EXECUTION COPY
____________________________________________________________
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1
Issuer
and
FIRST UNION NATIONAL BANK
Indenture Trustee
_________________________________________
INDENTURE
Dated as of April 1, 1998
__________________________________________
Relating to
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1
NOVASTAR HOME EQUITY LOAN ASSET-BACKED BONDS, SERIES 1998-1
_________________________________________________________________
TABLE OF CONTENTS
Page
GRANTING CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . .1
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 . . . . . . . . .3
ARTICLE II Original Issuance of Bonds. . . . . . . . . . . .3
Section 2.01. Form. . . . . . . . . . . . . . . . . .3
Section 2.02. Execution, Authentication and Delivery.4
Section 2.03. Acceptance of Mortgage Loans by
Indenture Trustee. . . . . . . . . . . . . . . . . . .4
ARTICLE III Covenants . . . . . . . . . . . . . . . . . . . .6
Section 3.01. Collection of Payments with respect to
the Mortgage Loans . . . . . . . . . .6
Section 3.02. Maintenance of Office or Agency . . . .6
Section 3.03. Money for Payments To Be Held in Trust;
Paying Agent. . . . . . . . . . . . . 6
Section 3.04. Existence . . . . . . . . . . . . . . .8
Section 3.05. Payment of Principal and Interest . . .8
Section 3.06. Protection of Trust Estate. . . . . . 10
Section 3.07. Opinions as to Trust Estate . . . . . 10
Section 3.08. Performance of Obligations. . . . . . 11
Section 3.09. Negative Covenants. . . . . . . . . . 12
Section 3.10. Annual Statement as to Compliance . . 12
Section 3.11. Servicing and Administration of the CAP
Agreements. . . . . . . . . . . . . . 13
Section 3.12. Representations and Warranties
Concerning the Mortgage Loans . . . . 13
Section 3.13. Amendments to Servicing Agreement . . 13
Section 3.14. Servicer as Agent and Bailee of the
Indenture Trustee . . . . . . . . . . 13
Section 3.15. Investment Company Act. . . . . . . . 14
Section 3.16. Issuer May Consolidate, etc.. . . . . 14
Section 3.17. Successor or Transferee . . . . . . . 16
Section 3.18. No Other Business . . . . . . . . . . 16
Section 3.19. No Borrowing. . . . . . . . . . . . . 16
Section 3.20. Guarantees, Loans, Advances and Other
Liabilities . . . . . . . . . . . . . 16
Section 3.21. Capital Expenditures. . . . . . . . . 17
Section 3.22. Purchase of Mortgage Loans Pursuant to
the Servicing Agreement . . . . . . . 17
Section 3.23. Restricted Payments . . . . . . . . . 17
Section 3.24. Notice of Events of Default . . . . . 17
Section 3.25. Further Instruments and Acts. . . . . 18
Section 3.26. Statements to Bondholders and Xxxxxxx
Xxxxx . . . . . . . . . . . . . . . . 18
Section 3.27. Determination of Bond Interest Rate . 18
Section 3.28. Payments under the Bond Insurance
Policy. . . . . . . . . . . . . . . . 18
ARTICLE IV The Bonds; Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . . . . . . . 19
Section 4.01. The Bonds . . . . . . . . . . . . . . 19
Section 4.02. Registration of and Limitations on
Transfer and Exchange of Bonds;
Appointment of Certificate Registrar. 19
Section 4.03. Mutilated, Destroyed, Lost or Stolen
Bonds . . . . . . . . . . . . . . . . 20
Section 4.04. Persons Deemed Owners . . . . . . . . 21
Section 4.05. Cancellation. . . . . . . . . . . . . 21
Section 4.06. Book-Entry Bonds. . . . . . . . . . . 22
Section 4.07. Notices to Depository . . . . . . . . 22
Section 4.08. Definitive Bonds. . . . . . . . . . . 22
Section 4.09. Tax Treatment . . . . . . . . . . . . 23
Section 4.10. Satisfaction and Discharge of
Indenture . . . . . . . . . . . . . . 23
Section 4.11. Application of Trust Money. . . . . . 24
Section 4.12. Subrogation and Cooperation . . . . . 25
Section 4.13. Repayment of Monies Held by Paying
Agent . . . . . . . . . . . . . . . . 26
Section 4.14. Temporary Bonds . . . . . . . . . . . 26
ARTICLE V Default and Remedies . . . . . . . . . . . . . . . . 27
Section 5.01. Events of Default . . . . . . . . . . 27
Section 5.02. Acceleration of Maturity; Rescission
and Annulment . . . . . . . . . . . . 27
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Indenture Trustee. 28
Section 5.04. Remedies; Priorities. . . . . . . . . 30
Section 5.05. Optional Preservation of the Trust
Estate. . . . . . . . . . . . . . . . 32
Section 5.06. Limitation of Suits . . . . . . . . . 33
Section 5.07. Unconditional Rights of Bondholders
To Receive Principal and Interest . . 33
Section 5.08. Restoration of Rights and Remedies. . 34
Section 5.09. Rights and Remedies Cumulative. . . . 34
Section 5.10. Delay or Omission Not a Waiver. . . . 34
Section 5.11. Control by Bond Insurer . . . . . . . 34
Section 5.12. Waiver of Past Defaults . . . . . . . 35
Section 5.13. Undertaking for Costs . . . . . . . . 35
Section 5.14. Waiver of Stay or Extension Laws. . . 36
Section 5.15. Sale of Trust Estate. . . . . . . . . 36
Section 5.16. Action on Bonds . . . . . . . . . . . 38
Section 5.17. Performance and Enforcement of
Certain Obligations . . . . . . . . . 38
ARTICLE VI The Indenture Trustee . . . . . . . . . . . . . 39
Section 6.01. Duties of Indenture Trustee . . . . . 39
Section 6.02. Rights of Indenture Trustee . . . . . 40
Section 6.03. Individual Rights of Indenture
Trustee . . . . . . . . . . . . . . . 41
Section 6.04. Indenture Trustee's Disclaimer. . . . 41
Section 6.05. Notice of Event of Default. . . . . . 41
Section 6.06. Tax Administration of the Issuer. . . 41
Section 6.07. Compensation and Indemnity. . . . . . 41
Section 6.08. Replacement of Indenture Trustee. . . 42
Section 6.09. Successor Indenture Trustee by Xxxxxx 43
Section 6.10. Appointment of Co-Indenture Trustee or
Separate Indenture Trustee. . . . . . 43
Section 6.11. Eligibility; Disqualification . . . . 45
Section 6.12. Preferential Collection of Claims
Against Issuer. . . . . . . . . . . . 45
Section 6.13. Representations and Warranties. . . . 45
Section 6.14. Directions to Indenture Trustee . . . 46
Section 6.15. The Agents. . . . . . . . . . . . . . 46
ARTICLE VII Bondholders' Lists and Reports . . . . . . . . . . 46
Section 7.01. Issuer To Furnish Indenture Trustee
Names and Addresses of Bondholders. . 46
Section 7.02. Preservation of Information;
Communications to Bondholders . . . . 46
Section 7.03. Reports by the Indenture Trustee;
Issuer Fiscal Year. . . . . . . . . . 47
Section 7.04. Reports by Indenture Trustee. . . . . 47
Section 7.05. Statements to Bondholders . . . . . . 48
Section 7.06. Books and Records . . . . . . . . . . 49
ARTICLE VIII Accounts, Disbursements and Releases. . . . . . . 50
Section 8.01. Collection of Money . . . . . . . . . 50
Section 8.02. Trust Accounts. . . . . . . . . . . . 50
Section 8.03. Officer's Certificate . . . . . . . . 51
Section 8.04. Termination Upon Distribution to
Bondholders . . . . . . . . . . . . . 51
Section 8.05. Release of Trust Estate . . . . . . . 51
Section 8.06. Surrender of Bonds Upon Final Payment 52
Section 8.07. Optional Redemption of the Bonds. . . 52
Section 8.08. Pre-Funding Account . . . . . . . . . 52
Section 8.09. Interest Coverage Account . . . . . . 53
ARTICLE IX Supplemental Indentures . . . . . . . . . . . . 54
Section 9.01. Supplemental Indentures Without
Consent of Bondholders. . . . . . . . 54
Section 9.02. Supplemental Indentures With Consent
of Bondholders. . . . . . . . . . . . 55
Section 9.03. Execution of Supplemental Indentures. 57
Section 9.04. Effect of Supplemental Indenture. . . 57
Section 9.05. Conformity with Trust Indenture Act . 57
Section 9.06. Reference in Bonds to Supplemental
Indentures. . . . . . . . . . . . . . 57
ARTICLE X Miscellaneous. . . . . . . . . . . . . . . . . . . . 58
Section 10.01. Compliance Certificates and Opinions,
etc. . . . . . . . . . . . . . . . . 58
Section 10.02. Form of Documents Delivered to
Indenture Trustee. . . . . . . . . . 59
Section 10.03. Acts of Bondholders. . . . . . . . . 60
Section 10.04. Notices, etc., to Indenture Trustee,
Issuer, Bond Insurer and Rating
Agencies.. . . . . . . . . . . . . . 61
Section 10.05. Notices to Bondholders; Waiver . . . 62
Section 10.06. Conflict with Trust Indenture Act. . 62
Section 10.07. Effect of Headings . . . . . . . . . 63
Section 10.08. Successors and Assigns . . . . . . . 63
Section 10.09. Separability . . . . . . . . . . . . 63
Section 10.10. Benefits of Indenture. . . . . . . . 63
Section 10.11. Legal Holidays . . . . . . . . . . . 63
Section 10.12. GOVERNING LAW. . . . . . . . . . . . 63
Section 10.13. Counterparts . . . . . . . . . . . . 63
Section 10.14. Recording of Indenture . . . . . . . 63
Section 10.15. Issuer Obligation. . . . . . . . . . 64
Section 10.16. No Petition. . . . . . . . . . . . . 64
Section 10.17. Inspection . . . . . . . . . . . . . 64
EXHIBIT
Exhibit A- Form of Bonds
Exhibit B- Form of Trustee Initial Certification
Exhibit C- Form of Trustee Final Certification
Exhibit D- Mortgage Loan Schedule
APPENDIX
Appendix A- Definitions
This Indenture, dated as of April 1, 1998, between
NovaStar Mortgage Funding Trust, Series 1998-1, a Delaware
business trust, as Issuer (the "Issuer"), and First Union
National Bank, a national banking association, as Indenture
Trustee (the "Indenture Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of
the other party and for the equal and ratable benefit of the
Holders of the NovaStar Mortgage Funding Trust, Series 1998-1
Home Equity Loan Asset-Backed Bonds (the "Bonds") and the Bond
Insurer.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at
the Closing Date, as trustee for the benefit of the Holders of
the Bonds and the Bond Insurer, all of the Issuer's right, title
and interest in and to whether now existing or hereafter created
by (a) the Initial Mortgage Loans, the Subsequent Mortgage Loans,
the Eligible Substitute Mortgage Loans and the proceeds thereof
and all rights under the Related Documents (including the related
Mortgage Files); (b) all funds on deposit from time to time in
the Collection Account allocable to the Mortgage Loans excluding
any investment income from such funds; (c) all funds on deposit
from time to time in the Payment Account and in all proceeds
thereof, including any income on funds deposited in, or
investments made with funds deposited in, the Payment Account,
which income shall belong to, and be for the account of, the
Indenture Trustee; (d) all funds on deposit from time to time in
the Interest Coverage Account and the Pre-Funding Account in each
case including any income on funds deposited in, or investments
made with funds deposited in such accounts; (e) all rights under
the (i) Mortgage Loan Purchase Agreement as assigned to the
Issuer and each Company's Subsequent Transfer Instrument, (ii)
the Servicing Agreement and any Subservicing Agreements, (iii)
any title and hazard insurance policies with respect to the
Mortgaged Properties and (iv) the CAP Agreements and the ML&Co
Guaranty; 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, accep-
tances, 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 fore-
going (collectively, the "Trust Estate" or the "Collateral").
The foregoing Grant is made in trust to secure (i) the
payment of principal of and interest on, and any other amounts
owing in respect of, the Bonds, equally and ratably without
prejudice, priority or distinction, (ii) the payment of all other
amounts payable under this Indenture and (iii) compliance with
the provisions of this Indenture, all as provided in this Inden-
ture.
The Indenture Trustee, as trustee on behalf of the
Holders of the Bonds and the Bond Insurer, acknowledges such
Grant, accepts the trust under this Indenture in accordance with
the provisions hereof and agrees to perform its duties as
Indenture Trustee as required herein. The Indenture Trustee
agrees that it will hold the Bond Insurance Policy in trust and
that it will hold any proceeds of any claim made upon the Bond
Insurance Policy solely for the use and benefit of the Holders of
the Bonds in accordance with the terms hereof and the terms of
the Bond Insurance Policy.
The Indenture Trustee further acknowledges that in the
event (i) the transfer of the Mortgage Loans from the Seller to
the Company pursuant to the Mortgage Loan Purchase Agreement is
determined to be a financing; (ii) the transfer of the Initial
Mortgage Loans from the Company to the Issuer pursuant to the
Trust Agreement is determined to be a financing; and/or (iii) the
transfer of the Subsequent Mortgage Loans by the Seller to the
Company and then by the Company to the Issuer pursuant to the
Mortgage Loan Purchase Agreement is determined to constitute a
financing, then in each case the Indenture Trustee holds the
Mortgage Loans as the designee and bailee of the Company and the
Issuer, respectively, subject however, in each case, to a prior
lien in favor of the Bondholders and the Bond Insurer pursuant to
the terms of this Indenture.
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Inden-
ture, 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 incorpo-
rated 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"), the provision is incorporated by
reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange
Commission.
"indenture securities" means the Bonds.
"indenture security holder" means a Bondholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Indenture Trustee.
"obligor" on the indenture securities means the Issuer
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA by reference to another statute or
defined by Commission rules, have the meanings assigned to them
by such definitions.
Section 1.03. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and
words in the plural include the singular; and
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate
delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified
or supplemented 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 Bonds
Section 2.01. Form. The Bonds, together with the Indenture
Trustee's certificate of authentication, shall be in
substantially the form set forth in Exhibit A, with such appro-
priate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture.
The Bonds shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or
without steel engraved borders).
The terms of the Bonds set forth in Exhibit A are part of
the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The
Bonds shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any such Authorized
Officer on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signature of individ-
uals 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 Bonds or did not hold such offices at the
date of such Bonds.
The Indenture Trustee shall upon Issuer Request authenticate
and deliver Bonds for original issue in an aggregate initial
principal amount of $300,000,000.
Each Bond shall be dated the date of its authentication.
The Bonds shall be issuable as registered Bonds and the Bonds
shall be issuable in the minimum initial Bond Principal Balances
of $25,000 and in integral multiples of $1,000 in excess thereof.
No Bond shall be entitled to any benefit under this Inden-
ture or be valid or obligatory for any purpose, unless there
appears on such Bond a certificate of authentication substan-
tially in the form provided for herein executed by the Indenture
Trustee by the manual signature of one of its authorized signa-
tories, and such certificate upon any Bond shall be conclusive
evidence, and the only evidence, that such Bond has been duly
authenticated and delivered hereunder.
Section 2.03. Acceptance of Mortgage Loans by Indenture
Trustee. (a) The Indenture Trustee acknowledges receipt of,
subject to the review described below and any exceptions it notes
pursuant to the procedures described below, the documents (or
certified copies thereof) referred to in Section 2.1(b) of the
Mortgage Loan Purchase Agreement and declares that it holds and
will continue to hold those documents and any amendments,
replacements or supplements thereto and all other assets of the
Trust Estate as Indenture Trustee in trust for the use and
benefit of all present and future Holders of the Bonds and the
Bond Insurer. No later than 45 days after the Closing Date and
each Subsequent Transfer Date (or, with respect to any Eligible
Substitute Mortgage Loan, within 5 Business Days after the
receipt by the Indenture Trustee thereof and, with respect to any
documents received beyond 45 days after the Closing Date,
promptly thereafter), the Indenture Trustee agrees, for the
benefit of the Bondholders and the Bond Insurer, to review each
Mortgage File delivered to it and to execute and deliver, or
cause to be executed and delivered, to the Seller and the Bond
Insurer an initial certification in the form annexed hereto as
Exhibit B. In conducting such review, the Trustee will ascertain
whether all required documents described in Section 2.1(b) of the
Mortgage Loan Purchase Agreement have been executed and received
and whether those documents relate, determined on the basis of
the Mortgagor name, original principal balance and loan number,
to the Mortgage Loans it has received, as identified in Exhibit D
to this Indenture, as supplemented (provided, however, that with
respect to those documents described in subclause (b)(vi) of such
section, the Indenture Trustee's obligations shall extend only to
documents actually delivered pursuant to such subclause). In
performing any such review, the Indenture Trustee may
conclusively rely on the purported due execution and genuineness
of any such document and on the purported genuineness of any
signature thereon. If the Indenture Trustee finds that any
document constituting part of the Mortgage File not to have been
executed or received, or to be unrelated to the Mortgage Loans
identified in Exhibit D or Attachment B to Exhibit 2 of the
Mortgage Loan Purchase Agreement or to appear to be defective on
its face, the Indenture Trustee shall promptly notify the Seller
and the Bond Insurer of such finding and the Seller's obligation
to cure such defect or repurchase or substitute for the related
Mortgage Loan.
Pursuant to Section 5.11 of this Indenture, the Bond
Insurer, so long as no Bond Insurer Default exists, has the right
to exercise any trust or power conferred on the Indenture
Trustee. In connection with the acceptance of the Subsequent
Mortgage Loans by the Indenture Trustee, the Bond Insurer has
provided a Certificate (the "MBIA Certificate") stating that the
Subsequent Mortgage Loans are acceptable to the Bond Insurer.
Since the Bond Insurer is acting on behalf of the Bondholders,
the MBIA Certificate will be binding upon those Bondholders. The
Indenture Trustee shall not agree to any transfer of Subsequent
Mortgage Loans to it without (i) receipt of the MBIA Certificate
and (ii) confirmation from the Rating Agencies that the purchase
of such Subsequent Mortgage Loans will not result in a downgrade,
withdrawal or qualification of the ratings then in effect for the
Outstanding Bonds (without regard to the Bond Insurance Policy).
(b) No later than 180 days after the Closing Date, the
Indenture Trustee will review, for the benefit of the Bondholders
and the Bond Insurer, the Mortgage Files and will execute and
deliver or cause to be executed and delivered to the Seller and
the Bond Insurer, a final certification in the form annexed
hereto as Exhibit C. In conducting such review, the Indenture
Trustee will ascertain whether an original of each document
described in subclauses (b)(ii)-(iv) of Section 2.1 of the
Mortgage Loan Purchase Agreement required to be recorded has been
returned from the recording office with evidence of recording
thereon or a certified copy has been obtained from the recording
office. If the Indenture Trustee finds any document constituting
part of the Mortgage File has not been received, or to be
unrelated, determined on the basis of the Mortgagor name,
original principal balance and loan number, to the Mortgage Loans
identified in Exhibit D or Attachment B to Exhibit 2 of the
Mortgage Loan Purchase Agreement or to appear defective on its
face, the Indenture Trustee shall promptly notify the Seller and
the Bond Insurer of such finding and the Seller's obligation to
cure such defect or repurchase or substitute for the related
Mortgage Loan.
(c) Upon deposit of the Repurchase Price in the
Collection Account and notification of the Indenture Trustee by a
certification signed by a Servicing Officer (which certification
shall include a statement to the effect that the Repurchase Price
has been deposited in the Collection Account), the Indenture
Trustee shall release to the Seller the related Mortgage File and
shall execute and deliver all instruments of transfer or
assignment, without recourse, furnished to it by the Seller as
are necessary to vest in the Seller title to and rights under the
related Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which certification of the deposit of the
Repurchase Price in the Payment Account was received by the
Indenture Trustee. The Indenture Trustee shall amend the
applicable Mortgage Loan Schedule to reflect such repurchase and
shall promptly notify the Servicer, the Bond Insurer and the
Rating Agencies of such amendment.
ARTICLE III
Covenants
Section 3.01. Collection of Payments with respect to the
Mortgage Loans. The Indenture Trustee shall establish and main-
tain an Eligible Account (the "Payment Account"), held in trust
for the benefit of the Bondholders and the Bond Insurer. The
Indenture Trustee shall, subject to the terms of this paragraph,
deposit in the Payment Account, (i) on the date of receipt (if
received prior to 3:00 p.m. Eastern Standard Time, and if not,
then on the Business Day following receipt) from the Servicer,
each remittance received by the Indenture Trustee with respect to
the Mortgage Loans and all payments received from the CAP
Provider under the CAP Agreements and from ML&Co. under the
ML&Co. Guaranty, and (ii) amounts transferred from the Pre-
Funding Account and the Interest Coverage Account pursuant to
Section 8.08 and 8.09 hereof. The Indenture Trustee shall make
all payments of principal of and interest on the Bonds, subject
to Section 3.03, as provided in Section 3.05 from monies on
deposit in the Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer
will maintain within the United States of America, an office or
agency where, subject to satisfaction of conditions set forth
herein, Bonds may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in
respect of the Bonds and this Indenture may be served. The
Issuer 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 of the Indenture Trustee, 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. (a) As provided in Section 3.01, all payments of
amounts due and payable with respect to any Bonds that are to be
made from amounts withdrawn from the Payment Account pursuant to
Section 3.01 shall be made on behalf of the Issuer by the
Indenture Trustee or by the Paying Agent, and no amounts so
withdrawn from the Payment Account for payments of Bonds shall be
paid over to the Issuer except as provided in this Section 3.03.
The Issuer will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee
an instrument in which such Paying Agent shall agree with the
Indenture Trustee (and if the Indenture Trustee acts as Paying
Agent it hereby so agrees), subject to the provisions of this
Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of
amounts due with respect to the Bonds in trust for the
benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Indenture Trustee and the Bond Insurer
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 Bonds;
(iii) at any time during the continuance of any
such default, upon the written request of the Indenture
Trustee, forthwith pay to the Indenture Trustee all sums so
held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust
for the payment of Bonds if at any time it ceases to meet
the standards required to be met by a Paying Agent at the
time of its appointment;
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on
any Bonds of any applicable withholding taxes imposed there-
on and with respect to any applicable reporting requirements
in connection therewith; and
(vi) not commence a bankruptcy proceeding against
the Issuer in connection with this Indenture.
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 Bond
(other than amounts paid under the Bond Insurance Policy) 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 upon receipt of an Issuer Request; and the Holder of
such Bond shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof (but only to the
extent of the amounts so paid to the Issuer), and all liability
of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that
the Indenture Trustee or such Paying Agent, before being required
to make any such repayment, shall at the expense and direction of
the Issuer cause to be published once, in an Authorized
Newspaper, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance
of such money then remaining will be repaid to the Issuer. The
Indenture Trustee with the consent of the Bond Insurer, so long
as no Bond Insurer Default exists, may also adopt and employ, at
the expense and direction of the Issuer, any other reasonable
means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose
Bonds have been called but have not been surrendered for redemp-
tion or whose right to or interest in monies due and payable but
not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for
each such Holder).
Section 3.04. Existence. The Issuer will keep in full
effect its existence, rights and franchises as a business trust
under the laws of the State of Delaware (unless it becomes, or
any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in
which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this
Indenture, the Bonds, the Mortgage Loans and each other instru-
ment or agreement included in the Trust Estate.
Section 3.05. Payment of Principal and Interest. (a) On
each Payment Date from amounts on deposit in the Payment Account
in accordance with Section 8.02 hereof, the Indenture Trustee
shall pay to the Bondholders and to other Persons the amounts to
which they are entitled in the priority set forth below;
provided, however, that any amounts representing payments from
the Bond Insurer shall only be used to pay interest and principal
to the Bondholders pursuant to clauses (iv) and (v):
(i) to the Indenture Trustee, the Indenture
Trustee Fee;
(ii) to the Bond Insurer, the Bond Insurance Premium;
(iii) to the CAP Provider, amounts (including
termination payments) due under the CAP Agreements, but only
to the extent that (A) such amounts have not been paid by
the Servicer pursuant to the Servicing Agreement, and (B)
such amounts represent insured amounts under the CAP
Agreement Insurance Policy;
(iv) to the Bondholders, the Interest Payment
Amount with respect to such Payment Date;
(v) to the Bondholders, as principal on the
Bonds, the Principal Payment Amount with respect to such
Payment Date;
(vi) to the Bond Insurer, the sum of (a) all
payments previously paid by the Bond Insurer under the Bond
Insurance Policy which have not previously been reimbursed,
(b) any other amounts due to the Bond Insurer pursuant to
the Insurance Agreement, to the extent not previously paid
or reimbursed and (c) interest on the foregoing as set forth
in the Insurance Agreement from the date such amounts become
due until paid in full;
(vii) to the Bondholders, as principal on the
Bonds, the Subordination Increase Amount for such Payment
Date;
(viii) to the Bondholders, any Carry-Forward Amount
for such Payment Date;
(ix) to the Indenture Trustee, any amounts owing
to the Indenture Trustee under any Basic Documents remaining
unpaid;
(x) to the CAP Provider, any amounts due under the CAP
Agreements, but only to the extent that such payments have
not been paid by the Servicer pursuant to the Servicing
Agreement or pursuant to clause (iii) above;
(xi) to the Servicer, any amounts owing to the
Servicer pursuant to Section 5.03 of the Servicing Agreement
in connection with the indemnity by the Issuer thereunder;
and
(xii) any remaining amount, to the Issuer or the
Certificate Paying Agent as its designee, on behalf of the
Certificateholders.
On each Payment Date, the Certificate Paying Agent shall
deposit in the Certificate Distribution Account all amounts it
received pursuant to this Section 3.05 for the purpose of
distributing such funds to the Certificateholders after payment
of trust expenses to the Owner Trustee or the Indenture Trustee
pursuant to the Trust Agreement.
Interest will accrue on the Bonds during an Interest Period
on the basis of the actual number of days in such Interest Period
and a year assumed to consist of 360 days.
Any installment of interest or principal, if any, payable on
any Bond that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall, so long as the Bonds
are Book-Entry Bonds registered in the name of the Depository or
its nominee, be paid by wire transfer to the Depository or its
nominee; otherwise if such Holder shall have so requested at
least five Business Days prior to the related Record Date and
such Holder holds Bonds of an aggregate initial Bond Principal
Balance of at least $5,000,000, such installment shall be paid on
such Payment Date to each Holder of record on such Record Date,
by wire transfer to an account specified in writing by such
Holder reasonably satisfactory to the Indenture Trustee, and in
all other cases or if no such instructions have been delivered to
the Indenture Trustee, by check to such Bondholder mailed to such
Holder's address as it appears in the Bond Register in the amount
required to be distributed to such Holder on such Payment Date;
provided, however, that the Indenture Trustee shall not pay to
such Holders any amount required to be withheld from a payment to
such Holder by the Code. The Indenture Trustee may deduct a
reasonable wire transfer fee from any payment made by wire
transfer.
(b) The principal of each Bond shall be due and
payable in full on the Final Scheduled Payment Date for such Bond
as provided in the form of Bond set forth in Exhibit A. All
principal payments on the Bonds shall be made to the Bondholders
entitled thereto in accordance with the Percentage Interests
represented by such Bonds. Upon notice to the Indenture Trustee
by the Issuer, the Indenture Trustee shall notify the Person in
whose name a Bond is registered at the close of business on the
Record Date preceding the Final Scheduled Payment Date or other
final Payment Date (including any final Payment Date resulting
from any redemption pursuant to Section 8.07 hereof). Such
notice shall to the extent practicable be mailed no later than
five Business Days prior to such Final Scheduled Payment Date or
other final Payment Date and shall specify that payment of the
principal amount and any interest due with respect to such Bond
at the Final Scheduled Payment Date or other final Payment Date
will be payable only upon presentation and surrender of such Bond
and shall specify the place where such Bond may be presented and
surrendered for such final payment. No interest shall accrue on
the Bonds on or after the Final Scheduled Payment Date or any
such other final Payment Date.
Section 3.06. Protection of Trust Estate. (a) The Issuer
will from time to time prepare, 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 Issuer or the Servicer to enforce
any of their rights with respect to the Mortgage Loans; and
(iv) preserve and defend title to the Trust Estate
and the rights of the Indenture Trustee, the Bond Insurer
and the Bondholders 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 hereof, 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.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to sign any financing statement, continu-
ation statement or other instrument required to be signed pur-
suant to this Section 3.06 upon the Issuer's preparation thereof
and delivery to the Indenture Trustee.
Section 3.07. Opinions as to Trust Estate. (a) On the
Closing Date, the Issuer shall furnish to the Indenture Trustee,
the Bond Insurer and the Owner Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action
has been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto, and any other
requisite documents, and with respect to the execution and filing
of any financing statements and continuation statements, as are
necessary to perfect and make effective the lien and first
priority security interest in the Collateral and reciting the
details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and first
priority security interest effective.
(b) On or before September 1 in each calendar year,
beginning in 1998, the Issuer shall furnish to the Indenture
Trustee and the Bond Insurer an Opinion of Counsel at the expense
of the Issuer either stating that, in the opinion of such
counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary
to maintain the lien and first priority security interest in the
Collateral and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary
to maintain such lien and security interest. Such Opinion of
Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and
filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to
maintain the lien and security interest in the Collateral until
December 31 in the following calendar year.
Section 3.08. Performance of Obligations. (a) The Issuer
will punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate.
(b) The Issuer, with the consent of the Bond Insurer
so long as no Bond Insurer Default exists, 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 will not take any action or permit any
action to be taken by others which would release any Person from
any of such Person's covenants or obligations under any of the
documents relating to the Mortgage Loans or under any instrument
included in the Trust Estate, or which would result in the amend-
ment, 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. The Indenture Trustee, as pledgee of
the Mortgage Loans, shall with the consent of, or direction of,
the Bond Insurer, so long as no Bond Insurer Default exists, be
able to exercise the rights of the Issuer to direct the actions
of the Servicer pursuant to the Servicing Agreement.
Section 3.09. Negative Covenants. So long as any Bonds are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this
Indenture, sell, transfer, exchange or otherwise dispose of
the Trust Estate, unless directed to do so by the Bond
Insurer or the Indenture Trustee with the consent of the
Bond Insurer, so long as no Bond Insurer Default exists;
(ii) claim any credit on, or make any deduction
from the principal or interest payable in respect of, the
Bonds (other than amounts properly withheld from such
payments under the Code) or assert any claim against any
present or former Bondholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of
this Indenture to be impaired, or permit the lien of this
Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to
the Bonds under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the Trust Estate
or any part thereof or any interest therein or the proceeds
thereof or (C) permit the lien of this Indenture not to
constitute a valid first priority security interest in the
Trust Estate; or
(iv) waive or impair, or fail to assert rights
under, the Mortgage Loans, or impair or cause to be impaired
the Issuer's interest in the Mortgage Loans, the Mortgage
Loan Purchase Agreement or any other Basic Document, if any
such action would materially and adversely affect the
interests of the Bondholders or the Bond Insurer.
Section 3.10. Annual Statement as to Compliance. The
Issuer will deliver to the Indenture Trustee and the Bond
Insurer, within 90 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1998), an Officer's
Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during
such year and of its performance under this Indenture has
been made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's
knowledge, based on such review, the Issuer has complied
with all conditions and covenants under this Indenture
throughout such year, or, if there has been a default in its
compliance with any such condition or covenant, specifying
each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.11. Servicing and Administration of the CAP
Agreements. The Indenture Trustee agrees that it will hold the
CAP Agreements and the ML&Co Guaranty, and the Issuer's rights
thereunder, and any payments received under the CAP Agreements
(net of any payments due to the CAP Provider under the CAP
Agreements) in trust solely for the use and benefit of the
Bondholders and the Bond Insurer in accordance with the terms
hereof and the terms of the Servicing Agreement. Subject to the
provisions of Section 3.05 hereof, the Indenture Trustee shall
take all such actions on behalf of the Issuer as are necessary to
service and administer the CAP Agreements and to perform the
Issuer's obligations and enforce the Issuer's rights under the
CAP Agreements, which actions shall conform to the standards of
an institution prudently administering the CAP Agreements for its
own account; provided, however, that so long as no Servicing
Default has occurred and is continuing, the Servicer shall act as
agent for the Indenture Trustee with respect to the servicing and
administering of the CAP Agreements and the performance of the
Issuer's obligations and the enforcement of the Issuer's rights
under the CAP Agreements pursuant to Section 3.10 of the
Servicing Agreement.
Section 3.12. Representations and Warranties Concerning the
Mortgage Loans. The Indenture Trustee, as pledgee of the
Mortgage Loans, has the benefit of the representations and
warranties made by the Seller in the Mortgage Loan Purchase
Agreement concerning the Seller and the Mortgage Loans and the
right to enforce the remedies against the Seller provided in such
Mortgage Loan Purchase Agreement to the same extent as though
such representations and warranties were made directly to the
Indenture Trustee. If the Indenture Trustee has actual knowledge
of any breach of any representation or warranty made by the
Seller in the Mortgage Loan Purchase Agreement, the Indenture
Trustee shall promptly notify the Seller and the Bond Insurer of
such finding and the Seller's obligation to cure such breach or
repurchase or substitute for the related Mortgage Loan.
Section 3.13. Amendments to Servicing Agreement. The
Issuer covenants with the Indenture Trustee and the Bond Insurer
that it will not enter into any amendment or supplement to the
Servicing Agreement without the prior written consent of the
Indenture Trustee and the Bond Insurer. The Indenture Trustee,
as pledgee of the Mortgage Loans, may, with the consent of the
Bond Insurer so long as no Bond Insurer Default exists, decline
to enter into or consent to any such supplement or amendment if
the Bond Insurer's or Bondholders' rights, duties or immunities
would be materially and adversely affected thereby. The
Indenture Trustee may, but shall not be obligated to, enter into
any amendment or supplement to the Servicing Agreement that
affects the Indenture Trustee's own rights, duties, liabilities
or immunities under this Indenture or otherwise.
Section 3.14. Servicer as Agent and Bailee of the Indenture
Trustee. Solely for purposes of perfection under Section 9-305
of the Uniform Commercial Code or other similar applicable law,
rule or regulation of the state in which such property is held by
the 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
Collection Account, as well as its agent and bailee in holding
any Related Documents released to the Servicer, 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, the Indenture
Trustee, as a secured party of the Mortgage Loans, will be deemed
to have possession of such Related Documents, such monies and
such other items for purposes of Section 9-305 of the Uniform
Commercial Code 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 and the
Bond Insurer, the due and punctual payment of the principal
of and interest on all Bonds and to the Certificate Paying
Agent, on behalf of the Certificateholders, and the payment
of the Bond Insurance Premium and all other amounts payable
to the Bond Insurer 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 Rating Agencies shall have notified the
Issuer that such transaction shall not cause the rating of
the Bonds to be reduced, suspended or withdrawn or to be
considered by either Rating Agency to be below investment
grade without taking into account the Bond Insurance Policy;
(iv) the Issuer and the Bond Insurer shall have
received an Opinion of Counsel (and shall have delivered a
copy thereof to the Indenture Trustee) to the effect that
such transaction will not (A) adversely affect the status of
the Bonds as indebtedness for federal income tax purposes,
or (B) cause the Trust to be subject to an entity level tax
for federal income tax purposes;
(v) any action that is necessary to maintain the lien
and security interest created by this Indenture shall have
been taken;
(vi) the Issuer shall have delivered to the
Indenture Trustee and the Bond Insurer 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); and
(vii) the Bond Insurer, so long as no Bond Insurer
Default exists, shall have given its prior written consent.
(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 assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Bonds and to
the Certificate Paying Agent, on behalf of the
Certificateholders, and the payment of the Bond Insurance
Premium and all other amounts payable to the Bond Insurer
and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly
agree by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall
be subject and subordinate to the rights of the Holders of
the Bonds and the Bond Insurer, (D) unless otherwise
provided in such supplemental indenture, expressly agree to
indemnify, defend and hold harmless the Issuer, the
Indenture Trustee and the Bond Insurer against and from any
loss, liability or expense arising under or related to this
Indenture and the Bonds and (E) expressly agree by means of
such supplemental indenture that such Person (or if a group
of Persons, then one specified Person) shall make all fil-
ings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Bonds;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing;
(iii) the Rating Agencies shall have notified the
Issuer that such transaction shall not cause the rating of
the Bonds or the rating of the Bonds without taking into
account the Bond Insurance Policy to be reduced, suspended
or withdrawn;
(iv) the Issuer and the Bond Insurer shall have
received an Opinion of Counsel (and shall have delivered a
copy thereof to the Indenture Trustee) to the effect that
such transaction will not (A) adversely affect the status of
the Bonds as indebtedness for federal income tax purposes,
or (B) cause the Trust to be subject to an entity level tax
for federal income tax purposes;
(v) any action that is necessary to maintain the lien
and security interest created by this Indenture shall have
been taken;
(vi) the Issuer shall have delivered to the
Indenture Trustee and the Bond Insurer 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); and
(vii) the Bond Insurer, so long as no Bond Insurer
Default exists, shall have given its prior written consent.
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 sub-
stituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.16(b), the Issuer
will be released from every covenant and agreement of this
Indenture to be observed or performed on the part of the Issuer
with respect to the Bonds immediately upon the delivery of
written notice to the Indenture Trustee and the Bond Insurer of
such conveyance or transfer and approval of such transaction
given by the Bond Insurer to the Indenture Trustee.
Section 3.18. No Other Business. The Issuer shall not
engage in any business other than financing, purchasing, owning,
selling and managing the Mortgage Loans and the issuance of the
Bonds 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 Bonds and amounts
due to the Bond Insurer under this Indenture and the Insurance
Agreement.
Section 3.20. Guarantees, Loans, Advances and Other Liabil-
ities. Except as contemplated by this Indenture or the Basic
Documents, the Issuer shall not make any loan or advance or
credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations, assets
or securities of, or any other interest in, or make any capital
contribution to, any other Person.
Section 3.21. Capital Expenditures. The Issuer shall not
make any expenditure (by long-term or operating lease or other-
wise) for capital assets (either realty or personalty).
Section 3.22. Purchase of Mortgage Loans Pursuant to the
Servicing Agreement. (a) Upon deposit of the Repurchase Price for
a defaulted Mortgage Loan in the Collection Account pursuant to
Section 3.18 of the Servicing Agreement and notification of the
Indenture Trustee by a certification signed by a Servicing
Officer (which certification shall include a statement to the
effect that the Repurchase Price has been deposited in the
Collection Account), the Indenture Trustee shall release to the
Servicer the related Mortgage File and shall execute and deliver
all instruments of transfer or assignment, without recourse,
furnished to it by the Servicer as are necessary to vest in the
Servicer title to and rights under the related Mortgage Loan.
Such purchase shall be deemed to have occurred on the date on
which certification of the deposit of the Repurchase Price in the
Collection Account was received by the Indenture Trustee. The
Indenture Trustee shall amend the applicable Mortgage Loan
Schedule to reflect such repurchase and shall promptly notify the
Servicer and the Bond Insurer of such amendment.
(b) Upon deposit of the Repurchase Price for such Converted
Mortgage Loan in the Collection Account pursuant to Section 3.20
of the Servicing Agreement and notification of the Indenture
Trustee by a certification signed by a Servicing Officer (which
certification shall include a statement to the effect that the
Repurchase Price has been deposited in the Collection Account),
the Indenture Trustee shall release to the Servicer or its
assignee the related Mortgage File and shall execute and deliver
all instruments of transfer or assignment, without recourse,
furnished to it by the Servicer or its assignee as are necessary
to vest in the Servicer or its assignee title to and rights under
the related Mortgage Loan. Such purchase shall be deemed to have
occurred on the date on which certification of the deposit of the
Repurchase Price in the Collection Account was received by the
Indenture Trustee. The Indenture Trustee shall amend the
applicable Mortgage Loan Schedule to reflect such purchase and
shall promptly notify the Servicer and the Bond Insurer of such
amendment.
Section 3.23. Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distri-
bution (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 this Indenture and 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
Collection Account except in accordance with this Indenture and
the Basic Documents.
Section 3.24. Notice of Events of Default. The Issuer
shall give the Indenture Trustee, the Bond Insurer 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 or the Bond Insurer, the Issuer will
execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.26. Statements to Bondholders and Xxxxxxx Xxxxx.
On each Payment Date, the Indenture Trustee and the Certificate
Registrar shall forward by mail to each Bondholder and
Certificateholder, respectively, the statement prepared pursuant
to Section 7.05 of this Indenture. On the Business Day
immediately preceding each Payment Date, the Indenture Trustee
shall forward the statement prepared pursuant to section 7.05 of
this Indenture by telecopy to Xxxxxxx Lynch, Xxxxxx, Xxxxxx &
Xxxxx Incorporated, Attention: Xxxxx Xxxxxxxxxxx, telecopy number
(000) 000-0000. The Indenture Trustee shall have no
responsibility to (i) verify information provided by the Servicer
to be included in such statement or (ii) include any information
required to be included in such statement if the Servicer has
failed to timely produce such information to the Indenture
Trustee as required pursuant to the Servicing Agreement.
Section 3.27. Determination of Bond Interest Rate. On the
Interest Determination Date, the Indenture Trustee shall
determine One-Month LIBOR and as soon as practical thereafter
shall (i) determine the Applicable Spread (taking into account
the Remarketing Spread as certified by the Remarketing Spread
Calculation Agent), and (ii) determine the Bond Interest Rate for
the Interest Period following such Interest Determination Date
and shall inform the Issuer, the Servicer and the Company at
their respective facsimile numbers given to the Indenture Trustee
in writing thereof.
Section 3.28. Payments under the Bond Insurance Policy. If
the Indenture Trustee determines that a Deficiency Amount will
exist for the following Payment Date, then the Indenture Trustee
shall submit a Notice (as defined in the Bond Insurance Policy)
for payment in the amount of the Deficiency Amount to the Bond
Insurer no later than 12:00 Noon, New York City time, on the
second Business Day prior to the applicable Payment Date. Upon
receipt of such Deficiency Amount in accordance with the terms of
the Bond Insurance Policy, the Indenture Trustee shall deposit
such Deficiency Amount in the Payment Account for distribution to
Bondholders pursuant to Section 3.05 hereof, or with respect to
an acceleration of the Bonds, pursuant to Section 6.02 hereof.
All amounts received by the Indenture Trustee under the Bond
Insurance Policy shall remain uninvested.
In addition, a claim may be made under the Bond Insurance
Policy in respect of any Preference Amount (as defined in and
pursuant to the terms and conditions of the Bond Insurance
Policy) and the Indenture Trustee shall submit a Notice (as
defined in the Bond Insurance Policy) for payment with respect
thereto together with the other documents required to be
delivered to the Bond Insurer pursuant to the Bond Insurance
Policy in connection with a claim in respect of any Preference
Amount.
ARTICLE IV
The Bonds; Satisfaction and Discharge of Indenture
Section 4.01. The Bonds. The Bonds shall be registered in
the name of a nominee designated by the Depository. Beneficial
Owners will hold interests in the Bonds through the book-entry
facilities of the Depository in minimum initial Bond Principal
Balances of $25,000 and integral multiples of $1,000 in excess
thereof.
Subject to the last sentence of Section 4.12 , the Indenture
Trustee may for all purposes (including the making of payments
due on the Bonds) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Bonds
for the purposes of exercising the rights of Holders of Bonds
hereunder. In addition, subject to the last sentence of Section
4.12, except as provided in the next succeeding paragraph of this
Section 4.01, the rights of Beneficial Owners with respect to the
Bonds 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 hereof,
Beneficial Owners shall not be entitled to definitive certif-
icates for the Bonds as to which they are the Beneficial Owners.
Requests and directions from, and votes of, the Depository as
Holder of the Bonds 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 Bondholders and give
notice to the Depository of such record date. Without the con-
sent of the Issuer and the Indenture Trustee, no Bond may be
transferred by the Depository except to a successor Depository
that agrees to hold such Xxxx for the account of the Beneficial
Owners.
In the event The Depository Trust Company resigns or is
removed as Depository, the Indenture Trustee with the approval of
the Issuer may appoint a successor Depository. If no successor
Depository has been appointed within 30 days of the effective
date of the Depository's resignation or removal, each Beneficial
Owner shall be entitled to certificates representing the Bonds it
beneficially owns in the manner prescribed in Section 4.08.
The Bonds shall, on original issue, be executed on behalf of
the Issuer by the Owner Trustee, not in its individual capacity
but solely as Owner Trustee, authenticated by the Indenture
Trustee 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 Bonds; Appointment of Certificate Registrar. The
Issuer shall cause the Indenture Trustee, as Bond Registrar, to
keep at the Corporate Trust Office a Bond Register in which,
subject to such reasonable regulations as it may prescribe, the
Bond Registrar shall provide for the registration of Bonds and of
transfers and exchanges of Bonds as herein provided.
Subject to the restrictions and limitations set forth below,
upon surrender for registration of transfer of any Bond at the
Corporate Trust Office, the Issuer shall execute and the
Indenture Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Bonds
in authorized initial Bond Principal Balances evidencing the same
aggregate Percentage Interests.
Subject to the foregoing, at the option of the Bondholders,
Bonds may be exchanged for other Bonds of like tenor and in
authorized initial Bond Principal Balances evidencing the same
aggregate Percentage Interests upon surrender of the Bonds to be
exchanged at the Corporate Trust Office of the Bond Registrar.
Whenever any Bonds are so surrendered for exchange, the Issuer
shall execute and the Indenture Trustee shall authenticate and
deliver the Bonds which the Bondholder making the exchange is
entitled to receive. Each Bond presented or surrendered for
registration of transfer or exchange shall (if so required by the
Bond Registrar) be duly endorsed by, or be accompanied by a
written instrument of transfer in form reasonably satisfactory to
the Bond Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing with such signature
guaranteed by a commercial bank or trust company located or
having a correspondent located in the City of New York or the
city in which any Corporate Trust Office is located. Bonds
delivered upon any such transfer or exchange will evidence the
same obligations, and will be entitled to the same rights and
privileges, as the Bonds surrendered.
No service charge shall be made for any registration of
transfer or exchange of Bonds, but the Bond Registrar shall re-
quire payment of a sum sufficient to cover any tax or governmen-
tal charge that may be imposed in connection with any registra-
tion of transfer or exchange of Bonds.
The Issuer hereby appoints the Indenture Trustee as
Certificate Registrar to keep at its Corporate Trust Office a
Certificate Register pursuant to Section 3.09 of the Trust
Agreement in which, subject to such reasonable regulations as it
may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges
thereof pursuant to Section 3.05 of the Trust Agreement. The
Indenture Trustee hereby accepts such appointment.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Bonds.
If (i) any mutilated Bond is surrendered to the Indenture
Trustee, or the Indenture Trustee receives evidence to its satis-
faction of the destruction, loss or theft of any Bond, and (ii)
there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer, the Bond
Insurer and the Indenture Trustee harmless, then, in the absence
of notice to the Issuer, the Bond Registrar or the Indenture
Trustee that such Bond has been acquired by a bona fide
purchaser, and provided that the requirements of Section 8-405 of
the UCC are met, the Issuer shall execute, and upon its request
the Indenture Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen
Bond, a replacement Bond; provided, however, that if any such
destroyed, lost or stolen Bond, but not a mutilated Bond, shall
have become or within seven days shall be due and payable,
instead of issuing a replacement Xxxx, the Issuer may pay such
destroyed, lost or stolen Bond when so due or payable without
surrender thereof. If, after the delivery of such replacement
Bond or payment of a destroyed, lost or stolen Bond pursuant to
the proviso to the preceding sentence, a bona fide purchaser of
the original Bond in lieu of which such replacement Bond was
issued presents for payment such original Bond, the Issuer, the
Bond Insurer and the Indenture Trustee shall be entitled to
recover such replacement Bond (or such payment) from the Person
to whom it was delivered or any Person taking such replacement
Bond from such Person to whom such replacement Bond 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, the Bond Insurer or the Indenture
Trustee in connection therewith.
Upon the issuance of any replacement Bond under this Section
4.03, the Issuer may require the payment by the Holder of such
Bond 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 Bond issued pursuant to this Section 4.03
in replacement of any mutilated, destroyed, lost or stolen Bond
shall constitute an original additional contractual obligation of
the Issuer, whether or not the mutilated, destroyed, lost or
stolen Bond 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 Bonds duly issued here-
under.
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, destroy-
ed, lost or stolen Bonds.
Section 4.04. Persons Deemed Owners. Prior to due present-
ment for registration of transfer of any Bond, the Issuer, the
Bond Insurer, the Indenture Trustee and any agent of the Issuer,
the Bond Insurer, or the Indenture Trustee may treat the Person
in whose name any Bond is registered (as of the day of
determination) as the owner of such Bond for the purpose of
receiving payments of principal of and interest, if any, on such
Bond and for all other purposes whatsoever, whether or not such
Bond be overdue, and neither the Issuer, the Bond Insurer, the
Indenture Trustee nor any agent of the Issuer, the Bond Insurer
or the Indenture Trustee shall be affected by notice to the
contrary.
Section 4.05. Cancellation. All Bonds 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 canceled
by the Indenture Trustee. The Issuer may at any time deliver to
the Indenture Trustee for cancellation any Bonds previously
authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Bonds so delivered
shall be promptly canceled by the Indenture Trustee. No Bonds
shall be authenticated in lieu of or in exchange for any Bonds
canceled as provided in this Section 4.05, except as expressly
permitted by this Indenture. All canceled Bonds 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 Bonds have not been previously disposed
of by the Indenture Trustee.
Section 4.06. Book-Entry Bonds. The Bonds, upon original
issuance, will be issued in the form of definitive Bonds
representing the Book-Entry Bonds, to be delivered to The
Depository Trust Company, the initial Depository, by, or on
behalf of, the Issuer. Such Bonds shall initially be registered
on the Bond Register in the name of Cede & Co., the nominee of
the initial Depository, and no Beneficial Owner will receive a
Definitive Bond representing such Beneficial Owner's interest in
such Bond, except as provided in Section 4.08. Unless and until
definitive, fully registered Bonds (the "Definitive Bonds") have
been issued to Beneficial Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in
full force and effect;
(ii) the Bond Registrar, the Bond Insurer 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 Bonds and the
giving of instructions or directions hereunder) as the sole
holder of the Bonds, and shall have no obligation to the
Beneficial Owners of Bonds;
(iii) to the extent that the provisions of this
Section 4.06 conflict with any other provisions of this
Indenture, the provisions of this Section 4.06 shall
control;
(iv) subject to the last sentence of Section 4.12,
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 Beneficial
Owners of Bonds and the Depository and/or the Depository
Participants. Unless and until Definitive Bonds 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 Bonds to such Depository Participants; and
(v) subject to the last sentence of Section 4.12,
whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of
Bonds evidencing a specified percentage of the Bond
Principal Balances of the Bonds, 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 Bonds and has delivered such
instructions to the Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or
other communication to the Bondholders is required under this
Indenture, unless and until Definitive Bonds 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 Holders of the Bonds to the
Depository, and shall have no obligation to the Beneficial
Owners.
Section 4.08. Definitive Bonds. If (i) the Indenture
Trustee determines that the Depository is no longer willing or
able to properly discharge its responsibilities with respect to
the Bonds and the Indenture Trustee is unable to locate a
qualified successor, (ii) the Indenture Trustee elects to
terminate the book-entry system through the Depository or
(iii) after the occurrence of an Event of Default, Beneficial
Owners of Bonds representing beneficial interests aggregating at
least a majority of the Bond Principal Balances of the Bonds
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 Bonds to Beneficial Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Bonds
representing the Book-Entry Bonds by the Depository, accompanied
by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Bonds in
accordance with the instructions of the Depository. None of the
Issuer, the Bond Registrar or the Indenture Trustee shall be
liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Bonds, the
Indenture Trustee shall recognize the Holders of the Definitive
Bonds as Bondholders. The Indenture Trustee shall notify the
Bond Insurer upon the issuance of Definitive Bonds.
Section 4.09. Tax Treatment. The Issuer has entered into
this Indenture, and the Bonds will be issued, with the intention
that, for federal, state and local income, single business and
franchise tax purposes, the Bonds will qualify as indebtedness.
The Issuer, by entering into this Indenture, and each Bondholder,
by its acceptance of its Bond (and each Beneficial Owner by its
acceptance of an interest in the applicable Book-Entry Bond),
agree to treat the Bonds for federal, state and local income,
single business and franchise tax purposes as indebtedness.
Section 4.10. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect
to the Bonds, except as to (i) rights of registration of transfer
and exchange, (ii) substitution of mutilated, destroyed, lost or
stolen Bonds, (iii) rights of Bondholders (and the Bond Insurer,
as subrogee of the Bondholders) 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 obli-
gations of the Indenture Trustee under Section 4.11) and (vi) the
rights of Bondholders 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 Bonds and shall release and deliver the Collateral
to or upon the order of the Issuer, when
(A) either
(1) all Bonds theretofore authenticated and delivered
(other than (i) Bonds that have been destroyed, lost or
stolen and that have been replaced or paid as provided in
Section 4.03 hereof and (ii) Bonds for whose payment money
has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section
3.03) have been delivered to the Indenture Trustee for
cancellation; or
(2) all Bonds not theretofore delivered to the Inden-
ture Trustee for cancellation
a. have become due and payable,
b. will become due and payable at the Final
Scheduled Payment Date within one year, or
c. have been called for early redemption
pursuant to Section 8.07 hereof,
and the Issuer, in the case of a. or b. above, has
irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America
(which will mature prior to the date such amounts are pay-
able), in trust for such purpose, in an amount sufficient to
pay and discharge the entire indebtedness on such Bonds then
outstanding not theretofore delivered to the Indenture
Trustee for cancellation when due on the Final Scheduled
Payment Date or other final Payment Date and has delivered
to the Indenture Trustee and the Bond Insurer a verification
report from a nationally recognized accounting firm
certifying that the amounts deposited with the Indenture
Trustee are sufficient to pay and discharge the entire
indebtedness of such Bonds, or, in the case of c. above, the
Issuer shall have complied with all requirements of Section
8.07 hereof;
(B) the Issuer has paid or caused to be paid all other
sums payable hereunder and under the Insurance Agreement by
the Issuer as evidenced by the written consent of the Bond
Insurer; and
(C) the Issuer has delivered to the Indenture Trustee
and the Bond Insurer an Officer's Certificate and an Opinion
of Counsel, each meeting the applicable requirements of
Section 10.01 hereof, each stating that all conditions
precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with and,
if the Opinion of Counsel relates to a deposit made in
connection with Section 4.10(A)(2)b. above, such opinion
shall further be to the effect that such deposit will
constitute an "in-substance defeasance" within the meaning
of Revenue Ruling 85-42, 1985-1 C.B. 36, and in accordance
therewith, the Issuer will be the owner of the assets
deposited in trust for federal income tax purposes.
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 Bonds and this Indenture, to the pay-
ment, either directly or through any Paying Agent or the Issuer,
Certificate Paying Agent as designee of the Issuer or the Bond
Insurer, as applicable, as the Indenture Trustee may determine,
to the Holders of Bonds, of all sums due and to become due
thereon for principal and interest or otherwise; 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 (and each Bondholder by
acceptance of its Bond hereby agrees) that (i) to the extent the
Bond Insurer makes payments under the Bond Insurance Policy on
account of principal of or interest on the Bonds, the Bond
Insurer will be fully subrogated to the rights of such Holders to
receive such principal and interest from the Issuer, and (ii) the
Bond Insurer shall be paid such principal and interest but only
from the sources and in the manner provided herein and in the
Insurance Agreement for the payment of such principal and
interest.
Insured Payments disbursed by the Indenture Trustee from
proceeds of the Bond Insurance Policy shall not be considered
payment by the Issuer with respect to the Bonds, nor shall such
disbursement of such Insured Payments discharge the obligations
of the Issuer with respect to the amounts thereof, and the Bond
Insurer shall become the owner of such amounts as the deemed
subrogee of such Bondholders.
So long as no Bond Insurer Default exists, the Indenture
Trustee shall cooperate in all respects with any reasonable
request by the Bond Insurer for action to preserve or enforce the
Bond Insurer's rights or interest under this Indenture or the
Insurance Agreement, consistent with this Indenture and without
limiting the rights of the Bondholders as otherwise set forth in
the Indenture, including, without limitation, upon the occurrence
and continuance of a default under the Insurance Agreement, a
request to take any one or more of the following actions:
(i) institute Proceedings for the collection of all
amounts then payable on the Bonds, or under this Indenture
in respect to the Bonds and all amounts payable under the
Insurance Agreement, 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 called and conducted in any manner permitted
by law;
(iii) file or record all Assignments of Mortgage
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 Bond Insurer
hereunder;
provided, however, action shall be taken pursuant to this Section
4.12 by the Indenture Trustee to preserve the Bond Insurer's
rights or interest under this Agreement or the Insurance
Agreement only to the extent such action is available to the
Bondholders or the Bond Insurer under other provisions of this
Indenture.
Notwithstanding any provision of this Indenture to the
contrary, so long as no Bond Insurer Default exists, the Bond
Insurer shall at all times be treated as if it were the exclusive
Bondholder for the purposes of all approvals, consents, waivers
and the institution of any action and the direction of all
remedies hereunder, and the Indenture Trustee shall act in
accordance with the directions of the Bond Insurer so long as it
is indemnified therefor to its reasonable satisfaction; provided,
however, that the provisions of the first paragraph of Section
5.06 shall not apply to the Bond Insurer when the Bond Insurer is
exercising the rights of the Bondholders pursuant to this
paragraph.
Section 4.13. Repayment of Monies Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture
with respect to the Bonds, all monies then held by any Person
other than the Indenture Trustee under the provisions of this
Indenture with respect to such Bonds 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 Person shall be
released from all further liability with respect to such monies.
Section 4.14. Temporary Bonds. Pending the preparation of
any Definitive Bonds, the Issuer may execute and upon its written
direction, the Indenture Trustee may authenticate and make
available for delivery, temporary Bonds that are printed,
lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive
Bonds in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the
officers executing such Bonds may reasonably determine, as
evidenced by their execution of such Bonds.
If temporary Bonds are issued, the Issuer will cause
Definitive Bonds to be prepared without unreasonable delay.
After the preparation of the Definitive Bonds, the temporary
Bonds shall be exchangeable for Definitive Bonds upon surrender
of the temporary Bonds at the office or agency of the Indenture
Trustee, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Bonds, the Issuer shall
execute and the Indenture Trustee shall authenticate and make
available for delivery, in exchange therefor, Definitive Bonds of
authorized denominations and of like tenor and aggregate
principal amount. Until so exchanged, such temporary Bonds shall
in all respects be entitled to the same benefits under this
Indenture as Definitive Bonds.
ARTICLE V
Default and Remedies
Section 5.01. Events of Default. The Issuer shall deliver
to the Indenture Trustee and the Bond Insurer, within five days
after learning of the occurrence of a Default or an Event of
Default, written notice in the form of an Officer's Certificate
of the occurrence of such Default or Event of Default, its status
and what action the Issuer is taking or proposes to take with
respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default should occur and be continu-
ing, then and in every such case the Indenture Trustee may (with
the prior written consent of the Bond Insurer), and, at the
written direction of the Bond Insurer (which such written
direction shall include a statement to the effect that such
acceleration is at the sole option of the Bond Insurer and that
an amount equal to the excess, if any, of the sum of the unpaid
Bond Principal Balance of the Bonds together with accrued and
unpaid interest thereon through the date of payment of such
accelerated Bonds, over Available Funds for such date of payment,
would constitute a Deficiency Amount pursuant to the terms of the
Bond Insurance Policy and will be paid by the Bond Insurer in
connection with the acceleration in accordance with the terms of
the Bond Insurance Policy), or if a Bond Insurer Default exists,
the Holders of Bonds representing not less than a majority of the
Bond Principal Balances of all Bonds, shall, declare the Bonds to
be immediately due and payable, by a notice in writing to the
Issuer (and to the Indenture Trustee if given by Xxxxxxxxxxx),
and upon any such declaration the unpaid Bond Principal Balance
of the Bonds, together with accrued and unpaid interest thereon
through the date of acceleration, shall become immediately due
and payable.
At any time after such declaration of acceleration of
maturity with respect to an Event of Default has been made and
before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this
Article V provided, the Bond Insurer or, if a Bond Insurer
Default exists, the Holders of Bonds representing a majority of
the Bond Principal Balances of all Bonds, by written notice to
the Issuer and the Indenture Trustee, may waive the related Event
of Default and rescind and annul such declaration and its
consequences if:
(i) the Issuer or the Bond Insurer has paid or
deposited with the Indenture Trustee a sum sufficient to
pay:
(A) all payments of principal of and interest on
the Bonds and all other amounts that would then be due
hereunder or upon the Bonds if the Event of Default
giving rise to such acceleration had not occurred; and
(B) all sums reasonably paid or advanced by the
Indenture Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the
nonpayment of the principal of the Bonds that has become due
solely by such acceleration, have been cured or waived as
provided in Section 5.12.
provided, however, the Bond Insurer, so long as no Bond Insurer
Default exists, may waive an Event of Default regardless of
Section 5.02(i) or (ii) above.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. (a) The Issuer covenants that
if (i) default is made in the payment of any interest (including
the Interest Payment Amount) on any Bond when the same becomes
due and payable, and such default continues for a period of five
days, or (ii) default is made in the payment of the principal
(including the Principal Payment Amount and the Subordination
Increase Amount) of or any installment of the principal of any
Bond when the same becomes due and payable, the Issuer shall,
upon demand of the Indenture Trustee, at the direction of the
Bond Insurer, so long as no Bond Insurer Default exists, pay to
the Indenture Trustee, for the benefit of the Holders of Bonds
and of the Bond Insurer, the whole amount then due and payable on
the Bonds for principal and interest, with interest at the Bond
Interest Rate upon the overdue principal, and in addition thereto
such further amount as shall be sufficient to cover the
reasonable costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay
such amounts upon such demand, the Indenture Trustee, in its own
name and as trustee of an express trust, and at the direction of
the Bond Insurer, so long as no Bond Insurer Default exists,
subject to the provisions of Section 10.16 hereof, may institute
a Proceeding for the collection of the sums so due and unpaid,
and may prosecute such Proceeding to judgment or final decree,
and may enforce the same against the Issuer or other obligor upon
the Bonds and collect in the manner provided by law out of the
property of the Issuer or other obligor the Bonds, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing,
the Indenture Trustee, at the direction of the Bond Insurer, so
long as no Bond Insurer Default exists, subject to the provisions
of Section 10.16 hereof may, as more particularly provided in
Section 5.04 hereof, in its discretion, proceed to protect and
enforce its rights and the rights of the Bondholders and the Bond
Insurer, by such appropriate Proceedings as the Indenture
Trustee, at the direction of the Bond Insurer, so long as no Bond
Insurer Default exists, shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other
proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the
Issuer or any other obligor upon the Bonds or any Person having
or claiming an ownership interest in the Trust Estate,
Proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the
Issuer or its property or such other obligor or Person, or in
case of any other comparable judicial Proceedings relative to the
Issuer or other obligor upon the Bonds, or to the creditors or
property of the Issuer or such other obligor, the Indenture
Trustee, at the direction of the Bond Insurer, so long as no Bond
Insurer Default exists, irrespective of whether the principal of
any Bonds shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the
Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect
of the Bonds 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 reasonable
expenses and liabilities incurred, and all advances made, by
the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith), the
Bond Insurer and of the Bondholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Bonds 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 Bondholders, the Bond Insurer 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, the Bond Insurer
or the Holders of Bonds 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 Bondholders to make payments to the Indenture Trustee, and,
in the event that the Indenture Trustee, with the consent of the
Bond Insurer, so long as no Bond Insurer Default exists, shall
consent to the making of payments directly to such Bondholders,
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, all other reasonable expenses and
liabilities incurred, all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee, except as a result of
negligence or bad faith, and all amounts due to the Bond Insurer.
(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 Bondholder any plan
of reorganization, arrangement, adjustment or composition
affecting the Bonds or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim
of any Bondholder 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 Bonds, may be enforced by the
Indenture Trustee without the possession of any of the Bonds 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 reasonable expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents and attorneys, shall be for
the ratable benefit of the Holders of the Bonds and the Bond
Insurer, subject to Section 5.05 hereof.
(g) In any Proceedings brought by the Indenture
Trustee with the consent of the Bond Insurer, so long as no Bond
Insurer Default exists (and also any Proceedings involving the
interpretation of any provision of this Indenture to which the
Indenture Trustee shall be a party), the Indenture Trustee shall
be held to represent all the Holders of the Bonds, and it shall
not be necessary to make any Bondholder a party to any such
Proceedings.
Section 5.04. Remedies; Priorities. (a) If an Event of
Default shall have occurred and be continuing and if an
acceleration has been declared and not rescinded pursuant to
Section 5.02 hereof, the Indenture Trustee, subject to the
provisions of Section 10.16 hereof and with the consent of the
Bond Insurer so long as no Bond Insurer Default exists, may and,
at the direction of the Bond Insurer so long as no Bond Insurer
Default exists, shall, do one or more of the following (subject
to Section 5.05 hereof):
(i) institute Proceedings in its own name and as
trustee of an express trust for the collection of all
amounts then payable on the Bonds or under this Indenture
with respect thereto, whether by declaration or otherwise,
and all amounts payable under the Insurance Agreement,
enforce any judgment obtained, and collect from the Issuer
and any other obligor upon such Bonds 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, the Holders of the Bonds and the Bond Insurer; 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 so long as a Bond Insurer Default exists,
the Indenture Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Holders of 100% of
the aggregate Bond Principal Balance, (B) the proceeds of such
sale or liquidation distributable to the Holders of the Bonds are
sufficient to discharge in full all amounts then due and unpaid
upon the Bonds for principal and interest and to reimburse the
Bond Insurer for any amounts drawn under the Bond Insurance
Policy and any other amounts due to the Bond Insurer 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 Bonds as they
would have become due if the Bonds had not been declared due and
payable, and the Indenture Trustee obtains the consent of the
Holders of a majority of the aggregate Bond Principal Balance.
In determining such sufficiency or insufficiency with respect to
clause (B) and (C), the Indenture Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of
the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or
property pursuant to this Article V, it shall pay out the money
or property in the following order; provided, however, that any
amounts representing payments from the Bond Insurer shall only be
used to pay interest and principal to the Bondholders pursuant to
clauses FOURTH and FIFTH below:
FIRST: to the Indenture Trustee for amounts due under
Section 6.07 hereof;
SECOND: to the Bond Insurer, provided no Bond Insurer
Default exists, with respect to any Bond Insurance
Premium then due;
THIRD: to the CAP Provider, any amounts then due and
owing under the CAP Agreements to the extent such
amounts have not been paid by the Servicer out of the
Collection Account pursuant to Section 3.10 of the
Servicing Agreement; provided, however, that no such
amounts in respect of termination payments shall be
paid unless (A) the Bond Insurer has directed a
termination of the CAP Agreements pursuant to the terms
thereof, or (B) the Bond Insurer has failed to pay any
insured amount to the CAP Provider under the CAP
Agreement Insurance Policy;
FOURTH: to the Bondholders for amounts due and unpaid
on the Bonds with respect to interest, ratably, without
preference or priority of any kind, according to the
amounts due and payable on the Bonds for interest
(including the Interest Payment Amount but not
including any Prepayment Interest Shortfalls, any
Relief Act Shortfalls and the Carry-Forward Amount)
from amounts available in the Trust Estate for the
Bondholders;
FIFTH: to Bondholders for amounts due and unpaid on
the Bonds with respect to principal (including, but not
limited to, any Principal Payment Amount), from amounts
available in the Trust Estate for the Bondholders, and
to each Bondholder ratably, without preference or
priority of any kind, according to the amounts due and
payable on the Bonds for principal, until the Bond
Principal Balance is reduced to zero;
SIXTH: to the Bond Insurer, the sum of (a) all
payments previously paid by the Bond Insurer under the
Bond Insurance Policy which have not previously been
reimbursed, (b) any other amounts due to the Bond
Insurer pursuant to the Insurance Agreement, to the
extent not previously paid or reimbursed and (c)
interest on the foregoing as set forth in the Insurance
Agreement from the date such amounts become due until
paid in full (including any Bond Insurance Premium not
paid pursuant to clause SECOND above);
SEVENTH: to the Bondholders for amounts due and unpaid
on the Bonds with respect to the Carry-Forward Amount,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Bonds
with respect thereto, from amounts available in the
Trust Estate for the Bondholders;
EIGHTH: to the CAP Provider, for amounts due and
owing under the CAP Agreements and not paid pursuant to
clause THIRD above; and
NINTH: 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 Bondholders pursuant to this Section 5.04.
With respect to any acceleration at the direction of the Bond
Insurer, the first payment date after the acceleration shall be
the first Payment Date after the acceleration. At least 15 days
before such record date, the Indenture Trustee shall mail to each
Bondholder 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 Bonds have been declared to be due and payable under
Section 5.02 following an Event of Default and such declaration
and its consequences have not been rescinded and annulled, the
Indenture Trustee may, with the consent of the Bond Insurer, and
shall, at the direction of the Bond Insurer, so long as no Bond
Insurer Default exists, elect to take and maintain possession of
the Trust Estate. It is the desire of the parties hereto and the
Bondholders that there be at all times sufficient funds for the
payment of principal of and interest on the Bonds and other
obligations of the Issuer including payment to the Bond Insurer,
and the Indenture Trustee shall take such desire into account
when determining whether or not to take and maintain possession
of the Trust Estate. In determining whether to take and maintain
possession of the Trust Estate, the Indenture Trustee may, but
need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Bond
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 subject to the provisions of Section 10.16 hereof:
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Bond
Principal Balances of the Bonds have made a 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;
(iii) such Holder or Holders have offered to the
Indenture Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in complying with
such request;
(iv) the Indenture Trustee for 60 days after its
receipt of such notice of request and offer of indemnity has
failed to institute such Proceedings;
(v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such
60-day period by the Holders of a majority of the Bond
Principal Balances of the Bonds; and
(vi) such Holder or Holders have the consent of
the Bond Insurer, unless a Bond Insurer Default exists.
It is understood and intended that no one or more Holders of
Bonds shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders of Bonds or
to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture,
except in the manner herein provided.
Subject to the last paragraph of Section 4.12 herein, in the
event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of
Holders of Bonds, each representing less than a majority of the
Bond Principal Balances of the Bonds, 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 Bondholders To
Receive Principal and Interest. Notwithstanding any other pro-
visions in this Indenture, the Holder of any Bond shall have the
right, which is absolute and unconditional, to receive payment of
the principal of and interest, if any, on such Bond on or after
the respective due dates thereof expressed in such Bond or in
this Indenture and to institute suit for the enforcement of any
such payment, and such right shall not be impaired without the
consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the
Indenture Trustee or any Bondholder 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, the Bond
Insurer or to such Bondholder, then and in every such case the
Issuer, the Indenture Trustee, the Bond Insurer and the
Bondholders 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, the Bond Insurer and the
Bondholders 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 Bond Insurer or to the Bondholders is intended to be
exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee, the Bond Insurer or any Holder
of any Bond 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, the Bond Insurer or
to the Bondholders may be exercised from time to time, and as
often as may be deemed expedient, by the Indenture Trustee, the
Bond Insurer or by the Bondholders, as the case may be.
Section 5.11. Control by Bond Insurer. The Bond Insurer,
or if a Bond Insurer Default exists, the Holders of a majority of
the Bond Principal Balances of Bonds shall have the right
(subject to the provisions of Section 5.06) to direct the time,
method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee with respect to the Bonds or
exercising any trust or power conferred on the Indenture Trustee;
provided that:
(i) such direction shall not be in conflict with any
rule of law or with this Indenture;
(ii) if a Bond Insurer Default exists, subject to
the express terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate
shall be by Holders of Bonds representing 100% of the Bond
Principal Balances of the Bonds;
(iii) if the conditions set forth in Section 5.05
hereof have been satisfied and the Indenture Trustee, with
the consent of the Bond Insurer, so long as no Bond Insurer
Default exists, elects to retain the Trust Estate pursuant
to such Section, then any direction to the Indenture Trustee
by Holders of Bonds (other than with respect to the Bond
Insurer exercising the rights of Bondholders pursuant to the
last sentence of Section 4.12) to sell or liquidate the
Trust Estate shall be of no force and effect; and
(iv) if a Bond Insurer Default exists, 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 Bondholders set forth in this
Section, subject to Section 6.01, the Indenture Trustee need not
take any action that it determines might involve it in liability
or, if a Bond Insurer Default exists, might materially adversely
affect the rights of any Bondholders not consenting to such
action.
Section 5.12. Waiver of Past Defaults. Prior to the
declaration of the acceleration of the maturity of the Bonds as
provided in Section 5.02 hereof, the Bond Insurer, or if a Bond
Insurer Default exists, the Holders of Bonds of not less than a
majority of the Bond Principal Balances of the Bonds, may waive
any past Event of Default and its consequences except an Event of
Default (a) with respect to payment of principal of or interest
on any of the Bonds or (b) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of
the Holder of each Bond or (c) the waiver of which would mate-
rially and adversely affect the interests of the Bond Insurer or
modify its obligation under the Bond Insurance Policy. In the
case of any such waiver, the Issuer, the Indenture Trustee and
the Holders of the Bonds shall be restored to their former
positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Event of Default or
impair any right consequent thereto.
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 Holder of any Bond by such Xxxxxx's
acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit
instituted by the Indenture Trustee or the Bond Insurer, (b) any
suit instituted by any Bondholder, or group of Bondholders, in
each case holding in the aggregate more than 10% of the Bond
Principal Balances of the Bonds or (c) any suit instituted by any
Bondholder for the enforcement of the payment of principal of or
interest on any Bond on or after the respective due dates
expressed in such Bond 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 whatso-
ever, 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 hereof is expressly
subject to the provisions of Section 5.05 hereof 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
Bonds and under this Indenture and under the Insurance Agreement
shall have been paid. The Indenture Trustee with the consent of
the Bond Insurer, so long as no Bond Insurer Default exists, may
from time to time postpone any public Sale by public announcement
made at the time and place of such Sale. The Indenture Trustee
hereby expressly waives its right to any amount fixed by law as
compensation for any Sale.
(b) The Indenture Trustee shall not in any private
Sale sell the Trust Estate, or any portion thereof, unless
(1) the Bond Insurer or, if a Bond Insurer Default
exists, the Holders of all Bonds, consent to or direct the
Indenture Trustee to make, such Sale, or
(2) unless the Bond Insurer otherwise consents, the
proceeds of such Sale would be not less than the entire
amount which would be payable to the Bondholders under the
Bonds and the Bond Insurer in respect of amounts drawn under
the Bond Insurance Policy and any other amounts due to the
Bond Insurer under the Insurance Agreement, in full payment
thereof in accordance with Section 5.02 hereof, on the
Payment Date next succeeding the date of such Sale, or
(3) The Indenture Trustee determines with the consent
of the Bond Insurer, so long as no Bond Insurer Default
exists, that the conditions for retention of the Trust
Estate set forth in Section 5.05 hereof cannot be satisfied
(in making any such determination, the Indenture Trustee may
rely upon an opinion of an Independent investment banking
firm obtained and delivered as provided in Section 5.05
hereof), and the Bond Insurer consents to such Sale, or if a
Bond Insurer Default exists, the Holders of Bonds
representing at least 66-2/3% of the Bond Principal Balances
of the Bonds consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of
the Trust Estate at a private Sale shall not be deemed a Sale or
other disposition thereof for purposes of this Section 5.15(b).
(c) Unless the Bond Insurer or, if a Bond Insurer
Default exists, the Holders of Bonds representing at least 66-
2/3% of the Bond Principal Balances of the Bonds have otherwise
consented or directed the Indenture Trustee, at any public Sale
of all or any portion of the Trust Estate at which a minimum bid
equal to or greater than the amount described in paragraph (2) of
subsection (b) of this Section 5.15 has not been established by
the Indenture Trustee and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee shall bid an
amount at least $1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of
the Trust Estate,
(1) any Holder or Holders of Bonds may bid for and
with the consent of the Bond Insurer 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 Bonds 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 Bonds, in case the amounts so
payable thereon shall be less than the amount due thereon,
shall be returned to the Holders thereof after being
appropriately stamped to show such partial payment;
(2) the Indenture Trustee, with the consent of the
Bond Insurer, so long as no Bond Insurer Default exists, may
bid for and acquire the property offered for Sale in
connection with any Sale thereof, and, subject to any
requirements of, and to the extent permitted by, applicable
law in connection therewith, may purchase all or any portion
of the Trust Estate in a private sale, and, in lieu of
paying cash therefor, may make settlement for the purchase
price by crediting the gross Sale price against the sum of
(A) the amount which would be distributable to the Holders
of the Bonds and Holders of Certificates and amounts owing
to the Bond Insurer as a result of such Sale in accordance
with Section 5.04(b) hereof on the Payment Date next
succeeding the date of such Sale and (B) the reasonable
expenses of the Sale and of any Proceedings in connection
therewith which are reimbursable to it, without being
required to produce the Bonds in order to complete any such
Sale or in order for the net Sale price to be credited
against such Bonds, and any property so acquired by the
Indenture Trustee shall be held and dealt with by it in
accordance with the provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its
interest in any portion of the Trust Estate in connection
with a Sale thereof;
(4) the Indenture Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Trust
Estate in connection with a Sale thereof, and to take all
action necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be
bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or
see to the application of any monies.
Section 5.16. Action on Bonds. The Indenture Trustee's
right to seek and recover judgment on the Bonds 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, the Bond Insurer or the
Bondholders 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) hereof.
Section 5.17. Performance and Enforcement of Certain Obli-
gations. (a) Promptly following a request from the Indenture
Trustee to do so, the Issuer, in its capacity as holder of the
Mortgage Loans, shall take all such lawful action as the
Indenture Trustee or the Bond Insurer may request to cause the
Issuer to compel or secure the performance and observance by the
Seller, the Company and the Servicer, as applicable, of each of
their obligations to the Issuer under or in connection with the
Mortgage Loan Purchase Agreement and the Servicing Agreement, and
to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the
Mortgage Loan Purchase Agreement and the Servicing Agreement to
the extent and in the manner directed by the Indenture Trustee,
with the consent of the Bond Insurer, so long as no Bond Insurer
Default exists, as pledgee of the Mortgage Loans, including the
transmission of notices of default on the part of the Seller, the
Company or the Servicer thereunder and the institution of legal
or administrative actions or proceedings to compel or secure
performance by the Seller, the Company or the Servicer of each of
their obligations under the Mortgage Loan Purchase Agreement and
the Servicing Agreement. So long as no Bond Insurer Default
exists, the Bond Insurer shall have the right to approve or
reject any proposed successor to the Servicer (other than the
Indenture Trustee) under the Servicing Agreement.
(b) The Indenture Trustee, as pledgee of the Mortgage
Loans, subject to the rights of the Bond Insurer under this
Agreement and the Servicing Agreement may, and at the direction
(which direction shall be in writing or by telephone (confirmed
in writing promptly thereafter)) of the Bond Insurer or, if a
Bond Insurer Default exists, the Holders of 66-2/3% of the Bond
Principal Balances of the Bonds, shall exercise all rights,
remedies, powers, privileges and claims of the Issuer against the
Seller or the Servicer under or in connection with the Mortgage
Loan Purchase Agreement and the Servicing Agreement, including
the right or power to take any action to compel or secure
performance or observance by the Seller or the 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 Mortgage Loan Purchase
Agreement and the Servicing Agreement, as the case may be, and
any right of the Issuer to take such action shall not be
suspended.
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee. (a) If an
Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of
Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Indenture and no implied covenants or obligations shall
be read into this Indenture against the Indenture Trustee;
and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this
Indenture; however, the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from
liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer unless it is proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable
with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it (A)
pursuant to Sections 5.11 or 5.15 or (B) from the Bond
Insurer, which it is entitled to give under any of the Basic
Documents.
(d) The Indenture Trustee shall not be liable for
interest on any money received by it except as the Indenture
Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Indenture Trustee need
not be segregated from other trust 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 the TIA.
(h) The Indenture Trustee shall act in accordance with
Sections 6.03 and 6.04 of the Servicing Agreement and shall act
as successor to the Servicer in accordance with Section 6.02 of
the Servicing Agreement.
(i) For all purposes under this Indenture, the Indenture
Trustee shall not be deemed to have notice or knowledge of any
Default or Event of Default unless a Responsible Officer assigned
to and working in the Indenture Trustee's corporate trust
department has actual knowledge thereof or unless written notice
of any event which is in fact such an Event of Default or Default
is received by the Indenture Trustee at the Corporate Trust
Office, and such notice references the Bonds generally, the
Issuer, the Trust Estate or this Indenture.
The Indenture Trustee is hereby authorized to execute and
shall execute the Servicing Agreement, the Mortgage Loan Purchase
Agreement, the Insurance Agreement and the Remarketing Spread
Calculation Agent Letter Agreement, and shall perform its duties
and satisfy its obligations thereunder. Every provision of this
Indenture relating to the conduct or affecting the liability of
or affording protection to the Indenture Trustee shall apply to
the Indenture Trustee's execution of the Servicing Agreement, the
Mortgage Loan Purchase Agreement, the Insurance Agreement and the
Remarketing Spread Calculation Agent Letter Agreement, and the
performance of its duties and satisfaction of its obligations
thereunder.
Section 6.02. Rights of Indenture Trustee. (a) The Inden-
ture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper
person. The Indenture Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from
acting, it may require an Officer's Certificate or an Opinion of
Counsel reasonably satisfactory in form and substance to the
Indenture Trustee, which Officer's Certificate or Opinion of
Counsel shall not be at the expense of the Indenture Trustee or
the Trust Estate (except in the priority set forth in Section
3.05(a)(viii)). The Indenture Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on
an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys or a custodian or
nominee.
(d) The Indenture Trustee shall not be liable for 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
chosen by it with due care, and the advice or opinion of counsel
with respect to legal matters relating to this Indenture and the
Bonds shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may
become the owner or pledgee of Bonds and may otherwise deal with
the Issuer or its Affiliates with the same rights it would have
if it were not Indenture Trustee. Any Bond Registrar, co-
registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Section 6.11
hereof.
Section 6.04. Indenture Trustee's Disclaimer. The Inden-
ture Trustee shall not be responsible for and makes no represen-
tation as to the validity or adequacy of this Indenture or the
Bonds, it shall not be accountable for the Issuer's use of the
proceeds from the Bonds, and it shall not be responsible for any
statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Bonds or in the Bonds
other than the Indenture Trustee's certificate of authentication.
Section 6.05. Notice of Event of Default. If an Event of
Default occurs and is continuing and if it is known to a Respon-
sible Officer of the Indenture Trustee, the Indenture Trustee
shall give notice thereof to the Bond Insurer. The Trustee shall
mail to each Bondholder notice of the Event of Default within 10
days after a Responsible Officer has actual knowledge thereof
unless such Event of Default shall have been waived or cured.
Except in the case of an Event of Default in payment of principal
of or interest on any Bond, the Indenture Trustee may withhold
the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is
in the interests of Bondholders.
Section 6.06. Tax Administration of the Issuer. The
Indenture Trustee, based solely on information timely provided by
the Servicer, shall prepare and file (or cause to be prepared and
filed), on behalf of the Owner Trustee, all tax returns and
information reports, tax elections and such annual or other
reports of the Issuer as are necessary for preparation of tax
returns and information reports as provided in Section 5.03 of
the Trust Agreement, including without limitation Form 1099. All
tax returns and information reports shall be signed by the Owner
Trustee as provided in Section 5.03 of the Trust Agreement.
Section 6.07. Compensation and Indemnity. The Issuer shall
pay to the Indenture Trustee on each Payment Date reasonable
compensation for its services. The amount of the Indenture
Trustee Fee shall be paid to the Indenture Trustee on each
Payment Date pursuant to Section 3.05(a)(i) of this Indenture,
and all amounts owing to the Indenture Trustee hereunder in
excess of such amount shall be paid solely as provided in Section
3.05(a)(viii) hereof and Section 5.06 of the Servicing Agreement.
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 compensation for its services subject
to the priorities established by Sections 3.05(a)(viii) and
5.04(b) of this Indenture. Such expenses shall include
reasonable compensation and expenses, disbursements and advances
of the Indenture Trustee's agents, counsel, accountants and
experts. Subject to the priorities established in Section
3.05(a)(viii) and Section 5.04(b) of this Indenture, the Issuer
shall indemnify the Indenture Trustee against any and all loss,
liability or expense (including reasonable attorneys' fees)
incurred by it in connection with the administration of this
Trust Estate 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 reasonable 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 with respect to the Issuer, the
expenses are intended to constitute expenses of administration
under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resig-
nation 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 Bond Insurer. The
Bond Insurer or, if a Bond Insurer Default exists, the Holders of
a majority of Bond Principal Balances of the Bonds may remove the
Indenture Trustee by so notifying the Issuer and the Indenture
Trustee and the Bond Insurer and may appoint a successor
Indenture Trustee. The Issuer shall, with the consent of the
Bond Insurer, so long as no Bond Insurer Default exists, remove
the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section
6.11 hereof;
(ii) the Indenture Trustee is adjudged a bankrupt
or insolvent;
(iii) a receiver or other public officer takes
charge of the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes
incapable of acting.
If the Indenture Trustee resigns or is removed or if a
vacancy exists in the office of the Indenture Trustee for any
reason (the Indenture Trustee in such event being referred to
herein as the retiring Indenture Trustee), the Issuer shall, with
the consent of the Bond Insurer, so long as no Bond Insurer
Default exists, promptly appoint a successor Indenture Trustee
reasonably acceptable to the Bond Insurer.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee,
the Bond Insurer 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 Bondholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within
60 days after the retiring Indenture Trustee resigns or is
removed, the retiring Indenture Trustee, the Issuer, the Bond
Insurer or the Holders of a majority of Bond Principal Balances
of the Bonds may petition any court of competent jurisdiction for
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 Xxxxxx. If
the Indenture Trustee consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust
business or assets to, another corporation or banking associa-
tion, 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 hereof. The
Indenture Trustee shall provide the Issuer, the Rating Agencies
and the Bond Insurer with prior written notice of any such
transaction.
If at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall
succeed to the trusts created by this Indenture and any of the
Bonds shall have been authenticated but not delivered, any such
successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee and deliver such Bonds
so authenticated; and if at that time any of the Bonds shall not
have been authenticated, any successor to the Indenture Trustee
may authenticate such Bonds either in the name of any predecessor
hereunder or in the name of the successor to the Indenture
Trustee; and in all such cases such certificates shall have the
full force which it is in the Bonds 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 pro-
visions of this Indenture, at any time, for the purpose of meet-
ing any legal requirement of any jurisdiction in which any part
of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee
or co-trustees, or separate trustee or separate trustees, of all
or any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Bondholders
and the Bond Insurer, such title to the Trust Estate, or any part
hereof, and, subject to the other provisions of this Section,
such powers, duties, obligations, rights and trusts as the
Indenture Trustee or the Bond Insurer 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 hereof and notice to, and the consent of, the
Bond Insurer (but not the Bondholders) of the appointment of any
co-trustee or separate trustee shall be required.
(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 particu-
lar 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 obli-
gations (including the holding of title to the Trust Estate
or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Indenture
Trustee;
(ii) no trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder; and
(iii) the Indenture Trustee may at any time accept
the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of
the then separate trustees and co-trustees, as effectively as if
given to each of them. Every instrument appointing any separate
trustee or co-trustee shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-
trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument
of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the pro-
visions of this Indenture, specifically including every provision
of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee.
Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact
with full power and authority, to the extent not prohibited by
law, to do any lawful act under or in respect of this Agreement
on its behalf and in its name. If any separate trustee or co-
trustee 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 be reasonably acceptable to the Bond
Insurer and authorized to exercise corporate trust powers. The
Indenture Trustee shall also satisfy the requirements of TIA
Section 310(a) and have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published
annual report of condition and it or its parent shall have a
long-term debt rating of Baa3 or better by Xxxxx'x and BBB or
better by Standard & Poor's. 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. If at any time the Indenture Trustee
shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with
the effect specified in Section 6.08 hereof.
Section 6.12. Preferential Collection of Claims Against
Issuer. The Indenture Trustee shall comply with TIA
Section 311(a), excluding any creditor relationship listed in TIA
Section 311(b). An Indenture Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent
indicated.
Section 6.13. Representations and Warranties. The
Indenture Trustee hereby represents that:
(i) The Indenture Trustee is duly organized and
validly existing as a national banking association in good
standing under the laws of the United States with power and
authority to own its properties and to conduct its business
as such properties are currently owned and such business is
presently conducted;
(ii) The Indenture Trustee has the power and
authority to execute and deliver this Indenture and to carry
out its terms; and the execution, delivery and performance
of this Indenture have been duly authorized by the Indenture
Trustee by all necessary corporate action;
(iii) The consummation of the transactions
contemplated by this Indenture and the fulfillment of the
terms hereof do not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the
articles of organization or bylaws of the Indenture Trustee
or any agreement or other instrument to which the Indenture
Trustee is a party or by which it is bound; and
(iv) To the Indenture Trustee's best knowledge,
there are no proceedings or investigations pending or
threatened before any court, regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over the Indenture Trustee or its properties:
(A) asserting the invalidity of this Indenture, (B) seeking
to prevent the consummation of any of the transactions
contemplated by this Indenture or (C) seeking any
determination or ruling that might materially and adversely
affect the performance by the Indenture Trustee of its
obligations under, or the validity or enforceability of,
this Indenture.
Section 6.14. Directions to Indenture Trustee. The Inden-
ture Trustee is hereby directed:
(a) to accept the pledge of the Mortgage Loans
and hold the assets of the Owner Trust Estate in trust for
the Bondholders and the Bond Insurer;
(b) to authenticate and deliver the Bonds
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. The Agents. The provisions of this Indenture
relating to the limitations of the Indenture Trustee's liability
and to its indemnity shall inure also to the Paying Agent, the
Bond Registrar, the Certificate Paying Agent and the Certificate
Registrar.
ARTICLE VII
Bondholders' Lists and Reports
Section 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Bondholders. The Issuer will furnish or cause to be
furnished to the Indenture Trustee (a) not more than five days
after each Record Date, a list, in such form as the Indenture
Trustee may reasonably require, of the names and addresses of the
Holders of Bonds as of such Record Date, (b) at such other times
as the Indenture Trustee and the Bond Insurer may request in
writing, within 30 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more
than 10 days prior to the time such list is furnished; provided,
however, that so long as the Indenture Trustee is the Xxxx Xxxxx-
trar, no such list shall be required to be furnished.
Section 7.02. Preservation of Information; Communications
to Bondholders. (a) The Indenture Trustee shall preserve, in as
current a form as is reasonably practicable, the names and
addresses of the Holders of Bonds contained in the most recent
list furnished to the Indenture Trustee as provided in Section
7.01 hereof and the names and addresses of Holders of Bonds
received by the Indenture Trustee in its capacity as Xxxx Xxxxx-
trar. 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) Bondholders may communicate pursuant to TIA
Section 312(b) with other Bondholders with respect to their
rights under this Indenture or under the Bonds.
(c) The Issuer, the Indenture Trustee and the Bond
Registrar shall have the protection of TIA Section 312(c).
Section 7.03. Reports by the Indenture Trustee; Issuer
Fiscal Year. (a) The Indenture Trustee shall:
(i) file with the Commission, on behalf of the Issuer,
the annual reports and information, documents and other
reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and
regulations prescribe) that the Issuer may be required to
file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act. Such filings shall be as follows: within
15 days after each Payment Date, the Indenture Trustee shall
file with the Commission via the Electronic Data Gathering,
Analysis and Retrieval System, a Form 8-K with a copy of the
statement to Bondholders for such Payment Date as an exhibit
thereto. Prior to January 31, 1999, the Indenture Trustee
shall file a Form 15 Suspension Notification with respect to
the Trust Fund, if applicable. Prior to March 31, 1999, the
Indenture Trustee shall file a Form 10-K, in substance
conforming to industry standards, with respect to the Trust
Fund. The Issuer hereby grants to the Indenture Trustee a
limited power of attorney to execute and file each such
document on behalf of the Issuer. Such power of attorney
shall continue until the earlier of (i) receipt by the
Trustee from the Issuer of written termination of such power
of attorney and (ii) the termination of the Trust Fund. The
Indenture Trustee shall deliver to the Company and the Bond
Insurer within three Business Days after filing any Form 8-K
or Form 10-K pursuant to this Section 7.03 a copy of such
Form 8-K or Form 10-K, as the case may be; and
(ii) file with the Commission (with copies to the
Company and the Bond Insurer) 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.
(b) Unless the Issuer otherwise notifies the Indenture
Trustee, 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 January 1 beginning
with January 1, 1999, the Indenture Trustee shall mail to each
Bondholder as required by TIA Section 313(c) and to the Bond
Insurer a brief report dated as of such date that complies with
TIA Section 313(a). The Indenture Trustee also shall comply with
TIA Section 313(b).
A copy of each report at the time of its mailing to Bond-
holders shall be filed by the Indenture Trustee with the Commis-
sion and each stock exchange, if any, on which the Bonds are
listed. The Issuer shall notify the Indenture Trustee and the
Bond Insurer if and when the Bonds are listed on any stock
exchange.
Section 7.05. Statements to Bondholders. (a) Subject to
Section 3.26 of this Indenture, with respect to each Payment
Date, the Indenture Trustee shall deliver to each
Certificateholder and Bondholder, the Bond Insurer, the Company,
the Owner Trustee, the Certificate Paying Agent and each Rating
Agency, a statement setting forth the following information as to
the Bonds, to the extent applicable:
(i) the aggregate amount of collections with respect
to the Mortgage Loans with respect to such Payment Date;
(ii) the Interest Payment Amount, Principal Payment
Amount and Subordination Increase Amount payable to the
Bondholders for such Payment Date, the Guaranteed Interest
Payment Amount and the Carry-Forward Amount for such Payment
Date and the aggregate unpaid Carry-Forward Amount for all
prior Payment Dates;
(iii) the amount of the aggregate distribution to
the Bondholders for such Payment Date;
(iv) the Insured Payments, if any, paid by the Bond
Insurer under the Bond Insurance Policy for such Payment
Date and the aggregate Insured Payments for all prior
Payment Dates paid by the Bond Insurer under the Bond
Insurance Policy and not yet reimbursed;
(v) the aggregate Principal Balance of the Mortgage
Loans as of the end of the preceding Due Period;
(vi) the number and aggregate Principal Balances of
Mortgage Loans (a) as to which the Monthly Payment is
delinquent for 30-59 days, 60-89 days and 90 or more days
(excluding any Mortgage Loans in foreclosure or that have
become REO Property), respectively, (b) in foreclosure and
(c) that have become REO Property, in each case as of the
end of the preceding Due Period; provided, however, that
such information will not be provided on the statements
relating to the first Payment Date;
(vii) the Weighted Average Mortgage Rate for the
related Payment Date;
(viii) the Required Subordination Amount,
Subordination Amount, Net Monthly Excess Cashflow and
Subordination Reduction Amount for such Payment Date;
(ix) the amount of any Advances and Compensating
Interest payments for such Payment Date;
(x) the aggregate Realized Losses with respect to the
related Payment Date and cumulative Realized Losses since
the Closing Date;
(xi) the amount of any unpaid accrued interest on the
Bonds after such Payment Date;
(xii) the aggregate Bond Principal Balance of the
Bonds after giving effect to the distribution of principal
on such Payment Date;
(xiii) the Maximum Bond Interest Rate and Bond
Interest Rate for such Payment Date;
(xiv) the number and aggregate Principal Balance of
Mortgage Loans repurchased pursuant to the Mortgage Loan
Purchase Agreement for the related Payment Date and
cumulatively since the Closing Date;
(xv) the Cumulative Loss Percentage, Delinquency
Percentage, Delinquency Amount and Rolling Delinquency
Percentage for such Payment Date;
(xvi) the amount of any Prepayment Interest
Shortfalls or Relief Act Shortfalls for such Payment Date;
(xvii) the aggregate Principal Balance of Mortgage
Loans purchased pursuant to Section 3.18 of the Servicing
Agreement for the related Payment Date and cumulatively
since the Closing Date;
(xviii) the aggregate amount collected with respect
to any prepayment penalties on the Mortgage Loans; and
(xix) the aggregate amount of all payments received
from the CAP Provider under the CAP Agreements and from
ML&Co pursuant to the ML&Co Guaranty, and all payments made
to the CAP Provider under the CAP Agreements.
Items (iii) and (xii) above shall be presented on the basis
of a Bond having a $1,000 denomination. In addition, by January
31 of each calendar year following any year during which the
Bonds are outstanding, the Indenture Trustee shall furnish a
report to each Bondholder of record if so requested in writing at
any time during each calendar year as to the amounts reported
pursuant to (iii) and (xii) with respect to the Bonds for such
calendar year.
The Indenture Trustee in the absence of manifest error may
conclusively rely upon the Determination Date Report provided by
the Servicer pursuant to Section 4.01 of the Servicing Agreement
in its preparation of its Statement to the Bondholders pursuant
to this Section 7.04.
Section 7.06. Books and Records. The Issuer hereby
covenants with the Indenture Trustee and the Bond Insurer that,
so long as any of the Bonds remain Outstanding, it shall:
(a) at all times cause to be kept proper books of
account and allow the Indenture Trustee and the Bond Insurer
and any person appointed by it, to whom the Issuer shall
have no reasonable objection, access to the books of account
of the Issuer at all reasonable times, on reasonable prior
notice and during normal business hours;
(b) at all times conduct and continue to conduct
business in its own corporate name;
(c) at all times act and continue to act through
its duly authorized officers and agents; and
(d) so far as permitted by law, at all times
cause to be given to the Indenture Trustee and the Bond
Insurer such information as it shall reasonably require for
the purpose of the discharge of the duties, powers, trusts,
authorities and discretions vested in it by this Indenture
or by operation of law.
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 appro-
priate 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 Bondholders and the Bond Insurer, the Payment
Account as provided in Section 3.01 hereof.
(b) All monies deposited from time to time in the
Payment Account (other than investments made with such monies
including all income or other gain from such investments pursuant
to this Indenture), including assumption fees and prepayment
penalties, and all deposits therein pursuant to this Indenture
are for the benefit of the Bondholders and the Bond Insurer.
On each Payment Date, the Indenture Trustee shall distribute
all amounts on deposit in the Payment Account to Bondholders in
respect of the Bonds and to such other persons in the order of
priority set forth in Section 3.05 hereof (except as otherwise
provided in Section 5.04(b) hereof).
The Indenture Trustee may invest any funds in the Payment
Account (other than the proceeds of the Bond Insurance Policy) in
Eligible Investments, in its discretion, maturing no later than
the Business Day preceding each Payment Date (provided, however,
that with respect to Eligible Investments that consist of
obligations of the Indenture Trustee or its affiliates, such
Eligible Investments may mature on the related Payment Date) and
such Eligible Investments shall not be sold or disposed of prior
to their maturity. All income or other gain from such
investments may be released from the Payment Account and paid to
the Indenture Trustee from time to time as part of its
compensation for acting as Indenture Trustee.
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) hereof,
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
reasonably satisfactory to the Indenture Trustee, stating the
legal effect of any such action, outlining the steps required to
complete such action, and concluding that all conditions
precedent to the taking of such action have been complied with.
Section 8.04. Termination Upon Distribution to Bondholders.
This Indenture and the respective obligations and responsibili-
ties of the Issuer and the Indenture Trustee created hereby shall
terminate upon the distribution to Bondholders, the Bond Insurer,
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 Xxxxxx X. Xxxxxxx, the late ambassador of the
United States to the Court of St. Xxxxx, living on the date
hereof.
Section 8.05. Release of Trust Estate. (a) Subject to the
payment of its reasonable fees and expenses, the Indenture
Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the
lien of this Indenture, or convey the Indenture Trustee's
interest in the same, in a manner and under circumstances that
are not inconsistent with the provisions of this Indenture.
(b) The Indenture Trustee shall, at such time as (i)
there are no Bonds Outstanding, (ii) all sums due to the
Indenture Trustee pursuant to this Indenture have been paid, and
(iii) all sums due to the Bond Insurer have been paid, release
any remaining portion of the Trust Estate that secured the Bonds
from the lien of this Indenture.
(c) The Indenture Trustee shall release property from
the lien of this Indenture pursuant to this Section 8.05 only
upon receipt of a request from the Issuer accompanied by an
Officers' Certificate and an Opinion of Counsel stating that all
applicable requirements have been satisfied, and a letter from
the Bond Insurer stating that the Bond Insurer has no objection
to such request from the Issuer.
Section 8.06. Surrender of Bonds Upon Final Payment. By
acceptance of any Xxxx, the Holder thereof agrees to surrender
such Xxxx to the Indenture Trustee promptly, prior to such Bond-
holder's receipt of the final payment thereon.
Section 8.07. Optional Redemption of the Bonds. (a) The
Issuer shall have the option to redeem the Bonds in whole, but
not in part, on any Payment Date on or after the earlier of (i)
the Payment Date on which the aggregate Principal Balance of the
Initial Mortgage Loans is less than or equal to 25% of the sum of
the aggregate Principal Balance of the Initial Mortgage Loans as
of the Cut-Off Date and the Original Pre-Funded Amount or (ii)
the Payment Date occurring in April, 2005. The aggregate
redemption price for the Bonds will be equal to the unpaid Bond
Principal Balance of the Bonds as of the Payment Date on which
the proposed redemption will take place in accordance with the
foregoing, together with accrued and unpaid interest thereon at
the Bond Interest Rate through such Payment Date (including any
Carry-Forward Amount), plus an amount sufficient to pay in full
all amounts owing to the Bond Insurer and the Indenture Trustee
under this Indenture and the Insurance Agreement (which amounts
shall be specified in writing upon request of the Issuer by the
Indenture Trustee and the Bond Insurer).
(b) In order to exercise the foregoing option, the
Issuer shall, not less than 15 days prior to the proposed Payment
Date on which such redemption is to be made, deposit the
aggregate redemption price specified in (a) above with the
Indenture Trustee (and the Indenture Trustee shall deposit such
funds in the Payment Account), and shall provide written notice
of its exercise of such option to the Indenture Trustee, the Bond
Insurer, the Owner Trustee and the Servicer. Following receipt
of the notice and the aggregate redemption price, calculated as
specified in Section 8.07(a) hereof, pursuant to the foregoing,
the Indenture Trustee shall provide notice to the Bondholders of
the final payment on the Bonds and shall apply such funds to make
final payments of principal and interest on the Bonds in
accordance with Section 3.05(a) hereof, and this Indenture shall
be discharged, subject to the provisions of Section 4.10 hereof.
If for any reason the amount deposited by the Issuer is not
sufficient to make such redemption or such redemption cannot be
completed for any reason, the amount so deposited by the Issuer
with the Indenture Trustee shall be immediately returned to the
Issuer in full and shall not be used for any other purpose or be
deemed to be part of the Trust Estate.
Section 8.08. Pre-Funding Account. (a) No later than the
Closing Date, the Indenture Trustee shall establish and maintain
in the name of the Indenture Trustee one or more segregated trust
accounts that are Eligible Accounts, which shall be titled "Pre-
Funding Account, First Union National Bank, as indenture trustee
for the registered Bondholders of NovaStar Mortgage Funding
Trust, Series 1998-1 Home Equity Loan Asset-Backed Bonds" (the
"Pre-Funding Account"). On the Closing Date, the Original Pre-
Funded Amount shall be deposited in the Pre-Funding Account from
the proceeds of the sale of the Bonds and retained therein.
Funds deposited in the Pre-Funding Account shall be held in trust
by the Indenture Trustee for the Holders of the Bonds and the
Bond Insurer for the uses and purposes set forth in the Indenture
and the Mortgage Loan Purchase Agreement. If the Indenture
Trustee shall not have received an investment direction from the
Issuer, the Indenture Trustee will invest funds deposited in the
Pre-Funding Account in Eligible Investments of the kind described
in clause (vii) of the definition of Eligible Investments. The
Issuer shall be the owner of the Pre-Funding Account and shall
report all items of income, deduction, gain or loss arising
therefrom. All income and gain realized from investment of funds
deposited in the Pre-Funding Account shall be transferred to the
Interest Coverage Account on each Payment Date.
(b) Amounts on deposit in the Pre-Funding Account
shall be withdrawn by the Indenture Trustee as follows:
(i) On any Subsequent Transfer Date, the
Indenture Trustee shall withdraw from the Pre-Funding
Account an amount equal to 100% of the Principal Balances of
the Subsequent Mortgage Loans transferred and assigned to
the Indenture Trustee on such Subsequent Transfer Date and
pay such amount to or upon the order of the Company upon
satisfaction of the conditions set forth in Section 2.2 of
the Mortgage Loan Purchase Agreement with respect to such
transfer and assignment; and
(ii) If the Pre-Funded Amount has not been reduced
to zero during the Funding Period, on the Payment Date
following the end of the Funding Period, the Indenture
Trustee shall deposit into the Payment Account any amounts
remaining in the Pre-Funding Account.
Section 8.09. Interest Coverage Account. (a) No later
than the Closing Date, the Indenture Trustee shall establish and
maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Interest
Coverage Account, First Union National Bank, as indenture trustee
for the registered Bondholders of NovaStar Mortgage Funding
Trust, Series 1998-1 Home Equity Loan Asset-Backed Bonds" (the
"Interest Coverage Account"). On the Closing Date, the Interest
Coverage Amount shall be deposited into the Interest Coverage
Account and retained therein. In addition, the Indenture Trustee
shall deposit into the Interest Coverage Account all income and
gain on investments in the Pre-Funding Account pursuant to
Section 8.08. Funds deposited in the Interest Coverage Account
shall be held in trust by the Indenture Trustee for the Holders
of the Bonds and the Bond Insurer for the uses and purposes set
forth herein. The Issuer shall be the owner of the Interest
Coverage Account and shall report all items of income, deduction,
gain or loss arising therefrom.
(b) On each Payment Date during the Funding Period,
the Indenture Trustee shall withdraw from the Interest Coverage
Account and deposit into the Payment Account the applicable
Interest Coverage Addition.
(c) Upon the earlier of (i) termination of the Trust
Fund in accordance with Section 8.01 of the Trust Agreement and
(ii) the Payment Date following the end of the Funding Period,
any amount remaining on deposit in the Interest Coverage Account
shall be withdrawn by the Indenture Trustee and deposited in the
Payment Account.
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of
Bondholders. (a) Without the consent of the Holders of any
Bonds but with the prior written consent of the Bond Insurer and
prior notice to the Rating Agencies, 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
TIA as in force at the date of the execution thereof), in form
reasonably satisfactory to the Indenture Trustee and the Bond
Insurer, 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 Bonds contained;
(iii) to add to the covenants of the Issuer, for
the benefit of the Holders of the Bonds, 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 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 Holders
of the Bonds;
(vii) to evidence and provide for the acceptance of
the appointment hereunder by a successor Indenture Trustee
with respect to the Bonds 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 hereof; or
(viii) to modify, eliminate or add to the provisions
of this Indenture to such extent as shall be necessary to
effect the qualification of this Indenture under the TIA or
under any similar federal statute hereafter enacted and to
add to this Indenture such other provisions as may be
expressly required by the TIA;
provided, however, that no such supplemental indenture shall be
entered into unless the Indenture Trustee shall have received an
Opinion of Counsel that entering into such supplemental indenture
will not (A) result in a "substantial modification" of the Bonds
under Treasury Regulation Section 1.1001.3 or adversely affect
the status of the Bonds as indebtedness for federal income tax
purposes or (B) cause the Trust to be subject to an entity level
tax.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any
further appropriate agreements and stipulations that may be
therein contained.
(b) The Issuer and the Indenture Trustee, when
authorized by an Issuer Request, may, also without the consent of
any of the Holders of the Bonds but with the prior written
consent of the Bond Insurer and prior notice to the Rating
Agencies, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders
of the Bonds under this Indenture; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel (or, in
the alternative, with respect to clause (i), as evidenced by a
rating letter confirming the existing ratings on the Bonds
(without taking into account the Bond Insurance Policy)) (i)
adversely affect in any material respect the interests of any
Bondholder or (ii) if 100% of the Certificates are not owned by
NCFC or if the Bond Insurance Policy is outstanding, cause the
Issuer to be subject to an entity level tax for federal income
tax purposes.
Section 9.02. Supplemental Indentures With Consent of Bond-
holders. The Issuer and the Indenture Trustee, when authorized
by an Issuer Request, also may, with prior notice to the Rating
Agencies and with the prior written consent of the Bond Insurer
and the consent of the Holders of not less than a majority of the
Bond Principal Balances of the Bonds affected thereby, by Act (as
defined in Section 10.03 hereof) of such Holders delivered to the
Issuer and the Indenture Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of
the provisions of, this Indenture or of modifying in any manner
the rights of the Holders of the Bonds under this Indenture;
provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Bond affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Bond, or reduce the prin-
cipal amount thereof or the interest rate thereon, change
the provisions of this Indenture relating to the application
of collections on, or the proceeds of the sale of, the Trust
Estate to payment of principal of or interest on the Bonds,
or change any place of payment where, or the coin or
currency in which, any Bond or the interest thereon is
payable, or impair the right to institute suit for the enforce-
ment 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
Bonds on or after the respective due dates thereof;
(ii) reduce the percentage of the Bond Principal
Balances of the Bonds, the consent of the Holders of which
is required for any such supplemental indenture, or the
consent of the Holders of which is required for any waiver
of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso
to the definition of the term "Outstanding" or modify or
alter the exception in the definition of the term
"Bondholder";
(iv) reduce the percentage of the Bond Principal
Balances of the Bonds required to direct the Indenture
Trustee to direct the Issuer to sell or liquidate the Trust
Estate pursuant to Section 5.04 hereof;
(v) modify any provision of this Section 9.02 except
to increase any percentage specified herein or to provide
that certain additional provisions of this Indenture or the
Basic Documents cannot be modified or waived without the
consent of the Holder of each Bond affected thereby;
(vi) modify any of the provisions of this
Indenture in such manner as to affect the calculation of the
amount of any payment of interest or principal due on any
Bond on any Payment Date (including the calculation of any
of the individual components of such calculation); or
(vii) permit the creation of any lien ranking prior
to or on a parity with the lien of this Indenture with
respect to any part of the Trust Estate or, except as
otherwise permitted or contemplated herein, terminate the
lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Bond 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, with the consent of the Bond
Insurer, so long as no Bond Insurer Default exists, in its
discretion determine whether or not any Bonds would be affected
by any supplemental indenture and any such determination shall be
conclusive upon the Holders of all Bonds, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in
good faith.
It shall not be necessary for any Act of Bondholders under
this Section 9.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section
9.02, the Indenture Trustee shall mail to the Holders of the
Bonds 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 hereof, 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 pro-
visions hereof, this Indenture shall be and shall be deemed to be
modified and amended in accordance therewith with respect to the
Bonds affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the
Holders of the Bonds shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifica-
tions and amendments, and all the terms and conditions of any
such supplemental indenture shall be and be deemed to be part of
the terms and conditions of this Indenture for any and all
purposes.
Section 9.05. Conformity with Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture
executed pursuant to this Article IX shall conform to the
requirements of the Trust Indenture Act as then in effect so long
as this Indenture shall then be qualified under the Trust Inden-
ture Act.
Section 9.06. Reference in Bonds to Supplemental Inden-
tures. Bonds 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 Inden-
ture Trustee shall so determine, new Bonds 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 Bonds.
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 Bond Insurer (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and
(ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied
with, except that, in the case of any such application or request
as to which the furnishing of such documents is specifically
required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall
include:
(1) a statement that each signatory of such certif-
icate or opinion has read or has caused to be read such
covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such
covenant or condition has been complied with;
(4) a statement as to whether, in the opinion of each
such signatory, such condition or covenant has been complied
with; and
(5) if the signatory of such certificate or opinion is
required to be Independent, the statement required by the
definition of the term "Independent".
(b) (i) Except with respect to the substitution of
Mortgage Loans pursuant to Section 2.1 of the Mortgage Loan
Purchase Agreement, 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
and the Bond Insurer 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
and a report from a nationally recognized accounting firm
verifying such value.
(ii) Whenever the Issuer is required to furnish to
the Indenture Trustee and the Bond Insurer 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 from a nationally recognized
accounting firm 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 Bond Principal Balances of the Bonds,
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 Bond
Principal Balances of the Bonds.
(iii) Except with respect to the substitution of
Mortgage Loans pursuant to Section 2.1 of the Mortgage Loan
Purchase Agreement, whenever any property or securities are
to be released from the lien of this Indenture, the Issuer
shall also furnish to the Indenture Trustee and the Bond
Insurer 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 and the Bond Insurer 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 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 Bond Principal Balances of the Bonds, but such
certificate need not be furnished in the case of any release
of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the then Bond Principal
Balances of the Bonds.
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 repre-
sentations by, an officer or officers of the Seller or the
Issuer, stating that the information with respect to such factual
matters is in the possession of the Seller or the Issuer, unless
such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any applica-
tion or certificate or report to the Indenture Trustee, it is
provided that the Issuer shall deliver any document as a condi-
tion 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 applica-
tion or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such docu-
ment 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 Bondholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by
Bondholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Bond-
holders 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 instru-
ments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Bondholders
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 hereof) 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 Bonds shall be proved by the Bond
Registrar.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any
Bonds shall bind the Holder of every Bond 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 Bond.
Section 10.04. Notices, etc., to Indenture Trustee,
Issuer, Bond Insurer and Rating Agencies. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Bond-
holders or other documents provided or permitted by this Inden-
ture shall be in writing and if such request, demand, authoriza-
tion, direction, notice, consent, waiver or Act of Bondholders is
to be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Bondholder or by the
Issuer or the Bond Insurer shall be sufficient for every
purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at the Corporate
Trust Office. The Indenture Trustee shall promptly transmit
any notice received by it from the Bondholders to the
Issuer; or
(ii) the Issuer by the Indenture Trustee or by any
Bondholder or the Bond Insurer shall be sufficient for every
purpose hereunder if in writing and mailed first-class,
postage prepaid, to the Issuer addressed to: NovaStar
Mortgage Funding Trust, Series 1998-1, in care of Wilmington
Trust Company, Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention:
Corporate Trust Administration (telecopy number (302) 651-
1576), 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
Bondholders to the Indenture Trustee; or
(iii) the Company by the Indenture Trustee or by any
Bondholder or the Bond Insurer shall be sufficient for every
purpose hereunder if in writing and mailed first-class,
postage prepaid, to the Company addressed to: NovaStar
Mortgage Funding Corporation, 0000 Xxxx 00xx Xxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxx 00000, Attention: Xxxxx Xxx (telecopy
number (000) 000-0000), or at any other address previously
furnished in writing to the Indenture Trustee by the
Company. The Company shall promptly transmit any notice
received by it from the Bondholders to the Indenture
Trustee; or
(iv) the Seller by the Indenture Trustee or by any
Bondholder or the Bond Insurer shall be sufficient for every
purpose hereunder if in writing and mailed first-class,
postage prepaid, to the Issuer addressed to: NovaStar
Financial, Inc., 0000 Xxxx 00xx Xxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxx 00000, Attention: Xxxxx X. Xxxxxxx (telecopy number
(000) 000-0000), or at any other address previously
furnished in writing to the Indenture Trustee by the Seller.
The Seller shall promptly transmit any notice received by it
from the Bondholders to the Indenture Trustee; or
(v) the Bond Insurer by the Issuer, the Indenture
Trustee or by any Bondholders shall be sufficient for every
purpose hereunder if in writing and mailed, first-class,
postage pre-paid, or personally delivered or telecopied to:
MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx
Xxxx 00000, Attention: Insured Portfolio Mgmt - SF (NovaStar
Mortgage Funding Trust, Series 1998-1) (telecopy number
(000) 000-0000).
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 first-class postage pre-
paid, to (i) in the case of Moody's, at the following address:
Xxxxx'x Investors Service, Inc., Residential Mortgage Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and
(ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's Ratings Group, 00 Xxxxxxxx (00xx Xxxxx), Xxx
Xxxx, Xxx Xxxx 00000, Attention of Asset Backed Surveillance
Department; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
Section 10.05. Notices to Bondholders; Waiver. Where
this Indenture provides for notice to Bondholders 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 Bondholder affected by such event, at such
Person's address as it appears on the Bond 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 Bondholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any
particular Bondholder shall affect the sufficiency of such notice
with respect to other Bondholders, 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
Bondholders 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 Bondholders
when such notice is required to be given pursuant to any pro-
vision 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. 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 Inden-
ture by any of the provisions of the Trust Indenture Act, such
required provision shall control.
The provisions of TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically
deemed included herein unless expressly excluded by this
Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.
Section 10.07. Effect of Headings. The Article and
Section headings herein are for convenience only and shall not
affect the construction hereof.
Section 10.08. Successors and Assigns. All covenants
and agreements in this Indenture and the Bonds 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 10.09. Separability. In case any provision in
this Indenture or in the Bonds shall be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
Section 10.10. Benefits of Indenture. The Bond Insurer
and its successors and assigns shall be a third-party beneficiary
to the provisions of this Indenture. To the extent that this
Indenture confers upon or gives or grants to the Bond Insurer any
right, remedy or claim under or by reason of this Indenture, the
Bond Insurer may enforce any such right, remedy or claim
conferred, given or granted hereunder. Nothing in this Indenture
or in the Bonds, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and
the Bondholders and the Bond Insurer, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 10.11. Legal Holidays. In any case where the
date on which any payment is due shall not be a Business Day,
then (notwithstanding any other provision of the Bonds 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 10.12. GOVERNING LAW. THIS INDENTURE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (BUT WITH
REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW, WHICH BY ITS TERMS APPLIES TO THIS INDENTURE), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.13. Counterparts. This Indenture may be
executed in any number of counterparts, each of which so executed
shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 10.14. Recording of Indenture. If this
Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Issuer
and at its expense accompanied by an Opinion of Counsel (which
may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect
that such recording is necessary either for the protection of the
Bondholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture
Trustee under this Indenture.
Section 10.15. 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
Bonds or under this Indenture or any certificate or other writing
delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations
in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent pro-
vided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or
call owing to such entity. For all purposes of this Indenture,
in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Article VI, VII and
VIII of the Trust Agreement.
Section 10.16. No Petition. The Indenture Trustee, by
entering into this Indenture, and each Bondholder, by accepting a
Bond, hereby covenant and agree that they will not at any time
institute against the Company or the Issuer, or join in any
institution against the Company 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 Bonds, this Indenture or any of the
Basic Documents. This Section 10.16 will survive for one year and
one day following the termination of this Indenture.
Section 10.17. Inspection. The Issuer agrees that, on
reasonable prior notice, it shall permit any representative of
the Indenture Trustee and the Bond Insurer, 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 and the Bond Insurer
shall cause their 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
necessary to perform 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.
NOVASTAR MORTGAGE FUNDING TRUST,
SERIES 1998-1, as Issuer
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
By: ________________________
Name:
Title:
FIRST UNION NATIONAL BANK, not in
its individual capacity but solely
as Indenture Trustee and as Bond
Registrar
By: _____________________________
Name:
Title:
FIRST UNION NATIONAL BANK
xxxxxx accepts the appointment as Certificate
Paying Agent pursuant to Section 3.10 of the
Trust Agreement and as Certificate Registrar
pursuant to Section 4.02 hereof.
By:___________________________
Name:
Title:
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE)
On this ____ day of April, before me personally appeared
___________________, to me known, who being by me duly sworn, did
depose and say, that he resides at _____________, he is the
Administrative Account Manager of the Owner Trustee, one of the
corporations described in and which executed the above
instrument; that he 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 signed his name thereto by like order.
____________________________
Notary Public
[NOTARIAL SEAL]
STATE OF NORTH CAROLINA)
) ss.:
COUNTY OF MECKLENBURG )
On this ____ day of April, before me personally appeared
___________________, to me known, who being by me duly sworn, did
depose and say, that he resides at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx, he is a _________________ of the
Indenture Trustee, one of the corporations described in and which
executed the above instrument; that he 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 signed his name there-
to by like order.
______________________________
Notary Public
[NOTARIAL SEAL]
EXHIBIT A
FORM OF BONDS
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY BOND 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.
THIS BOND IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS
LIMITED IN RIGHT OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST
ESTATE AND THE BOND INSURANCE POLICY AS PROVIDED IN THE INDENTURE
REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE
FOR PAYMENTS ON THIS BOND.
PRINCIPAL OF THIS BOND IS PAYABLE OVER TIME AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS BOND AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1
HOME EQUITY LOAN ASSET-BACKED BONDS
AGGREGATE BOND PRINCIPAL
BALANCE: $300,000,000
INITIAL BOND PRINCIPAL
BALANCE OF THIS BOND: $ CUSIP NO.
BOND NUMBER:
NovaStar Mortgage Funding Trust, Series 1998-1 (the
"Issuer"), a Delaware business trust, for value received, hereby
promises to pay to __________ or registered assigns, the
principal sum of ______________________________________
($___________) in monthly installments on the twenty-fifth day of
each month or, if such day is not a Business Day, the next
succeeding Business Day (each a "Payment Date"), commencing in
May 1998 and ending on or before the Payment Date occurring in
April 2028 (the "Final Scheduled Payment Date") and to pay
interest on the Bond Principal Balance of this Bond outstanding
from time to time as provided below.
This Bond is one of a duly authorized issue of NovaStar
Mortgage Funding Trust, Series 1998-1 Home Equity Loan Asset-
Backed Bonds (the "Bonds"), issued under an Indenture, dated as
of April 1, 1998 (the "Indenture"), between the Issuer and First
Union National Bank, as indenture trustee (the "Indenture
Trustee", which term includes any successor Indenture Trustee
under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of
the respective rights thereunder of the Issuer, the Indenture
Trustee, and the Holders of the Bonds and the terms upon which
the Bonds are to be authenticated and delivered. All terms used
in this Bond which are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
On each Payment Date, Bondholders will be entitled to
receive interest payments in an aggregate amount equal to the
Interest Payment Amount for such Payment Date, together with
principal payments in an aggregate amount equal to the Principal
Payment Amount plus the Subordination Increase Amount, if any,
for such Payment Date. In addition, on each Payment Date,
Bondholders in the aggregate will be entitled to receive
additional interest payments equal to the Carry-Forward Amount
for such Payment Date, to the extent of available funds. The
"Bond Principal Balance" of a Bond as of any date of
determination is equal to the initial principal balance thereof
as of the Closing Date, reduced by the aggregate of all amounts
previously paid with respect to such Bond on account of
principal.
The principal of, and interest on, this Bond are due and
payable as described in the Indenture, 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 Bond shall be
equal to this Bond's pro rata share of the aggregate payments on
all Bonds as described above, and shall be applied as between
interest and principal as provided in the Indenture.
MBIA Insurance Corporation (the "Bond Insurer"), in
consideration of the payment of the premium and subject to the
terms of the financial guaranty insurance policy (the "Bond
Insurance Policy") issued thereby, has unconditionally and
irrevocably guaranteed the payment of the Insured Payment. The
Bond Insurance Policy will not cover any Prepayment Interest
Shortfalls, Relief Act Shortfalls or Carry-Forward Amount.
All principal and interest accrued on the Bonds, if not
previously paid, will become finally due and payable at the Final
Scheduled Payment Date.
The Bonds are subject to redemption in whole, but not in
part, by the Issuer on any Payment Date on or after the earlier
of (i) the Payment Date on which the outstanding Bond Principal
Balance is reduced to less than 25% of the original Bond
Principal Balance or (ii) the Payment Date in April 2005.
The Issuer shall not be liable upon the indebtedness
evidenced by the Bonds except to the extent of amounts available
from the Trust Estate which constitutes security for the payment
of the Bonds. The assets included in the Trust Estate and
payments under the Bond Insurance Policy will be the sole source
of payments on the Bonds, and each Holder hereof, by its
acceptance of this Bond, agrees that (i) such Bond will be
limited in right of payment to amounts available from the Trust
Estate and the Bond Insurance Policy as provided in the Indenture
and (ii) such Holder shall have no recourse to the Issuer, the
Owner Trustee, the Indenture Trustee, the Company, the Servicer
or any of their respective affiliates, or to the assets of any of
the foregoing entities, except the assets of the Issuer pledged
to secure the Bonds pursuant to the Indenture.
Any installment of interest or principal, if any, payable on
this Bond that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall, so long as this Bond
is a Book-Entry Bond registered in the name of the Depository or
its nominee, be paid by wire transfer to the Depository or its
nominee, except for the final installment of principal and
interest payable with respect to this Bond, which shall be
payable as provided below; otherwise, if the Holder of this Bond
shall have so requested at least five Business Days prior to the
related Record Date and holds an aggregate initial Bond Principal
Balance of at least $5,000,000, such installment, other than the
final installment of principal or interest, shall be paid on such
Payment Date to the Holder of record on such Record Date, by wire
transfer to an account specified in writing by such Holder
reasonably satisfactory to the Indenture Trustee, and in all
other cases, other than the payment of the final installment of
principal or interest, or if no such instructions have been
delivered to the Indenture Trustee, by check to such Bondholder
mailed to such Holder's address as it appears in the Bond
Register in the amount required to be distributed to such Holder
on such Payment Date; provided, however, that the Indenture
Trustee shall not pay to such Holder any amount required to be
withheld from a payment to such Holder by the Code. The Indenture
Trustee may deduct a reasonable wire transfer fee from any
payment made by wire transfer. All reductions in the principal
amount of a Bond (or one or more predecessor Bonds) effected by
payments of principal made on any Payment Date shall be binding
upon all Holders of this Bond and of any bond issued upon the
registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted on such Bond.
The final payment of this Bond shall be payable upon presentation
and surrender thereof on or after the Payment Date thereof at the
Corporate Trust Office or the office or agency of the Issuer
maintained by it for such purpose pursuant to Section 3.02 of the
Indenture.
Subject to the foregoing provisions, each Bond delivered
under the Indenture, upon registration of transfer of or in
exchange for or in lieu of any other Bond, shall carry the rights
to unpaid principal and interest that were carried by such other
Bond.
If an Event of Default as defined in the Indenture shall
occur and be continuing with respect to the Bonds, the Bonds may
become or be declared to be due and payable in the manner and
with the effect provided in the Indenture. If any such
acceleration of maturity occurs prior to the payment of the
entire unpaid Bond Principal Balance of the Bonds, the amount
payable to the Holder of this Bond will be equal to the sum of
the unpaid Bond Principal Balance of the Bonds, together with
accrued and unpaid interest thereon as described in the
Indenture. The Indenture provides that, notwithstanding the
acceleration of the maturity of the Bonds, under certain
circumstances specified therein, all amounts collected as
proceeds of the Trust Estate securing the Bonds or otherwise
shall continue to be applied to payments of principal of and
interest on the Bonds as if they had not been declared due and
payable.
The failure to pay any Subordination Increase Amount or
Carry-Forward Amount at any time when funds are not available to
make such payment as provided in the Indenture shall not
constitute an Event of Default under the Indenture.
Pursuant to the Indenture, unless a Bond Insurer Default
exists (i) the Bond Insurer shall be deemed to be the holder of
the Bonds for certain purposes specified in the Indenture (other
than with respect to payment on the Bonds), and will be entitled
to exercise all rights of the Bondholders thereunder, including
the rights of Bondholders relating to the occurrence of, and the
remedies with respect to, an Event of Default, without the
consent of such Bondholders, and (ii) the Indenture Trustee may
take actions which would otherwise be at its option or within its
discretion, including actions relating to the occurrence of, and
the remedies with respect to, an Event of Default, only at the
direction of the Bond Insurer.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Bond may be
registered on the Bond Register of the Issuer. Upon surrender
for registration of transfer of, or presentation of a written
instrument of transfer for, this Bond at the Corporate Trust
Office, accompanied by proper instruments of assignment in form
satisfactory to the Indenture Trustee, one or more new Bonds of
any authorized denominations and of a like aggregate initial Bond
Principal Balance will be issued to the designated transferee or
transferees.
Prior to the due presentment for registration of transfer of
this Bond, the Issuer, the Bond Insurer, the Indenture Trustee
and any agent of the Issuer, the Bond Insurer or the Indenture
Trustee may treat the Person in whose name this Bond is
registered as the owner of such Bond (i) on the applicable Record
Date for the purpose of making payments and interest of such
Bond, and (ii) on any other date for all other purposes
whatsoever, as the owner hereof, whether or not this Bond be
overdue, and none of the Issuer, the Bond Insurer, the Indenture
Trustee or any such agent of the Issuer or the Indenture Trustee
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the
rights and obligations of the Issuer and the rights of the
Holders of the Bonds under the Indenture at any time by the
Issuer with the consent of the Bond Insurer and the Holders of a
majority of all Bonds at the time outstanding. The Indenture
also contains provisions permitting (i) the Bond Insurer or
(ii) if a Bond Insurer Default exists, the Holders of Bonds
representing specified percentages of the aggregate Bond
Principal Balance of the Bonds on behalf of the Holders of all
the Bonds, to waive any past Event of Default under the Indenture
and its consequences. Any such waiver by the Holder, at the time
of the giving thereof, of this Bond (or any one or more
predecessor Bonds) shall bind the Holder of every Bond 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 such Bond. 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 the
Holders of the Bonds issued thereunder.
Initially, the Bonds will be represented by two bonds
registered in the name of CEDE & Co. as nominee of DTC, acting in
its capacity as the Depository for the Bonds. The Bonds will be
delivered in denominations as provided in the Indenture and
subject to certain limitations therein set forth. The Bonds are
exchangeable for a like aggregate initial Bond Principal Balance
of Bonds of different authorized denominations, as requested by
the Holder surrendering the same.
Unless the Certificate of Authentication hereon has been
executed by the Indenture Trustee by manual signature, this Bond
shall not be entitled to any benefit under the Indenture, or be
valid or obligatory for any purpose.
Each Bondholder, by accepting a Bond, hereby covenants and
agrees that such Bondholder will not at any time institute
against the Company or the Issuer, or join in any institution
against the Company 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 Bonds, the Indenture or any of the
Basic Documents.
So long as no Bond Insurer Default exists, the Bond Insurer
shall at all times be treated as if it were the exclusive
Bondholder for the purposes of all approvals, consents, waivers
and the institution of any action and the direction of all
remedies, and the Indenture Trustee shall act in accordance with
the directions of the Bond Insurer so long as it is indemnified
therefor to its reasonable satisfaction.
AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE
CREATING THIS BOND SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed by Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee.
Dated:
NOVASTAR MORTGAGE FUNDING TRUST, SERIES 1998-1
BY: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its
capacity as Owner Trustee
By: _______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds referred to in the within-mentioned
Indenture.
FIRST UNION NATIONAL BANK, not in its individual
capacity but solely as Indenture Trustee
By: ___________________________
Authorized Signatory
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of the Bond, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT -- _______ Custodian_______________________
(Cust) (Minor)
under Uniform Gifts to Minor Act________
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE:
___________________________________
___________________________________
___________________________________
(Please print or typewrite name and address, including zip code,
of assignee)
_________________________________________________________________
the within bond and all rights thereunder, hereby irrevocably
constitution and appointing
attorney to transfer said Xxxx on
the books of the Issuer, with full power of substitution in the
premises.
Dated:_____________________ ______________________________
Signature Guaranteed by ____________________________________
NOTICE: The signature(s) to this assignment must correspond with
the name as it appears upon the face of the within Bond in every
particular, without alteration or enlargement or any change
whatsoever. Signature(s) must be guaranteed by a commercial bank
or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures
are not acceptable.
EXHIBIT B
FORM OF TRUSTEE INITIAL CERTIFICATION
[Closing Date]
[Seller]
[Servicer]
[Bond Insurer]
[Company]
_________________________
_________________________
Re: Indenture, dated as of April 1, 1998 (the
"Indenture"), between NovaStar Mortgage
Funding Trust, Series 19981 (the "Issuer")
and First Union National Bank (the "Indenture
Trustee") -- NovaStar Mortgage Funding Trust,
Series 1998-1 Home Equity Loan Asset-Backed
Bonds.
Gentlemen:
In accordance with Section 2.03 of the above-captioned
Indenture, and Section 2.1(b) of the Mortgage Loan Purchase
Agreement, dated as of April 1, 1998, between NovaStar Financial,
Inc., the Issuer, the Indenture Trustee and NovaStar Mortgage
Funding Corporation (the "Mortgage Loan Purchase Agreement"; and
together with the Indenture, the "Agreements"), the undersigned,
as Indenture Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto) it
has reviewed the Mortgage File and the Mortgage Loan Schedule and
has determined that: (i) all documents required to be included in
the Mortgage File are in its possession; (ii) such documents have
been reviewed by it and appear regular on their face and relate
to such Mortgage Loan; and (iii) based on examination by it, and
only as to such documents, the information set forth in items (i)
- (vii) and (xiv) of the definition or description of "Mortgage
Loan Schedule" is correct.
The Indenture Trustee has made no independent
examination of any documents contained in each Mortgage File
beyond the review specifically required in the above-referenced
Agreements. The Indenture Trustee makes no representation that
any documents specified in clause (vi) of Section 2.1(b) of the
Mortgage Loan Purchase Agreement should be included in any
Mortgage File. The Indenture Trustee makes no representations as
to and shall not be responsible to verify: (i) the validity,
legality, sufficiency, enforceability, due authorization,
recordability or genuineness of any of the documents contained in
each Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan, or
(iii) the existence of any assumption, modification, written
assurance or substitution agreement with respect to any Mortgage
File if no such documents appear in the Mortgage File delivered
to the Indenture Trustee.
Capitalized words and phrases used herein shall have
the respective meanings assigned to them in the above-captioned
Indenture.
FIRST UNION NATIONAL BANK, not in
its individual capacity but solely
as Indenture Trustee
By:______________________________
Name:
Title:
EXHIBIT C
FORM OF TRUSTEE FINAL CERTIFICATION
[date]
[Seller]
[Servicer]
[Bond Insurer]
[Company]
__________________________
__________________________
Re: Indenture, dated as of April 1, 1998 (the
"Indenture"), between NovaStar Mortgage Funding
Trust, Series 1998-1 (the "Issuer") and First
Union National Bank (the "Indenture Trustee") --
NovaStar Mortgage Funding Trust, Series 1998-1
Home Equity Loan Asset-Backed Bonds.
Gentlemen:
In accordance with Section 2.03 of the above-captioned
Indenture, and Section 2.1(b) of the Mortgage Loan Purchase
Agreement, dated as of April 1, 1998, between NovaStar Financial,
Inc., the Issuer, the Indenture Trustee and NovaStar Mortgage
Funding Corporation (the "Mortgage Loan Purchase Agreement"; and
together with the Indenture, the "Agreements"), the undersigned,
as Indenture Trustee, hereby certifies that as to each Mortgage
Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto) it
has received the documents set forth in Section 2.1(b) of the
Mortgage Loan Purchase Agreement.
The Indenture Trustee has made no independent
examination of any documents contained in each Mortgage File
beyond the review specifically required in the Agreements. The
Indenture Trustee makes no representation that any documents
specified in clause (vi) of Section 2.1(b) should be included in
any Mortgage File. The Indenture Trustee makes no
representations as to and shall not be responsible to verify: (i)
the validity, legality, sufficiency, enforceability, due
authorization, recordability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, (ii) the
collectability, insurability, effectiveness or suitability of any
such Mortgage Loan or (iii) the existence of any assumption,
modification, written assurance or substitution agreement with
respect to any Mortgage File if no such documents appear in the
Mortgage File delivered to the Indenture Trustee.
Capitalized words and phrases used herein shall have
the respective meanings assigned to them in the above-captioned
Indenture.
FIRST UNION NATIONAL BANK, not in
its individual capacity but solely
as Indenture Trustee
By:______________________________
Name:
Title:
EXHIBIT D
MORTGAGE LOAN SCHEDULE
APPENDIX A
DEFINITIONS
Addition Notice: With respect to the transfer of
Subsequent Mortgage Loans to the Trust pursuant to Section 2.2(b)
of the Mortgage Loan Purchase Agreement, a notice given to the
Rating Agencies, the Indenture Trustee, the Bond Insurer and the
Owner Trustee , which shall be given not later than six Business
Days prior to the related Subsequent Transfer Date, of the
Seller's and the Company's designation of Subsequent Mortgage
Loans to be sold to the Trust and the aggregate principal balance
as of the Subsequent Cut-off Date of such Subsequent Mortgage
Loans.
Adjustable Rate Initial Mortgage Loan: Each of the
Adjustable Rate Mortgage Loans transferred to the Trust on the
Closing Date.
Adjustable Rate Mortgage Loan: Each of the Mortgage
Loans identified in the Mortgage Loan Schedule as having a
Mortgage Rate that is subject to adjustment.
Adjustment Date: As to each Adjustable Rate Mortgage
Loan, each date set forth in the related Mortgage Note on which
an adjustment to the interest rate on such Mortgage Loan becomes
effective.
Administrative Fee: The sum of the Owner Trustee Fee
and the Bond Insurance Premium.
Advance: As to any Mortgage Loan, any advance made by
the Servicer pursuant to Section 4.02 of the Servicing Agreement.
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.
Applicable Spread: A percentage equal to the greater
of (i) the Minimum Spread or (ii) the lesser of (a) the
Remarketing Spread or (b) the Maximum Spread, which formula
results in, with respect to the first year following the Closing
Date, 0.07% per annum.
Appraised Value: The appraised value of a Mortgaged
Property based upon the lesser of (i) the appraisal made at the
time of the origination of the related Mortgage Loan, or (ii) the
sales price of such Mortgaged Property at such time of
origination. With respect to a Mortgage Loan the proceeds of
which were used to refinance an existing mortgage loan, the
appraised value of the Mortgaged Property based upon the
appraisal (as reviewed and approved by the Seller) obtained at
the time of refinancing.
Assignment of Mortgage: An assignment of Mortgage,
notice of transfer or equivalent instrument, in recordable form,
which is sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect of record
the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties
located in the same county, if permitted by law.
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 iden-
tified 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 there-
after).
Available Funds: As to any Payment Date, an amount
equal to the amount on deposit in the Payment Account on such
Payment Date and available for distribution to the Bondholders
(minus (i) the Bond Insurance Premium, the Indenture Trustee Fee
and regularly scheduled amounts due under the CAP Agreements to
the CAP Provider and (ii) if the Bonds have been declared due and
payable following an Event of Default on such Payment Date, any
amounts owed to the Indenture Trustee by the Issuer pursuant to
Section 6.07 of the Indenture and any amounts owed to the Bond
Insurer by the Issuer pursuant to Section 5.04(b) of the
Indenture).
Bankruptcy Code: The Bankruptcy Code of 1978, as
amended.
Base Prospectus: The base Prospectus, dated April 23,
1998, with respect to the Bonds.
Base Specified Overcollateralization Amount:
$15,454,546, which equals the product of the Target Percentage
and the Original Pool Balance.
Basic Documents: The Trust Agreement, the Certificate
of Trust, the Indenture, the Mortgage Loan Purchase Agreement,
each Seller's Subsequent Transfer Instrument, each Company's
Subsequent Transfer Instrument, the Insurance Agreement, the
Indemnification Agreement, the Servicing Agreement, the
Certificates Sale Agreement, the CAP Agreements and the other
documents and certificates delivered in connection with any of
the above.
Beneficial Owner: With respect to any Bond, the Person
who is the beneficial owner of such Xxxx 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).
Bond Insurance Policy: The financial guaranty
insurance policy number 26328, issued by the Bond Insurer to the
Indenture Trustee for the benefit of the Bondholders.
Bond Insurance Premium: The premium payable to the
Bond Insurer, as specified in the Insurance Agreement.
Bond Insurer: MBIA Insurance Corporation, a New York
stock insurance company, or any successor thereto.
Bond Insurer Default: The existence and continuance of
any of the following: (a) a failure by the Bond Insurer to make a
payment required under the Bond Insurance Policy in accordance
with its terms; or (b)(i) the Bond Insurer (A) files any petition
or commences any case or proceeding under any provision or
chapter of the Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment for
the benefit of its creditors, or (C) has an order for relief
entered against it under the Bankruptcy Code or any other similar
federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and
nonappealable; or (ii) a court of competent jurisdiction, the New
York Department of Insurance or other competent regulatory
authority enters a final and nonappealable order, judgment or
decree (A) appointing a custodian, trustee, agent or receiver for
the Bond Insurer or for all or any material portion of its
property or (B) authorizing the taking of possession by a
custodian, trustee, agent or receiver of the Bond Insurer (or the
taking of possession of all or any material portion of the
property of the Bond Insurer).
Bond Interest Rate: With respect to each Payment Date
after the first Payment Date, a floating rate equal to the lesser
of (i) (a) with respect to each Payment Date up to and including
the earlier of (x) the Payment Date in April 2005 and (y) the
Payment Date which occurs on or prior to the date on which the
outstanding Bond Principal Balance is reduced to less than 25% of
the original Bond Principal Balance, One-Month LIBOR plus the
Applicable Spread, and (b) with respect to each Payment Date
thereafter, One Month LIBOR plus 0.40%, and (ii) the Maximum
Interest Rate. The Bond Interest Rate for the first Payment Date
will 5.72625% per annum.
Bond Owner: The Beneficial Owner of a Bond.
Bond Percentage: With respect to any Payment Date and
any Bond, the ratio expressed as a percentage of the Bond
Principal Balance of such Bond to the aggregate Bond Principal
Balance of all Bonds immediately prior to such Payment Date.
Bond Principal Balance: With respect to any Bond, the
initial principal balance thereof as of the Closing Date,
reduced by all amounts distributed in respect of principal with
respect to such Bond.
Bond Register: The register maintained by the Bond
Registrar in which the Bond Registrar shall provide for the
registration of Bonds and of transfers and exchanges of Bonds.
Bond Registrar: The Indenture Trustee, in its capacity
as Bond Registrar.
Bondholder or Holder: The Person in whose name a Bond
is registered in the Bond Register, except that, any Bond
registered in the name of the Seller, the Company, the Issuer or
the Indenture Trustee or any Affiliate of any of them shall be
deemed not to be a Bondholder or Holder, nor shall any Bond so
owned be considered outstanding, 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 Bonds that the
Indenture Trustee knows to be so owned shall be so disregarded.
Pledgees of Bonds that have been pledged in good faith may be
regarded as Holders if the pledgee establishes to the satisfac-
tion of the Indenture Trustee the pledgee's right so to act with
respect to such Bonds and that the pledgee is not the Issuer, any
other obligor upon the Bonds or any Affiliate of any of the
foregoing Persons. Any Bonds on which payments are made under the
Bond Insurance Policy shall be deemed Outstanding until the Bond
Insurer has been reimbursed with respect thereto and the Bond
Insurer shall be deemed the Bondholder thereof to the extent of
such unreimbursed payment.
Bonds: NovaStar Mortgage Funding Trust, Series 1998-1,
Home Equity Loan Asset-Backed Bonds, Series 1998-1, designated as
the "Bonds" in the Indenture.
Book-Entry Bonds: Beneficial interests in the Bonds,
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 City of
New York, Delaware, California or Kansas or in the city in which
the corporate trust offices of the Indenture Trustee or the
principal office of the Bond Insurer are located, are required or
authorized by law to be closed.
Business 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.
CAP Agreements: The First CAP Agreement and the Second
CAP Agreement.
CAP Agreement Insurance Policy: The interest rate swap
insurance policy, number 26329, issued by the Bond Insurer to the
CAP Provider.
CAP Provider: Xxxxxxx Xxxxx Capital Services, Inc., a
Delaware corporation, and its successors and assigns.
Carry-Forward Amount: With respect to the Bonds and
any Payment Date, an amount equal to the excess, if any, of (a)
the amount determined pursuant to clause (i) of the definition of
the Interest Payment Amount minus (b) the Guaranteed Interest
Payment Amount.
Cash Liquidation: As to any defaulted Mortgage Loan
other than a Mortgage Loan as to which an REO Acquisition
occurred, a determination by the Servicer that it has received
all Liquidation Proceeds and other payments or cash recoveries
which the Servicer reasonably and in good faith expects to be
finally recoverable with respect to such Mortgage Loan.
Certificate Distribution Account: The account or
accounts created and maintained pursuant to Section 3.10(c) of
the Trust Agreement. The Certificate Distribution Account shall
be an Eligible Account.
Certificate Paying Agent: The meaning specified in
Section 3.10 of the Trust Agreement.
Certificate Percentage Interest: With respect to each
Certificate, the Certificate Percentage Interest on the face
thereof.
Certificate Register: The register maintained by the
Certificate Registrar in which the Certificate Registrar shall
provide for the registration of Certificates and of transfers and
exchanges of Certificates.
Certificate Registrar: Initially, the Indenture
Trustee, in its capacity as Certificate Registrar, or any
successor to the Indenture Trustee in such capacity.
Certificates Sale Agreement: The Certificates Sale
Agreement, dated as of April 30, 1998, between NovaStar Mortgage
Funding Corporation and NCFC.
Certificate of Trust: The Certificate of Trust filed
for the Trust pursuant to Section 3810(a) of the Business Trust
Statute.
Certificates: The NovaStar Mortgage Funding Trust,
Series 1998-1, Home Equity Loan Asset-Backed Certificates,
evidencing the beneficial ownership interest in the Issuer and
executed by the Owner Trustee in substantially the form set forth
in Exhibit A to the Trust Agreement.
Certificateholder: The Person in whose name a
Certificate is registered in the Certificate Register. Pledgees
of Certificates that have been pledged in good faith may be
regarded as Certificateholders if the pledgee establishes to the
satisfaction of the Certificate Paying Agent or the Owner
Trustee, as the case may be, the pledgee's right so to act with
respect to such Certificates and that the pledgee is not the
Issuer, any other obligor upon the Certificates or any Affiliate
of any of the foregoing Persons.
Closing Date: April 30, 1998.
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 Account: The account or accounts created
and maintained pursuant to Section 3.06(d) of the Servicing
Agreement. The Collection Account shall be an Eligible Account.
Combined Loan-to-Value Ratio: With respect to any
Mortgage Loan which is secured by a second lien on the related
Mortgaged Property at any given time generally will be the ratio,
expressed as a percentage, the numerator of which is the sum of
(i) the original principal balance of the Mortgage Loan plus (ii)
the unpaid principal balance of any first lien on the related
Mortgaged Property as of such date, and the denominator of which
is the lesser of (i) the appraised value of the related Mortgaged
Property as of the date of the appraisal used by or on behalf of
the Seller to underwrite such Mortgage Loan or (ii) the sale
price of the related Mortgaged Property if such a sale occurred
at origination of the Mortgage Loan.
Company: NovaStar Mortgage Funding Corporation, a
Delaware corporation, and its successors and assigns.
Compensating Interest: With respect to any
Determination Date, an amount equal to the lesser of (i) the
aggregate amount of Prepayment Interest Shortfall for the related
Prepayment Period and (ii) the Servicing Fee for the related
Payment Date.
Conversion Date: The date on which a Convertible
Mortgage Loan becomes a Converted Mortgage Loan according to the
terms of the related Mortgage Note.
Converted Mortgage Loan: Any convertible Mortgage Loan
as to which the Mortgagor has exercised the option to convert to
a fixed Mortgage Rate and satisfied all of the conditions to
conversion set forth in the Mortgage Note.
Convertible Mortgage Loans: Any Mortgage Loan
evidenced by a Mortgage Note that according to its terms is
convertible at the option of the Mortgagor from a variable
Mortgage Rate to a fixed Mortgage Rate, subject to satisfaction
of the conditions set forth in such note.
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 Bond 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 000 X. Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000-0000, Attention: NovaStar Mortgage Funding Trust, Series
1998-1. 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 admin-
istered, which office at the date of the execution of this Trust
Agreement is located at Wilmington Trust Company, Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: NovaStar Mortgage Funding Trust, Series 1998-1.
Cumulative Loss Percentage: As to any Payment Date and
the Mortgage Loans, the percentage equivalent of the fraction
obtained by dividing (i) the aggregate of Realized Losses on the
Mortgage Loans from the Cut-off Date through such Payment Date by
(ii) the aggregate Principal Balance of the Mortgage Loans as of
the Cut-off Date.
Cut-off Date: April 1, 1998.
Cut-off Date Principal Balance: With respect to any
Initial Mortgage Loan, the unpaid principal balance thereof as of
the opening of business on the last day of the related Due Period
immediately prior to the Cut-off Date and with respect to the
Initial Mortgage Loans, the sum of $248,615,603.
Debt Service Reduction: With respect to any Mortgage
Loan, a reduction in the scheduled Monthly Payment for such
Mortgage Loan by a court of competent jurisdiction in a
proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results
in a permanent forgiveness of principal.
Default: Any occurrence which is or with notice or the
lapse of time or both would become an Event of Default.
Deficiency Amount: The meaning provided in the Bond
Insurance Policy.
Deficient Valuation: With respect to any Mortgage
Loan, a valuation by a court of competent jurisdiction of the
Mortgaged Property in an amount less than the then outstanding
indebtedness under the Mortgage Loan, or any reduction in the
amount of principal to be paid in connection with any scheduled
Monthly Payment that constitutes a permanent forgiveness of
principal, which valuation or reduction results from a proceeding
under the Bankruptcy Code.
Definitive Bonds: The meaning specified in Section
4.08 of the Indenture.
Deleted Mortgage Loan: A Mortgage Loan replaced or to
be replaced with an Eligible Substitute Mortgage Loan.
Delinquency Amount: The product of the Rolling
Delinquency Percentage and the aggregate Principal Balances of
the Mortgage Loans as of the close of business on the last day of
the related Due Period.
Delinquency Percentage: As of the last day of any Due
Period and with respect to the Mortgage Loans, the percentage
equivalent of a fraction, the numerator of which equals the
aggregate Principal Balance of the Mortgage Loans that are 90 or
more days delinquent, in foreclosure or converted to REO
Properties as of such last day of such Due Period, and the
denominator of which is the aggregate Principal Balance of the
Mortgage Loans as of the last day of such Due Period.
Depository or Depository Agency: 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 Securities and Exchange Commission thereunder.
Depository Participant: A Person for whom, from time
to time, the Depository effects book-entry transfers and pledges
of securities deposited with the Depository.
Determination Date: With respect to any Payment Date,
the 15th day of the related month, or if the 15th day of such
month is not a Business Day, the immediately preceding Business
Day.
Determination Date Report: The meaning specified in
Section 4.01 of the Servicing Agreement.
Due Date: The first day of the month of the related
Payment Date.
Due Period: With respect to any Mortgage Loan and Due
Date, the period commencing on the second day of the month
preceding the month of such Payment Date (or, with respect to the
first Due Period, the day following the Cut-off Date) and ending
on the related Due Date.
Eligible Account: An account that is either: (A) a
segregated account or accounts maintained with an institution
whose deposits are insured by the FDIC, the unsecured and
uncollateralized long term debt obligations of which institution
shall be rated AA or higher by Standard & Poor's and Aa2 or
higher by Xxxxx'x and in the highest short term rating category
by each of the Rating Agencies, and which is (i) a federal
savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing
under the applicable banking laws of any state; (iii) a national
banking association duly organized, validly existing and in good
standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company or (v) approved in writing
by the Bond Insurer and each Rating Agency or (B) a segregated
trust account or accounts maintained with the trust department of
a federal or state chartered depository institution acceptable to
the Bond Insurer and each Rating Agency, having capital and
surplus of not less than $100,000,000, acting in its fiduciary
capacity.
Eligible Investments: One or more of the following:
(i) direct obligations of, and obligations fully
guaranteed by, the United States of America, any of the
Federal Home Mortgage Corporation, the Federal National
Mortgage Association, the Federal Home Loan Banks or any
agency or instrumentality of the United States of America
the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates
of deposit of, banker's acceptances issued by or federal
funds sold by any depository institution or trust company
(including the Indenture Trustee or its agent acting in
their respective commercial capacities) incorporated under
the laws of the United States of America or any State
thereof and subject to supervision and examination by
federal and/or state authorities, so long as at the time of
such investment or contractual commitment providing for such
investment, such depository institution or trust company has
a short term unsecured debt rating in the highest available
rating category of each of the Rating Agencies and provided
that each such investment has an original maturity of no
more than 365 days, and (B) any other demand or time deposit
or deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(iii) repurchase obligations with a term not to
exceed 30 days with respect to any security described in
clause (i) above and entered into with a depository
institution or trust company (acting as a principal) rated
"A" or higher by S&P and A2 or higher by Xxxxx'x; provided,
however, that collateral transferred pursuant to such
repurchase obligation must (A) be valued daily at current
market price plus accrued interest, (B) pursuant to such
valuation, equal, at all times, 105% of the cash transferred
by the Indenture Trustee in exchange for such collateral and
(C) be delivered to the Indenture Trustee or, if the
Indenture Trustee is supplying the collateral, an agent for
the Indenture Trustee, in such a manner as to accomplish
perfection of a security interest in the collateral by
possession of certificated securities.
(iv) securities bearing interest or sold at a
discount issued by any corporation incorporated under the
laws of the United States of America or any State thereof
which has a long term unsecured debt rating in the highest
available rating category of each of the Rating Agencies at
the time of such investment;
(v) commercial paper having an original maturity
of less than 365 days and issued by an institution having a
short term unsecured debt rating in the highest available
rating category of each of the Rating Agencies at the time
of such investment;
(vi) a guaranteed investment contract approved by
each of the Rating Agencies and the Bond Insurer and issued
by an insurance company or other corporation having a long
term unsecured debt rating in the highest available rating
category of each of the Rating Agencies at the time of such
investment;
(vii) money market funds having ratings in the
highest available long-term rating category of each of the
Rating Agencies at the time of such investment; any such
money market funds which provide for demand withdrawals
being conclusively deemed to satisfy any maturity
requirement for Eligible Investments set forth in the
Indenture; and
(viii) any investment approved in writing by each of
the Rating Agencies and the Bond Insurer;
provided, however, that each such instrument shall be acquired in
an arm's length transaction and no such instrument shall be an
Eligible 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;
provided further, however, that each such instrument acquired
shall not be acquired at a price in excess of par.
The Indenture Trustee may purchase from or sell to itself or an
affiliate, as principal or agent, the Eligible Investments listed
above.
Eligible Substitute Mortgage Loan: A Mortgage Loan
substituted by the Seller for a Deleted Mortgage Loan which must,
on the date of such substitution, as confirmed in an Officer's
Certificate delivered to the Indenture Trustee and the Bond
Insurer, (i) have an outstanding principal balance, after
deduction of the principal portion of the monthly payment due in
the month of substitution (or in the case of a substitution of
more than one Mortgage Loan for a Deleted Mortgage Loan, an
aggregate outstanding principal balance, after such deduction),
not in excess of the outstanding principal balance of the Deleted
Mortgage Loan (the amount of any shortfall to be deposited by the
Seller in the Collection Account in the month of substitution);
(ii) comply in all material respects with each representation and
warranty set forth in clauses (ii) through (lxviii) of Section
3.1(b) of the Mortgage Loan Purchase Agreement other than clauses
(iii), (v)-(xiv), (xlii), (xlv), (lvi), (lvii), (lx) and (lxiii);
(iii) have a Mortgage Rate and, with respect to an Adjustable
Rate Mortgage Loan, a Gross Margin no lower than and not more
than 1% per annum higher than the Mortgage Rate and Gross Margin,
respectively, of the Deleted Mortgage Loan as of the date of
substitution; (iv) have a Loan-to-Value Ratio and Combined Loan-
to-Value Ratio, if applicable, at the time of substitution no
higher than that of the Deleted Mortgage Loan at the time of
substitution; (v) have a remaining term to stated maturity not
greater than (and not more than one year less than) that of the
Deleted Mortgage Loan; (vi) not be 30 days or more delinquent;
(vii) not be a negative amortization loan; and (viii) have a lien
priority equal to or superior to the lien priority of the Deleted
Mortgage Loan .
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):
(1) a default by the Issuer in the payment
of (a) the Interest Payment Amount or the
Principal Payment Amount with respect to a
Payment Date on such Payment Date or (b) the
Subordination Increase Amount or the Carry-
Forward Amount, but only, with respect to
clause (b), to the extent funds are available
to make such payment as provided in the
Indenture (provided that for purposes of this
clause, payment by the Indenture Trustee from
proceeds of the Bond Insurance Policy shall
not be considered payment by the Issuer with
respect to the Bonds); or
(2) the failure by the Issuer on the Final
Scheduled Payment Date to reduce the Bond
Principal Balance to zero (provided that for
purposes of this clause, payment by the
Indenture Trustee from proceeds of the Bond
Insurance Policy shall not be considered
payment by the Issuer with respect to the
Bonds) ; or
(3) there occurs a default in the observance
or performance of any covenant or agreement
of the Issuer made in the Indenture, or any
representation or warranty of the Issuer made
in the Indenture or in any certificate or
other writing delivered pursuant thereto or
in connection therewith proving to have been
incorrect in any material respect as of the
time when the same shall have been made, and
such default shall continue or not be cured,
or the circumstance or condition in respect
of which such 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 regis-
tered or certified mail, to the Issuer by the
Indenture Trustee or to the Issuer and the
Indenture Trustee by the Bond Insurer, or if
a Bond Insurer Default exists, the Holders of
at least 25% of the aggregate Bond Principal
Balance of the Bonds, a written notice
specifying such default or incorrect
representation or warranty and requiring it
to be remedied and stating that such notice
is a notice of default hereunder; or
(4) there occurs the filing of a decree or
order for relief by a court having
jurisdiction in the premises in respect of
the Issuer or any substantial part of the
Trust Estate in an involuntary case under any
applicable federal or state bankruptcy,
insolvency or other similar law now or
hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of
the Issuer or for any substantial part of the
Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such
decree or order shall remain unstayed and in
effect for a period of 60 consecutive days;
or
(5) there occurs the commencement by the
Issuer of a voluntary case under any
applicable federal or state bankruptcy,
insolvency or other similar law now or
hereafter in effect, or the consent by the
Issuer to the entry of an order for relief in
an involuntary case under any such law, or
the consent by the Issuer to the appointment
or taking possession by a receiver,
liquidator, assignee, custodian, trustee,
sequestrator or similar official of the
Issuer or for any substantial part of the
assets of the Trust Estate, or the making by
the Issuer of any general assignment for the
benefit of creditors, or the failure by the
Issuer generally to pay its debts as such
debts become due, or the taking of any action
by the Issuer in furtherance of any of the
foregoing.
Event of Servicer Termination: With respect to the
Servicing Agreement, a Servicing Default as defined in Section
6.01 of the Servicing Agreement.
Excess Subordination Amount: With respect to any
Payment Date, the excess, if any, of (a) the Subordination Amount
that would apply on such Payment Date after taking into account
all distributions to be made on such Payment Date (exclusive of
any reductions thereto attributable to Subordination Reduction
Amounts on such Payment Date) over (b) the Required Subordination
Amount for such Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Expenses: The meaning specified in Section 7.02 of the
Trust Agreement.
FDIC: The Federal Deposit Insurance Corporation or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or
any successor thereto.
Final Scheduled Payment Date: The Payment Date
occurring in April 2028.
First CAP Agreement: The interest rate CAP Agreement,
dated the Closing Date, between the Issuer and the CAP Provider,
in the notional principal amount of $45,000,000.
Fixed Rate Initial Mortgage Loan: Each of the Fixed
Rate Mortgage Loans transferred to the Trust on the Closing Date.
Fixed Rate Mortgage Loan: Each of the Mortgage Loans
identified in the Mortgage Loan Schedule as having a Mortgage
Rate that is fixed.
FNMA: The Federal National Mortgage Association, or
any successor thereto.
Foreclosure Profit: With respect to a Liquidated
Mortgage Loan, the amount, if any, by which (i) the aggregate of
its Net Liquidation Proceeds exceeds (ii) the related Principal
Balance (plus accrued and unpaid interest thereon at the
applicable Mortgage Rate from the date interest was last paid
through the date of receipt of the final Liquidation Proceeds) of
such Liquidated Mortgage Loan immediately prior to the final
recovery of its Liquidation Proceeds.
Funding Period: The period beginning on the Closing
Date and ending on the earlier of the date on which (a) the
amount on deposit in the Pre-Funding Account is less than $10,000
or (b) the close of business on June 25, 1998.
Xxxxx: Pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and xxxxx x
xxxx upon and a security interest in and right of set-off
against, deposit, set over and confirm pursuant to the Indenture.
A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and
give receipt for principal and interest payments in respect of
such collateral or other agreement or instrument and all other
moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise
all rights and options, to bring proceedings in the name of the
granting party or otherwise, and generally to do and receive
anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
Gross Margin: With respect to any Mortgage Loan, the
percentage set forth as the "Gross Margin" for such Mortgage Loan
on the Mortgage Loan Schedule, as adjusted from time to time in
accordance with the terms of the Servicing Agreement.
Guaranteed Interest Payment Amount: As to any Payment
Date, an amount equal to interest accrued on the aggregate
outstanding Principal Balance of the Mortgage Loans payable on
the related Due Date minus the aggregate amount of the related
Servicing Fee, the Indenture Trustee Fee, the Owner Trustee Fee,
the Bond Insurance Premium and the Minimum Interest Spread.
Indemnification Agreement: The Indemnification Agree-
ment, dated as of April 30, 1998, among the Bond Insurer, the
Seller, the Company and the Underwriter, including any amendments
and supplements thereto.
Indemnified Party: The meaning specified in Section
7.02 of the Trust Agreement.
Indenture: The indenture, dated as of April 1, 1998,
between the Issuer, as debtor, and the Indenture Trustee, as
Indenture Trustee.
Indenture Trustee: First Union National Bank, a
national banking association, and its successors and assigns or
any successor indenture trustee appointed pursuant to the terms
of the Indenture.
Indenture Trustee Fee: With respect to each Payment
Date, the product of (i) the Indenture Trustee Fee Rate divided
by 12 and (ii) the sum of the Principal Balance of the Mortgage
Loans and the Pre-Funded Amount as of such date.
Indenture Trustee Fee Rate: 0.0125% per annum.
Independent: When used with respect to any specified
Person, the Person (i) is in fact independent of the Issuer, any
other obligor on the Bonds, the Seller, the Company, the Servicer
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 Company, the Servicer, the Issuer or any Affiliate of
any of the foregoing Persons and (iii) is not connected with the
Issuer, any such other obligor, the Seller, the Company, the
Servicer, the Issuer, 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 the Issuer
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.
Index: With respect to any Adjustable Rate Mortgage
Loan, the index for the adjustment of the Mortgage Rate set forth
as such on the related Mortgage Note.
Initial Mortgage Loan: A Mortgage Loan transferred and
conveyed by the Company to the Issuer on the Closing Date, as
listed on the Mortgage Loan Schedule.
Insurance Agreement: The Insurance Agreement, dated as
of April 1, 1998, among the Servicer, the Seller, the Company,
the Issuer, the Indenture Trustee and the Bond Insurer, including
any amendments and supplements thereto.
Insured Payment: Shall have the meaning set forth in
the Bond Insurance Policy.
Insurance Proceeds: Proceeds paid by any insurer
(other than the Bond Insurer) 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 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 or
(iii) released to the Mortgagor in accordance with the Servicer's
normal servicing procedures.
Insurer Subsequent Mortgage Loan Certificate: The
certificate set forth as an Exhibit to the Insurance Agreement.
Interest Coverage Account: The account established and
maintained by the Indenture Trustee pursuant to Section 8.09 of
the Indenture.
Interest Coverage Addition: As to any Payment Date
during the Funding Period, an amount, not less than $0.00, equal
to the remainder of (x) the product of (A) the Original Pre-
Funded Amount and (B) a rate equal to the sum of (i) the Bond
Interest Rate for the related Interest Period, (ii) the rate used
to calculate the Bond Insurance Premium and (iii) the rate used
to calculate the Indenture Trustee Fee (all rates calculated as
one-twelfth of the annual rate) minus (y) interest collected on
all Subsequent Mortgage Loans during the related Interest Period
(and after the related Subsequent Cut-off Date with respect to
any Subsequent Mortgage Loans transferred during such Interest
Period).
Interest Coverage Amount: The amount to be paid from
proceeds received from the sale of the Bonds for deposit into the
Interest Coverage Account pursuant to Section 8.09 of the
Indenture, which amount shall be $355,623 on the Closing Date.
Interest Determination Date: With respect to any
Interest Period, the second London Business Day preceding the
commencement of such Interest Period.
Interest Payment Amount: With respect to any Payment
Date, an amount equal to the lesser of (i) interest accrued
during the related Interest Period on the Bond Principal Balances
of the Bonds at the then-applicable Bond Interest Rate and (ii)
the Guaranteed Interest Payment Amount.
Interest Period: With respect to 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
Adjustable Rate Mortgage Loan, the date or dates on which the
Mortgage Rate is adjusted in accordance with the related Mortgage
Note.
Investment Company Act: The Investment Company Act of
1940, as amended, and any amendments thereto.
Issuer: NovaStar Mortgage Funding Trust, Series 1998-1,
a Delaware business trust, or its successor in interest.
Issuer Request: A written order or request signed in
the name of the Issuer by any one of its Authorized Officers and
approved in writing by the Bond Insurer, so long as no Bond
Insurer Default exists, and delivered to the Indenture Trustee.
LIBOR Business Day: Any day other than (i) a Saturday
or a Sunday or (ii) a day on which banking institutions in the
State of New York or 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 agree-
ment, 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.
Lifetime Rate Cap: With respect to each Adjustable
Rate Mortgage Loan with respect to which the related Mortgage
Note provides for a lifetime rate cap, the maximum Mortgage Rate
permitted over the life of such Mortgage Loan under the terms of
such Mortgage Note, as set forth on the Mortgage Loan Schedule
and initially as set forth on Exhibit A to the Servicing
Agreement.
Liquidated Mortgage Loan: With respect to any Payment
Date, (i) 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
Prepayment Period that substantially all Liquidation Proceeds
which it reasonably expects to recover with respect to the
disposition of the related Mortgaged Property or REO Property
have been recovered and, (ii) any Mortgage Loan secured by a
second lien of which any portion of a scheduled monthly payment
of principal and interest is in excess of 180 days past due.
Liquidation Expenses: Out-of-pocket expenses
(exclusive of overhead) which are incurred by or on behalf of the
Servicer in connection with the liquidation of any Mortgage Loan
and not recovered under any insurance policy, such expenses
including, without limitation, legal fees and expenses, any
unreimbursed amount expended respecting the related 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 Proceeds: Proceeds (including Insurance
Proceeds but not including amounts received under the Bond
Insurance Policy) received in connection with the liquidation of
any Mortgage Loan or related REO Property, including any proceeds
received on second lien Mortgage Loans in excess of 180 days past
due, whether through trustee's sale, foreclosure sale or
otherwise.
Loan-to-Value Ratio: With respect to any Mortgage
Loan, as of any date of determination, a fraction expressed as a
percentage, the numerator of which is the then current principal
amount of the Mortgage Loan, and the denominator of which is the
lesser of the Purchase Price or the Appraised Value of the
related Mortgaged Property.
Loan Year: With respect to any Mortgage Loan, the one
year period commencing on the day succeeding the origination of
such Mortgage Loan and ending on the anniversary date of such
Mortgage Loan, and each annual period thereafter.
London Business Day: Any day on which banks in the
City of London, England are open and conducting transactions in
United States dollars.
Maximum Interest Rate: 13.50% per annum.
Maximum Mortgage Rate: With respect to each Adjustable
Rate Mortgage Loan, the maximum Mortgage Rate specified in the
related Mortgage Note.
Maximum Spread: 0.40% per annum.
Minimum Interest Spread: With respect to each Mortgage
Loan and any Payment Date the product of (i) 0.50% divided by 12
and (ii) the Principal Balance of such Mortgage Loan as of such
date.
Minimum Mortgage Rate: With respect to each Adjustable
Rate Mortgage Loan, the minimum Mortgage Rate.
Minimum Spread: 0.07% per annum.
ML&Co: Xxxxxxx Xxxxx & Co., Inc., a Delaware
corporation, and its successors and assigns.
ML&Co Guaranty: The Guarantee of Xxxxxxx Xxxxx & Co.
Inc., dated as of April 30, 1998, pursuant to which ML&Co
guarantees the obligation of the CAP Provider under the CAP
Agreements.
Monthly Payment: With respect to any Mortgage Loan
(including any REO Property) and any Due Date, the payment of
principal and interest due thereon in accordance with the
amortization schedule at the time applicable thereto (after
adjustment, if any, for partial Principal Prepayments and for
Deficient Valuations occurring prior to such Due Date but before
any adjustment to such amortization schedule by reason of any
bankruptcy, other than a Deficient Valuation, or similar
proceeding or any moratorium or similar waiver or grace period).
Moody's: Xxxxx'x Investors Service, Inc. or its
successor in interest.
Mortgage: The mortgage, deed of trust or other
instrument creating a first lien on an estate in fee simple
interest in real property securing a Mortgage Loan.
Mortgage File: The file containing the Related
Documents pertaining to a particular Mortgage Loan and any addi-
tional documents required to be added to the Mortgage File pur-
suant to the Mortgage Loan Purchase Agreement or the Servicing
Agreement.
Mortgage Loan Purchase Agreement: The Mortgage Loan
Purchase Agreement, dated as of April 1, 1998, among the Seller,
the Company, the Indenture Trustee and the Issuer.
Mortgage Loan Schedule: With respect to any date, the
schedule of Mortgage Loans pledged under the Indenture on such
date. The schedule of Initial Mortgage Loans as of the Cut-off
Date is the schedule set forth in Exhibit D of the Indenture and
the schedule or schedules of Subsequent Mortgage Loans, if any,
as of the Subsequent Cut-off Date, which schedules set forth as
to each Mortgage Loan
(i) the loan number and name of the Mortgagor;
(ii) the street address, city, state and zip code of
the Mortgaged Property;
(iii) the Mortgage Rate at origination;
(iv) with respect to an Adjustable Rate Mortgage Loan,
the Maximum Rate and the Minimum Rate;
(v) the maturity date;
(vi) the original principal balance;
(vii) the first payment date;
(viii) the type of Mortgaged Property;
(ix) the Monthly Payment in effect as of the Cut-off
Date (with respect to an Initial Mortgage Loan) or
Subsequent Cut-off Date (with respect to a
Subsequent Mortgage Loan);
(x) the Principal Balance as of the Cut-off Date (with
respect to an Initial Mortgage Loan) or Subsequent
Cut-off Date (with respect to a Subsequent
Mortgage Loan);
(xi) with respect to an Adjustable Rate Mortgage Loan,
the Index, the Gross Margin; the Lifetime Rate Cap
and the Periodic Rate Cap;
(xii) with respect to an Adjustable Rate Mortgage Loan,
the first Adjustment Date and next Adjustment
Date, if any;
(xiii) with respect to an Adjustable Rate Mortgage Loan,
the Adjustment Date frequency and Payment Date
frequency;
(xiv) the occupancy status;
(xv) the purpose of the Mortgage Loan;
(xvi) the Appraised Value of the Mortgaged Property;
(xvii) the original term to maturity;
(xviii) the paid-through date of the Mortgage Loan;
(xix) the Loan-to-Value Ratio;
(xx) whether the Mortgage Loan is an Adjustable Rate
Mortgage Loan or a Fixed Rate Mortgage Loan;
(xxi) whether or not the Mortgage Loan was underwritten
pursuant to a limited documentation program; and
(xxii) whether or not the Mortgage Loan is a
Convertible Mortgage Loan.
The Mortgage Loan Schedule shall also set forth the
total of the amounts described under (ix) above for all of the
Mortgage Loans.
Mortgage Loans: At any time, collectively, all
Mortgage Loans that have been sold to the Company under the
Mortgage Loan Purchase Agreement or sold to or substituted for
pursuant to Section 2.1 and 3.1 of the Mortgage Loan Purchase
Agreement, and transferred and conveyed to the Issuer, in each
case together with the Related Documents, and that remain subject
to the terms of the Indenture. As applicable, Mortgage Loan
shall be deemed to refer to the related REO Property and both
Initial Mortgage Loans and Subsequent Mortgage Loans.
Mortgage Note: The note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Rate: With respect to any Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan.
Mortgaged Property: The underlying property, including
real property and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Mortgage
Note.
NCFC: NovaStar Certificates Financing Corp., a Delaware
corporation, and its successors and assigns.
Net Liquidation Proceeds: With respect to any
Liquidated Mortgage Loan, Liquidation Proceeds net of Liquidation
Expenses.
Net Monthly Excess Cashflow: For any Payment Date, the
amount of Available Funds remaining after distributions pursuant
to clauses (i) through (v) of Section 3.05 of the Indenture
(minus any Subordination Reduction Amount).
Net Mortgage Rate: With respect to any Mortgage Loan
and any day, the related Mortgage Rate less the sum of the
related Servicing Fee Rate and the Indenture Trustee Fee Rate.
Nonrecoverable Advance: With respect to any Mortgage
Loan, any Advance (i) which was previously made or is proposed to
be made by the Servicer; and (ii) which, in the good faith
judgment of the Servicer, will not or, in the case of a proposed
Advance, would not, be ultimately recoverable by the Servicer
from Liquidation Proceeds, Insurance Proceeds, Repurchase Price
or future payments on such Mortgage Loan.
Officer's Certificate: With respect to the Servicer, a
certificate signed by the President, 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. With respect to the Seller,
a certificate signed by the President, a Director, a Vice
President or an Assistant Vice President of the Seller and
delivered to the Indenture Trustee and the Bond Insurer. 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.
One-Month LIBOR: With respect to any Interest Period,
the rate determined by the Indenture Trustee on the related
Interest Determination Date on the basis of the offered rates of
the Reference Banks for one-month United States dollar deposits,
as such rates appear on the Telerate Page 3750, as of 11:00 a.m.
(London time) on such Interest Determination Date. If such rate
does not appear on Telerate Page 3750, the rate for that day will
be determined on the basis of the rates at which deposits in
United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks
in the London interbank market for a period equal to the relevant
Interest Period (commencing on the first day of such Interest
Period). The Indenture Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate
for that day will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for
that day will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Indenture Trustee, at
approximately 11:00 a.m., New York City time, on that day for
loans in United States dollars to leading European banks for a
period equal to the relevant Interest Period (commencing on the
first day of such Interest Period).
The establishment of One-Month LIBOR on each Interest
Determination Date by the Indenture Trustee and the Indenture
Trustee's calculation of the rate of interest applicable to the
Bonds for the related Interest Period shall (in the absence of
manifest error) be final and binding.
Opinion of Counsel: A written opinion of counsel
acceptable to the Bond Insurer, who may be in-house counsel for
the Servicer if acceptable to the Indenture Trustee, the Bond
Insurer and the Rating Agencies or counsel for the Company, as
the case may be.
Original Pool Balance: The sum of the aggregate of the
Principal Balances of all Initial Mortgage Loans as of the Cut-
off Date and the Original Pre-Funded Amount.
Original Pre-Funded Amount: The amount deposited (from
the Bond proceeds) in the Pre-Funding Account on the Closing
Date, which amount is $54,414,700.
Original Value: Except in the case of a refinanced
Mortgage Loan, the lesser of the Appraised Value or sales price
of Mortgaged Property at the time a Mortgage Loan is closed, and
for a refinanced Mortgage Loan, the Original Value is the value
of such property set forth in an appraisal acceptable to the
Servicer.
Outstanding: With respect to the Bonds, as of the date
of determination, all Bonds theretofore executed, authenticated
and delivered under this Indenture except:
(i) Bonds theretofore canceled by the Bond Registrar
or delivered to the Indenture Trustee for cancellation; and
(ii) Bonds in exchange for or in lieu of which other
Bonds have been executed, authenticated and delivered pur-
suant to the Indenture unless proof satisfactory to the
Indenture Trustee is presented that any such Bonds are held
by a holder in due course;
All Bonds that have been paid with funds provided under the Bond
Insurance Policy shall be deemed to be Outstanding until the Bond
Insurer has been reimbursed with respect thereto.
Owner Trust Estate: The corpus of the Issuer created
by the Trust Agreement which consists of items referred to in
Section 2.05 of the Trust Agreement.
Owner Trustee: Wilmington Trust Company, and its
successors and assigns, or any successor owner trustee appointed
pursuant to the terms of the Trust Agreement.
Owner Trustee Fee: $4,000 per annum, payable on the
Payment Date occurring each April commencing in April 1998.
Paying Agent: Any paying agent or co-paying agent
appointed pursuant to Section 3.03 of the Indenture, which
initially shall be the Indenture Trustee.
Payment Account: The account established by the
Indenture Trustee pursuant to Section 3.01 of the Indenture. The
Payment Account shall be an Eligible Account.
Payment Adjustment Date: With respect to each negative
amortization loan, the date set forth in the related Mortgage
Note on which the Monthly Payment may change each month. The
first Payment Adjustment Date as to each negative amortization
loan is set forth in the Mortgage Loan Schedule.
Payment Cap: With respect to each negative
amortization loan and each Payment Adjustment Date, the amount
(expressed as a percentage) by which the Monthly Payment on such
negative amortization loan due in the month preceding such
Payment Adjustment Date is multiplied for purposes of calculating
the maximum amount to which the Monthly Payment may be adjusted,
as identified as such on the Mortgage Loan Schedule.
Payment Date: The 25th day of each month, or if such
day is not a Business Day, then the next Business Day, commencing
on May 26, 1998.
Percentage Interest: With respect to any Bond, the
percentage obtained by dividing the Bond Principal Balance of
such Bond by the aggregate of the Bond Principal Balances of all
Bonds. With respect to any Certificate, the percentage on the
face thereof.
Periodic Rate Cap: With respect to any Adjustable Rate
Mortgage Loan, the maximum rate, if any, by which the Mortgage
Rate on such Mortgage Loan can adjust on any Adjustment Date, as
stated in the related Mortgage Note or Mortgage.
Person: Any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
Pool Balance: With respect to any date, the sum of the
aggregate of the Principal Balances of all Mortgage Loans and the
Pre-Funded Amount as of such date.
Pre-Funded Amount: With respect to any date of
determination, the amount on deposit in the Pre-Funding Account.
Pre-Funding Account: The account established and
maintained by the Indenture Trustee pursuant to Section 8.08 of
the Indenture.
Preference Amount: Any amount previously distributed
to a Holder on the Bonds that is recoverable and sought to be
recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Prepayment Interest Shortfall: As to any Payment Date
and any Mortgage Loan (other than a Mortgage Loan relating to an
REO Property) that was the subject of (a) a Principal Prepayment
in full during the related Prepayment Period, an amount equal to
the excess of interest accrued during the related Prepayment
Period at the Mortgage Rate (net of the Servicing Fee) on the
Principal Balance of such Mortgage Loan over the amount of
interest (adjusted to the Mortgage Rate (net of the Servicing
Fee)) paid by the Mortgagor for such Prepayment Period to the
date of such Principal Prepayment in full or (b) a partial
Principal Prepayment during the prior calendar month, an amount
equal to interest accrued during the related Prepayment Period at
the Mortgage Rate (net of the Servicing Fee) on the amount of
such partial Prepayment.
Prepayment Period: As to any Payment Date, the
calendar month preceding the month of such Payment Date.
Principal Balance: With respect to any Mortgage Loan
or related REO Property, at any given time, (i) the Principal
Balance of the Mortgage Loan as of the Cut-off Date or Subsequent
Cut-off Date, as applicable, minus (ii) the sum of (a) the
principal portion of the Monthly Payments due with respect to
such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Payment Date which were received or with
respect to which an Advance was made, and (b) all Principal
Prepayments with respect to such Mortgage Loan or REO Property,
and all Insurance Proceeds, Liquidation Proceeds and REO
Proceeds, to the extent applied by the Servicer as recoveries of
principal in accordance with the Servicing Agreement with respect
to such Mortgage Loan or REO Property, and (c) the principal
portion of any Realized Loss with respect thereto for any
previous Payment Date.
Principal Payment Amount: (a) With respect to any
Payment Date, other than the Final Scheduled Payment Date and the
first Payment Date following any acceleration of the Bonds
following an Event of Default, the lesser of (a) the sum of (x)
the Available Funds remaining after distributions pursuant to
clauses (i) through (iv) of Section 3.05 of the Indenture and (y)
any portion of any Insured Payment for such Payment Date
representing a Subordination Deficit and (b) the sum of:
(1) the principal portion of all Monthly Payments
received and Advances made during the related Due
Period on each Mortgage Loan;
(2) the Principal Balance of any Mortgage Loan
repurchased during the related Prepayment Period
pursuant to the Mortgage Loan Purchase Agreement
or Sections 3.12 or 3.18 of the Servicing
Agreement and the amount of any Substitution
Adjustment Amounts received during the related
Prepayment Period;
(3) the principal portion of all other
unscheduled collections received during the
related Prepayment Period (or deemed to be
received during the related Prepayment Period)
(including, without limitation and without
duplication, Principal Prepayments in full,
partial Principal Prepayments, Insurance Proceeds,
Liquidation Proceeds and REO Proceeds) to the
extent applied by the Servicer as payments or
recoveries of principal of the related Mortgage
Loan;
(4) any Insured Payment paid with respect to any
Subordination Deficit; and
(5) with respect to the Payment Date immediately
following the end of the Funding Period, any
amounts in the related Pre-Funding Account and the
Interest Coverage Account after giving effect to
any purchase of related Subsequent Mortgage Loans;
minus
(6) the amount of any Subordination Reduction
Amount for such Payment Date;
and (b) with respect to the Final Scheduled Payment Date and the
first Payment Date following any acceleration of the Bonds
following an Event of Default, the amount necessary to reduce the
Bond Principal Balance to zero.
Principal Prepayment: Any payment of principal made by
the Mortgagor on a Mortgage Loan which is received in advance of
its scheduled Due Date and which is not accompanied by an amount
of interest representing scheduled interest due on any date or
dates in any month or months subsequent to the month of
prepayment.
Proceeding: Any suit in equity, action at law or other
judicial or administrative proceeding.
Prospectus: The Prospectus Supplement together with the
Base Prospectus attached thereto with respect to the Bonds.
Prospectus Supplement: The Prospectus Supplement dated
April 28, 1998, with respect to the Bonds.
Purchase Price: The meaning specified in Section
2.1(a) of the Mortgage Loan Purchase Agreement.
Rating Agency: Any nationally recognized statistical
rating organization, or its successor, that rated the Bonds at
the request of the Company at the time of the initial issuance of
the Bonds. Initially such rating agencies shall consist of
Xxxxx'x and Standard & Poor's. If such organization or a
successor is no longer in existence, "Rating Agency" shall be
such nationally recognized statistical rating organization, or
other comparable Person, designated by the Bond Insurer so long
as no Bond Insurer Default exists, 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 Xxxxx'x and in the case of any
other Rating Agency shall mean such equivalent rating.
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 Xxxxx'x and in the case of any other
Rating Agency, such equivalent rating.
Realized Loss: With respect to each Mortgage Loan (or
REO Property) as to which a Cash Liquidation or REO Disposition
has occurred, an amount (not less than zero) equal to (i) the
Principal Balance of the Mortgage Loan (or REO Property) as of
the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage
Rate from the Due Date as to which interest was last paid or
advanced to Bondholders up to the last day of the month in which
the Cash Liquidation (or REO Disposition) occurred on the
Principal Balance of such Mortgage Loan (or REO Property)
outstanding during each Due Period that such interest was not
paid or advanced, minus (iii) Net Liquidation Proceeds, if any,
received during the month in which such Cash Liquidation (or REO
Disposition) occurred, minus the portion thereof reimbursable to
the Servicer or any Subservicer with respect to related Advances
or expenses as to which the Servicer or Subservicer is entitled
to reimbursement thereunder but which have not been previously
reimbursed. With respect to each Mortgage Loan which has become
the subject of a Deficient Valuation, the difference between the
principal balance of the Mortgage Loan outstanding immediately
prior to such Deficient Valuation and the principal balance of
the Mortgage Loan as reduced by the Deficient Valuation. With
respect to each Mortgage Loan which has become the object of a
Debt Service Reduction, the amount of such Debt Service
Reduction.
Record Date: With respect to the Bonds and any Payment
Date, the last day of the calendar month preceding such Payment
Date or in the case of the first Payment Date, the Record Date
shall be the Closing Date.
Reference Banks: Bankers Trust Company, Xxxxxxx'x Bank
PLC, The Bank of Tokyo and National Westminster Bank PLC and
their successors in interest; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank,
then any leading banks selected by the Indenture Trustee which
are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of
or under common control with the Company or any Affiliate
thereof, (iii) whose quotations appear on the Reuters Screen LIBO
Page on the relevant Interest Determination Date and (iv) which
have been designated as such by the Indenture Trustee.
Registered Holder: The Person in whose name a Bond is
registered in the Bond Register on the applicable Record Date.
Related Documents: With respect to each Mortgage Loan,
the documents specified in Section 2.1(b) of the Mortgage Loan
Purchase Agreement and any documents required to be added to such
documents pursuant to the Mortgage Loan Purchase Agreement, the
related Seller's Subsequent Transfer Instrument, the related
Company's Subsequent Transfer Instrument, the Trust Agreement,
the Indenture or the Servicing Agreement.
Relief Act: The Soldiers' and Sailors' Civil Relief
Act of 1940, as amended.
Relief Act Shortfall: As to any Payment Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO
Property), any shortfalls relating to the Relief Act or similar
legislation or regulations.
Remarketing Spread: With respect to each anniversary of
the Closing Date, (a) an amount expressed as a percentage by
which (i) the interest rate then payable on similarly-structured,
monthly floating-rate, taxable debt securities with a remaining
term to maturity of not more than 397 days rated either (A) in
one of the two highest short term rating categories by both S&P
and Xxxxx'x or (B) if at that time the rating on the Bonds is
lower, then the lowest rating category assigned at that time to
the Bonds by S&P or Xxxxx'x, exceeds (ii) One-Month LIBOR, or (b)
if the amount under clause (a) cannot be calculated, then an
amount expressed as a percentage by which (i) the interest rate
then payable on similarly-structured, monthly floating-rate,
asset-backed bonds rated either (A) in the highest rating
category by both S&P and Xxxxx'x or (B) if at that time the
rating on the Bonds is lower, then the lowest rating category
assigned at that time to the Bonds by S&P or Xxxxx'x, exceeds
(ii) One-Month LIBOR, in either case as reasonably determined and
certified to the Indenture Trustee by the Remarketing Spread
Calculation Agent (as defined herein); provided, that in
determining the rates under clauses (a)(i) and (b)(i) above, the
Remarketing Spread Calculation Agent shall take into account
prevailing market conditions and current spreads to LIBOR for
such securities, the principal amount of such securities that
prospective purchasers and/or current holders of such securities
are willing to purchase or hold, and indications from prospective
purchasers and/or current holders of such securities of the
interest rates at which they would be willing to purchase and/or
hold such securities.
Remarketing Spread Calculation Agent: Xxxxxxx Xxxxx
Capital Services, Inc., a Delaware corporation, and its
successors and assigns.
Remarketing Spread Calculation Agent Letter Agreement:
The letter agreement, dated as of April 30, 1998, among the
Issuer, the Indenture Trustee and the Remarketing Spread
Calculation Agent, pursuant to which the Remarketing Spread
Calculation Agent agrees to determine the Remarketing Spread.
REO Acquisition: The acquisition by the Servicer on
behalf of the Indenture Trustee for the benefit of the
Bondholders and the Bond Insurer of any REO Property pursuant to
Section 3.13 of the Servicing Agreement.
REO Disposition: As to any REO Property, a
determination by the Servicer that it has received substantially
all Insurance Proceeds, Liquidation Proceeds, REO Proceeds and
other payments and recoveries (including proceeds of a final
sale) which the Servicer expects to be finally recoverable from
the sale or other disposition of the REO Property.
REO Imputed Interest: As to any REO Property, for any
period, an amount equivalent to interest (at the Net Mortgage
Rate that would have been applicable to the related Mortgage Loan
had it been outstanding net, with respect to a negative
amortization loan, of amounts that would have been Deferred
Interest, if any) on the unpaid principal balance of the Mortgage
Loan as of the date of acquisition thereof for such period as
such balance is reduced pursuant to Section 3.13 of the Servicing
Agreement by any income from the REO Property treated as a
recovery of principal and with respect to a negative amortization
loan, as such balance is increased by the addition of Deferred
Interest.
REO Proceeds: Proceeds, net of expenses, received in
respect of any REO Property (including, without limitation,
proceeds from the rental of the related Mortgaged Property),
which proceeds are required to be deposited into the Collection
Account within two days of receipt by the Servicer.
REO Property: A Mortgaged Property that is acquired by
the Issuer by foreclosure or by deed in lieu of foreclosure.
Repurchase Event: With respect to any Mortgage Loan,
either (i) a discovery that, as of the Closing Date the related
Mortgage was not a valid lien on the related Mortgaged Property
subject only to (A) the lien of real property taxes and
assessments not yet due and payable, (B) 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 permitted and (C)
other matters to which like properties are commonly subject which
do not materially adversely affect the value, use, enjoyment or
marketability of the related Mortgaged Property or (ii) with
respect to any Mortgage Loan as to which the Seller delivers an
affidavit certifying that the original Mortgage Note has been
lost or destroyed, a subsequent default on such Mortgage Loan if
the enforcement thereof or of the related Mortgage is materially
and adversely affected by the absence of such original Mortgage
Note.
Repurchase Price: With respect to any Mortgage Loan
required to be repurchased on any date pursuant to the Mortgage
Loan Purchase Agreement or permitted or required to be purchased
by the Servicer pursuant to the Servicing Agreement, an amount
equal to the sum, without duplication, of (i) 100% of the
Principal Balance thereof (without reduction for any amounts
charged off) and (ii) unpaid accrued interest at the Mortgage
Rate on the outstanding principal balance thereof from the Due
Date to which interest was last paid by the Mortgagor (or with
respect to which an Advance was last made by the Servicer) to the
first day of the month following the month of purchase plus (iii)
the amount of any unreimbursed Servicing Advances or unreimbursed
Advances made with respect to such Mortgage Loan plus (iv) any
other amounts owed to the Servicer or the Subservicer pursuant to
Section 3.07 of the Servicing Agreement and not included in
clause (iii) of this definition.
Required Subordination Amount: (a) For any Payment Date
occurring during the period commencing on the Closing Date and
ending on the later of the thirtieth Payment Date following the
Closing Date and the date upon which the principal in the amount
of one-half of the Original Pool Balance has been received by the
Bondholders, the greater of: (i) the Base Specified
Overcollateralization Amount and (ii) 100% of the Delinquency
Amount and (b) for any Payment Date occurring after the end of
the period in clause (a) above, the greatest of (i) two times the
product of the Target Percentage and the Pool Balance as of the
close of business as of the last day of the related Due Period,
(ii) 100% of the Delinquency Amount, (iii) 0.50% of the Original
Pool Balance and (iv) an amount equal to the sum of the Principal
Balances of the three Mortgage Loans with the largest Principal
Balances. On or prior to the day the Funding Period ends, the
Bond Insurer may adjust the Required Subordinated Amount. The
Required Subordinated Amount may be increased by the Rating
Agencies at the time of the delivery of any Subsequent Mortgage
Loans.
Notwithstanding the above, the Required Subordination
Amount shall not step-down pursuant to clause (b) above, (i) if a
claim on the Bond Insurance Policy has occurred, (ii) if a
Servicing Default has occurred which has not been waived by the
Bond Insurer or (iii) if the Delinquency Amount equals or exceeds
8% of the aggregate of the Principal Balance of the Mortgage
Loans as of the close of business on the last day of the related
Due Period.
Upon the end of the Funding Period, the Required
Subordination Amount may be reduced or eliminated by the Bond
Insurer in its sole discretion. Upon any such reduction or
elimination, the Servicer shall give written notice thereof to
each Rating Agency.
Responsible Officer: With respect to the Indenture
Trustee, any officer of the Indenture Trustee with direct respon-
sibility for the administration of 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.
Rolling Delinquency Percentage: For any Payment Date,
the average of the Delinquency Percentages for the Mortgage Loans
as of the last day of each of the three (or 1 and 2 in the case
of the first two Payment Dates, as applicable) most recently
ended Due Periods.
Sale: The meaning assigned in Section 5.15 of the
Indenture.
Second CAP Agreement: The interest rate CAP Agreement,
dated the Closing Date, between the Issuer and the CAP Provider,
in the notional principal amount of $30,000,000.
Securities Act: The Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
Security: Any of the Certificates or Bonds.
Securityholder or Holder: Any Bondholder or a
Certificateholder.
Security Instrument: A written instrument creating a
valid first lien on a Mortgaged Property securing a Mortgage
Note, which may be any applicable form of mortgage, deed of
trust, deed to secure debt or security deed, including any riders
or addenda thereto.
Seller: NovaStar Financial, Inc., a Maryland corpora-
tion, and its successors and assigns.
Servicer: NovaStar Mortgage, Inc., a Virginia
corporation, and its successors and assigns.
Servicing Account: The separate trust account created
and maintained by the Servicer or each Subservicer with respect
to the Mortgage Loans or REO Property, which shall be an Eligible
Account, for collection of taxes, assessments, insurance premiums
and comparable items as described in Section 3.08 of the
Servicing Agreement.
Servicing Advances: All customary, reasonable and
necessary "out of pocket" costs and expenses incurred in
connection with a default, delinquency or other unanticipated
event in the performance by the Servicer of its servicing
obligations, including, without duplication, but not limited to,
the cost of (i) the preservation, restoration and protection of a
Mortgaged Property, (ii) any enforcement or judicial proceedings,
including foreclosures, (iii) the management and liquidation of
any REO Property and (iv) compliance with the obligations under
Section 3.13 of the Servicing Agreement.
Servicing Agreement: The Servicing Agreement, dated as
of April 1, 1998, among the Servicer, the Indenture Trustee and
the Issuer.
Servicing Default: The meaning assigned in Section
6.01 of the Servicing Agreement.
Servicing Fee: With respect to the Mortgage Loans and
any Payment Date, the product of (i) the Servicing Fee Rate
divided by 12 and (ii) the Principal Balance of such Mortgage
Loans as of such Payment Date.
Servicing Fee Rate: With respect to any Mortgage Loan,
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 Bond Insurer) by the Servicer or a
Subservicer, as such list may be amended from time to time.
Single Bond: A Bond in the amount of $1,000.
Standard & Poor's: Standard & Poor's Ratings Services,
a division of The McGraw Hill Companies, Inc., or its successor
in interest.
Subordination Amount: As of any Payment Date, the
excess, if any, of (x) the sum of the Pool Balance as of the
close of business on the last day of the related Due Period, over
(y) the Bond Principal Balance of the Bonds as of such Payment
Date (and following the making of all distributions on such
Payment Date).
Subordination Deficit: With respect to any Payment
Date, the amount, if any, by which (x) the aggregate Bond
Principal Balance of the Bonds as of such Payment Date, and
following the making of all distributions to be made on such
Payment Date (except for any payment to be made as to principal
from proceeds of the Bond Insurance Policy), exceeds (y) the Pool
Balance as of the close of business on the related Due Date for
such Payment Date.
Subordination Increase Amount: With respect to any
Payment Date, the amount of any Net Monthly Excess Cashflow
(including any Subordination Reduction Amount) available in the
Payment Account to increase the Subordination Amount up to the
Required Subordination Amount.
Subordination Reduction Amount: With respect to any
Payment Date, an amount equal to the lesser of (a) the Excess
Subordination Amount and (b) the principal collections received
by the Servicer with respect to the prior Due Period.
Subsequent Cut-off Date: With respect to those
Subsequent Mortgage Loans which are sold to the Trust pursuant to
a Subsequent Transfer Instrument, one Business Day prior to the
Subsequent Transfer Date.
Subsequent Mortgage Loan: A Mortgage Loan sold by the
Seller to the Company, who in turn sold such Mortgage Loan to the
Trust, pursuant to Section 2.2 of the Mortgage Loan Purchase
Agreement, such Mortgage Loan being identified on the Mortgage
Loan Schedule attached to a Subsequent Transfer Instrument.
Subsequent Transfer Date: With respect to each
Subsequent Transfer Instrument, the date on which the related
Subsequent Mortgage Loans are sold to the Trust.
Subsequent Transfer Instrument: Each Seller's
Subsequent Transfer Instrument dated as of a Subsequent Transfer
Date executed by the Seller and the Company substantially in the
form of Exhibit 2(A) to the Mortgage Loan Purchase Agreement, by
which Subsequent Mortgage Loans are sold to the Company and each
Company's Subsequent Transfer Instrument dated as of a Subsequent
Transfer Date executed by the Company and the Issuer
substantially in the form of Exhibit 2(B) to the Mortgage Loan
Purchase Agreement, by which Subsequent Mortgage Loans are sold
to the Trust.
Subservicer: Any Person with whom the Servicer has
entered into a Subservicing Agreement as a Subservicer.
Subservicing Account: An Eligible Account established
or maintained by a Subservicer as provided for in Section 3.06(e)
of the Servicing Agreement.
Subservicing Agreement: The written contract between
the Servicer and any Subservicer relating to servicing and
administration of certain Mortgage Loans as provided in Section
3.02 of the Servicing Agreement.
Subservicing Fee: With respect to each Mortgage Loan
and any Payment Date, the portion of the Servicing Fee paid to a
Subservicer.
Substitution Adjustment Amount: With respect to any
Eligible Substitute Mortgage Loan, the amount as defined in
Section 2.03 of the Servicing Agreement.
Superior Lien: With respect to any Mortgage Loan which
is secured by a second lien, the mortgage loan(s) having a
superior priority on the related Mortgaged Property.
Target Percentage: 5.10%.
Telerate Page 3750: The display page currently so
designated on the Dow Xxxxx Telerate Service (or such other page
as may replace that page on that service for the purpose of
displaying comparable rates or prices) and "Reference Banks"
means leading banks selected by the Indenture Trustee and engaged
in transactions in European deposits in the international
Eurocurrency market.
Treasury Regulations: Regulations, including proposed
or temporary Regulations, promulgated under the Code. References
herein to specific provisions of proposed or temporary regula-
tions shall include analogous provisions of final Treasury
Regulations or other successor Treasury Regulations.
Trust: The NovaStar Mortgage Funding Trust, Series
1998-1, a Delaware business trust, to be created pursuant to the
Trust Agreement.
Trust Agreement: The Trust Agreement, dated as of
April 1, 1998, as amended and restated by the Amended and
Restated Trust Agreement, dated as of April 1, 1998, between the
Owner Trustee and the Company.
Trust Estate: The meaning specified in the Granting
Clause of the Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of
1939, as amended from time to time, as in effect on any relevant
date.
UCC: The Uniform Commercial Code, as amended from time
to time, as in effect in any specified jurisdiction.
Underwriter: Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx
Incorporated, a Delaware corporation and its successors and
assigns.
Underwriting Agreement: The Underwriting Agreement
dated as of April 28, 1998 among the Underwriter and the Company
with respect to the offer and sale of the Bonds, as the same may
be amended from time to time.
Underwriting Guidelines: The underwriting guidelines
set forth in the Prospectus Supplement under the heading
"Description of the Mortgage Pool Underwriting Standards for the
Initial Mortgage Loans" and in the Base Prospectus under the
heading "Description of the Assets Mortgage Loans Underwriting
Standards for Subprime Mortgage Loans."
