If (i) in the actual knowledge of a Responsible Officer of the Indenture
Trustee the Depository is no longer willing or able to properly discharge its responsibilities with respect to
the Notes and the Indenture Trustee is unable to locate a qualified successor, (ii) after the occurrence of an
Event of Default, Beneficial Owners of Notes representing beneficial interests aggregating at least a majority of
the Note Balance of the Notes advise the Depository in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Beneficial Owners, then the Depository shall
notify all Beneficial Owners and the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same. Upon surrender to the Indenture
Trustee of the typewritten Notes representing the Book-Entry Notes by the Depository, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Depository. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions, and each 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 Noteholders of the Definitive Notes as Noteholders.
Section 4.09 Tax Treatment. The Issuer has entered into this Indenture, and the Notes will be issued, with
the intention that, for federal, state and local income, single business and franchise tax purposes, the Notes
will be treated as indebtedness for purposes of such taxes. The Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of its Note (and each Beneficial Owner by its acceptance of an interest in the
applicable Book-Entry Note), agree to treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness for purposes of such taxes.
Section 4.10 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) Sections 3.03, 3.04, 3.06, 3.09, 3.16, 3.18 and 3.19, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07
and the obligations of the Indenture Trustee under Section 4.11) and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any
of them, and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when:
(a) either:
(i) 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 4.03 and (ii) Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section 3.03) have been delivered to the Indenture
Trustee for cancellation; or
(ii) all Notes not theretofore delivered to the Indenture Trustee for cancellation:
(A) have become due and payable;
(B) will become due and payable at the Final Payment Date within one year; or
(C) have been declared immediately due and payable pursuant to Section 5.02.
and the Issuer, in the case of Section 4.10(a)(ii)(A) or (B) above, has irrevocably deposited or caused
to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Notes and Certificates then outstanding not theretofore delivered to the Indenture
Trustee for cancellation when due on the Final Payment Date, as evidenced to the Indenture Trustee by an
accountant's letter or an Officer's Certificate of the Issuer;
(iii) the Issuer has paid or caused to be paid all other sums payable hereunder and under
the Insurance Agreement by the Issuer; and
(iv) the Issuer has delivered to the Indenture Trustee and the Enhancer an Officer's Certificate and an
Opinion of Counsel, each meeting the applicable requirements of Section 10.01 and each stating that all
conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been
complied with and, if the Opinion of Counsel relates to a deposit made in connection with Section 4.10(a)(ii)(B)
above, such opinion shall further be to the effect that such deposit will not have any material adverse tax
consequences to the Issuer, any Noteholders or any Certificateholders.
Section 4.11 Application of Trust Money. All monies deposited with the Indenture Trustee pursuant to
Section 4.10 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent or Certificate Paying Agent, as the
Indenture Trustee may determine, to the Securityholders of Securities, of all sums due and to become due thereon
for principal and interest; but such monies need not be segregated from other funds except to the extent required
herein or required by law.
Section 4.12 Subrogation and Cooperation.
(a) The Issuer and the Indenture Trustee acknowledge that (i) to the extent the Enhancer makes payments
under the Policy on account of principal of or interest on the Mortgage Loans, the Enhancer will be fully
subrogated to the rights the Noteholders to receive such principal of and interest on the Mortgage Loans, and
(ii) the Enhancer shall be paid such principal and interest only from the sources and in the manner provided
herein and in the Insurance Agreement for the payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any reasonable request by the Enhancer for
action to preserve or enforce the Enhancer's rights or interest under this Indenture or the Insurance Agreement,
consistent with this Indenture and without limiting the rights of the Noteholders as otherwise set forth in the
Indenture, including upon the occurrence and continuance of a default under the Insurance Agreement, a request
(which request shall be in writing) to take any one or more of the following actions:
(i) institute Proceedings for the collection of all amounts then payable on the Notes or under this
Indenture in respect to the Notes and all amounts payable under the Insurance Agreement and to enforce
any judgment obtained and collect from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or
private Sales (as defined in Section 5.15 hereof) called and conducted in any manner permitted by law;
(iii) file or record all assignments that have not previously been recorded;
(iv) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC and take any other appropriate action to protect
and enforce the rights and remedies of the Enhancer hereunder.
Following the payment in full of the Notes, the Enhancer shall continue to have all rights and
privileges provided to it under this Section and in all other provisions of this Indenture, until all amounts
owing to the Enhancer have been paid in full.
Section 4.13 Repayment of Monies Held by Paying Agent. In connection with the satisfaction and discharge of
this Indenture with respect to the Notes, all monies then held by any 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 3.05; and thereupon, such Paying Agent
shall be released from all further liability with respect to such monies.
Section 4.14 Temporary Notes. Pending the preparation of any Definitive Notes, the Issuer may execute and
upon its written direction, the Indenture Trustee may authenticate and make available for delivery, temporary
Notes that are printed, lithographed, typewritten, photocopied or otherwise produced, in any denomination,
substantially of the tenor of the Definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be prepared without
unreasonable delay. After the preparation of the Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the temporary Notes at the office or agency of the Indenture Trustee, without
charge to the Noteholder. Upon surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and make available for delivery, in exchange therefor,
Definitive Notes of authorized denominations and of like tenor and aggregate principal amount. Until so
exchanged, such temporary Notes shall in all respects be entitled to the same benefits under this Indenture as
Definitive Notes.
ARTICLE V
Default And Remedies
Section 5.01 Events of Default. The Issuer shall deliver to the Indenture Trustee and the Enhancer, within
five days after learning of the occurrence of any event that with the giving of notice and the lapse of time
would become an Event of Default under clause (b) of the definition of "Event of Default" written notice in the
form of an Officer's Certificate of its status and what action the Issuer is taking or proposes to take with
respect thereto.
Section 5.02 Acceleration of Maturity; Rescission and Annulment. If an Event of Default shall occur and be
continuing, then and in every such case the Indenture Trustee, acting at the written direction of the Enhancer
(so long as no Enhancer Default exists) or the Noteholders of Notes representing not less than a majority of the
Note Balance of the Notes (if an Enhancer Default exists), may declare the Notes to be immediately due and
payable by a notice in writing to the Issuer (and to the Indenture Trustee if given by Noteholders); and upon any
such declaration, the unpaid principal amount of the Notes, together with accrued and unpaid interest thereon
through the date of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity with respect to an Event of Default has
been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee
as hereinafter provided in this Article V, the Enhancer (so long as no Enhancer Default exists) or the
Noteholders of Notes representing a majority of the Note Balance of the Notes (if an Enhancer Default exists), by
written notice to the Issuer and the Indenture Trustee, may in writing waive the related Event of Default and
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:
(i) all payments of principal of and interest on the Notes and all other amounts that would then be due
hereunder or upon the Notes if the Event of Default giving rise to such acceleration had not occurred;
(ii) all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses,
disbursements, advances and indemnification of the Indenture Trustee and its agents and counsel; and
(iii) 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 there is a default in the payment of (i) any interest on any Note when the
same becomes due and payable, and such default continues for a period of five days, or (ii) the principal of or
any installment of the principal of any Note when the same becomes due and payable, the Issuer shall, upon demand
of the Indenture Trustee, pay to it, for the benefit of the Noteholders, the entire amount then due and payable
on the Notes for principal and interest, with interest on 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, advances and indemnification owed to the Indenture Trustee and its agents
and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in
its own name and as trustee of an express trust, subject to the provisions of Section 10.17 hereof, may institute
a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or
final decree, and may enforce the same against the Issuer or other obligor on the Notes and collect in the manner
provided by law out of the property of the Issuer or other obligor on the Notes, wherever situated, the monies
adjudged or decreed to be payable.
(c) If an Event of Default shall occur and be continuing, the Indenture Trustee, subject to the provisions
of Section 10.17 hereof, may, as more particularly provided in Section 5.04, in its discretion proceed to protect
and enforce its rights and the rights of the Noteholders by such appropriate Proceedings as the Indenture Trustee
shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any
other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) If there shall be pending, relative to the Issuer or any other obligor on the Notes or any Person having
or claiming an ownership interest in the Trust Estate, Proceedings under Title 11 of the United States Code or
any other applicable federal or state bankruptcy, insolvency or other similar law, or if 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 if there shall be any
other comparable judicial Proceedings relative to the Issuer or other any other obligor on the Notes, or relative
to the creditors or property of the Issuer or such other obligor, then the Indenture Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or
otherwise, and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire amount of principal and interest owing and unpaid in
respect of the Notes and to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to
the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence, willful
misconduct or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on behalf of the Noteholders in any
election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable or deliverable on any such claims and to
distribute all amounts received with respect to the claims of the Noteholders and of the Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee or the Noteholders 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 the Indenture
Trustee shall consent to the making of payments directly to such Noteholders, to pay to the Indenture Trustee
such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence, willful misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to
or vote for or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder 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, indemnification and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the
Noteholders.
(g) In any Proceedings to which the Indenture Trustee shall be a party (including any Proceedings involving
the interpretation of any provision of this Indenture), the Indenture Trustee shall be held to represent all
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, then the Indenture Trustee, subject to the
provisions of Section 10.17 hereof, with the written consent of the Enhancer may, or, at the written direction of
the Enhancer, shall, do one or more of the following, in each case subject to Section 5.05:
(i) institute Proceedings in its own name and as trustee of an express trust for the collection of all
amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration
or otherwise, and all amounts payable under the Insurance Agreement, enforce any judgment obtained, and
collect from the Issuer and any other obligor on the Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with
respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and take any other appropriate action to protect
and enforce the rights and remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise liquidate the Trust Estate following an
Event of Default, unless (A) the Indenture Trustee obtains the written consent of the Enhancer, so long as no
Enhancer Default exists, or, if an Enhancer Default exists, the Noteholders of 100% of the Note Balance of the
Notes, (B) the proceeds of such sale or liquidation distributable to Noteholders are sufficient to discharge in
full all amounts then due and unpaid upon the Notes for principal and interest and to reimburse the Enhancer for
any amounts drawn under the Policy and any other amounts due the Enhancer under the Insurance Agreement or (C)
the Indenture Trustee determines that the Mortgage Loans will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the written consent of the Enhancer and the
Noteholders of 66 2/3% of the Note Balance of the Notes. In determining such sufficiency or insufficiency with
respect to clause (B) and (C) above, the Indenture Trustee may, but need not, obtain and rely, and shall be
protected in relying in good faith, upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate
for such purpose. Notwithstanding the foregoing, provided that a Servicing Default shall not have occurred, any
Sale (as defined in Section 5.15 hereof) of the Trust Estate shall be made subject to the continued servicing of
the Mortgage Loans by the Servicer as provided in the Servicing Agreement. Notwithstanding any sale of the
Mortgage Loans pursuant to this Section 5.04(a), the Indenture Trustee shall, for so long as any principal or
accrued interest on the Notes remains unpaid, continue to act as Indenture Trustee hereunder and to draw amounts
payable under the Policy in accordance with its terms.
(b) If the Indenture Trustee collects any money or property pursuant to this Article V, it shall pay out
such money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section 6.07;
SECOND: to the Noteholders for amounts due and unpaid on the related Notes for interest,
including accrued and unpaid interest on the Notes for any prior Payment Date, ratably, without
preference or priority of any kind, according to the amounts due and payable on such Notes for
interest from amounts available in the Trust Estate for such Noteholders, but excluding any
Interest Shortfalls;
THIRD: to the Noteholders for amounts due and unpaid on the related Notes for principal,
ratably, without preference or priority of any kind, according to the amounts due and payable
on such Notes for principal, from amounts available in the Trust Estate for such Noteholders,
until the Note Balance of such Notes have been reduced to zero;
FOURTH: to the payment of all amounts due and owing the Enhancer under the Insurance Agreement;
FIFTH: to the Noteholders for amounts due and unpaid on the related Notes for Interest
Shortfalls, if any, including any unpaid Interest Shortfalls on the Notes for any prior Payment
Date, ratably, without preference or priority of any kind, according to such amounts due and
payable from amounts available in the Trust Estate for such Noteholders;
SIXTH: to the Certificate Paying Agent for amounts due under Article VIII of the Trust
Agreement; and
SEVENTH: to the payment of the remainder, if any, to the Issuer or any other person legally
entitled thereto.
The Indenture Trustee may fix a record date and payment date for any payment to Noteholders pursuant to
this Section 5.04. At least 15 days before such record date, the Indenture Trustee shall mail to each Noteholder
a notice that states the record date, the payment date and the amount to be paid.
Section 5.05 Optional Preservation of the Trust Estate. If the Notes have been declared 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 (with the prior written consent of the Enhancer so long as no
Enhancer Default exists), but need not (but shall at the written direction of the Enhancer so long as no Enhancer
Default exists), elect to take and maintain possession of the Trust Estate. It is the desire of the parties
hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and
interest on the Notes and other obligations of the Issuer including payment to the Enhancer, and the Indenture
Trustee shall take such desire into account when determining whether or not to take and maintain possession of
the Trust Estate. In determining whether to take and maintain possession of the Trust Estate, the Indenture
Trustee may, but need not, obtain and rely, and shall be protected in relying in good faith, upon an opinion of
an Independent investment banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
Section 5.06 Limitation of Suits. No Noteholder shall have any right to institute any Proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless and subject to the provisions of Section 10.17 hereof:
(a) such Noteholder shall have previously given written notice to the Indenture Trustee of a continuing
Event of Default;
(b) the Noteholders of not less than 25% of the Note Balance of the Notes shall 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 Noteholder or Noteholders shall have offered the Indenture Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred by it in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall
have failed to institute such Proceedings;
(e) the Enhancer has given its written consent to the proposed proceedings; and
(f) no written direction inconsistent with such written request shall have been given to the Indenture
Trustee during such 60-day period by the Noteholders of a majority of the Note Balance of the Notes or by the
Enhancer.
It is understood and intended that no Noteholder 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
Noteholders or to obtain or to seek to obtain priority or preference over any other Noteholders 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 Noteholders, each representing less than a majority of the Note Balance of the Notes, the
Indenture Trustee shall act at the direction of the group of Noteholders with the greater Note Balance. In the
event that the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or
more groups of Noteholders representing the same Note Balance, then 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. Subject to the
provisions of this Indenture, the Noteholder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without the consent of such Noteholder.
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, the Enhancer or 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, 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, the Enhancer or
any Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article V or by law to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be.
Section 5.11 Control by Enhancer or Noteholders. The Enhancer (so long as no Enhancer Default exists) or if
an Enhancer Default exists, the Noteholders of a majority of the Note Balance of Notes, shall have the right to
direct in writing 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;
(b) subject to the express terms of Section 5.04, any direction to the Indenture Trustee to sell or
liquidate the Trust Estate shall be by the Enhancer (so long as no Enhancer Default exists) or if an Enhancer
Default exists, by the Noteholders of Notes representing not less than 100% of the Note Balance of the Notes;
(c) if the conditions set forth in Section 5.05 shall have been satisfied and the Indenture Trustee elects
to retain the Trust Estate pursuant to such Section, then any direction to the Indenture Trustee by Noteholders
of Notes representing less than 100% of the Note Balance of the Notes to sell or liquidate the Trust Estate 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 Noteholders set forth in this Section, subject to Section 6.01, the Indenture
Trustee need not take any action that it determines (in its sole discretion) might involve it in liability or
might materially adversely affect the rights of any Noteholders not consenting to such action, unless the Trustee
has received satisfactory indemnity from the Enhancer or a Noteholder.
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 Enhancer (so long as no Enhancer Default exists) or if an Enhancer Default
exists, the Noteholders of not less than a majority of the Note Balance of the Notes, may waive in writing any
past Event of Default and its consequences, except an Event of Default (a) with respect to payment of principal
of or interest on any of the Notes or (b) in respect of a covenant or provision hereof that cannot be modified or
amended without the consent of the Noteholder of each Note. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Noteholders shall be restored to their respective former positions and rights
hereunder; but no such waiver shall extend to any subsequent or other Event of Default or impair any right
consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be deemed to have been cured and not
to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other
Event of Default or impair any right consequent thereto.
Section 5.13 Undertaking for Costs. All parties to this Indenture agree, and each Noteholder by such
Noteholder's acceptance of the related Note shall be deemed to have agreed, that any court may in its discretion
require, in any Proceeding for the enforcement of any right or remedy under this Indenture, or in any Proceeding
against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by
any party litigant in such Proceeding of an undertaking to pay the costs of such Proceeding, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any
party litigant in such Proceeding, 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 Proceeding instituted
by the Indenture Trustee, (b) any Proceeding instituted by any Noteholder, or group of Noteholders, in each case
holding in the aggregate more than 10% of the Note Balance of the Notes or (c) any Proceeding instituted by any
Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective
due dates expressed in such Note and in this Indenture.
Section 5.14 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 shall not hinder, delay
or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 5.15 Sale of Trust Estate.
(a) The power to effect any sale or other disposition (a "Sale") of any portion of the Trust Estate pursuant
to Section 5.04 is expressly subject to the provisions of Section 5.05 and this Section 5.15. The power to
effect any such Sale shall not be exhausted by any one or more Sales as to any portion of the Trust Estate
remaining unsold, but shall continue unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes and under this Indenture and under the Insurance Agreement shall have been paid. The
Indenture Trustee may from time to time postpone any public Sale by public announcement made at the time and
place of such Sale. The Indenture Trustee hereby expressly waives its right to any amount fixed by law as
compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust Estate, or any portion thereof,
unless:
(i) the Enhancer, if no Enhancer Default exists, or, if an Enhancer Default exists, the Noteholders of 100%
of the Note Balance of the Notes, direct the Indenture Trustee in writing to make such Sale,
(ii) the proceeds of such Sale would be not less than the entire amount that would be payable to the
Noteholders under the Notes, the Certificateholders under the Certificates and the Enhancer in respect
of amounts drawn under the Policy and any other amounts due the Enhancer under the Insurance Agreement,
in full payment thereof in accordance with Section 5.02, on the Payment Date next succeeding the date of
such Sale, or
(iii) the Indenture Trustee determines, in its sole discretion, that the conditions for retention of the Trust
Estate set forth in Section 5.05 cannot be satisfied (in making any such determination, the Indenture
Trustee may rely and shall be protected in relying in good faith upon an opinion of an Independent
investment banking firm obtained and delivered as provided in Section 5.05), and the Enhancer, so long
as no Enhancer Default exists, consents in writing to such Sale, and, if an Enhancer Default exists, the
Noteholders of Notes representing at least 66 2/3% of the Note Balance of the Notes consent in writing
to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate at a private Sale shall not be
deemed a Sale or other disposition thereof for purposes of this Section 5.15(b).
(c) Unless the Enhancer, so long as no Enhancer Default exists, or, if an Enhancer Default exists, the
Noteholders of 100% of the Note Balance of the Notes, shall have otherwise consented or directed the Indenture
Trustee, at any public Sale of all or any portion of the Trust Estate at which a minimum bid equal to or greater
than the amount described in paragraph (ii) of subsection (b) of this Section 5.15 has not been established by
the Indenture Trustee and no Person bids an amount equal to or greater than such amount, then the Indenture
Trustee shall bid an amount at least $1.00 more than the highest other bid, which bid shall be subject to the
provisions of Section 5.15(d)(ii) herein.
(d) In connection with a Sale of all or any portion of the Trust Estate:
(i) any Noteholder may bid for and, with the consent of the Enhancer, purchase the property offered for
sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such
property, without further accountability, and may, in paying the purchase money therefor, deliver any
Notes or claims for interest thereon in lieu of cash up to the amount which shall, upon distribution of
the net proceeds of such sale, be payable thereon, and such Notes, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to the Noteholders thereof after
being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the property offered for Sale in connection with any Sale
thereof and, subject to any requirements of, and to the extent permitted by, applicable law in
connection therewith, may purchase all or any portion of the Trust Estate in a private sale;
(iii) the Indenture Trustee shall execute and deliver an appropriate instrument of conveyance transferring its
interest in any portion of the Trust Estate in connection with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Trust Estate in connection with a Sale thereof,
and to take all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the application of any monies.
Section 5.16 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 Trust Estate or upon any of
the assets of the Issuer. Any money or property collected by the Indenture Trustee shall be applied in
accordance with Section 5.04(b).
Section 5.17 Performance and Enforcement of Certain Obligations.
(a) Promptly following a written request from the Enhancer or the Indenture Trustee (with the written
consent of the Enhancer), the Issuer, in its capacity as owner of the Mortgage Loans, shall, with the written
consent of the Enhancer, take all such lawful action as the Indenture Trustee may request to cause the Issuer to
compel or secure the performance and observance by the Seller and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Purchase Agreement and the Servicing Agreement, and to
exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Purchase Agreement and the Servicing Agreement to the extent and in the manner directed by
the Indenture Trustee, as pledgee of the Mortgage Loans, including the transmission of notices of default on the
part of the Seller or the Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Seller or the Servicer of each of their obligations under the
Purchase Agreement and the Servicing Agreement.
(b) If an Event of Default shall have occurred and be continuing, the Indenture Trustee, as pledgee of the
Mortgage Loans, subject to the rights of the Enhancer hereunder and under the Servicing Agreement, may, and at
the direction (which direction shall be in writing) of the Noteholders of 66 2/3% of the Note Balance of the
Notes, shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller or
the Servicer under or in connection with the Purchase Agreement and the Servicing Agreement, including the right
or power to take any action to compel or secure performance or observance by the Seller or the 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 Purchase Agreement and the Servicing Agreement, as the case
may be, and any right of the Issuer to take such action shall not be suspended. In connection therewith, as
determined by the Indenture Trustee, the Issuer shall take all actions necessary to effect the transfer of the
Mortgage Loans to the Indenture Trustee.
ARTICLE VI
The Indenture Trustee
Section 6.01 Duties of Indenture Trustee.
(a) If an Event of Default shall have occurred and be 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, reports or
opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture;
provided, however, that the Indenture Trustee shall examine the certificates, reports 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 (a) 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 or any direction from the
Enhancer or the Noteholders that the Enhancer or the Noteholders are is entitled to give under any of
the Basic Documents.
(d) The Indenture Trustee shall not be liable for interest on any money received by it except as the
Indenture Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated from other funds except to the
extent required by law or the terms of this Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any
of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this Section and to the provisions of
TIA.
(h) [reserved].
(i) The Indenture Trustee hereby accepts appointment as Certificate Paying Agent under the Trust Agreement
and agrees to be bound by the provisions of the Trust Agreement relating to the Certificate Paying Agent. The
Indenture Trustee hereby agrees to be bound by the provisions of Article IX of the Trust Agreement.
(j) The Indenture Trustee shall not be required to take notice or be deemed to have notice or knowledge of
any Event of Default (except for an Event of Default specified in clause (a) of the definition thereof) unless a
Responsible Officer of the Indenture Trustee shall have received written notice or have actual knowledge
thereof. In the absence of receipt of such notice or such knowledge, the Indenture Trustee may conclusively
assume that there is no default or Event of Default.
(k) The Indenture Trustee shall have no duty to see to any recording or filing of any financing statement or
continuation statement evidencing a security interest or to see to the maintenance of any such recording or
filing or to any rerecording or refiling of any thereof.
Section 6.02 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely and shall be protected in acting or refraining from acting in good faith
upon any resolution, Officer's Certificate, opinion of counsel, certificate of auditors, or any other
certificate, statement, instrument, report, notice, consent or other 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 any such 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 any such Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent,
attorney, custodian or nominee appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which
it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to
legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall not be personally liable for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by
this Indenture, unless it shall be proved that the Indenture Trustee was negligent in ascertaining the pertinent
facts.
(g) Prior to the occurrence of an Event of Default hereunder, and after the curing or waiver of all Events
of Default that may have occurred, the Indenture Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless requested in writing to do so by the Enhancer
or the Noteholders representing a majority of the Note Balance; provided, however, that if the payment within a
reasonable time to the Indenture Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Indenture Trustee, not assured to the Indenture Trustee by
the security afforded to it by the terms of this Indenture, the Indenture Trustee may require indemnity
satisfactory to the Indenture Trustee against such cost, expense or liability as a condition to taking any such
action.
(h) The Indenture Trustee shall be under no obligation to exercise any of the trusts or powers vested in it
by this Indenture or to institute, conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Enhancer or the Noteholders, pursuant to the provisions of this
Indenture, unless the Enhancer or the Noteholders shall have offered to the Indenture Trustee reasonable security
or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Indenture Trustee of the obligation, upon the occurrence of an Event
of Default (which has not been cured or waived), to exercise such of the rights and powers vested in it by this
Indenture, and to use the same degree of care and skill in their exercise as a prudent investor would exercise or
use under the circumstances in the conduct of such investor's own affairs.
(i) Anything in this Indenture to the contrary notwithstanding, in no event shall the Indenture Trustee be
liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Indenture Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action, so long as the action taken by the Indenture Trustee was in accordance with
this Indenture and the Insurance Agreement.
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 Note Registrar, co-registrar or co-paying
agent may do the same with like rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
Section 6.04 Indenture Trustee's Disclaimer. The Indenture Trustee shall not be (i) responsible for and
makes no representation as to the validity or adequacy of this Indenture or the Notes, (ii) accountable for the
Issuer's use of the proceeds from the Notes or (iii) responsible for any statement of the Issuer in this
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 thereon.
Section 6.05 Notice of Event of Default. If an Event of Default shall occur and be continuing, and if such
Event of Default is known to a Responsible Officer of the Indenture Trustee, then the Indenture Trustee shall
give notice thereof to the Enhancer. The Indenture Trustee shall mail to each Noteholder notice of such Event of
Default within 90 days after it occurs. Except in the case of an Event of Default with respect to the payment of
principal of or interest on any Note, the Indenture Trustee may withhold such notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding such notice is in the interests
of the Noteholders.
Section 6.06 Reports by Indenture Trustee to Noteholders. The Indenture Trustee shall deliver to each
Noteholder such information as may be required to enable such Noteholder to prepare its federal and state income
tax returns. In addition, upon Issuer Request, the Indenture Trustee shall promptly furnish such information
reasonably in writing requested by the Issuer that is reasonably available to the Indenture Trustee to enable the
Issuer to perform its federal and state income tax reporting obligations.
Section 6.07 Compensation and Indemnity. The Indenture Trustee shall be compensated and indemnified by the
Servicer in accordance with Section 6.06 of the Servicing Agreement. All amounts owing the Indenture Trustee
hereunder in excess of such amount, as well as any amount owed to the Indenture Trustee in accordance with
Section 6.06 of the Servicing Agreement, to the extent the Servicer has failed to pay such amount, shall be paid
solely as provided in Section 3.05 hereof (subject to the priorities set forth therein). The Indenture Trustee's
compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs
of collection, in addition to the compensation for its services. Such expenses shall include the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee's agents, counsel, accountants and
experts. The Issuer shall indemnify the Indenture Trustee against any and all loss, liability or expense
(including attorneys' fees and expenses) incurred by it in connection with the administration of this trust and
the performance of its duties hereunder. The Indenture Trustee shall notify the Issuer promptly of any claim for
which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer shall not relieve the
Issuer of its obligations hereunder. The Issuer shall defend any such claim, and the Indenture Trustee may have
separate counsel and the Issuer shall pay the fees and expenses of such counsel. The Issuer is not obligated to
reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee
through the Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this Section 6.07 shall survive
the discharge of this Indenture. When the Indenture Trustee incurs expenses after the occurrence of an Event of
Default specified in clause (c) or (d) of the definition thereof with respect to the Issuer, such 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 and the Enhancer. The Enhancer (so long as no Enhancer Default exists) or if an Enhancer
Default exists, the Noteholders of a majority of the Note Balance of the Notes, may remove the Indenture Trustee
by so notifying the Indenture Trustee and the Enhancer in writing (if given by such Noteholders) and may appoint
a successor Indenture Trustee. Unless a Servicer Default has occurred and is continuing, the appointment of any
successor Indenture Trustee shall be subject to the prior written approval of the Servicer. 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 fulfilling its duties under the Basic Documents.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of the Indenture
Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture
Trustee), the Issuer shall promptly appoint a successor Indenture Trustee with the consent of the Enhancer, which
consent shall not be unreasonably withheld. In addition, the Indenture Trustee shall resign to avoid being
directly or indirectly controlled by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring
Indenture Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the
Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to
the 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, then the retiring Indenture Trustee, the Issuer or the Noteholders of a majority
of Note Balance of the Notes may petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the Issuer's
obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.
Section 6.09 Successor Indenture Trustee by ▇▇▇▇▇▇. 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, then 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
with written notice of any such transaction occurring after the Closing Date.
If at the time of any such succession by merger, conversion or consolidation, any of the Notes shall
have been authenticated but not delivered, then any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated. If at such
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 that 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 Trust Estate may at such 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
Issuer, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such
title to the Trust Estate, or any part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11, and no notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act
subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be
conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to
act separately without the Indenture Trustee joining in such act), except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Estate or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee
hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given
to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this
Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically
including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.
(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 Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts
shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment
of a new or successor trustee.
Section 6.11 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 and it or its parent either (a)
shall have a long-term debt rating of A or better by ▇▇▇▇▇'▇ or (b) such other rating so longs as such rating
would not cause any Rating Agency to lower the rating of the Class A Notes below its initial rating thereof. 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 that has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13 Representations and Warranties. The Indenture Trustee hereby represents and warrants that:
(a) The Indenture Trustee is duly organized, validly existing and in good standing as a New York banking
corporation with power and authority to own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted.
(b) The Indenture Trustee has the power and authority to execute and deliver this Indenture and to carry out
its terms; and the execution, delivery and performance of this Indenture have been duly authorized by the
Indenture Trustee by all necessary corporate action.
(c) The consummation of the transactions contemplated by this Indenture and the fulfillment of the terms
hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of organization or bylaws of the Indenture Trustee
or any agreement or other instrument to which the Indenture Trustee is a party or by which it is bound.
(d) To the Indenture Trustee's best knowledge, there are no Proceedings or investigations pending or
threatened before any court, regulatory body, administrative agency or other governmental instrumentality having
jurisdiction over the Indenture Trustee or its properties (A) asserting the invalidity of this Indenture, (B)
seeking to prevent the consummation of any of the transactions contemplated by this Indenture or (C) seeking any
determination or ruling that might materially and adversely affect the performance by the Indenture Trustee of
its obligations under, or the validity or enforceability of, this Indenture.
(e) The Indenture Trustee does not have notice of any adverse claim (as such terms are used in Section 8-302
of the UCC in effect in the State of Delaware) with respect to the Mortgage Loans.
Section 6.14 Directions to Indenture Trustee. The Indenture Trustee is hereby directed:
(a) to accept the pledge of the Mortgage Loans and hold the assets of the Trust in trust for the Noteholders
and the Enhancer;
(b) to authenticate and deliver the Notes substantially in the form prescribed by Exhibit A in accordance
with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by the terms of this Indenture.
Section 6.15 Indenture Trustee May Own Securities. The Indenture Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not
Indenture Trustee.
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders. The Issuer shall
furnish or cause to be furnished to the Indenture Trustee (a) not more than five days after each Record Date, a
list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Noteholders
as of such Record Date, and (b) at such other times as the Indenture Trustee and the Enhancer may request in
writing, within 30 days after receipt by the Issuer of any such request, a list of similar form and content as of
a date not more than 10 days prior to the time such list is furnished; provided, however, that for so long as the
Indenture Trustee is the Note Registrar, no such list need 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 Noteholders contained in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01 and the names and addresses of the Noteholders 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 the information, documents and other reports including any
certifications required to be filed with Form 10-K by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (or copies of such
portions of any of the foregoing as the Commission may from time to time by rules and regulations
prescribe) that the Issuer may be required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as may be required from
time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders
described in TIA 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 May 15,
beginning with May 15, 2003, the Indenture Trustee shall make available to each Noteholder as required by TIA Section
313(c) and to the Enhancer 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 distribution to Noteholders shall be filed by the Indenture
Trustee with the Commission, if required, and each stock exchange, if any, on which the Notes are listed. The
Issuer shall notify the Indenture Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01 Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may
demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture
Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money received by it as provided
in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making
of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture
Trustee may take such action as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in
Article V.
Section 8.02 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Indenture Trustee to establish and maintain,
in the name of the Indenture Trustee, for the benefit of the Noteholders, the Certificate Paying Agent, on behalf
of the Certificateholders, and the Enhancer, the Note Payment Account as provided in Section 3.01 of this
Indenture.
(b) All monies deposited from time to time in the Note Payment Account pursuant to the Servicing Agreement
and all deposits therein pursuant to this Indenture are for the benefit of the Noteholders and the Certificate
Paying Agent, on behalf of the Certificateholders, and all investments made with such monies, including all
income or other gain from such investments, are for the benefit of the Servicer as provided in Section 5.01 of
the Servicing Agreement.
On each Payment Date, the Indenture Trustee shall distribute all amounts on deposit in the Note Payment
Account to the Noteholders in respect of the Notes and, in its capacity as Certificate Paying Agent, to the
Certificateholders from the Distribution Account in the order of priority set forth in Section 3.05 (except as
otherwise provided in Section 5.04(b)) and in accordance with the Servicing Certificate.
The Indenture Trustee shall invest any funds in the Note Payment Account in Permitted Investments
selected in writing by the Servicer maturing no later than the Business Day preceding the next succeeding Payment
Date and shall not be sold or disposed of prior to the maturity. In addition, such Permitted Investments shall
not be purchased at a price in excess of par. The Indenture Trustee shall have no liability whatsoever for
investment losses on Permitted Investments, if such investments are made in accordance with the provisions of
this Indenture and the Indenture Trustee is not the obligor under the Permitted Investment.
Section 8.03 Officer's Certificate. The Indenture Trustee shall receive at least seven days' notice when
requested by the Issuer to take any action pursuant to Section 8.05(a), accompanied by copies of any instruments
to be executed, and the Indenture Trustee shall also require, as a condition to such action, an Officer's
Certificate, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding that all conditions precedent to the
taking of such action have been complied with.
Section 8.04 Termination Upon Distribution to Noteholders. This Indenture and the respective obligations
and responsibilities of the Issuer and the Indenture Trustee created hereby shall terminate upon the distribution
to the Noteholders, the Certificate Paying Agent on behalf of the Certificateholders and the Indenture Trustee of
all amounts required to be distributed pursuant to Article III; provided, however, that in no event shall the
trust created hereby continue beyond the expiration of 21 years from the death of the survivor of the descendants
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States to the Court of St. James's, living on the date
hereof.
Section 8.05 Release of Trust Estate.
(a) Subject to the payment of its fees, expenses and indemnification, the Indenture Trustee may, and when
required by the provisions of this Indenture or the Servicing Agreement, 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 Person relying upon an
instrument executed by the Indenture Trustee as provided in Article VIII hereunder shall be bound to ascertain
the Indenture Trustee's authority, inquire into the satisfaction of any conditions precedent, or see to the
application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no Notes Outstanding, (ii) all sums due the
Indenture Trustee pursuant to this Indenture have been paid and (iii) all sums due the Enhancer have been paid,
release any remaining portion of the Trust Estate that secured the Notes from the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this Indenture pursuant to this
Section 8.05 only upon receipt of an Issuer Request accompanied by an Officers' Certificate and a letter from the
Enhancer stating that the Enhancer has no objection to such request from the Issuer.
(d) The Indenture Trustee shall surrender the Policy to the Enhancer for cancellation upon the final payment
of principal of and interest on the Notes.
Section 8.06 Surrender of Notes Upon Final Payment. By acceptance of any Note, the Noteholder thereof
agrees to surrender such Note to the Indenture Trustee promptly, prior to such Noteholder's receipt of the final
payment thereon.
ARTICLE IX
Supplemental Indentures
Section 9.01 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Noteholders of any Notes, but with prior notice to the Rating Agencies and
the prior written consent of the Enhancer (which consent shall not be unreasonably withheld) unless an Enhancer
Default shall have occurred, the Issuer and the Indenture Trustee, when authorized by an Issuer Request, at any
time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to
the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time subject to the lien of this Indenture,
or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional
property;
(ii) to evidence the succession, in compliance with the applicable provisions hereof, of another Person to
the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the
Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of the Noteholders or the Enhancer, or to
surrender any right or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct any error or to correct or supplement any provision herein or in any
supplemental indenture that may be inconsistent with any other provision herein or in any supplemental
indenture;
(vi) to make any other provisions with respect to matters or questions arising under this Indenture or in any
supplemental indenture; provided, that such action shall not materially and adversely affect the
interests of the Noteholders or the Enhancer (as evidenced by an Opinion of Counsel);
(vii) to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with
respect to the Notes and to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to
the requirements of Article VI; or
(viii) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to
effect the qualification of this Indenture under TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be expressly required by TIA;
provided, however, that no such supplemental indenture shall be entered into unless the Indenture Trustee and the
Enhancer shall have received an Opinion of Counsel to the effect that the execution of such supplemental
indenture will not give rise to any material adverse tax consequence to the Noteholders.
The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture
and to make any further appropriate agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer Request, may, without the consent of
any Noteholder but with prior notice to the Rating Agencies and the Enhancer, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Noteholders
under this Indenture; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, (i)
adversely affect in any material respect the interests of any Noteholder or the Enhancer or (ii) cause the Issuer
to be subject to an entity level tax.
Section 9.02 Supplemental Indentures With Consent of Noteholders. The Issuer and the Indenture Trustee,
when authorized by an Issuer Request, may, with prior notice to the Rating Agencies and with the written consent
of the Enhancer and the Noteholders of not less than a majority of the Note Balance affected thereby, by Act (as
defined in Section 10.03 hereof) of such Noteholders 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 Noteholders under this Indenture; provided, however, that no such supplemental indenture shall, without the
consent of the Noteholder of each 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 or the Note Rate thereon, change the provisions of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates thereof;
(b) reduce the percentage of the Note Balance, the consent of the Noteholders of which is required for any
such supplemental indenture, or the consent of the Noteholders 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" or modify or
alter the exception in the definition of the term "Noteholder";
(d) reduce the percentage of the Note Balance of the Notes required to direct the Indenture Trustee to
direct the Issuer to sell or liquidate the Trust Estate pursuant to Section 5.04;
(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 other Basic Documents cannot be modified or
waived without the consent of the Noteholder of each 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 Payment Date (including the calculation of any of
the individual components of such calculation); 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 Trust Estate or, except as otherwise permitted or contemplated herein, terminate the
lien of this Indenture on any property at any time subject hereto or deprive the Noteholder of any Note of the
security provided by the lien of this Indenture; and provided further, that such action shall not, as evidenced
by an Opinion of Counsel, cause the Issuer to be subject to an entity level tax.
The Indenture Trustee may in its discretion determine whether or not any Notes would be affected by any
supplemental indenture and any such determination shall be conclusive upon the Noteholders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture Trustee shall not be liable for
any such determination made in good faith.
It shall not be necessary for any Act (as defined in Section 10.03 hereof) 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.
Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture
pursuant to this Section 9.02, the Indenture Trustee shall mail to the Noteholders of the Notes to which such
amendment or supplemental indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental indenture.
Section 9.03 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
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 Indenture. Upon the execution of any supplemental indenture pursuant to
the provisions hereof, this Indenture shall be and shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the
Noteholders 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 TIA as in effect at the time
of such amendment or supplement so long as this Indenture shall then be qualified under TIA.
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.
ARTICLE X
Miscellaneous
Section 10.01 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Indenture Trustee and to the Enhancer (i) an
Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with and (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except that, in the case of any such
application or request as to which the furnishing of such documents is specifically required by any provision of
this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in
this Indenture shall include:
(i) 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;
(ii) a brief statement as to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such 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;
(iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been
complied with; and
(v) if the signer of such certificate or opinion is required to be Independent, the statement required by
the definition of the term "Independent".
(b) (i) Prior to the deposit of any Collateral or other property or securities with the Indenture Trustee
that is to be made the basis for the release of any property or securities subject to the lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture,
furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the Collateral or
other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or release since the commencement
of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to
clause (i) above and this clause (ii), is 10% or more of the Note Balance 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 Note Balance of the Notes.
(iii) Whenever any property or securities are to be released from the lien of this
Indenture, the Issuer shall furnish to the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and stating that in the opinion of such
person the proposed release will not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or securities and of all other
property, other than property as contemplated by clause (v) below or securities released from the lien
of this Indenture since the commencement of the then-current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10% or more of the Note Balance
of the Notes, but such certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the Note Balance of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer may, without
compliance with the requirements of the other provisions of this Section 10.01, (A) collect upon, sell
or otherwise dispose of the Mortgage Loans as and to the extent permitted or required by the Basic
Documents or (B) make cash payments out of the Note Payment Account as and to the extent permitted or
required by the Basic Documents, so long as the Issuer shall deliver to the Indenture Trustee every six
months, commencing December 31, 2002, an Officer's Certificate of the Issuer stating that all the
dispositions of Collateral described in clauses (A) or (B) above that occurred during the preceding six
calendar months (or such longer period, in the case of the first such Officer's Certificate) were in the
ordinary course of the Issuer's business and that the proceeds thereof were applied in accordance with
the Basic Documents.
Section 10.02 Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any
specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized
Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of either Seller or the Issuer, stating that the
information with respect to such factual matters is in the possession of either Seller or the Issuer, unless such
counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or certificate or report to the Indenture
Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the effective date of such certificate or report
(as the case may be), of the facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate
or report. The foregoing shall not, however, be construed to affect the Indenture Trustee's right to rely upon
the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.
Section 10.03 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this
Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and
except as herein otherwise expressly provided such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner
provided in this Section 10.03.
(b) The fact and date of the execution by any person of any such instrument or writing may be proved in any
manner that the Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Noteholder
of any Note shall bind the Noteholder of every Note issued upon the registration thereof or in exchange therefor
or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made upon such Note.
Section 10.04 Notices, etc., to Indenture Trustee, Issuer, Enhancer 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.
The Indenture Trustee shall promptly transmit any notice received by it from the Noteholders to the Issuer,
(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: Wachovia Asset Securitization,
Inc. 2002-HE1 Trust, in care of the Owner Trustee, or at any other address previously furnished in writing to the
Indenture Trustee by the Issuer. The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee, or
(c) the Enhancer by the Issuer, the Indenture Trustee or by any Noteholders shall be sufficient for every
purpose hereunder to in writing and mailed, first-class postage pre-paid, or personally delivered or telecopied
to: Ambac Assurance Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Risk Management,
Consumer Asset-Backed Services, telecopier number (▇▇▇) ▇▇▇-▇▇▇▇. The Enhancer shall promptly transmit any
notice received by it from the Issuer, the Indenture Trustee or the Noteholders to the Issuer or Indenture
Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the Issuer, the Indenture Trustee or the Owner
Trustee shall be in writing, personally delivered or mailed by certified mail, return receipt requested, to (i)
in the case of Moody's, at the following address: ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring Department, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance
Department; or, as to each of the foregoing Persons, at such other address as shall be designated by written
notice to the other foregoing Persons.
Section 10.05 Notices to Noteholders; Waiver. Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and
mailed, first-class, postage prepaid to each Noteholder affected by such event, at such Person's address as it
appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency
of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided
shall conclusively be presumed to have been duly given regardless of whether such notice is in fact actually
received.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by any
Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or
similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required
to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not
affect any other rights or obligations created hereunder, and shall not under any circumstance constitute an
Event of Default.
Section 10.06 Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or
any of the Notes to the contrary, the Issuer may enter into any agreement with any Noteholder providing for a
method of payment, or notice by the Indenture Trustee to such Noteholder, that is different from the methods
provided for in this Indenture for such payments or notices. The Issuer shall furnish to the Indenture Trustee a
copy of each such agreement and the Indenture Trustee shall cause payments to be made and notices to be given in
accordance with such agreements.
Section 10.07 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with
another provision hereof that is required to be included in this Indenture by any of the provisions of TIA, 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.
Section 10.08 Effect of Headings. The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
Section 10.09 Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the
Issuer shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture
Trustee in this Indenture shall bind its successors, co-trustees and agents.
Section 10.10 Severability. In case any provision in this Indenture or in the Notes shall be held invalid,
illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not
in any way be affected or impaired thereby.
Section 10.11 Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder, and the Noteholders, the
Enhancer, and any other party secured hereunder, and any other Person with an ownership interest in any part of
the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture. The Enhancer
shall be a third party beneficiary of this Indenture.
Section 10.12 Legal Holidays. In any case where the date on which any payment is due shall not be a Business
Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date
on which nominally due, and no interest shall accrue for the period from and after any such nominal date.
Section 10.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.14 Counterparts. This Indenture may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 10.15 Recording of Indenture. If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which counsel shall be reasonably acceptable to the Indenture Trustee) to the effect that such recording
is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this Indenture.
Section 10.16 Issuer Obligation. No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee or
the Owner Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and
the Owner Trustee have no such obligations in their respective individual capacities), 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
Articles VI, VII and VIII of the Trust Agreement.
Section 10.17 No Petition. The Indenture Trustee, by entering into this Indenture, and each Noteholder, by
its acceptance of a Note, hereby covenant and agree that they will not at any time institute against the
Depositor or the Issuer, or join in any institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, this
Indenture or any of the other Basic Documents.
Section 10.18 Inspection. The Issuer agrees that, on reasonable prior notice, it shall permit any
representative of the Indenture Trustee, during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such
books to be audited by Independent certified public accountants, and to discuss the Issuer's affairs, finances
and accounts with the Issuer's officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the extent disclosure may be required by law
(and all reasonable applications for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused their names to be signed hereto by
their respective officers thereunto duly authorized, all as of the day and year first above written.
WACHOVIA ASSET SECURITIZATION, INC. 2002-HE1 TRUST, as Issuer
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Owner Trustee
By:________________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Indenture Trustee
By:________________________________________
Name:
Title:
JPMORGAN CHASE BANK
hereby accepts the appointment as Paying
Agent pursuant to Section 3.03 hereof
and as Note Registrar pursuant to Section
4.02 hereof.
By:_____________________________________
Name:
Title:
Signatures and Seals
STATE OF _______________ )
) ss.:
COUNTY OF _____________ )
On this ___ day of September, 2002, before me personally appeared ____________, to me known, who being
by me duly sworn, did depose and say, that he/she resides at _____________, that he/she is the ____________ of
Wilmington Trust Company, the Owner Trustee, one of the corporations described in and which executed the above
instrument; that he/she knows the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of said corporation; and that he/she
signed his/her name thereto by like order.
_______________________________________________
Notary Public
Acknowledgements
EXHIBIT A
FORM OF NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER, THE DEPOSITOR, THE SERVICER, THE
INDENTURE TRUSTEE, THE OWNER TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE
INDENTURE OR THE OTHER BASIC DOCUMENTS.
WACHOVIA ASSET SECURITIZATION, INC. 2002-HE1 TRUST
Wachovia Asset Securitization, Inc. Asset-Backed Note, Series 2002-HE1, Class A
Registered Initial Note Balance:
$950,000,000
No. 1 Note Rate: Variable
CUSIP No. 929759 AA 6
Wachovia Asset Securitization, Inc. 2002-HE1, a statutory trust duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Issuer"), for value received, hereby promises to pay to
CEDE & CO. or its registered assigns, the principal sum of nine hundred and fifty million dollars ($950,000,000),
payable on each Payment Date in an amount equal to the pro rata portion allocable hereto (based on the Initial
Note Balance specified above and the Initial Note Balance) of the aggregate amount, if any, payable from the Note
Payment Account in respect of principal of the Notes (defined below) pursuant to Section 3.05 of the indenture
dated as of September 27, 2002 (the "Indenture"), between the Issuer and JPMorgan Chase Bank, as indenture
trustee (the "Indenture Trustee"); provided, however, that the entire unpaid principal amount of this Note shall
be due and payable on the Payment Date in September 2032, to the extent not previously paid on a prior Payment
Date. Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in
Appendix A to the Indenture.
Interest on the Notes will be paid monthly on each Payment Date at the Note Rate for the related
Interest Period subject to limitations that may result in Interest Shortfalls (as further described in the
Indenture). The Note Rate for each Interest Period will be a floating rate equal to the least of (i) LIBOR plus
0.37% per annum and (ii) the Net WAC Rate. LIBOR for each applicable Interest Period will be determined on the
second LIBOR Business Day immediately preceding (i) the Closing Date in the case of the first Interest Period and
(ii) the first day of each succeeding Interest Period by the Indenture Trustee as set forth in the Indenture.
All determinations of LIBOR by the Indenture Trustee shall, in the absence of manifest error, be conclusive for
all purposes, and each holder of this Note, by accepting this Note, agrees to be bound by such determination.
Interest on this Note will accrue for each Payment Date from the most recent Payment Date on which interest has
been paid (in the case of the first Payment Date, from the Closing Date) to but excluding such Payment Date.
Interest will be computed on the basis of the actual number of days in each Interest Period and a year assumed to
consist of 360 days. Principal of and interest on this Note shall be paid in the manner specified on the reverse
hereof.
Principal of and interest on this Note are payable in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and private debts. All payments made by
the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided
above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall
have the same effect as though fully set forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name
appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
This Note is one of a duly authorized issue of Notes of the Issuer, designated as its Wachovia Asset
Securitization, Inc. Asset-Backed Notes, Series 2002-HE1 (the "Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes are
subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
This Note is entitled to the benefits of an irrevocable and unconditional financial guaranty insurance
policy issued by Ambac Assurance Corporation.
Principal of and interest on this Note will be payable on each Payment Date, commencing on October 25,
2002, as described in the Indenture. "Payment Date" means the twenty-fifth day of each month, or, if any such
date is not a Business Day, then the next succeeding Business Day.
The entire unpaid principal amount of this Note shall be due and payable in full on the Payment Date in
September 2032 pursuant to the Indenture, to the extent not previously paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be continuing, then the Indenture
Trustee, the Enhancer or the holders of Notes representing not less than a majority of the Note Balance of the
Notes, with the consent of the Enhancer, may declare the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Notes shall be made pro rata to the
Noteholders entitled thereto.
Any installment of interest or principal, if any, payable on any Note that is punctually paid or duly
provided for by the Issuer on the applicable Payment Date shall be paid to the related Noteholder on the
preceding Record Date, by wire transfer to an account specified in writing by such Noteholder reasonably
satisfactory to the Indenture Trustee as of the preceding Record Date or, if no such instructions have been
delivered to the Indenture Trustee, by check or money order to such Noteholder mailed to such Noteholder's
address as it appears in the Note Register, the amount required to be distributed to such Noteholder on such
Payment Date pursuant to such Noteholder's Notes; provided, however, that the Indenture Trustee shall not pay to
such Noteholder any amount required to be withheld from a payment to such Noteholder by the Code. Any reduction
in the principal amount of this Note (or any one or more predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected
to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount
of this Note on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the registered Noteholder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the amount then due and payable shall
be payable only upon presentation and surrender of this Note at the address specified in such notice of final
payment.
As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this
Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the
Corporate Trust Office of the Indenture Trustee, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or such
Noteholder'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, and thereupon one or more new Notes in authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the Note Registrar shall require payment
of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
registration of transfer or exchange of this Note.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note, or, in the case of a
Beneficial Owner of a Note, a beneficial interest in a Note, covenants and agrees that no recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee, the Seller, the
Servicer, the Depositor or the Indenture Trustee on the Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note or, in the case of a
Beneficial Owner of a Note, a beneficial interest in a Note, covenants and agrees by accepting the benefits of
the Indenture that such Noteholder or Beneficial Owner will not at any time institute against the Depositor, the
Seller, the Servicer or the Issuer, or join in any institution against the Depositor, the Seller, the Servicer or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes will qualify as indebtedness of the
Issuer. Each Noteholder by its acceptance of a Note (and each Beneficial Owner of a Note by its acceptance of a
beneficial interest in a Note), agrees to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture
Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in the name of which this Note
is registered (as of the day of determination or as of such other date as may be specified in the Indenture) as
the owner hereof for all purposes, whether or not this Note be overdue, and none of the Issuer, the Indenture
Trustee or any such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions therein provided, the amendment thereof and the
modification of the rights and obligations of the Issuer and the Indenture Trustee and the rights of the
Noteholders under the Indenture at any time by the Issuer and the Indenture Trustee with the consent of the
Enhancer and the holders of Notes representing a majority of the Note Balance of the Notes then Outstanding and
with prior notice to the Rating Agencies. The Indenture also contains provisions permitting the holders of Notes
representing specified percentages of the Note Balance, on behalf of the Noteholders, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Noteholder of this Note (or any one of more predecessor Notes)
shall be conclusive and binding upon such Noteholder and upon all future holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the Issuer and the Indenture
Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of
Noteholders but with prior notice to the Rating Agencies and the Enhancer.
The term "Issuer" as used in this Note includes any successor or the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject
to the rights of the Indenture Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to
certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws of the State of New York,
without reference to its conflicts of law provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or
impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents,
none of Wilmington Trust Company in its individual capacity, JPMorgan Chase Bank in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on this Note or the performance of, or the failure to
perform, any of the covenants, obligations or indemnifications contained in the Indenture. The Noteholder of
this Note, by its acceptance hereof, agrees that, except as expressly provided in the Basic Documents, in the
case of an Event of Default under the Indenture, such Noteholder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations
and undertakings contained in the Indenture or in this Note.
The Servicer shall have the right to purchase from the Issuer all of the Mortgage Loans and related REO
Property if the Note Balance of the Notes as of any Payment Date is less than 10% of the Note Balance of the
Notes as of the Closing Date, (provided that a draw on the Policy would not occur as a result of such purchase
and provided further that the purchase price will provide sufficient funds to pay the outstanding Note Balance
and accrued and unpaid interest on the Notes to the Payment Date on which such amounts are to be distributed to
the Securityholders), at a price equal to 100% of the aggregate unpaid Principal Balance of all such remaining
Mortgage Loans, plus accrued and unpaid interest thereon at the weighted average of the Loan Rates thereon up to
the date preceding the Payment Date on which such amounts are to be distributed to the Securityholders (and in
the case of REO Property, the fair market value of the REO Property), plus any amounts due and owing to the
Enhancer under the Insurance Agreement related to the Mortgage Loans or the Notes (and any unpaid Servicing Fee
relating to the Mortgage Loans shall be deemed to have been paid at such time), plus any Interest Shortfall and
interest owed thereon to the Noteholders.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in its individual capacity, has
caused this Note to be duly executed.
WACHOVIA ASSET SECURITIZATION, INC. 2002-HE1 TRUST
By: WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Owner Trustee
Dated: September 27, 2002
By: _______________________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
JPMORGAN CHASE BANK,
not in its individual capacity but solely as
Indenture Trustee
Dated: September 27, 2002
By__________________________________________________
Authorized Signatory
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee: _______________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
___________________________, attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated: */
Signature Guaranteed:
*/
___________________________________
* NOTICE: The signature to this assignment must correspond with the name of the registered owner as it
appears on the face of the within Term Note in every particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
APPENDIX A
DEFINITIONS
Addition Notice: With respect to (i) the transfer of Subsequent Mortgage Loans to the Purchaser by the
Seller as provided in Section 2.2 of the Purchase Agreement, or (ii) the transfer of Subsequent Mortgage Loans to
the Issuer by the Depositor as provided in Section 3.05 of the Trust Agreement, as the context requires, a notice
given by the Seller or Depositor, as applicable, in the manner provided by the terms of the Purchase Agreement
(in substantially the form set forth in Exhibit 3 to such agreement) or the Trust Agreement (in substantially the
form set forth in Exhibit I to such agreement), as applicable.
Additional Balance: With respect to any Mortgage Loan, any future Draw made by the related Mortgagor
pursuant to the related Loan Agreement after the Cut-Off Date or Subsequent Cut-Off Date, together with all money
due or to become due in respect of such Draw; provided, however, that any Draw during the Rapid Amortization
Period shall be an Excluded Amount, shall not be acquired by the Trust and shall not be an Additional Balance.
Additional Balance Increase Amount: Shall mean (a) the excess, if any, of (i) the aggregate principal
amount of Additional Balances conveyed to the Trust Estate, over (ii) Principal Collections and Excess Spread
applied to purchase those Additional Balances from the Funding Account and/or the Custodial Account minus (b)
amounts paid on previous Payment Dates to the holders of the Certificates pursuant to Section 3.19(c) of the
Servicing Agreement and Section 3.05(a)(vi) of the Indenture with respect to any Additional Balance Increase
Amount.
Administration Agreement: The Administration Agreement dated as of the Closing Date between the
Administrator and the Issuer.
Affiliate: With respect to any Person, any other Person controlling, controlled by or under common
control with such Person. For purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of voting securities, by contract or
otherwise and "controlling" and "controlled" shall have meanings correlative to the foregoing.
Amortization Periods: Collectively, the Managed Amortization Period and the Rapid Amortization Period.
Appraised Value: With respect to any Mortgage Loan, the appraised value of the related Mortgaged
Property determined in the appraisal used in the origination of that Mortgage Loan, which may have been obtained
at an earlier time, but in no event more than twelve months from origination; provided that if the Mortgage Loan
was originated simultaneously with a senior lien on the related Mortgaged Property, the Appraised Value shall be
the lesser of the appraised value at the origination of the senior lien and the sales price for the related
Mortgaged Property.
Assignment of Mortgage: With respect to any Mortgage, an assignment, notice of transfer or equivalent
instrument, in recordable form, sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect the conveyance of such Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments covering Mortgages secured by
Mortgaged Properties located in the same jurisdiction.
Authorized Newspaper: A newspaper of general circulation in the Borough of Manhattan, The City of New
York, printed in the English language and customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
Authorized Officer: With respect to the Issuer, any officer of the Owner Trustee who is authorized to
act for the Owner Trustee in matters relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basic Documents: The Trust Agreement, the Indenture, the Purchase Agreement, the Insurance Agreement,
the Policy, the Servicing Agreement, any Subsequent Transfer Agreement and the other documents and certificates
delivered in connection with any of the above.
Beneficial Owner: With respect to any Note, the Person who is the beneficial owner of such Note as
reflected on the books of the Depository or on the books of a Person maintaining an account with such Depository
(directly as a Depository Participant or indirectly through a Depository Participant, in accordance with the
rules of such Depository).
Billing Cycle: With respect to any Mortgage Loan and Due Date, the calendar month preceding such Due
Date.
Book-Entry Notes: Beneficial interests in the Notes, ownership and transfers of which shall be made
through book entries by the Depository as described in Section 4.06 of the Indenture.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions
in the States of New York, North Carolina, Delaware or the State in which the Corporate Trust Office are required
or authorized by law to be closed.
Capitalized Interest Account: The account established and maintained pursuant to Section 3.20 of the
Servicing Agreement.
Capitalized Interest Requirement: With respect to each Payment Date during the Pre-Funding Period and
on the Payment Date immediately after the end of the Pre-Funding Period, the excess, if any of (i) the sum of (A)
the amount of interest accrued at the Note Rate or Rates on the Note Balance for the related Interest Period on
the amount on deposit in the Pre-Funding Account as of the close of business on the preceding Payment Date (or as
of the Closing Date, in the case of the first Payment Date) and (B) the amount of any fees paid to the Enhancer
for the Policy, over (ii) the amount of reinvestment earnings since the preceding Payment Date (or the Closing
Date, in the case of the first Payment Date) in the Pre-Funding Account.
Certificate Distribution Amount: For any Payment Date, the amount, if any, distributable on the
Certificates for such Payment Date pursuant to Sections 3.05(a)(vi) and (xiii) of the Indenture, Sections 3.04(a)
and (l) of the Servicing Agreement and Sections 5.01(a) and 8.01(c) of the Trust Agreement.
Certificate of Trust: The Certificate of Trust filed for the Trust pursuant to Section 3810(a) of the
Statutory Trust Statute.
Certificate Paying Agent: The Indenture Trustee, as further described in Section 3.14 of the Trust
Agreement.
Certificate Percentage Interest: With respect to any Payment Date and any Certificate, the Percentage
Interest for such Certificate.
Certificate Register: The register maintained by the Certificate Registrar in which the Certificate
Registrar shall provide for the registration of Certificates and of transfers and exchanges of Certificates.
Certificate Registrar: Initially, the Indenture Trustee, in its capacity as Certificate Registrar.
Certificateholder: The Person in whose name a Certificate is registered in the Certificate Register
except that, any Certificate registered in the name of the Issuer, the Owner Trustee or the Indenture Trustee or
any Affiliate of the Owner Trustee or the Indenture Trustee shall be deemed not to be outstanding and the
registered holder will not be considered a Certificateholder for purposes of giving any request, demand,
authorization, direction, notice, consent or waiver under the Indenture or the Trust Agreement; provided that, in
determining whether the Indenture Trustee or the Owner Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Certificates that the Indenture
Trustee or the Owner Trustee knows to be so owned shall be so disregarded. Owners of Certificates that have been
pledged in good faith may be regarded as Certificateholders if the pledgee establishes to the satisfaction of the
Indenture Trustee or the Owner Trustee, as the case may be, the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Issuer, any other obligor upon the Certificates or any Affiliate of
the Owner Trustee or the Indenture Trustee.
Certificates: The Certificates issued pursuant to the Trust Agreement.
Closing Date: September 27, 2002.
Code: The Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder.
Collateral: The meaning specified in the Granting Clause of the Indenture.
Collection Period: With respect to any Mortgage Loan and Payment Date, the calendar month preceding any
such Payment Date.
Collection Policy: The meaning specified in Section 3.01(b) of the Servicing Agreement.
Collections: With respect to any Collection Period, all Interest Collections and Principal Collections
during such Collection Period.
Combined Loan-to-Value Ratio or CLTV: With respect to each Mortgage Loan, the ratio, expressed as a
percentage, of (a) the sum of (i) the Credit Limit thereof and (ii) any outstanding principal balance, at
origination of such Mortgage Loan, of all other mortgage loans, if any, secured by senior or subordinate liens on
the related Mortgaged Property, over (b) the Appraised Value of that Mortgage Loan.
Commission: The Securities and Exchange Commission.
Condemnation Proceeds: All awards or settlements in respect of a Mortgaged Property, whether permanent
or temporary, partial or entire, by exercise of the power of eminent domain or condemnation, in any case to the
extent not applied to the restoration or repair of such Mortgaged Property or required to be released to a
Mortgagor in accordance with the terms of the related Loan Agreement, the Collection Policy or applicable law.
Corporate Trust Office: With respect to the Indenture Trustee, Certificate Registrar, Certificate
Paying Agent and Paying Agent, the principal corporate trust office of the Indenture Trustee and Note Registrar
at which at any particular time its corporate trust business shall be administered, which office at the date of
the execution of this instrument is located at (i) for Note and Certificate transfer purposes: JPMorgan Chase
Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Institutional Trust Services;
Wachovia Asset Securitization, Inc. 2002-HE1 Trust. With respect to the Owner Trustee, the principal corporate
trust office of the Owner Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Trust Agreement is located at ▇▇▇▇▇▇ Square
North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration.
Credit Limit: With respect to any Mortgage Loan, the maximum Principal Balance permitted under the
terms of the related Loan Agreement.
Custodial Account: The account or accounts created and maintained by the Servicer pursuant to
Section 3.03(b) of the Servicing Agreement, in which the Servicer shall deposit or cause to be deposited certain
amounts in respect of the Mortgage Loans.
Cut-Off Date: The opening of business on September 1, 2002.
Cut-Off Date Principal Balance: With respect to any Initial Mortgage Loan or Subsequent Mortgage Loan,
the unpaid principal balance thereof as of the close of business on the last day of the Billing Cycle immediately
prior to the Cut-Off Date or Subsequent Cut-Off Date, as the case may be.
Default: Any occurrence which is or with notice or the lapse of time or both would become an Event of
Default.
Deficiency Amount: With respect to any Payment Date, the sum of (a) the amount by which the aggregate
amount of accrued interest on the Notes (excluding any Relief Act Shortfalls for such Payment Date) at the Note
Rate on such Payment Date exceeds the amount on deposit in the Note Payment Account available for interest
distributions on the Notes on such Payment Date and (b)(i) with respect to any Payment Date that is not the Final
Payment Date, any Liquidation Loss Amount for that Payment Date, to the extent that, after taking into account
all amounts available under the Indenture to reduce the Note Balance, the Note Balance would exceed the sum of
the Pool Balance and the amount on deposit in the Funding Account, in each case as of the close of business on
the last day of the related Collection Period or (ii) on the Final Payment Date, the aggregate outstanding Note
Balance to the extent otherwise not paid on such date from amounts available under the Indenture to pay such
amount.
Definitive Notes: Any definitive, fully registered Note, as described in Section 4.08 of the Indenture.
Deleted Loan: A Mortgage Loan replaced or to be replaced with an Eligible Substitute Loan.
Depositor: Wachovia Asset Securitization, Inc., a North Carolina corporation, or its successor in
interest.
Depository: The Depository Trust Company or a successor appointed by the Indenture Trustee with the
approval of the Issuer. Any successor to the Depository shall be an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act and the regulations of the Commission thereunder.
Depository Participant: A Person for whom, from time to time, the Depository effects book-entry
transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Payment Date, the 18th day of the month in which such Payment
Date occurs or if such day is not a Business Day, the next succeeding Business Day.
Distribution Account: The account or accounts created and maintained by the Certificate Paying Agent
pursuant to Section 3.14(c) of the Trust Agreement. The Certificate Paying Agent will make all distributions on
the Certificates from money on deposit in the Distribution Account.
Draw: With respect to any Mortgage Loan, a borrowing by the related Mortgagor under the related Loan
Agreement.
Due Date: With respect to each Mortgage Loan, the date on which monthly payments on such Mortgage Loan
are due.
Eligible Account: An account that is either (a) a segregated account (including a securities account)
with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), having corporate trust powers and acting
as trustee for funds deposited in such account, so long as any of the securities of such depository institution
shall have a credit rating from each of Standard & Poor's and ▇▇▇▇▇'▇ in one of its generic rating categories
which signifies investment grade.
Eligible Institution: An institution that is either a depository institution, which may include the
Indenture Trustee or the Owner Trustee, organized under the laws of the United States of America or any one of
the States thereof or the District of Columbia, the deposits in which are insured by the FDIC and which at all
times has a short-term unsecured debt rating of at least A-1+ by Standard & Poor's and P-1 by ▇▇▇▇▇'▇.
Eligible Substitute Loan: A Mortgage Loan substituted by the Seller for a Deleted Loan, which must, on
the date of such substitution, as confirmed in an Officers' Certificate delivered to the Indenture Trustee, (i)
comply with each representation and warranty set forth in Section 3.1(b) of the Purchase Agreement, other than
clause (xxii), as of the date of substitution; (ii) have a Loan Rate and Gross Margin no lower than and not more
than 1% per annum higher than the Loan Rate and Gross Margin, respectively, of the Deleted Loan as of the date of
substitution; (iii) have a CLTV at the time of substitution no higher than that of the Deleted Loan at the
Cut-Off Date or Subsequent Cut-Off Date, as applicable; (iv) have a remaining term to stated maturity not greater
than (and not more than one year less than) that of the Deleted Loan and (vi) not be 30 days or more delinquent.
Enhancer: Ambac Assurance Corporation, any successor thereto or any replacement Enhancer substituted
pursuant to the Indenture.
Enhancer Default: Any failure by the Enhancer to make a payment required under the Policy in accordance
with its terms.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: With respect to the Indenture, any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) a default in the payment of the principal of, any installment of the principal of or interest
on any Note when the same becomes due and payable, and such default shall continue for a period of five days;
(b) there occurs a default in the observance or performance in any material respect of any covenant or
agreement of the Issuer made in the Indenture, or any representation or warranty of the Issuer made in the
Indenture or in any certificate 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 that has a material adverse
effect on the Noteholders or the Enhancer, and such default shall continue or not be cured, or the circumstance
or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given, by registered or certified mail, to
the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Enhancer or the Noteholders
of at least 25% of the Note Balance 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;
(c) there occurs the filing of a decree or order for relief by a court having jurisdiction in the premises
in respect of the Issuer or any substantial part of the Trust Estate in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, servicer, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or
(d) there occurs the commencement by the Issuer of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry
of an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment
or taking possession by a receiver, liquidator, assignee, servicer, trustee, sequestrator or similar official of
the Issuer or for any substantial part of the assets of the Trust Estate, or the making by the Issuer of any
general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of any action by the Issuer in furtherance of any of the foregoing.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Excess Spread: With respect to any Payment Date and without taking into account any Draw on the Policy
for such Payment Date, the excess, if any, of (i) Interest Collections (exclusive of the pro rata portion of
interest attributable to Additional Balances represented by any Additional Balance Increase Amount) for the
related Collection Period with respect to Mortgage Loans over (ii) the sum of (x) the premium for the Policy for
such Payment Date, and (y) the amounts paid on such Payment Date to the Noteholders of the Notes pursuant to
Section 3.05(a)(ii) of the Indenture.
Excess Spread Percentage: As to any Payment Date, the product of (x) (i) the sum of the Excess Spread,
less Liquidation Loss Amounts for the related Collection Period, divided by (ii) the Pool Balance as of the
beginning of the related Collection Period and (y) 12, expressed as a percentage.
Excluded Amount: For any Payment Date during the Rapid Amortization Period, all Draws made by an
obligor under any Mortgage Loan during the Rapid Amortization Period, which shall not be transferred to the Trust
Estate, and the portion of the Principal Collections and Interest Collections for each Collection Period
allocated to such Excluded Amount as provided in Section 2.4 of the Purchase Agreement provided, that the
Excluded Amount with respect to any Liquidation Loss Amount, shall be the pro rata portion of such Liquidation
Loss Amount on the Mortgage Loans during the related Collection Period attributable to additional balances not
conveyed to the Trust.
Expenses: The meaning specified in Section 7.02 of the Trust Agreement.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇, formerly the Federal National Mortgage Association, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
FICO: A consumer credit scoring methodology developed by Fair, ▇▇▇▇▇ Company as applied by the Seller
to rank potential borrowers based on the likelihood that they would pay their credit obligations.
Final Payment Date: The Payment Date occurring in September 2032.
Fiscal Year: The fiscal year of the Trust, which shall end on December 31 of each year.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the amount, if any, by which (i) the
aggregate of Liquidation Proceeds net of Liquidation Expenses exceeds (ii) the Principal Balance of such
Liquidated Mortgage Loan (plus accrued and unpaid interest thereon at the applicable Loan Rate from the date
interest was last paid through the date of receipt of the final Liquidation Proceeds) immediately prior to the
final recovery of the related Liquidation Proceeds.
Freddie Mac: Freddie Mac, formerly the Federal Home Loan Mortgage Corporation, or any successor thereto.
Funding Account: The account established and maintained pursuant to Section 3.19 of the Servicing
Agreement.
GAAP: Generally accepted accounting principles.
▇▇▇▇▇: Pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and
▇▇▇▇▇ ▇ ▇▇▇▇ upon and a security interest in and right of set-off against, deposit, set over and confirm. A
Grant of any item of Collateral or of any other property 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 such item of Collateral or
other agreement or instrument and all other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and options, to bring proceedings in
the name of the granting party or otherwise, and generally to do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.
Gross Margin: With respect to any Mortgage Loan, the percentage set forth as the "Margin" for such
Mortgage Loan on the Mortgage Loan Schedule.
Indemnified Party: The meaning specified in Section 7.02 of the Trust Agreement.
Indenture: The Indenture dated as of the Closing Date between the Issuer and the Indenture Trustee.
Indenture Trustee: JPMorgan Chase Bank, a New York banking corporation, and its successors and assigns
or any successor indenture trustee appointed pursuant to the terms of the Indenture.
Independent: When used with respect to any specified Person, such Person (i) is in fact independent of
the Issuer, any other obligor on the Notes, the Seller, the Depositor and any Affiliate of any of the foregoing
Persons, (ii) does not have any direct financial interest or any material indirect financial interest in the
Issuer, any such other obligor, the Seller, the Depositor or any Affiliate of any of the foregoing Persons and
(iii) is not connected with the Issuer, any such other obligor, the Seller, the Depositor or any Affiliate of any
of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Independent Certificate: A certificate or opinion to be delivered to the Indenture Trustee under the
circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the
Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and approved by the
Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer
has read the definition of "Independent" in this Indenture and that the signer is Independent within the meaning
thereof.
Initial Certificate Balance: $0.
Initial Note Balance: $950,000,000.
Initial Mortgage Loans: The adjustable rate home equity revolving lines of credit (i) sold by the
Seller to the Purchaser pursuant to Section 2.1 of the Purchaser Agreement or (ii) sold by the Depositor to the
Issuer pursuant to Section 3.01 of the Trust Agreement, as context requires, which are listed on the applicable
Mortgage Loan Schedule on the Closing Date.
Initial Transferred Property: All of the Seller's right, title and interest, whether now owned or
existing or hereafter created, arising, or acquired, in, to and under the following: (i) the Initial Mortgage
Loans (including the Cut-Off Date Principal Balances of such Initial Mortgage Loans now existing and all
Additional Balances arising thereunder after the Cut-Off Date through and including the date immediately
preceding the commencement of the Rapid Amortization Period), all interest accruing thereon, all monies due or to
become due thereon, and all collections in respect thereof received on or after the Cut-Off Date (other than
interest thereon in respect of any period prior to the Cut-Off Date); provided, however, that any Principal
Balance represented by a Draw made during the Rapid Amortization Period and interest thereon and money due or to
become due in respect thereof will not be or deemed to be transferred to the Purchaser, and the Seller in such
event shall retain ownership of each Principal Balance represented by each such Draw and interest thereon and
money due or to become due in respect thereof; (ii) the interest of the Seller in any insurance policies in
respect of the Initial Mortgage Loans; (iii) the interest of the Seller in the Mortgages and the Loan Agreements
related to each Initial Mortgage Loan and the other Related Documents and (iv) all proceeds of the foregoing.
Insolvency Event: With respect to a specified Person, (a) the filing of a decree or order for relief by
a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in
an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such
Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person's
affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such debts become due or the admission by
such Person in writing (as to which the Indenture Trustee shall have notice) of its inability to pay its debts
generally, or the adoption by the Board of Directors or managing member of such Person of a resolution which
authorizes action by such Person in furtherance of any of the foregoing.
Insurance Agreement: The Insurance and Indemnity Agreement dated as of the Closing Date, among the
Servicer, the Seller, the Depositor, the Issuer, the Indenture Trustee and the Enhancer, including any amendments
and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the Enhancer) pursuant to any insurance
policy covering a Mortgage Loan which are required to be remitted to the Servicer, or amounts required to be paid
by the Servicer pursuant to the next to last sentence of Section 3.05 of the Servicing Agreement, net of any
component thereof (i) covering any expenses incurred by or on behalf of the Servicer in connection with obtaining
such proceeds, (ii) that is applied to the restoration or repair of the related Mortgaged Property, (iii)
released to the related Mortgagor in accordance with the Servicer's normal servicing procedures or (iv) required
to be paid to any holder of a mortgage senior to such Mortgage Loan.
Interest Collections: With respect to any Payment Date, the sum of all payments by or on behalf of
Mortgagors and any other amounts constituting interest (including without limitation such portion of Insurance
Proceeds, Net Liquidation Proceeds, Repurchase Prices and any payment by the Servicer pursuant to Section 8.10 of
the Servicing Agreement as is allocable to interest on the applicable Mortgage Loan, but excluding the Excluded
Amount) as is paid by the Seller or the Servicer (including any optional servicing advance) or is collected and
applied by the Servicer under the Mortgage Loans, exclusive of the pro rata portion thereof attributable to any
Excluded Amounts, and reduced by the Servicing Fee for the related Collection Period and by any fees (including
annual fees) or late charges or similar administrative fees paid by Mortgagors during the related Collection
Period plus any amounts in respect of investment earnings on amounts on deposit in the Pre-Funding Account or Funding
Account pursuant to the Servicing Agreement. The terms of the related Loan Agreement shall determine the portion
of each payment in respect of such Mortgage Loan that constitutes principal or interest.
Interest Coverage Amount: The amount to be paid from proceeds received from the sale of the Notes for
deposit into the Capitalized Interest Account pursuant to Section 3.20(a) of the Servicing Agreement on the
Closing Date, which amount initially shall be $319,231, and thereafter, shall be the amount computed in
accordance with Section 3.20(c) of the Servicing Agreement.
Interest Period: With respect to the Notes and any Payment Date (other than the first Payment Date), the
period beginning on the preceding Payment Date and ending on the day preceding such Payment Date, and in the case
of the first Payment Date, the period beginning on the Closing Date and ending on the day preceding the first
Payment Date.
Interest Rate Adjustment Date: With respect to each Mortgage Loan, the date or dates on which the Loan
Rate is adjusted in accordance with the related Loan Agreement.
Interest Shortfall: With respect to any Payment Date on which the Net WAC Rate cap determines the Note
Rate, the excess of (a) the amount of interest that would have accrued on the Notes during the related Interest
Period had such amount not been determined pursuant to the definition "Net WAC Rate" over (b) the interest
actually accrued on the Notes during such Interest Period at the Note Rate.
Interest Shortfalls are not included as interest payments on the Notes for any Payment Date, such amount
shall accrue interest at the related Note Rate (as adjusted from time to time) and shall be paid on future
Payment Dates only to the extent funds are available therefor as set forth in Section 3.05(a) of the Indenture.
Issuer or Trust: Wachovia Asset Securitization, Inc. 2002-HE1 Trust, a Delaware statutory trust, or its
successor in interest.
Issuer Order or Issuer Request: A written order or request signed in the name of the Issuer by any one
of its Authorized Officers and delivered to the Indenture Trustee.
LIBOR: As to any Interest Period, (a) for any Interest Period other than the first Interest Period, the
rate for United States dollar deposits for one month that appears on the Telerate Screen Page 3750 as of 11:00
a.m., London, England time, on the second LIBOR Business Day prior to the first day of that Interest Period or
(b) with respect to the first Interest Period, the rate for United States dollar deposits for one month that
appears on the Telerate Screen Page 3750 as of 11:00 a.m., London, England time, two LIBOR Business Days prior to
the Closing Date. If such rate does not appear on such page (or other page as may replace that page on that
service, or if such service is no longer offered, such other service for displaying LIBOR or comparable rates as
may be reasonably selected by the Indenture Trustee after consultation with the Servicer), the rate will be the
Reference Bank Rate. If no Reference Bank Rate is available, LIBOR will be LIBOR applicable to the preceding
Payment Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking
institutions in the city of London, England are required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation, assignment, participation,
deposit arrangement, encumbrance, lien (statutory or other), preference, priority right or interest or other
security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation,
any conditional sale or other title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any
such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence
any of the foregoing; provided, however, that any assignment pursuant to Section 6.02 of the Servicing Agreement
shall not be deemed to constitute a Lien.
Liquidated Mortgage Loan: With respect to any Payment Date, any Mortgage Loan in respect of which the
Servicer has determined, in accordance with the servicing procedures specified in the Servicing Agreement, as of
the end of the related Collection Period that substantially all Liquidation Proceeds which it reasonably expects
to recover, if any, with respect to the disposition of the related REO Property have been recovered.
Liquidation Expenses: All out-of-pocket expenses (exclusive of overhead) incurred by or on behalf of
the Servicer in connection with the liquidation of any Mortgage Loan and not recovered under any insurance
policy, including legal fees and expenses, any unreimbursed amount expended (including, without limitation,
amounts advanced to correct defaults on any mortgage loan which is senior to such Mortgage Loan and amounts
advanced to keep current or pay off a mortgage loan that is senior to such Mortgage Loan) respecting such
Mortgage Loan and any related and unreimbursed expenditures for real estate property taxes or for property
restoration, preservation or insurance against casualty loss or damage.
Liquidation Loss Amount: With respect to any Payment Date and any Mortgage Loan that became a
Liquidated Mortgage Loan (excluding the Excluded Amount) during the related Collection Period, the unrecovered
portion of the Principal Balance of such Mortgage Loan and any unpaid accrued interest thereon at the end of such
Collection Period, after giving effect to the Net Liquidation Proceeds applied in reduction of such Principal
Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not including amounts drawn under the
Policy) if any received in connection with the liquidation of any Mortgage Loan or related REO Property, whether
through trustee's sale, foreclosure sale or otherwise.
Loan Agreement: With respect to each Mortgage Loan, the credit line agreement, pursuant to which the
related ▇▇▇▇▇▇▇▇▇ agrees to pay the indebtedness evidenced thereby and secured by the related Mortgage as
modified or amended.
Loan Rate: With respect to any Mortgage Loan and any day, the per annum rate of interest applicable
under the related Loan Agreement.
Lost Note Affidavit: With respect to any Mortgage Loan as to which the original Loan Agreement has been
permanently lost or destroyed and has not been replaced, an affidavit from the related Seller certifying that the
original Loan Agreement has been lost, misplaced or destroyed (together with a copy of the related Loan
Agreement, if available).
Managed Amortization Event: The occurrence of any date prior to the commencement of the Managed
Amortization Period on which the amount on deposit in the Funding Account equals or exceeds $57,000,000.
Managed Amortization Period: The period beginning on the first Payment Date following the end of the
related Revolving Period and ending on the earlier of (i) December 31, 2007 and (ii) the occurrence of a Rapid
Amortization Event.
Maximum Loan Rate: With respect to each Mortgage Loan, the maximum loan rate thereon specified in the
related Loan Agreement.
Minimum Monthly Payment: With respect to any Mortgage Loan and any month, the minimum amount required
to be paid by the related Mortgagor in such month.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a first or second lien on an estate
in fee simple interest in real property securing a Mortgage Loan.
Mortgage File: With respect to each Mortgage Loan, the documents specified in Section 2.1(d) of the
Purchase Agreement and any documents required to be added to such documents pursuant to the Purchase Agreement,
the Trust Agreement or the Servicing Agreement.
Mortgage Loans: At any time, all Initial Mortgage Loans and Subsequent Mortgage Loans, including
Additional Balances, if any, that have been sold to the Purchaser or the Issuer, as the context requires,
together with all monies due or become due thereunder or the Related Documents, and that remain subject to the
terms thereof.
Mortgage Loan Schedule: In connection with (a) the Purchase Agreement, the initial schedule of Initial
Mortgage Loans as of the Cut-Off Date set forth in Exhibit 1 of the Purchase Agreement, and as of each Subsequent
Cut-Off Date, the related schedule of Subsequent Mortgage Loans, which schedule sets forth the loan number, the
lien position of the related Mortgage, the Cut-Off Date Principal Balance, the Credit Limit and Gross Margin, as
amended or supplemented from time to time in accordance with the Purchase Agreement, and (b) the Servicing
Agreement, the initial schedule of Initial Mortgage Loans as of the Cut-Off Date set forth in Exhibit A of the
Servicing Agreement, and as of each Subsequent Cut-Off Date, the related schedule of Subsequent Mortgage Loans,
which schedule sets forth the loan number, the lien position of the related Mortgage, the Cut-Off Date Principal
Balance, the Credit Limit and Gross Margin, as amended or supplemented from time to time in accordance with the
Servicing Agreement.
Mortgaged Property: The underlying property, including real property and improvements thereon, securing
a Mortgage Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan, Liquidation Proceeds net of
Liquidation Expenses minus the pro rata portion of such amount that is attributable to any Excluded Amount (but
not including the portion, if any, of such amount that exceeds the Principal Balance of, plus accrued and unpaid
interest on, such Mortgage Loan at the end of the Collection Period immediately preceding the Collection Period
in which such Mortgage Loan became a Liquidated Mortgage Loan).
Net Loan Rate: With respect to any Payment Date and any Mortgage Loan, the Loan Rate of that Mortgage
Loan as of the first day of the calendar month in which the related Interest Period begins, net of the Servicing
Fee Rate, adjusted to an effective rate reflecting the methods by which interest is calculated on the Notes
during such Interest Period.
Net Principal Collections: With respect to any Payment Date, the excess, if any, of Principal
Collections for such Payment Date over the aggregate amount of Additional Balances created during the related
Collection Period, conveyed to the Issuer.
Net WAC Rate: With respect to any Payment Date, (i) a per annum rate equal to the weighted average of
the Net Loan Rates of the Mortgage Loans as of the first day of the related Collection Period, and weighted on
the basis of the respective Principal Balances of such Mortgage Loans as of the first day of the related
Collection Period, minus (ii) the premium rate on the Policy multiplied by a fraction, the numerator of which is
the Note Balance as of the first day of the related Collection Period and the denominator of which is the Pool
Balance as of the first day of the related Collection Period.
Nonrecoverable P&I Advance: Any P&I Advance previously made or proposed to be made in respect of a
Mortgage Loan that, in the judgment (in accordance with the Collection Policy) of the Servicer, will not be
ultimately recoverable, together with any accrued and unpaid interest thereon, from late Collections or any other
recovery on or in respect of such Mortgage Loan.
Note Balance: With respect to any Payment Date the Initial Note Balance reduced by all payments of
principal on the Notes prior to such Payment Date or reduction thereof by application of the Liquidation Loss
Amounts.
Noteholder: The Person in whose name a Note is registered in the Note Register, except that, any Note
registered in the name of the Depositor, the Issuer or the Indenture Trustee or any Affiliate of any of them
shall be deemed not to be outstanding and the registered holder will not be considered a Noteholder for purposes
of giving any request, demand, authorization, direction, notice, consent or waiver under the Indenture or the
Trust Agreement; provided, that in determining whether the Indenture Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver, only Notes that the Indenture
Trustee or the Owner Trustee knows to be so owned shall be so disregarded. Owners of Notes that have been
pledged in good faith may be regarded as Noteholders if the pledgee thereof establishes to the satisfaction of
the Indenture Trustee or the Owner Trustee such pledgee's right so to act with respect to such Notes and that
such pledgee is not the Issuer, any other obligor on the Notes or any Affiliate of any of the foregoing Persons.
Note Owner or Owner: The Beneficial Owner of a Note.
Note Payment Account: The account established by the Indenture Trustee pursuant to Section 8.02 of the
Indenture and Section 5.01 of the Servicing Agreement. Amounts deposited in the Note Payment Account will be
distributed by the Paying Agent in accordance with Section 3.05(b) of the Indenture.
Note Rate: A floating rate equal to the lesser of (i) LIBOR plus 0.37% per annum, and (ii) the Net WAC
Rate.
Note Register: The register maintained by the Note Registrar in which the Note Registrar shall provide
for the registration of Notes and of transfers and exchanges of Notes.
Note Registrar: The Indenture Trustee, in its capacity as Note Registrar.
Notes: The Class A Wachovia Asset Securitization, Inc. Asset-Backed Notes, Series 2002-HE1, in
substantially the form set forth in Exhibit A to the Indenture.
Officer's Certificate: With respect to the Servicer, a certificate signed by the President, Managing
Director, a Director, a Vice President or an Assistant Vice President, of the Servicer and delivered to the
Indenture Trustee. With respect to the Issuer, a certificate signed by any Authorized Officer of the Issuer,
under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01
of the Indenture, and delivered to the Indenture Trustee. Unless otherwise specified, any reference in the
Indenture to an Officer's Certificate shall be to an Officer's Certificate of any Authorized Officer of the
Issuer.
Opinion of Counsel: A written opinion of counsel of a law firm reasonably acceptable to the recipient
thereof. Any Opinion of Counsel for the Servicer may be provided by in-house counsel for the Servicer if
reasonably acceptable.
Original Pre-Funded Amount: The amount deposited from the proceeds of the sale of the Securities into
the Pre-Funding Account on the Closing Date, which amount is $79,917,338.
Outstanding: With respect to the Notes, as of the date of determination, all Notes theretofore
executed, authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to the Indenture
Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other Notes have been executed,
authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Indenture Trustee
is presented that any such Notes are held by a holder in due course;
provided, however, that for purposes of effectuating the Enhancer's right of subrogation as set forth in
Section 4.12 of the Indenture only, all Notes that have been paid with funds provided under the Policy shall be
deemed to be Outstanding until the Enhancer has been reimbursed with respect thereto.
Overcollateralization Amount: With respect to any Payment Date, the amount, if any, by which the sum of
(a) the Pool Balance and (b) the Funding Account, in each case as of the close of business on the last day of the
related Collection Period, exceeds the Note Balance.
Overcollateralization Target Amount: As to each Payment Date (a) prior to the Stepdown Date, an amount
equal to the sum of (i) 1.50% of the Note Balance as of the Closing Date and (ii) 100% of the aggregate Principal
Balances of all Mortgage Loans that are 180 days or more contractually delinquent as of the last day of the
related Collection Period, and (b) on or after the Stepdown Date, provided that the Stepdown Delinquency Test and
the Stepdown Cumulative Loss Test have each been met, an amount equal to 3.00% of the Pool Balance on such
Payment Date (exclusive of the pro rata portion thereof relating to any Excluded Amount or the Additional Balances
represented by Additional Balance Increase Amount), provided, however, that in no event shall the Overcollateralization
Target Amount be less than the greater of (x) 0.50% of the Note Balance as of the Closing Date and (y) the sum of
the three largest outstanding Mortgage Loans (by Principal Balance as of such Payment Date).
Owner Trust: Wachovia Asset Securitization, Inc. 2002-HE1 Trust, created by the Certificate of Trust
pursuant to the Trust Agreement.
Owner Trustee: Wilmington Trust Company, not in its individual capacity but solely as owner trustee,
and its successors and assigns or any successor Owner Trustee appointed pursuant to the terms of the Trust
Agreement.
Ownership Interest: As to any Certificate, any ownership or security interest in such Certificate,
including any interest in such Certificate as the Certificateholder thereof and any other interest therein,
whether direct or indirect, legal or beneficial, as owner or as pledgee.
P&I Advance: The meaning specified in Section 3.21 of the Servicing Agreement.
Paying Agent: Any paying agent or co-paying agent appointed pursuant to Section 3.03 of the Indenture,
which initially shall be the Indenture Trustee.
Payment Date: The 25th day of each month, or if such day is not a Business Day, then the next Business
Day.
Percentage Interest: With respect to any Note and Payment Date, the percentage obtained by dividing the
Note Balance of such Note by the Note Balance of all Notes prior to such Payment Date. With respect to any
Certificate and any Payment Date, the Percentage Interest stated on the face of such Certificate.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof when such obligations are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i) above maturing not more than one
month from the date of acquisition thereof; provided, that the unsecured short-term debt obligations of the party
agreeing to repurchase such obligations are at the time rated by each Rating Agency in at least its third highest
short-term rating category available;
(iii) federal funds, certificates of deposit, demand deposits, time deposits and bankers' acceptances
(which shall each have an original maturity of not more than 90 days and, in the case of bankers' acceptances,
shall in no event have an original maturity of more than 365 days or a remaining maturity of more than 30 days)
denominated in United States dollars of any U.S. depository institution or trust company incorporated under the
laws of the United States or any state thereof or of any domestic branch of a foreign depository institution or
trust company; provided, that the short-term debt obligations of such depository institution or trust company,
other than JPMorgan Chase Bank, (or, if the only Rating Agency is Standard & Poor's, in the case of the principal
depository institution in a depository institution holding company, debt obligations of the depository
institution holding company) at the date of acquisition thereof have been rated by each Rating Agency in its
highest short-term rating category available; and provided further, that if the only Rating Agency is Standard &
Poor's and if the depository or trust company is a principal subsidiary of a bank holding company and the debt
obligations of such subsidiary are not separately rated, the applicable rating shall be that of the bank holding
company; and provided further, that if the only Rating Agency is Standard & Poor's and the original maturity of
such short-term debt obligations of a domestic branch of a foreign depository institution or trust company shall
exceed 30 days, the short-term rating of such institution shall be A-1+;
(iv) commercial paper (having original maturities of not more than 365 days) of any corporation
incorporated under the laws of the United States or any state thereof which on the date of acquisition has been
rated by each Rating Agency in its highest short-term rating category available; provided, that such commercial
paper shall have a remaining maturity of not more than 30 days;
(v) a money market fund or a qualified investment fund (including without limitation, any such fund
for which the Indenture Trustee or an Affiliate of the Indenture Trustee acts as an advisor or a manager) rated
by each Rating Agency in one of its two highest long-term rating categories available; and
(vi) other obligations or securities that are acceptable to each Rating Agency as a Permitted
Investment hereunder and will not cause a Rating Event, and which are acceptable to the Enhancer, as evidenced in
writing; provided, however, in no event shall such other obligation or security be rated less than "AA/A-1" or
"Aa3/P-1" by S&P or ▇▇▇▇▇'▇, respectively;
provided, however, that no instrument shall be a Permitted Investment if it represents, either (1) the right to
receive only interest payments with respect to the underlying debt instrument or (2) the right to receive both
principal and interest payments derived from obligations underlying such instrument and the principal and
interest payments with respect to such instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying obligations. References herein to the highest long-term rating category
available debt shall mean AAA in the case of Standard & Poor's and Aaa in the case of ▇▇▇▇▇'▇, and references
herein to the highest short-term rating category available shall mean A-1+ in the case of Standard & Poor's and
P-1 in the case of ▇▇▇▇▇'▇.
Person: Any legal individual, corporation, partnership, joint venture, association, joint-stock
company, limited liability company, trust, unincorporated organization or government or any agency or political
subdivision thereof.
Plan: Any employee benefit plan or certain other retirement plans and arrangements, including
individual retirement accounts and annuities, ▇▇▇▇▇ plans and bank collective investment funds and insurance
company general or separate accounts in which such plans, accounts or arrangements are invested, that are subject
to ERISA or Section 4975 of the Code.
Plan Assets: The meaning specified in Section 2510.3-101 of the Department of Labor Regulations.
Policy: The certificate guaranty insurance policy #AB0600BE, and any endorsement thereto, dated as of
the Closing Date, issued by the Enhancer.
Pool Balance: With respect to any date, the aggregate Principal Balance of all Mortgage Loans as of
such date and (during the Pre-Funding Period) the Pre-Funded Amount.
Pre-Funded Amount: With respect to any date of determination during the Pre-Funding Period, the amount
on deposit in the Pre-Funding Account.
Pre-Funding Account: The account established and maintained pursuant to Section 3.18 of the Servicing
Agreement.
Pre-Funding Period: The period commencing on the Closing Date until the earliest of (i) the date on
which the amount on deposit in the Pre-Funding Account is less than $50,000, (ii) December 26, 2002 or (iii) the
occurrence of a Rapid Amortization Event.
Predecessor Note: With respect to any Note, every previous Note evidencing all or a portion of the same
debt as that evidenced by such Note; and, for the purpose of this definition, any Note authenticated and
delivered under Section 4.03 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall be
deemed to evidence the same debt as such mutilated, lost, destroyed or stolen Note.
Prime: The prime rate as published in the Eastern Edition of The Wall Street Journal on the 25th day of
the prior calendar month. If more than one prime rate is published on the 25th day of the prior calendar month,
"Prime" shall equal the highest prime rate published on such date. If the prime rate is not published on the
25th day of the prior calendar month, "Prime" shall equal the prime rate published on the last business day prior
to such 25th day.
Principal Balance: With respect to any Mortgage Loan, other than a Liquidated Mortgage Loan, and as of
any day, the related Cut-Off Date Principal Balance, plus (i) any Additional Balances in respect of such Mortgage
Loan conveyed to the Trust, minus (ii) all collections credited as principal in respect of any such Mortgage Loan
in accordance with the related Loan Agreement (except any such collections that are allocable to any Excluded
Amount) and applied in reduction of the Principal Balance thereof. For purposes of this definition, a Liquidated
Mortgage Loan shall be deemed to have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan immediately prior to the final recovery of substantially all related Liquidation Proceeds and a Principal
Balance of zero thereafter.
Principal Collections: With respect to any Payment Date, the aggregate of the following amounts:
(i) the total amount of payments made by or on behalf of the related Mortgagor, received and
applied as payments of principal on such Mortgage Loan during the related Collection Period, as reported by the
Servicer or the related Subservicer;
(ii) any Net Liquidation Proceeds allocable as a recovery of principal received in connection with
such Mortgage Loan during the related Collection Period;
(iii) if such Mortgage Loan was repurchased by the Seller pursuant to the Purchase Agreement during
the related Collection Period, 100% of the Principal Balance thereof as of the date of such purchase and if any
Eligible Substitute Loan is substituted for a Deleted Loan, the Substitution Adjustment Amount; and
(iv) any other amounts received as payments on or proceeds of such Mortgage Loan during the
Collection Period, to the extent applied in reduction of the Principal Balance thereof;
provided, that Principal Collections shall be reduced by any amounts withdrawn from the Custodial Account
pursuant to clauses (c) and (f) of Section 3.04 of the Servicing Agreement, and shall not include any portion of
such amounts attributable to any Excluded Amount in respect of any Mortgage Loan that are allocable to principal
of such Mortgage Loan and not otherwise excluded from the amounts specified in (i) through (iv) above.
Principal Distribution Amount: For any Payment Date (i) during the Revolving Period, the amount, if
any, transferred from the Pre-Funding Account to the Note Payment Account pursuant to Section 3.18(b) of the
Servicing Agreement, and the amount, if any, transferred from the Funding Account to the Note Payment Amount
pursuant to Section 3.19(c)(ii) of the Servicing Agreement, (ii) during the Managed Amortization Period, Net
Principal Collections for the Mortgage Loans, less amounts paid to Certificateholders in respect of the
Additional Balance Increase Amount for that Payment Date, (iii) during the Rapid Amortization Period, Principal
Collections for the Mortgage Loans; provided, that on any Payment Date during the Amortization Periods, the
Principal Distribution Amount for such Payment Date shall include, from the Excess Spread, to the extent
available or, to the extent not available, from a draw on the Policy (but only to the extent the
Overcollateralization Amount is zero), an amount equal to the aggregate of the Liquidation Loss Amounts, if any,
for such Payment Date and (iv) the Outstanding Note Balance on the Final Payment Date.
Proceeding: Any suit in equity, action at law or other judicial or administrative proceeding.
Prospectus Supplement: The prospectus supplement dated September 25, 2002, relating to the Notes.
Purchase Agreement: The Mortgage Loan Purchase Agreement dated as of the Closing Date, between the
Seller and the Purchaser.
Purchase Price: The amounts specified in Section 2.3(a) of the Purchase Agreement.
Purchaser: Wachovia Asset Securitization, Inc., as purchaser under the Purchase Agreement, and its
successors and assigns.
Rapid Amortization Event: Any one of the following events:
(a) the failure on the part of the Seller (i) to make any payment or deposit required to be made under the
Purchase Agreement within three Business Days after the date such payment or deposit is required to be made; or
(ii) to observe or perform in any material respect any other covenants or agreements of the Seller set forth in
the Purchase Agreement, which failure continues unremedied for a period of 60 days after written notice and such
failure materially and adversely affects the interests of the Securityholders or the Enhancer; provided, however,
that a Rapid Amortization Event shall not be deemed to have occurred if Seller has repurchased or caused to be
repurchased or substituted for the affected Mortgage Loan during such period (or within an additional 60 days
with the consent of the Indenture Trustee and the Enhancer) in accordance with the provisions of the Purchase
Agreement;
(b) if any representation or warranty made by the Seller in the Purchase Agreement proves to have been
incorrect in any material respect when made and which continues to be incorrect in any material respect for a
period of 90 days after written notice and as a result of which the interests of the Securityholders or the
Enhancer are materially and adversely affected; provided, however, that a Rapid Amortization Event shall not be
deemed to have occurred if the Seller has repurchased or caused to be repurchased or substituted for the affected
Mortgage Loan during such period (or within an additional 60 days with the consent of the Indenture Trustee and
the Enhancer) in accordance with the provisions of the Trust Agreement;
(c) the entry against the Seller of a decree or order by a court or agency or supervisory authority having
jurisdiction under Title 11 of the United States Code or any other applicable federal or state bankruptcy,
insolvency or other similar law, or if a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Depositor
or its property, and the continuance of any such decree or order unstayed and in effect for a period of 60
consecutive days;
(d) the Seller shall voluntarily submit to Proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other similar law relating to the Seller or of or relating
to all or substantially all of its property; or the Seller shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations;
(e) the Issuer shall become subject to regulation by the Commission as an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(f) a Servicing Default shall occur and be unremedied under the Servicing Agreement and a qualified
successor Servicer shall not have been appointed;
(g) the occurrence of a draw on the Policy;
(h) the Issuer (or a portion thereof) is determined to be a taxable mortgage pool or an association (or a
publicly-traded partnership) taxable as a corporation or a taxable mortgage pool for federal income tax purposes;
(i) an event of default under the Insurance Agreement (except for a default by the Enhancer, unless such
Enhancer cannot be replaced without additional expense); or
(j) an Event of Default has occurred and continues beyond the expiration of the applicable cure period.
(k) In the case of any event described in (a), (b), (f), or (i), a Rapid Amortization Event shall be deemed
to have occurred only if, after any applicable grace period described in such clauses, any of the Indenture
Trustee, the Enhancer or, with the consent of the Enhancer, Securityholders evidencing not less than 51% of the
aggregate Securities Balance, by written notice to the Seller, the Servicer, the Depositor and the Owner Trustee
(and to the Indenture Trustee, if given by the Enhancer or the Securityholders), declare that a Rapid
Amortization Event has occurred as of the date of such notice. In the case of any event described in clauses
(c), (d), (e), (g), (h) or (j), a Rapid Amortization Event shall be deemed to have occurred without any notice or
other action on the part of the Indenture Trustee, the Securityholders or the Enhancer immediately upon the
occurrence of such event; provided, that any Rapid Amortization Event may be waived and deemed of no effect with
the written consent of the Enhancer and each Rating Agency, subject to the satisfaction of any conditions to such
waiver.
Rapid Amortization Period: The period beginning on the earlier of (i) the first Payment Date following
the end of the Managed Amortization Period and (ii) the occurrence of a Rapid Amortization Event, and ending upon
the termination of the Issuer.
Rating Agency: Each of ▇▇▇▇▇'▇, Standard & Poor's or, if any such organization or a successor thereto is
no longer in existence, such nationally recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the Indenture Trustee. References
herein to the highest short term unsecured rating category of a Rating Agency shall mean A-1+ or better in the
case of Standard & Poor's and P-1 or better in the case of ▇▇▇▇▇'▇; and in the case of any other Rating Agency,
shall mean such equivalent ratings. References herein to the highest long-term rating category of a Rating
Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa" in the case of ▇▇▇▇▇'▇; and in the case of any
other Rating Agency, shall mean such equivalent rating.
Rating Event: The qualification, reduction or withdrawal by a Rating Agency of its then-current rating
of the Notes.
Record Date: With respect to the Notes and any Payment Date, unless Notes are no longer held in
book-entry form, the close business on the Business Day immediately preceding such Payment Date and if the Notes
are no longer held in book-entry form, the close of business on the last Business Day of the month preceding the
month of such Payment Date.
Recovery Fee: A customary fee calculated based on additional recovery amounts charged for the
collection of such additional recovery amounts on any Mortgage Loan after the date that such Mortgage Loan became
a Liquidated Mortgage Loan.
Reference Bank Rate: With respect to any Interest Period, as follows: the arithmetic mean (rounded
upwards, if necessary, to the nearest one sixteenth of one percent) of the offered rates for United States dollar
deposits for one month which are offered by the Reference Banks as of 11:00 a.m., London, England time, on the
second LIBOR Business Day prior to the first day of such Interest Period to prime banks in the London interbank
market in amounts approximately equal to the sum of the outstanding Note Balance of the Notes; provided, that at
least two Reference Banks provide such rate. If fewer than two such rates are provided, the Reference Bank Rate
will be the arithmetic mean of the rates quoted by one or more major banks in New York City, selected by the
Indenture Trustee after consultation with the Servicer and the Enhancer, as of 11:00 a.m., New York time, on such
date for loans in U.S. Dollars to leading European banks for a period of one month in amounts approximately equal
to the Note Balance of the Notes. If no quotations can be obtained, the Reference Bank Rate will be the
Reference Bank Rate applicable to the preceding Interest Period.
Reference Banks: Shall mean at least three major banks in the London interbank market selected by the
Indenture Trustee after consultation with the Servicer.
Related Documents: With respect to each Mortgage Loan, the documents contained in the Mortgage File.
Relief Act Shortfalls: With respect to any Payment Date, for any Mortgage Loan as to which there has
been a reduction in the amount of interest collectible thereon for the related Collection Period as a result of
the application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, the shortfall, if any, equal
to (i) one month's interest on the Principal Balance of such Mortgage Loan at the applicable Loan Rate, over (ii)
the interest collectible on such Mortgage Loan during such Collection Period.
REO Proceeds: Proceeds (net of any directly related expenses incurred by or on behalf of the Servicer
for the proper operation, management and maintenance of the related REO Property and of any reserves reasonably
required from time to time to be maintained to satisfy anticipated liabilities) received in respect of all REO
Properties (including, without limitation, proceeds from the rental of the related Mortgaged Property) that are
received prior to the final liquidation of such Mortgaged Property.
REO Property: A Mortgaged Property that is acquired by the Trust in foreclosure or by deed in lieu of
foreclosure.
Representative: Wachovia Securities, Inc., as representative of the Underwriters.
Repurchase Event: With respect to any Mortgage Loan, either (i) a discovery that, as of the Closing
Date with respect to an Initial Mortgage Loan or the related Subsequent Transfer Date with respect to any
Subsequent Mortgage Loan, the related Mortgage was not a valid lien on the related Mortgaged Property subject
only to (A) the lien of any prior mortgage indicated on the Mortgage Loan Schedule, (B) the lien of real property
taxes and assessments not yet due and payable, (C) covenants, conditions, and restrictions, rights of way,
easements and other matters of public record as of the date of recording of such Mortgage and such other
permissible title exceptions as are customarily accepted for similar loans and (D) other matters to which like
properties are commonly subject that do not materially adversely affect the value, use, enjoyment or
marketability of the related Mortgaged Property or (ii) with respect to any Mortgage Loan as to which either
Seller delivers an affidavit certifying that the original Loan Agreement has been lost or destroyed, a subsequent
default on such Mortgage Loan if the enforcement thereof or of the related Mortgage is materially and adversely
affected by the absence of such original Loan Agreement.
Repurchase Price: With respect to any Mortgage Loan required to be repurchased on any date pursuant to
the Purchase Agreement, purchased by the Depositor pursuant to the Trust Agreement or purchased by the Servicer
pursuant to the Servicing Agreement, an amount equal to the sum of (i) 100% of the Principal Balance thereof
(without reduction for any amounts charged off) and (ii) unpaid accrued interest at the Loan Rate (or with
respect to the last day of the month in the month of repurchase, the Loan Rate will be the Loan Rate in effect as
of the second to last day in such month) on the outstanding Principal Balance thereof from the Due Date to which
interest was last paid by the related Mortgagor to the first day of the month following the month of purchase.
Required Insurance Policy: With respect to any Mortgage Loan, any insurance policy which is required to
be maintained from time to time under the Servicing Agreement or the related Subservicing Agreement in respect of
such Mortgage Loan.
Responsible Officer: With respect to the Indenture Trustee, any officer of the Indenture Trustee with
direct responsibility for the administration of the Trust Estate pursuant to the Indenture 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.
Revolving Period: The period beginning on the Closing Date and ending on the earlier of (i) December
31, 2003, and (ii) the occurrence of a Managed Amortization Event or a Rapid Amortization Event.
Secretary of State: The Secretary of State of the State of Delaware.
Securities Act: The Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
Securities Balance: The Note Balance or Certificate Balance, as the context may require.
Security: Any Certificate or a Note, as the context may require.
Securityholder: Any Noteholder or Certificateholder.
Seller: ▇▇▇▇▇▇▇▇, as seller under the Purchase Agreement, and its successors and assigns.
Servicer: Wachovia, and its successors and assigns.
Servicing Advance: The meaning specified in Section 3.08 of the Servicing Agreement.
Servicing Agreement: The Servicing Agreement dated as of the Closing Date among the Servicer, the
Issuer and the Indenture Trustee.
Servicing Certificate: A certificate completed and executed by a Servicing Officer on behalf of the
Servicer in accordance with Section 4.01 of the Servicing Agreement.
Servicing Default: Any one of the following events:
(i) any failure by the Servicer to deposit in the Custodial Account, Funding Account, Note Payment Account
or Distribution Account any deposit required to be made under the terms of this Agreement that continues
unremedied for a period of three (3) Business Days after the earlier of (A) the date upon which written notice of
such failure shall have been given to the Servicer by the Issuer or the Indenture Trustee and (B) the first date
on which the Servicer has actual knowledge of such failure;
(ii) any failure on the part of the Servicer duly to observe or perform any other covenants or agreements of
the Servicer set forth in this Agreement, which failure, in each case, materially and adversely affects the
interests of the Securityholders, and which failure continues unremedied for a period of 45 days after the
earlier of (A) the date on which written notice of such failure, requiring the same to be remedied, and stating
that such notice is a "Notice of Default" hereunder, shall have been given to the Servicer by the Issuer or the
Indenture Trustee and (B) the first date on which the Servicer has actual knowledge of such failure;
(iii) the entry against the Servicer of a decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee, conservator, receiver or liquidator in any
conservatorship, receivership, readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs; or
(iv) the consent by the Servicer to the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to all or substantially all of its property; or the
commencement of an involuntary case relating to the Servicer under any applicable federal or state bankruptcy,
insolvency or other similar law and such case shall either be consented to by the Servicer or shall not have been
dismissed or stayed within sixty (60) day of its commencement; or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations.
Servicing Fee: With respect to any Mortgage Loan and any Collection Period, the product of (i) the
Servicing Fee Rate divided by 12 and (ii) the related Principal Balance as of the first day of such Collection
Period.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible for, the administration and
servicing of the Mortgage Loans whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Enhancer) by the Servicer, as such list may be amended
from time to time.
Servicer Termination Triggers: A Servicing Termination Trigger will be hit if the percentage of
cumulative losses on the Mortgage Loans (exclusive of the pro rata portion thereof relating to any Excluded
Amount or the Additional Balances represented by Additional Balance Increase Amount) as of any date exceed the
applicable percentage listed in the chart below of the Pool Balance as of the Closing Date:
Months Percentage
1 - 24 2.00%
25 - 36 2.75%
37 - 48 3.75%
49 - 60 4.25%
61 - 72 5.00%
73+ 5.75%
Standard & Poor's: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or
its successor in interest.
Statutory Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Sections 3801 et seq., as
the same may be amended from time to time.
Stepdown Cumulative Loss Test: With respect to any date of determination, the Stepdown Cumulative Loss
Test shall be met if the percentage of cumulative losses on the Mortgage Loans (exclusive of the pro rata portion
thereof relating to any Excluded Amount or the Additional Balances represented by Additional Balance Increase
Amount) as of such date of determination is less than the applicable percentage listed in the chart below of the
Pool Balance as of the Closing Date:
Months Percentage
31 - 48 1.50%
49 - 60 2.00%
61+ 2.50%
Stepdown Date: The later to occur of (i) the thirty-first Payment Date and (ii) the Payment Date on
which the Note Balance immediately prior to that payment date is less than or equal to 50% of the Initial Note
Balance.
Stepdown Delinquency Test: With respect to any date of determination, the Stepdown Delinquency Test
shall be met if the six month rolling sixty-day average delinquency rate (including foreclosures and REO
Properties) on the Mortgage Loans (exclusive of the pro rata portion thereof relating to any Excluded Amount or
the Additional Balances represented by Additional Balance Increase Amount) as of such date of determination is
less than 3.50%.
Subsequent Cut-Off Date: With respect to any Subsequent Mortgage Loan, the date specified in the
related Subsequent Transfer Agreement.
Subsequent Mortgage Loan: An adjustable rate home equity revolving line of credit (i) sold by the
Seller to the Purchaser pursuant to Section 2.2 of the Purchase Agreement and the applicable Subsequent Transfer
Agreement, or (ii) sold by the Depositor to the Issuer pursuant to Sections 3.01 and 3.05 of the Trust Agreement
and the applicable Subsequent Transfer Agreement, as the context requires, such adjustable rate home equity
revolving line of credit being identified on the Mortgage Loan Schedule attached to the related Subsequent
Transfer Agreement, as set forth in such Subsequent Transfer Agreement.
Subsequent Net Recovery Amounts: Amounts collected on a Mortgage Loan after the Mortgage Loan becomes a
Liquidated Mortgage Loan, net of any Recovery Fee.
Subsequent Transfer Agreement: Each Subsequent Transfer Agreement, dated as of a Subsequent Transfer
Date (i) executed by the Seller and the Purchaser substantially in the form of Exhibit 2 to the Purchase
Agreement, or (ii) executed by the Depositor and the Issuer substantially in the form of Exhibit J to the Trust
Agreement, as the context requires, by which the related Subsequent Mortgage Loans are sold to the Purchaser or
the Issuer, as applicable.
Subsequent Transfer Date: With respect to each Subsequent Transfer Agreement, the date on which the
related Subsequent Mortgage Loans are sold to the Purchaser or the Issuer, as applicable.
Subsequent Transferred Property: Collectively with respect to each Subsequent Transfer Date, all of the
right, title and interest of the Seller whether now owned or existing or hereafter created, arising, or acquired,
in, to and under the following: (i) the related Subsequent Mortgage Loans (including the related Cut-Off Date
Principal Balances then existing and all Additional Balances arising thereunder after the Subsequent Cut-Off Date
through and including the date immediately preceding the commencement of the Rapid Amortization Period) and
interest thereon and money due or to become due in respect thereof, all interest accruing thereon, all monies due
or to become due thereon, and all collections in respect thereof received on or after the Subsequent Cut-Off Date
(other than interest thereon in respect of any period prior to the Subsequent Cut-Off Date); provided, however,
that any Principal Balance represented by a Draw made during the Rapid Amortization Period and interest thereon
and money due or to become due in respect thereof will not be or deemed to be transferred to the Purchaser, and
the Seller in such event shall retain ownership of each Principal Balance represented by each such Draw; (ii) the
interest of the Seller in any insurance policies in respect of the Subsequent Mortgage Loans; (iii) the interest
of the Seller in the Mortgages and the Loan Agreements related to each Subsequent Mortgage Loan and the other
Related Documents and (iv) all proceeds of the foregoing.
Subservicer: Each Person that enters into a Subservicing Agreement as a subservicer of Mortgage Loans.
Subservicing Agreement: The written contract between the Servicer and any Subservicer relating to
servicing and administration of certain Mortgage Loans as provided in Section 3.01 of the Servicing Agreement.
Substitution Adjustment Amount: With respect to any Eligible Substitute Loan and any Deleted Loan, the
amount, if any, as determined by the Servicer, by which the aggregate principal balance of all such Eligible
Substitute Loans as of the date of substitution is less than the aggregate Principal Balance of all such Deleted
Loans (after application of the principal portion of the Monthly Payments due in the month of substitution that
are to be distributed to the Securityholders in the month of substitution).
Telerate Screen Page 3750: The display page so designated on the Bridge Telerate Capital Markets Report
(or such other page as may replace page 3750 on such service for the purpose of displaying London interbank
offered rates of major banks, or, if such service is no longer offered, such other service for displaying London
interbank offered rates or comparable rates as may be selected by the Indenture Trustee after consultation with
the Servicer.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation or other form of assignment of
any Ownership Interest in a Certificate.
Transfer Date: The Payment Date on which the Servicer, upon receipt of written notice and direction from
the Issuer, shall cause the retransfer of Mortgage Loans from the Trust Estate to the Issuer, pursuant to
Section 3.22(a) of the Servicing Agreement.
Transferee: Any Person who is acquiring by Transfer any Ownership Interest in a Certificate.
Transfer Notice Date: The fifth Business Day prior to the Transfer Date for which the Servicer shall
give the Indenture Trustee, the Rating Agencies and the Enhancer a notice of the proposed retransfer of Mortgage
Loans, pursuant to Section 3.22(a) of the Servicing Agreement.
Transferor: Any Person who is disposing by Transfer of any Ownership Interest in a Certificate.
Transferred Property: The Initial Transferred Property and the Subsequent Transferred Property.
Treasury Regulations: Regulations, including proposed or temporary Regulations, promulgated under the
Code. References herein to specific provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury Regulations.
Trust Agreement: The Trust Agreement dated as of the Closing Date, between the Owner Trustee and the
Depositor.
Trust Estate: The meaning specified in the Granting Clause of the Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as amended from time to time, as in effect
on any relevant date.
UCC: The Uniform Commercial Code, as in effect from time to time, as in effect in any specified
jurisdiction.
Underwriters: Each of Wachovia Securities, Inc., Banc of America Securities, LLC and ▇.▇. ▇▇▇▇▇▇
Securities, Inc.
Underwriting Agreement: The underwriting agreement dated September 25, 2002, between the Depositor and
the Representative.
Uniform Single Attestation Program for Mortgage Bankers: The Uniform Single Attestation Program for
Mortgage Bankers, as published by the Mortgage Bankers Association of America and effective with respect to
fiscal periods ending on or after December 15, 1995.
Unpaid Principal Amount: As defined in Section 3.05(a) of the Indenture.
Wachovia: Wachovia Bank, National Association, a national banking association.