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NEWCASTLE MORTGAGE SECURITIES TRUST 2007-1
Issuing Entity
WELLS FARGO BANK, N.A.
Securities Administrator
and
THE BANK OF NEW YORK
Indenture Trustee
_____________________________
INDENTURE
Dated as of July 12, 2007
_____________________________
ASSET-BACKED NOTES, SERIES 2007-1
________________
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions..................................................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act............................................2
Section 1.03. Rules of Construction........................................................................2
ARTICLE II
ORIGINAL ISSUANCE OF THE NOTES
Section 2.01. Form.........................................................................................4
Section 2.02. Execution, Authentication and Delivery.......................................................4
Section 2.03. Authorization to Enter into the Interest Rate Cap Agreement and the Interest Rate Swap
Agreement....................................................................................5
ARTICLE III
COVENANTS
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....................................................................................7
Section 3.05. Payment of Principal and Interest............................................................8
Section 3.06. Protection of Trust Estate..................................................................14
Section 3.07. Opinions as to Trust Estate.................................................................15
Section 3.08. Performance of Obligations..................................................................16
Section 3.09. Negative Covenants..........................................................................16
Section 3.10. [Reserved]..................................................................................17
Section 3.11. [Reserved.].................................................................................17
Section 3.12. Representations and Warranties Concerning the Mortgage Loans................................17
Section 3.13. Amendments to Sale and Servicing Agreement..................................................17
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee.......................................17
Section 3.15. Investment Company Act......................................................................18
Section 3.16. Issuing Entity May Consolidate, etc.........................................................18
Section 3.17. Successor or Transferee.....................................................................19
Section 3.18. No Other Business...........................................................................19
Section 3.19. No Borrowing................................................................................19
Section 3.20. Guarantees, Loans, Advances and Other Liabilities...........................................19
Section 3.21. Capital Expenditures........................................................................20
Section 3.22. Determination of Note Rate..................................................................20
Section 3.23. Restricted Payments.........................................................................20
Section 3.24. Notice of Events of Default.................................................................20
Section 3.25. Further Instruments and Acts................................................................20
Section 3.26. Statements to Noteholders...................................................................21
Section 3.27. [Reserved]..................................................................................21
Section 3.28. Certain Representations Regarding the Trust Estate..........................................21
Section 3.29. Allocation of Realized Losses...............................................................22
ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.01. The Notes...................................................................................24
Section 4.02. Registration of and Limitations on Transfer and Exchange of Notes; Appointment of Note
Registrar and Certificate Registrar.........................................................24
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes..................................................25
Section 4.04. Persons Deemed Owners.......................................................................26
Section 4.05. Cancellation................................................................................26
Section 4.06. Book-Entry Notes............................................................................27
Section 4.07. Notices to Depository.......................................................................28
Section 4.08. Definitive Notes............................................................................28
Section 4.09. Tax Treatment...............................................................................28
Section 4.10. Satisfaction and Discharge of Indenture.....................................................28
Section 4.11. Application of Trust Money..................................................................29
Section 4.12. [Reserved]..................................................................................30
Section 4.13. Repayment of Monies Held by Paying Agent....................................................30
Section 4.14. Temporary Notes.............................................................................30
Section 4.15. Representation Regarding ERISA..............................................................30
ARTICLE V
DEFAULT AND REMEDIES
Section 5.01. Events of Default...........................................................................32
Section 5.02. Acceleration of Maturity; Rescission and Annulment..........................................32
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee...................33
Section 5.04. Remedies; Priorities........................................................................35
Section 5.05. Optional Preservation of the Trust Estate...................................................38
Section 5.06. Limitation of Suits.........................................................................38
Section 5.07. Unconditional Rights of Noteholders To Receive Principal and Interest.......................39
Section 5.08. Restoration of Rights and Remedies..........................................................39
Section 5.09. Rights and Remedies Cumulative..............................................................39
Section 5.10. Delay or Omission Not a Waiver..............................................................39
Section 5.11. Control By Noteholders......................................................................39
Section 5.12. Waiver of Past Defaults.....................................................................40
Section 5.13. Undertaking for Costs.......................................................................40
Section 5.14. Waiver of Stay or Extension Laws............................................................41
Section 5.15. Sale of Trust Estate........................................................................41
Section 5.16. Action on Notes.............................................................................43
Section 5.17. Performance and Enforcement of Certain Obligations..........................................43
ARTICLE VI
THE INDENTURE TRUSTEE AND THE SECURITIES ADMINISTRATOR
Section 6.01. Duties of Indenture Trustee and Securities Administrator....................................45
Section 6.02. Rights of Indenture Trustee and Securities Administrator....................................48
Section 6.03. Individual Rights of Indenture Trustee and Securities Administrator.........................49
Section 6.04. Indenture Trustee's and Securities Administrator's Disclaimer...............................49
Section 6.05. Notice of Event of Default..................................................................50
Section 6.06. Reports by the Securities Administrator to Holders and Tax Administration...................50
Section 6.07. Compensation and Indemnity..................................................................50
Section 6.08. Replacement of Indenture Trustee or Securities Administrator................................51
Section 6.09. Successor Indenture Trustee or Securities Administrator by Merger...........................53
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee...........................53
Section 6.11. Eligibility; Disqualification...............................................................54
Section 6.12. Preferential Collection of Claims Against Issuing Entity....................................55
Section 6.13. Representations and Warranties..............................................................55
Section 6.14. Directions to Indenture Trustee and Securities Administrator................................55
Section 6.15. The Agents..................................................................................55
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuing Entity To Furnish Securities Administrator Names and Addresses of Noteholders.......57
Section 7.02. Preservation of Information; Communications to Noteholders..................................57
Section 7.03. Reports of Issuing Entity...................................................................57
Section 7.04. Reports by Securities Administrator.........................................................59
Section 7.05. Statements to Noteholders...................................................................59
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money.........................................................................63
Section 8.02. Trust Accounts..............................................................................63
Section 8.03. Officer's Certificate.......................................................................63
Section 8.04. Termination Upon Payment to Noteholders.....................................................63
Section 8.05. Release of Trust Estate.....................................................................64
Section 8.06. Surrender of Notes Upon Final Payment.......................................................64
Section 8.07. Optional Redemption of the Notes............................................................64
Section 8.08. Collateral Account..........................................................................66
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders......................................68
Section 9.02. Supplemental Indentures With Consent of Noteholders.........................................69
Section 9.03. Execution of Supplemental Indentures........................................................71
Section 9.04. Effect of Supplemental Indenture............................................................71
Section 9.05. Conformity with Trust Indenture Act.........................................................72
Section 9.06. Reference in Notes to Supplemental Indentures...............................................72
ARTICLE X
MISCELLANEOUS
Section 10.01. Compliance Certificates and Opinions, etc...................................................73
Section 10.02. Form of Documents Delivered to Indenture Trustee............................................74
Section 10.03. Acts of Noteholders.........................................................................75
Section 10.04. Notices etc., to Indenture Trustee, Securities Administrator, Issuing Entity and Rating
Agencies....................................................................................76
Section 10.05. Notices to Noteholders; Waiver..............................................................76
Section 10.06. Conflict with Trust Indenture Act...........................................................77
Section 10.07. Effect of Headings..........................................................................77
Section 10.08. Successors and Assigns......................................................................77
Section 10.09. Separability................................................................................77
Section 10.10. Third Party Beneficiaries...................................................................77
Section 10.11. Legal Holidays..............................................................................78
Section 10.12. GOVERNING LAW...............................................................................78
Section 10.13. Counterparts................................................................................78
Section 10.14. Recording of Indenture......................................................................78
Section 10.15. Issuing Entity Obligation...................................................................78
Section 10.16. No Petition.................................................................................79
Section 10.17. Inspection..................................................................................79
Section 10.18. No Recourse to Owner Trustee................................................................79
Section 10.19. Proofs of Claim.............................................................................80
EXHIBITS
Exhibit A-1 Form of Class A Note
Exhibit A-2 Form of Class M Note
Exhibit B Mortgage Loan Schedule
Exhibit C Interest Rate Swap Agreement
Exhibit D Interest Rate Cap Agreement
Appendix A Definitions
This Indenture, dated as of July 12, 2007, is entered into among Newcastle Mortgage Securities
Trust 2007-1, a Delaware statutory trust, as Issuing Entity (the "Issuing Entity"), Wells Fargo Bank, N.A., a
national banking association, as Securities Administrator (the "Securities Administrator", which term includes
any successor Securities Administrator under the Indenture") and The Bank of New York, a New York banking
corporation, 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 Issuing Entity's Asset-Backed Notes, Series 2007-1 (the "Notes").
GRANTING CLAUSE
The Issuing Entity hereby Grants to the Indenture Trustee at the Closing Date, as trustee for
the benefit of the Holders of the Notes, all of the Issuing Entity's right, title and interest, whether now owned
or hereafter acquired, in, to and under (a) the Mortgage Loans, Qualified Substitute Mortgage Loans and the
proceeds thereof; (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 Note
Account and in all proceeds thereof; (d) all rights under (i) the Assignment Agreement as assigned to the Issuing
Entity, (ii) the Sale and Servicing Agreement, (iii) any title, hazard and primary insurance policies with
respect to the Mortgaged Properties, (iv) the rights with respect to the Interest Rate Swap Agreement and (v) the
rights with respect to the Interest Rate Cap Agreement; (e) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and all payments on or under, and all proceeds of
every kind and nature whatsoever in respect of, any or all of the foregoing and all payments on or under, and all
proceeds of every kind and nature whatsoever in the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, checks,
deposit accounts, rights to payment of any and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or are included in the proceeds of any
of the foregoing and (f) all other property of the Issuing Entity (collectively, the "Trust Estate" or the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal of and interest on, and
any other amounts owing in respect of, the Notes, equally and ratably without prejudice, priority or distinction,
and to secure compliance with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as trustee on behalf of the Holders of the Notes, acknowledges such
Grant, accepts the trust under this Indenture in accordance with the provisions hereof and each of the Indenture
Trustee and the Securities Administrator agree to perform their respective duties as Indenture Trustee and
Securities Administrator as required herein.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided herein or unless the
context otherwise requires, capitalized terms not otherwise defined herein shall have the meanings assigned to
such terms in the Definitions attached hereto as Appendix A which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act (the "TIA"), the
provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Indenture Trustee.
"Obligor" on the indenture securities means the Issuing Entity and any other obligor on the
indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by Commission rules and 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 THE NOTES
Section 2.01. Form.
The Notes, together with the Securities Administrator's certificate of authentication, shall be
in substantially the form set forth in Exhibits A-1 or A-2 to this Indenture, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this Indenture.
The Notes 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 Notes set forth in Exhibits A-1 and A-2 to this Indenture are part of the
terms of this Indenture. To the extent the Notes and the terms of the Indenture are inconsistent, the terms of
the Indenture shall control.
Section 2.02. Execution, Authentication and Delivery.
The Notes shall be executed on behalf of the Issuing Entity by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were at any time Authorized
Officers of the Issuing Entity shall bind the Issuing Entity, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such
offices at the date of such Notes.
The Securities Administrator shall upon Issuing Entity Request authenticate and deliver the
Notes for original issue in an aggregate initial principal amount of $1,036,250,000. The Classes of Notes shall
have the following Initial Note Balances:
Class Initial Note Balance
____________________________________________
1-A-1 $ 370,224,000
2-A-1 $ 285,332,000
2-A-2 $ 27,683,000
2-A-3 $ 77,257,000
2-A-4 $ 39,130,000
M-1 $ 42,429,000
M-2 $ 41,341,000
M-3 $ 25,022,000
M-4 $ 22,846,000
M-5 $ 21,215,000
M-6 $ 18,495,000
M-7-A $ 5,000,000
M-7-B $ 12,407,000
M-8-A $ 3,500,000
M-8-B $ 12,275,000
M-9 $ 14,143,000
M-10 $ 17,951,000
Each of the Notes shall be dated the date of its authentication. The Notes shall be issuable
as registered Notes and the Notes shall be issuable in the minimum initial Note Balances of $25,000 and in
integral multiples of $1 in excess thereof; provided that the Notes must be purchased in minimum total
investments of $100,000 per class.
No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for
herein executed by the Securities Administrator by the manual signature of one of its authorized signatories, and
such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.03. Authorization to Enter into the Interest Rate Cap Agreement and the Interest
Rate Swap Agreement.
The Securities Administrator is hereby directed to perform the Issuing Entity's obligations
under the Interest Rate Cap Agreement and the Interest Rate Swap Agreement, exercise the rights and perform the
obligations on behalf of Party B (each as defined therein) and not in its individual capacity. The Issuing
Entity acknowledges and agrees that (i) the Securities Administrator shall perform the Owner Trustee's
obligations under the Interest Rate Cap Agreement and the Interest Rate Swap Agreement on behalf of Party B (each
as defined therein) and (ii) the Securities Administrator shall exercise the rights and perform the obligations
of Party B thereunder, solely in its capacity as Securities Administrator on behalf of Party B (each as defined
therein) and not in its individual capacity.
Every provision of this Indenture affording protection to the Securities Administrator shall
apply to the Securities Administrator's delivery of the Interest Rate Cap Agreement and the Interest Rate Swap
Agreement and the performance of its duties and satisfaction of its obligations thereunder.
ARTICLE III
COVENANTS
Section 3.01. Collection of Payments with respect to the Mortgage Loans.
The Securities Administrator shall make all payments of principal of and interest on the Notes,
subject to Section 3.03 as provided in Section 3.05 herein from monies on deposit in the Note Account.
Section 3.02. Maintenance of Office or Agency.
The Issuing Entity will maintain an office or agency where, subject to satisfaction of
conditions set forth herein, Notes may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Issuing Entity in respect of the Notes and this Indenture may be served. The Issuing
Entity hereby initially appoints the Securities Administrator to serve as its agent for the foregoing purposes.
If at any time the Issuing Entity shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders may be made at the office designated by the
Securities Administrator for such purpose.
Section 3.03. Money for Payments To Be Held in Trust; Paying Agent.
As provided in Section 3.01, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Note Account pursuant to Section 3.01 shall be made on behalf
of the Issuing Entity by the Securities Administrator or by the Paying Agent, and no amounts so withdrawn from
the Note Account for payments of Notes shall be paid over to the Issuing Entity except as provided in this
Section 3.03. The Issuing Entity hereby appoints the Securities Administrator as its Paying Agent.
The Securities Administrator will cause each Paying Agent other than the Securities
Administrator to execute and deliver to the Securities Administrator an instrument in which such Paying Agent
shall agree with the Securities Administrator (and if the Securities Administrator acts as Paying Agent it hereby
so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with respect to the
Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Securities Administrator notice of any default by the Issuing Entity
of which it has actual knowledge in the making of any payment required to be made with respect
to the Notes;
(iii) at any time during the continuance of any such default, upon the written
request of the Securities Administrator, forthwith pay to the Securities Administrator all sums
so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to the Securities
Administrator all sums held by it in trust for the payment of Notes if at any time it ceases to
meet the standards required to be met by a Paying Agent at the time of its appointment;
(v) comply with all requirements of the Code with respect to the withholding from
any payments made by it on any Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in connection therewith; and
(vi) not commence a bankruptcy proceeding against the Issuing Entity in connection
with this Indenture.
The Issuing Entity may at any time, for the purpose of obtaining the satisfaction and discharge
of this Indenture or for any other purpose, by Issuing Entity Request direct any Paying Agent to pay to the
Securities Administrator all sums held in trust by such Paying Agent, such sums to be held by the Securities
Administrator 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 Securities Administrator, 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 Securities
Administrator or any Paying Agent in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for one year after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuing Entity on Issuing Entity Request; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuing Entity for payment thereof (but only to the extent of the
amounts so paid to the Issuing Entity), and all liability of the Securities Administrator or such Paying Agent
with respect to such trust money shall thereupon cease; provided, however, that the Securities Administrator or
such Paying Agent, before being required to make any such repayment, shall at the expense and direction of the
Issuing Entity cause to be published once, in an Authorized Newspaper published in the English language, 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
Issuing Entity. The Securities Administrator may also adopt and employ, at the expense and direction of the
Issuing Entity, any other reasonable means of notification of such repayment (including, but not limited to,
mailing notice of such repayment to Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in monies due and payable but not claimed is determinable from the
records of the Securities Administrator or of any Paying Agent, at the last address of record for each such
Holder).
Section 3.04. Existence.
The Issuing Entity will keep in full effect its existence, rights and franchises as a statutory
trust under the laws of the State of Delaware (unless it becomes, or any successor Issuing Entity hereunder is or
becomes, organized under the laws of any other state or of the United States of America, in which case the
Issuing Entity will keep in full effect its existence, rights and franchises under the laws of such other
jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes,
the Mortgage Loans and each other instrument or agreement included in the Trust Estate.
Section 3.05. Payment of Principal and Interest.
(a) On each Payment Date from amounts on deposit in the Note Account in accordance with
Section 8.02 hereof, the Securities Administrator shall pay (i) to the Swap Provider, any Net Swap Payment or
Swap Termination Payment (other than any Swap Termination Payment resulting from a Swap Provider Trigger Event)
owed to the Swap Provider and (ii) to the Persons specified below, to the extent provided therein, the Available
Funds for such Payment Date in the following order of priority:
(A) On each Payment Date, the Group 1 Interest Remittance Amount for such Payment Date
will be distributed by the Securities Administrator as follows:
first, to the Class 1-A-1 Notes, the Class Monthly Interest Amount and any Class Interest
Carryover Shortfall for such class and such Payment Date;
second, to the extent not paid pursuant to priority (B) below, to the Class 2-A-1 Notes, the
Class 2-A-2 Notes, the Class 2-A-3 Notes and the Class 2-A-4 Notes, the related Class Monthly Interest
Amount and any related Class Interest Carryover Shortfall for each such class and that Payment Date,
allocated among each such class of notes on a pro rata basis based on each note's Class Monthly Interest
Amount and Class Interest Carryover Shortfall;
(B) On each Payment Date, the Group 2 Interest Remittance Amount for such Payment Date
will be distributed as follows:
first, to the Class 2-A-1 Notes, the Class 2-A-2 Notes, the Class 2-A-3 Notes and the Class
2-A-4 Notes, the related Class Monthly Interest Amount and any related Class Interest Carryover
Shortfall for each such class and that Payment Date, allocated among each such class of notes on a pro
rata basis based on each note's Class Monthly Interest Amount and Class Interest Carryover Shortfall;
second, to the extent not paid pursuant to priority (A) above, to the Class 1-A-1 Notes, the
Class Monthly Interest Amount and any Class Interest Carryover Shortfall for such class and such Payment
Date;
(C) On each Payment Date, the Interest Remittance Amount remaining for such Payment Date
will be distributed as follows:
first, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7 (allocated among the Class M-7 Notes, pro rata based on their respective Note Balances), Class
M-8 (allocated among the Class M-8 Notes, pro rata based on their respective Note Balances), Class M-9
and M-10 Notes, in that order, the Class Monthly Interest Amount for each such class and that Payment
Date;
(D) On each Payment Date, (1) prior to the Stepdown Date or (2) on which a Trigger Event
is in effect, concurrently as follows:
(i) from the Group 1 Principal Remittance Amount,
first, to the Class 1-A-1 Notes, the Group 1 Principal Distribution Amount for that Payment
Date (excluding any Overcollateralization Increase Amount included therein), until the Note Balance
thereof has been reduced to zero;
second and following the payments pursuant to priority (D)(ii) below, sequentially to the Class
2-A-1 Notes, the Class 2-A-2 Notes, the Class 2-A-3 Notes and the Class 2-A-4 Notes, in that order, the
remaining Group 1 Principal Distribution Amount (excluding any Overcollateralization Increase Amount
included therein) in reduction of the Note Balances, until the Note Balances thereof have been reduced
to zero; provided, that notwithstanding the foregoing order of priority, if on any Payment Date, the
aggregate Note Balance of the Subordinate Notes as of the day prior to such Payment Date is equal to
zero and the Overcollateralization Amount for the prior Payment Date is equal to zero, then such amount
shall be paid to the Group 2 Notes, pro rata, based on their respective Note Balances;
(ii) from the Group 2 Principal Remittance Amount,
first, sequentially to the Class 2-A-1 Notes, the Class 2-A-2 Notes, the Class 2-A-3 Notes and
the Class 2-A-4 Notes, in that order, the Group 2 Principal Distribution Amount (excluding any
Overcollateralization Increase Amount included therein) in reduction of the Note Balances, until the
Note Balances thereof have been reduced to zero; provided, that notwithstanding the foregoing order of
priority, if on any Payment Date, the aggregate Note Balance of the Subordinate Notes as of the day
prior to such Payment Date is equal to zero and the Overcollateralization Amount for the prior Payment
Date is equal to zero, then such amount shall be paid to the Group 2 Notes, pro rata, based on their
respective Note Balances;
second and following the payments pursuant to priority (D)(i) above, to the Class 1-A-1 Notes,
the remaining Group 2 Principal Distribution Amount (excluding any Overcollateralization Increase Amount
included therein) for that Payment Date, until the Note Balance thereof has been reduced to zero;
(iii) from the Principal Remittance Amount remaining, sequentially, to the Class M-1, Class
M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7 (allocated among the Class M-7 Notes, pro
rata based on their respective Note Balances), Class M-8 (allocated among the Class M-8 Notes, pro rata
based on their respective Note Balances), Class M-9 and M-10 Notes, in that order, the Principal
Distribution Amount remaining (excluding any Overcollateralization Increase Amount included therein) in
reduction of the Note Balances, until the Note Balances thereof have been reduced to zero;
(E) On each Payment Date, (1) on or after the Stepdown Date or (2) on which a Trigger
Event is not in effect, concurrently as follows:
(i) from the Group 1 Principal Remittance Amount,
first, to the Class 1-A-1 Notes, the Group 1 Senior Principal Distribution Amount for that
Payment Date, until the Note Balance thereof has been reduced to zero;
second and following the payments pursuant to priority (E)(ii) below, sequentially to the Class
2-A-1 Notes, the Class 2-A-2 Notes, the Class 2-A-3 Notes and the Class 2-A-4 Notes, in that order, the
Group 2 Senior Principal Distribution Amount remaining unpaid in reduction of the Note Balances, until
the Note Balances thereof have been reduced to zero; provided, that notwithstanding the foregoing order
of priority, if on any Payment Date, the aggregate Note Balance of the Subordinate Notes as of the day
prior to such Payment Date is equal to zero and the Overcollateralization Amount for the prior Payment
Date is equal to zero, then such amount shall be paid to the Group 2 Notes, pro rata, based on their
respective Note Balances;
(ii) from the Group 2 Principal Remittance Amount,
first, sequentially to the Class 2-A-1 Notes, the Class 2-A-2 Notes, the Class 2-A-3 Notes and
the Class 2-A-4 Notes, in that order, the Group 2 Senior Principal Distribution Amount in reduction of
the Note Balances, until the Note Balances thereof have been reduced to zero; provided, that
notwithstanding the foregoing order of priority, if on any Payment Date, the aggregate Note Balance of
the Subordinate Notes as of the day prior to such Payment Date is equal to zero and the
Overcollateralization Amount for the prior Payment Date is equal to zero, then such amount shall be paid
to the Group 2 Notes, pro rata, based on their respective Note Balances;
second and following the payments pursuant to priority (E)(i) above, to the Class 1-A-1 Notes,
the Group 1 Senior Principal Distribution Amount remaining unpaid for that Payment Date, until the Note
Balance thereof has been reduced to zero;
(iii) from the Principal Remittance Amount remaining, as follows
first, to the Class M-1 Notes, the Class M-1 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero;
second, to the Class M-2 Notes, the Class M-2 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero;
third, to the Class M-3 Notes, the Class M-3 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero;
fourth, to the Class M-4 Notes, the Class M-4 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero;
fifth, to the Class M-5 Notes, the Class M-5 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero;
sixth, to the Class M-6 Notes, the Class M-6 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero;
seventh, to the Class M-7 Notes, the Class M-7 Principal Distribution Amount for such Payment
Date (allocated among the Class M-7 Notes, pro rata based on their respective Note Balances), until the
Note Balances thereof has been reduced to zero;
eighth, to the Class M-8 Notes, the Class M-8 Principal Distribution Amount for such Payment
Date (allocated among the Class M-8 Notes, pro rata based on their respective Note Balances), until the
Note Balances thereof have been reduced to zero;
ninth, to the Class M-9 Notes, the Class M-9 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero; and
tenth, to the Class M-10 Notes, the Class M-10 Principal Distribution Amount for such Payment
Date, until the Note Balance thereof has been reduced to zero;
(F) From the Available Funds remaining for such Payment Date as follows:
first, to the Notes, the Overcollateralization Increase Amount for such Payment Date, in the
following order of priority:
(i) the Group 1 Allocation Percentage of the Overcollateralization Increase Amount
to the Group 1 Notes in reduction of the Note Balance, until the Note Balance thereof has been
reduced to zero;
(ii) the Group 2 Allocation Percentage of the Overcollateralization Increase Amount
to the Group 2 Notes (allocated among such notes in the order of priority set forth in clause
(D) above) in reduction of the Note Balance, until the Note Balances thereof have been reduced
to zero;
(iii) any remaining Overcollateralization Increase Amount, pro rata, to the Group 1
Notes and Group 2 Notes then entitled to principal in reduction of the Note Balance, until the
Note Balances thereof have been reduced to zero;
(iv) any remaining Overcollateralization Increase Amount sequentially, to the Class
M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7 (allocated among the
Class M-7 Notes, pro rata based on their respective Note Balances), Class M-8 (allocated among
the Class M-8 Notes, pro rata based on their respective Note Balances), Class M-9 and M-10
Notes, in that order, in each case in reduction of the Note Balance thereof, until the Note
Balance thereof has been reduced to zero;
second, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7 (allocated among the Class M-7 Notes, pro rata based on their respective Note Balances), Class
M-8 (allocated among the Class M-8 Notes, pro rata based on their respective Note Balances), Class M-9
and M-10 Notes, in that order, in each case, first (a) any related Class Interest Carryover Shortfall
and then (b) any related Allocated Realized Loss Amount;
third, concurrently and pro rata based on the related Basis Risk Shortfall Amount due to each
group, (i) to the Class 1-A-1 Notes, the related Basis Risk Shortfall Amount and (ii) to the Group 2
Notes, pro rata among the Group 2 Notes, the related Basis Risk Shortfall Amount
fourth, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7 (allocated among the Class M-7 Notes, pro rata based on their respective Note Balances), Class
M-8 (allocated among the Class M-8 Notes, pro rata based on their respective Note Balances), Class M-9
and M-10 Notes, in that order, the related Basis Risk Shortfall Amount;
fifth, to the Swap Provider, any Swap Termination Payments resulting from a Swap Provider
Trigger event; and
sixth, to the Certificate Paying Agent for deposit in the Certificate Distribution Account and
distribution pursuant to the Trust Agreement.
(b) On each Payment Date, all amounts representing Prepayment Charges in respect of the
Mortgage Loans received during the related Prepayment Period shall be remitted to the Certificate Paying Agent
for deposit in the Certificate Distribution Account and distribution pursuant to the Trust Agreement and shall not
be available for payment to the Holders of any Class of Notes.
(c) Following the foregoing payments, an amount equal to the amount of Subsequent
Recoveries deposited into the Collection Account pursuant to Section 3.10(a)(iii) of the Sale and Servicing
Agreement shall be applied to increase the Note Balance of the Class of Notes with the Highest Priority up to the
extent of such Realized Losses previously unreimbursed to that Class of Notes pursuant to Section 3.29. An
amount equal to the amount of any remaining Subsequent Recoveries shall be applied to increase the Note Balance
of the Class of Notes with the next Highest Priority, up to the amount of such Realized Losses previously
allocated to that Class of Notes pursuant to Section 3.29. Holders of such Notes will not be entitled to any
distribution in respect of interest on the amount of such increases for any Interest Accrual Period preceding the
Payment Date on which such increase occurs. Any such increases shall be applied to the Note Balance of each Note
of such Class in accordance with its respective Percentage Interest.
(d) On each Payment Date, after making the payments of the Available Funds as set forth
above, the Securities Administrator shall pay the amount on deposit in the Swap Account as follows:
first, concurrently, to the Class A Notes, any related Class Monthly Interest Amount and Class
Interest Carryover Shortfall, pro rata, to the extent remaining unpaid; provided, that for this purpose no Notes
held by the Seller, the Sponsor or any Affiliate shall receive such distribution;
second, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7-A and Class M-8-A Notes, in that order, any related Class Monthly Interest Amount and Class Interest
Carryover Shortfall, to the extent remaining unpaid;
third, to the Class A Notes and Subordinate Notes (other than the Class M-7-B, Class M-8-B,
Class M-9 and Class M-10 Notes), the Overcollateralization Deficiency Amount for such Payment Date, to the extent
remaining unpaid; provided, that for this purpose no Notes held by the Seller, the Sponsor or any Affiliate shall
receive such distribution;
fourth, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7-A and Class M-8-A Notes, in that order, any related Allocated Realized Loss Amount, to the extent
remaining unpaid;
fifth, to the Class A Notes and Subordinate Notes (other than the Class M-7-B, Class M-8-B,
Class M-9 and Class M-10 Notes) any related Basis Risk Shortfall Amount to the extent remaining unpaid; and
sixth, any remaining amounts to the Certificate Paying Agent for deposit in the Certificate
Distribution Account and distribution pursuant to the Trust Agreement
(e) On each Payment Date, the Securities Administrator shall deposit into the Cap Account,
amounts if any, received from the Cap Provider. On each Payment Date, following the payments on the Notes from
amounts on deposit in the Swap Account as described above, the Securities Administrator will withdraw from
amounts in the Cap Account to make the following payments in the following order of priority:
first, concurrently, to the Class A Notes, any related Class Monthly Interest Amount and Class
Interest Carryover Shortfall, pro rata, to the extent remaining unpaid; provided, that for this purpose no Notes
held by the Seller, the Sponsor or any Affiliate shall receive such distribution;
second, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7-A and Class M-8-A Notes, in that order, any related Class Monthly Interest Amount and Class Interest
Carryover Shortfall, to the extent remaining unpaid;
third, to the Class A Notes and Subordinate Notes (other than the Class M-7-B, Class M-8-B,
Class M-9 and Class M-10 Notes), the Overcollateralization Deficiency Amount for such Payment Date, to the extent
remaining unpaid; provided, that for this purpose no Notes held by the Seller, the Sponsor or any Affiliate shall
receive such distribution;
fourth, sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6,
Class M-7-A and Class M-8-A Notes, in that order, any related Allocated Realized Loss Amount, to the extent
remaining unpaid;
fifth, to the Class A Notes and Subordinate Notes (other than the Class M-7-B, Class M-8-B,
Class M-9 and Class M-10 Notes) any related Basis Risk Shortfall Amount to the extent remaining unpaid; provided,
that for this purpose no Notes held by the Seller, the Sponsor or any Affiliate shall receive such distribution;
and
sixth, any remaining amounts to the Certificate Paying Agent for deposit in the Certificate
Distribution Account and distribution pursuant to the Trust Agreement
(f) Each payment with respect to a Book-Entry Note shall be paid to the Depository, as
Holder thereof, and the Depository shall be responsible for crediting the amount of such payment to the accounts
of its Depository Participants in accordance with its normal procedures. Each Depository Participant shall be
responsible for disbursing such payment to the Note Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which it acts as agent. Each brokerage
firm shall be responsible for disbursing funds to the Note Owners that it represents. None of the Securities
Administrator, the Indenture Trustee, the Note Registrar, the Paying Agent, the Depositor, the Servicer or the
Master Servicer shall have any responsibility therefor except as otherwise provided by this Indenture or
applicable law.
(g) 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 pursuant to the Trust Agreement.
(h) Any installment of interest or principal, if any, payable on any Note that is
punctually paid or duly provided for by the Issuing Entity on the applicable Payment Date shall, if such Holder
shall have so requested at least five Business Days prior to the related Record Date, be paid to each Holder of
record on the preceding Record Date, by wire transfer to an account specified in writing by such Holder as of the
preceding Record Date or in all other cases or if no such instructions have been delivered to the Securities
Administrator, by check to such Noteholder mailed to such Holder's address as it appears in the Note Register in
the amount required to be paid to such Holder on such Payment Date pursuant to such Holder's Notes; provided,
however, that the Securities Administrator shall not pay to such Holders any amount required to be withheld from
a payment to such Holder by the Code.
(i) The principal of each Note shall be due and payable in full on the Final Stated
Maturity Date for such Note. All principal payments on the Notes shall be made to the Noteholders entitled
thereto in accordance with the Percentage Interests represented by such Notes. The Securities Administrator
shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding
the Final Stated Maturity 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 Stated Maturity Date or other final Payment Date and shall specify that
payment of the principal amount and any interest due with respect to such Note at the Final Stated Maturity Date
or other final Payment Date will be payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for such final payment. No interest shall accrue on
the Notes on or after the Final Stated Maturity Date or any such other final Payment Date.
Section 3.06. Protection of Trust Estate.
(a) The Issuing Entity 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 Issuing Entity, the Servicer or the Master Servicer to enforce any
of the rights to the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of the Indenture
Trustee and the Noteholders in such Trust Estate against the claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Securities Administrator 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 (or from the jurisdiction in which it was held as described in the
Opinion of Counsel delivered on the Closing Date pursuant to Section 3.07(a) hereof, or if no Opinion of
Counsel has yet been delivered pursuant to Section 3.07(b) hereof, unless the Securities Administrator 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 Issuing Entity hereby designates the Securities Administrator its agent and
attorney-in-fact to sign any financing statement, continuation statement or other instrument required to be
signed pursuant to this Section 3.06 upon the Issuing Entity's preparation thereof and delivery to the Securities
Administrator.
Section 3.07. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuing Entity shall furnish to the Indenture Trustee, the
Securities Administrator 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 April 15th in each calendar year, beginning in 2008, the Issuing Entity,
upon request, shall furnish to the Indenture Trustee and the Securities Administrator an Opinion of Counsel at
the expense of the Issuing Entity either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and re-filing of this Indenture, 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 re-filing 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 31st in the following calendar year.
Section 3.08. Performance of Obligations.
The Issuing Entity 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.
The Issuing Entity 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 Issuing Entity shall be deemed to be action taken by the Issuing Entity.
The Issuing Entity 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
amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of,
any of the documents relating to the Mortgage Loans or any such instrument, except such actions as the Servicer
or the Master Servicer is expressly permitted to take in the Sale and Servicing Agreement. The Indenture Trustee
and the Securities Administrator may exercise the rights of the Issuing Entity to direct the actions of the
Servicer and/or the Master Servicer pursuant to the Sale and Servicing Agreement.
The Issuing Entity may retain an administrator and may enter into contracts with other Persons
for the performance of the Issuing Entity's obligations hereunder, and performance of such obligations by such
Persons shall be deemed to be performance of such obligations by the Issuing Entity.
Section 3.09. Negative Covenants. So long as any Notes are Outstanding, the Issuing Entity
shall not:
(i) except as expressly permitted by this Indenture, sell, transfer, exchange or
otherwise dispose of the Trust Estate;
(ii) claim any credit on, or make any deduction from the principal or interest
payable in respect of, the Notes (other than amounts properly withheld from such payments under
the Code) or assert any claim against any present or former Noteholder by reason of the payment
of the taxes levied or assessed upon any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture to be impaired, or
permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may be expressly permitted hereby, (B) permit any
lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the proceeds thereof or (C) permit
the lien of this Indenture not to constitute a valid first priority security interest in the
Trust Estate; or
(iv) waive or impair, or fail to assert rights under, the Mortgage Loans, or impair
or cause to be impaired the Issuing Entity's interest in the Mortgage Loans, the Assignment
Agreement or in any Basic Document, if any such action would materially and adversely affect
the interests of the Noteholders.
Section 3.10. [Reserved].
Section 3.11. [Reserved.]
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 Originator in the Purchase Agreement concerning the Originator and the Mortgage Loans
to the same extent as though such representations and warranties were made directly to the Indenture Trustee. If
a Responsible Officer of the Indenture Trustee or the Securities Administrator has actual knowledge of any breach
of any representation or warranty made by the Originator in the Purchase Agreement, the Indenture Trustee or the
Securities Administrator shall promptly notify the Originator of such finding and the Originator's obligation to
cure such defect or repurchase or substitute for the related Mortgage Loan.
Section 3.13. Amendments to Sale and Servicing Agreement.
The Issuing Entity covenants with the Indenture Trustee and the Securities Administrator that
it will not enter into any amendment or supplement to the Sale and Servicing Agreement without the prior written
consent of the Indenture Trustee and the Securities Administrator.
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee.
Solely for purposes of perfection under Section 9-305 of the UCC or other similar applicable
law, rule or regulation of the state in which such property is held by the Servicer, the Issuing Entity, the
Indenture Trustee and the Securities Administrator hereby acknowledge that the Servicer is acting as bailee of
the Indenture Trustee in holding amounts on deposit in the Collection Account, as well as its 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 bailee arrangement, 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 UCC
of the state in which such property is held by the Servicer. Neither the Indenture Trustee nor the Securities
Administrator shall be liable with respect to such documents, monies or items while in possession of the Servicer.
Section 3.15. Investment Company Act.
The Issuing Entity shall not become an "investment company" or be 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 Issuing Entity 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. Issuing Entity May Consolidate, etc.
(a) The Issuing Entity shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuing Entity) 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 and the
Securities Administrator, in form reasonably satisfactory to the Indenture Trustee and the
Securities Administrator, the due and punctual payment of the principal of and interest on all
Notes, and all amounts payable to the Indenture Trustee and the Securities Administrator, the
payment to the Certificate Paying Agent of all amounts due to the Certificateholders, and the
performance or observance of every agreement and covenant of this Indenture on the part of the
Issuing Entity 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 Issuing Entity that such
transaction shall not cause the rating of the Notes to be reduced, suspended or withdrawn or to
be considered by either Rating Agency to be below investment grade;
(iv) the Issuing Entity shall have received an Opinion of Counsel (and shall have
delivered a copy thereof to the Indenture Trustee and the Securities Administrator) to the
effect that such transaction will not (A) result in a "substantial modification" of the Notes
under Treasury Regulation section 1.1001-3, or adversely affect the status of the Notes as
indebtedness for federal income tax purposes, or (B) if 100% of the Certificates are not owned
by a REIT, a "qualified REIT subsidiary" or by an entity that is wholly-owned by a REIT or a
"qualified REIT subsidiary" and disregarded for federal income tax purposes, 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 Issuing Entity shall have delivered to the Indenture Trustee and the
Securities Administrator 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 or relating to such transaction have been
complied with (including any filing required by the Exchange Act), and that such supplemental
indenture is enforceable; and
(vii) the consent of the Holders of not less than 50% of the aggregate Note Balance
of the Notes has been obtained.
Section 3.17. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuing Entity in accordance with Section
3.16(a), the Person formed by or surviving such consolidation or merger (if other than the Issuing Entity) shall
succeed to, and be substituted for, and may exercise every right and power of, the Issuing Entity under this
Indenture with the same effect as if such Person had been named as the Issuing Entity herein.
(b) Upon a conveyance or transfer of all the assets and properties of the Issuing Entity
as permitted under this Agreement, the Issuing Entity will be released from every covenant and agreement of this
Indenture to be observed or performed on the part of the Issuing Entity with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee and the Securities Administrator of such conveyance
or transfer.
Section 3.18. No Other Business.
The Issuing Entity shall not engage in any business other than financing, purchasing, owning
and selling and managing the Mortgage Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities incidental thereto.
Section 3.19. No Borrowing.
The Issuing Entity shall not issue, incur, assume, guarantee or otherwise become liable,
directly or indirectly, for any indebtedness except for the Notes under this Indenture.
Section 3.20. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by this Indenture or the Basic Documents, the Issuing Entity 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 Issuing Entity shall not make any expenditure (by long-term or operating lease or
otherwise) for capital assets (either realty or personalty).
Section 3.22. Determination of Note Rate.
On each Interest Determination Date, the Securities Administrator shall determine LIBOR and the
related Note Rate for each Class of Notes for the following Interest Accrual Period. The establishment of LIBOR
on each Interest Determination Date by the Securities Administrator and the Securities Administrator's
calculation of the rate of interest applicable to each Class of Notes for the related Interest Accrual Period
shall (in the absence of manifest error) be final and binding.
Section 3.23. Restricted Payments.
The Issuing Entity shall not, directly or indirectly, (i) pay any dividend or make any
distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the Issuing Entity or otherwise with
respect to any ownership or equity interest or security in or of the Issuing Entity, (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 Issuing Entity may make, or
cause to be made, (x) distributions and payments to the Owner Trustee, the Indenture Trustee, the Securities
Administrator, the Master Servicer, the Servicer, the Certificate Registrar, the Certificate Paying Agent, the
Noteholders 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 Master Servicer or the Servicer pursuant to
the terms of the Sale and Servicing Agreement. The Issuing Entity will not, directly or indirectly, make
payments to or distributions from the Note Account except in accordance with this Indenture and the Basic
Documents.
Section 3.24. Notice of Events of Default.
The Issuing Entity shall give the Indenture Trustee, the Securities Administrator and each
Rating Agency 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 Securities Administrator, the Issuing Entity 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 Noteholders.
On each Payment Date, the Securities Administrator and the Certificate Registrar shall prepare
and make available on the Securities Administrator's website, https://www.ctslink.com (or deliver at the
recipient's option), to each Noteholder and Certificateholder the most recent statement prepared by the Securities
Administrator pursuant to Section 7.05 hereof.
Section 3.27. [Reserved].
Section 3.28. Certain Representations Regarding the Trust Estate.
(a) With respect to that portion of the Collateral described in clauses (a) through (d) of
the definition of Trust Estate, the Issuing Entity represents to the Indenture Trustee and the Securities
Administrator that:
(i) This Indenture creates a valid and continuing security interest (as defined in
the applicable UCC) in the Collateral in favor of the Indenture Trustee, which security
interest is prior to all other liens, and is enforceable as such as against creditors of and
purchasers from the Issuing Entity.
(ii) The Collateral constitutes "deposit accounts" or "instruments," as applicable,
within the meaning of the applicable UCC.
(iii) The Issuing Entity owns and has good and marketable title to the Collateral,
free and clear of any lien, claim or encumbrance of any Person.
(iv) The Issuing Entity has taken all steps necessary to cause the Indenture
Trustee to become the account holder of the Collateral.
(v) Other than the security interest granted to the Indenture Trustee pursuant to
this Indenture, the Issuing Entity has not pledged, assigned, sold, granted a security interest
in, or otherwise conveyed any of the Collateral.
(vi) The Collateral is not in the name of any Person other than the Issuing Entity
or the Indenture Trustee. The Issuing Entity has not consented to the bank maintaining the
Collateral to comply with instructions of any Person other than the Indenture Trustee.
(b) With respect to that portion of the Collateral described in clause (e), the Issuing
Entity represents to the Indenture Trustee and the Securities Administrator that:
(i) This Indenture creates a valid and continuing security interest (as defined in
the applicable UCC) in the Collateral in favor of the Indenture Trustee, which security
interest is prior to all other liens, and is enforceable as such as against creditors of and
purchasers from the Issuing Entity.
(ii) The Collateral constitutes "general intangibles" within the meaning of the
applicable UCC.
(iii) The Issuing Entity owns and has good and marketable title to the Collateral,
free and clear of any lien, claim or encumbrance of any Person.
(iv) Other than the security interest granted to the Indenture Trustee pursuant to
this Indenture, the Issuing Entity has not pledged, assigned, sold, granted a security interest
in, or otherwise conveyed any of the Collateral.
(c) With respect to any Collateral in which a security interest may be perfected by
filing, the Issuing Entity has not authorized the filing of, and is not aware of any financing statements
against, the Issuing Entity, that include a description of collateral covering such Collateral, other than any
financing statement relating to the security interest granted to the Indenture Trustee hereunder or that has been
terminated. The Issuing Entity is not aware of any judgment or tax lien filings against the Issuing Entity.
(d) The Issuing Entity has caused or will have caused, within ten days, the filing of all
appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable
law in order to perfect the security interest in all Collateral granted to the Indenture Trustee hereunder in
which a security interest may be perfected by filing and the Issuing Entity will cause such security interest to
be maintained. Any financing statement that is filed in connection with this Section 3.28 shall contain a
statement that a purchase or security interest in any collateral described therein will violate the rights of the
secured party named in such financing statement.
(e) The foregoing representations may not be waived and shall survive the issuance of the
Notes.
Section 3.29. Allocation of Realized Losses.
(a) Any Realized Losses on the Mortgage Loans will have the effect of first reducing the
Excess Interest for the related Payment Date and second, reducing the Overcollateralization Amount. If on any
Payment Date the aggregate Note Balance of the Notes (after all payments of principal on such Payment Date have
been made) exceed the aggregate Principal Balance of the Mortgage Loans (as of the last day of the related Due
Period and after giving effect to principal prepayments received during the related Prepayment Period) the
Securities Administrator shall allocate such excess first, to the Class M-10 Notes, in reduction of the Note
Balance thereof, until reduced to zero, second, to the Class M-9 Notes, in reduction of the Note Balance thereof,
until reduced to zero, third, to the Class M-8 Notes, in reduction of the Note Balance thereof (allocated among
the Class M-8 Notes, pro rata based on their respective Note Balances), until reduced to zero, fourth, to the
Class M-7 Notes, in reduction of the Note Balance thereof (allocated among the Class M-7 Notes, pro rata based on
their respective Note Balances), until reduced to zero, fifth, to the Class M-6 Notes, in reduction of the Note
Balance thereof, until reduced to zero, sixth, to the Class M-5 Notes, in reduction of the Note Balance thereof,
until reduced to zero, seventh, to the Class M-4 Notes, in reduction of the Note Balance thereof, until reduced
to zero, eighth, to the Class M-3 Notes, in reduction of the Note Balance thereof, until reduced to zero, ninth,
to the Class M-2 Notes, in reduction of the Note Balance thereof, until reduced to zero and tenth, to the Class
M-1 Notes, in reduction of the Note Balance thereof, until reduced to zero.
(b) All Realized Losses to be allocated to the Note Balances of all Classes on any Payment
Date shall be so allocated after the actual payments to be made on such date as provided above. All references
above to the Note Balance of any Class of Notes shall be to the Note Balance of such Class immediately prior to
the relevant Payment Date, before reduction thereof by any Realized Losses, in each case to be allocated to such
Class of Notes, on such Payment Date.
Any allocation of Realized Losses to a Subordinate Note on any Payment Date shall be made by
reducing the Note Balance thereof by the amount so allocated. No allocations of any Realized Losses shall be
made to the Note Balances of the Class A Notes.
As used herein, an allocation of a Realized Loss on a "pro rata basis" among two or more
specified Classes of Notes means an allocation on a pro rata basis, among the various Classes so specified, to
each such Class of Notes on the basis of their then outstanding Note Balances prior to giving effect to payments
to be made on such Payment Date. All Realized Losses and all other losses allocated to a Class of Notes
hereunder will be allocated among the Notes of such Class in proportion to the Percentage Interests evidenced
thereby.
ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.01. The Notes.
Each Class of Notes shall be registered in the name of a nominee designated by the Depository.
Beneficial Owners will hold interests in the Notes through the book-entry facilities of the Depository in minimum
initial Note Balances of $25,000 and integral multiples of $1 in excess thereof; provided that the Notes must be
purchased in minimum total investments of $100,000 per Class.
The Securities Administrator may for all purposes (including the making of payments due on the
Notes) deal with the Depository as the authorized representative of the Beneficial Owners with respect to the
Notes for the purposes of exercising the rights of Holders of the Notes hereunder. Except as provided in the next
succeeding paragraph of this Section 4.01, the rights of Beneficial Owners with respect to the Notes shall be
limited to those established by law and agreements between such Beneficial Owners and the Depository and
Depository Participants. Except as provided in Section 4.08 hereof, Beneficial Owners shall not be entitled to
definitive notes for the Notes as to which they are the Beneficial Owners. Requests and directions from, and
votes of, the Depository as Holder of the Notes shall not be deemed inconsistent if they are made with respect to
different Beneficial Owners. The Securities Administrator may establish a reasonable record date in connection
with solicitations of consents from or voting by Noteholders and give notice to the Depository of such record
date. Without the consent of the Issuing Entity and the Securities Administrator, no Note may be transferred by
the Depository except to a successor Depository that agrees to hold such Note for the account of the Beneficial
Owners.
In the event the Depository Trust Company resigns or is removed as Depository, the Securities
Administrator with the approval of the Issuing Entity may appoint a successor Depository. If no successor
Depository has been appointed within 30 days of the effective date of the Depository's resignation or removal,
each Beneficial Owner shall be entitled to certificates representing the Notes it beneficially owns in the manner
prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuing Entity by the Owner
Trustee, not in its individual capacity but solely as Owner Trustee, authenticated by the Securities
Administrator and delivered by the Securities Administrator to or upon the order of the Issuing Entity.
Section 4.02. Registration of and Limitations on Transfer and Exchange of Notes; Appointment
of Note Registrar and Certificate Registrar.
The Securities Administrator shall cause to be kept at the Corporate Trust Office a Note
Register in which, subject to such reasonable regulations as it may prescribe, the Note Registrar shall provide
for the registration of Notes and of transfers and exchanges of Notes as herein provided.
Subject to the restrictions and limitations set forth below, upon surrender for registration of
transfer of any Note at the Corporate Trust Office, the Issuing Entity shall execute and the Note Registrar shall
authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes in
authorized initial Note Balances evidencing the same Class and aggregate Percentage Interests.
Subject to the foregoing, at the option of the Noteholders, Notes may be exchanged for other
Notes of like tenor and in authorized initial Note Balances evidencing the same Class and aggregate Percentage
Interests upon surrender of the Notes to be exchanged at the Corporate Trust Office of the Note Registrar.
Whenever any Notes are so surrendered for exchange, the Issuing Entity shall execute and the Securities
Administrator shall authenticate and deliver the Notes which the Noteholder making the exchange is entitled to
receive. Each Note presented or surrendered for registration of transfer or exchange shall (if so required by
the Note Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Note Registrar duly executed by the Holder thereof or his attorney duly authorized in writing
with such signature guaranteed by a commercial bank or trust company located or having a correspondent located in
the city of New York. Notes delivered upon any such transfer or exchange will evidence the same obligations, and
will be entitled to the same rights and privileges, as the Notes surrendered.
Notwithstanding anything to the contrary contained herein, the Securities Administrator shall
not register transfer of any of the Notes owned by the Issuing Entity or by the direct or indirect owner of the
Owner Trust Certificates on the Closing Date when such entity or owner proposes to transfer such Notes unless in
connection with such proposed transfer, the Issuing Entity and the Indenture Trustee have received an Opinion of
Counsel, satisfactory to the Indenture Trustee, that such Notes will be treated as indebtedness for U.S. federal
income tax purposes.
No service charge shall be made for any registration of transfer or exchange of Notes, but the
Note Registrar shall require payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes.
The Issuing Entity hereby appoints the Securities Administrator as (i) 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 and (ii) Note Registrar under this Indenture. The Securities Administrator hereby accepts such
appointments.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes.
If (i) any mutilated Note is surrendered to the Securities Administrator, or the Securities
Administrator receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there
is delivered to the Securities Administrator such security or indemnity as may be required by it to hold the
Issuing Entity, the Indenture Trustee and the Securities Administrator harmless, then, in the absence of notice
to the Issuing Entity, the Note Registrar, the Indenture Trustee or the Securities Administrator that such Note
has been acquired by a bona fide purchaser, and provided that the requirements of Section 8-405 of the UCC are
met, the Issuing Entity shall execute, and upon its request the Securities Administrator shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note;
provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become
or within seven days shall be due and payable, instead of issuing a replacement Note, the Issuing Entity may pay
such destroyed, lost or stolen Note when so due or payable without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuing Entity and the Securities Administrator shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such
replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person,
except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor
to the extent of any loss, damage, cost or expense incurred by the Issuing Entity, the Indenture Trustee or the
Securities Administrator in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03, the Issuing Entity may
require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the
Indenture Trustee and the Securities Administrator) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in replacement of any mutilated,
destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuing
Entity, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen
Notes.
Section 4.04. Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Note, the Issuing Entity, the
Indenture Trustee, the Securities Administrator, the Paying Agent and any agent of any of them may treat the
Person in whose name any Note is registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Issuing Entity, the Indenture Trustee, the
Securities Administrator the Paying Agent nor any agent of any of them shall be affected by notice to the
contrary..
Section 4.05. Cancellation.
All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if
surrendered to any Person other than the Securities Administrator, be delivered to the Securities Administrator
and shall be promptly cancelled by the Securities Administrator. The Issuing Entity may at any time deliver to
the Securities Administrator for cancellation any Notes previously authenticated and delivered hereunder which
the Issuing Entity may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Securities Administrator. No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section 4.05, except as expressly permitted by this Indenture. All cancelled
Notes may be held or disposed of by the Securities Administrator in accordance with its standard retention or
disposal policy as in effect at the time unless the Issuing Entity shall direct by an Issuing Entity Request that
they be destroyed or returned to it; provided, however, that such Issuing Entity Request is timely and the Notes
have not been previously disposed of by the Securities Administrator.
Section 4.06. Book-Entry Notes.
The Notes, upon original issuance, will be issued in the form of typewritten Notes representing
the Book-Entry Notes, to be delivered to The Depository Trust Company, the initial Depository, by, or on behalf
of, the Issuing Entity. The Notes shall initially be registered on the Note Register in the name of Cede & Co.,
the nominee of the initial Depository, and no Beneficial Owner will receive a Definitive Note representing such
Beneficial Owner's interest in such Note, except as provided in Section 4.08. With respect to such Notes, unless
and until definitive, fully registered Notes (the "Definitive Notes") have been issued to Beneficial Owners
pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in full force and effect;
(ii) the Note Registrar, the Paying Agent, the Indenture Trustee and the Securities
Administrator shall be entitled to deal with the Depository for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving of instructions
or directions hereunder) as the sole holder of the Notes, and shall have no obligation to the
Beneficial Owners of the Notes;
(iii) to the extent that the provisions of this Section 4.06 conflict with any other
provisions of this Indenture, the provisions of this Section 4.06 shall control;
(iv) the rights of Beneficial Owners shall be exercised only through the Depository
and shall be limited to those established by law and agreements between such Owners of Notes
and the Depository and/or the Depository Participants. Unless and until Definitive Notes are
issued pursuant to Section 4.08, the initial Depository will make book-entry transfers among
the Depository Participants and receive and transmit payments of principal of and interest on
the Notes to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be taken based upon
instructions or directions of Holders of Notes evidencing a specified percentage of the
aggregate Note Balance of the Notes, the Depository shall be deemed to represent such
percentage with respect to the Notes only to the extent that it has received instructions to
such effect from Beneficial Owners and/or Depository Participants owning or representing,
respectively, such required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Securities Administrator and the Indenture Trustee.
Section 4.07. Notices to Depository.
Whenever a notice or other communication to the Note Holders is required under this Indenture,
unless and until Definitive Notes shall have been issued to Beneficial Owners pursuant to Section 4.08, the
Securities Administrator shall give all such notices and communications specified herein to be given to Holders
of the Notes to the Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes.
If (i) the Securities Administrator determines that the Depository is no longer willing or able
to properly discharge its responsibilities with respect to the Notes and the Securities Administrator is unable
to locate a qualified successor or (ii) after the occurrence of an Event of Default, Beneficial Owners of Notes
representing beneficial interests aggregating at least a majority of the Note Balance of the Notes advise the
Depository in writing that the continuation of a book-entry system through the Depository is no longer in the
best interests of the Beneficial Owners, then the Depository shall notify all Beneficial Owners and the
Securities Administrator of the occurrence of any such event and of the availability of Definitive Notes to
Beneficial Owners requesting the same. Upon surrender to the Securities Administrator of the typewritten Notes
representing the Book-Entry Notes by the Depository, accompanied by registration instructions, the Issuing Entity
shall execute and the Securities Administrator shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuing Entity, the Note Registrar, the Indenture Trustee or the
Securities Administrator shall be liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes, the
Securities Administrator shall recognize the Holders of the Definitive Notes as Noteholders.
Section 4.09. Tax Treatment.
The Issuing Entity has entered into this Indenture, and the Notes will be issued with the
intention that, for federal, state and local income, single business and franchise tax purposes, the Notes will
qualify as indebtedness. The Issuing Entity, the Indenture Trustee and the Securities Administrator (in
accordance with Section 6.06 hereof), by entering into this Indenture, and each Noteholder, by its acceptance of
its Note (and each Beneficial Owner by its acceptance of an interest in the applicable Book-Entry Note), agree to
treat the Notes for federal, state and local income, single business and franchise tax purposes as indebtedness.
Section 4.10. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes,
(iii) rights of Noteholders to receive payments of principal thereof and interest thereon, (iv) Sections 3.03,
3.04, 3.06, 3.09, 3.17, 3.19 and 3.20, (v) the rights, obligations and immunities of the Indenture Trustee and
the Securities Administrator hereunder (including the rights of the Indenture Trustee and the Securities
Administrator under Section 6.07 and the obligations of the Securities Administrator under Section 4.11) and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property so deposited with the Indenture
Trustee payable to all or any of them, and the Indenture Trustee, on demand of and at the expense of the Issuing
Entity, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect
to the Notes and shall release and deliver the Collateral to or upon the order of the Issuing Entity, when:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i) Notes that have been
destroyed, lost or stolen and that have been replaced or paid as provided in Section 4.03 hereof and
(ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in
trust by the Issuing Entity and thereafter repaid to the Issuing Entity or discharged from such trust,
as provided in Section 3.03) have been delivered to the Securities Administrator for cancellation; or
(2) all Notes not theretofore delivered to the Securities Administrator for cancellation
(a) have become due and payable, (b) will become due and payable at the Final Stated Maturity Date
within one year, or (c) have been called for early redemption pursuant to Section 8.07 hereof, and the
Issuing Entity, in the case of (a) or (b) above, has irrevocably deposited or caused to be irrevocably
deposited with the Securities Administrator cash (which cash shall come from payments received on the
Mortgage Loans), in trust for such purpose, in an amount sufficient to pay and discharge the entire
indebtedness on such Notes then outstanding not theretofore delivered to the Securities Administrator
for cancellation when due on the Final Stated Maturity Date or other final Payment Date, or, in the case
of (c) above, the Issuing Entity shall have complied with all requirements of Section 8.07 hereof,
(B) the Issuing Entity has paid or caused to be paid all other sums payable hereunder,
pursuant to the terms of this Indenture; and
(C) the Issuing Entity has delivered to the Indenture Trustee and the Securities
Administrator 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 Issuing Entity 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 Securities Administrator pursuant to Section 4.10 hereof shall be
held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent or the Issuing Entity, Certificate Paying Agent as designee
of the Issuing Entity, as the Securities Administrator may determine, to the Holders of Notes or Certificates, 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. [Reserved].
Section 4.13. Repayment of Monies Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Person other than the Securities Administrator under the provisions of this Indenture
with respect to such Notes shall, upon demand of the Issuing Entity, be paid to the Securities Administrator 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 Notes.
Pending the preparation of any Definitive Notes, the Issuing Entity may execute and upon its
written direction, the Securities Administrator may authenticate and make available for delivery, temporary Notes
that are printed, lithographed, typewritten, photocopied or otherwise produced, in any denomination,
substantially of the tenor of the Definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuing Entity will cause Definitive Notes to be prepared
without unreasonable delay. After the preparation of the Definitive Notes, the temporary Notes shall be
exchangeable for Definitive Notes upon surrender of the temporary Notes at the Corporate Trust Office of the
Securities Administrator, without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Issuing Entity shall execute and the Securities Administrator shall authenticate and make
available for delivery, in exchange therefor, Definitive Notes of authorized denominations and of like tenor,
class and aggregate principal amount. Until so exchanged, such temporary Notes shall in all respects be entitled
to the same benefits under this Indenture as Definitive Notes.
Section 4.15. Representation Regarding ERISA.
By acquiring an Offered Note or interest therein, each Holder of such Note or Beneficial Owner
of any such interest will be deemed to represent that either (1) it is not acquiring the Note with Plan Assets or
(2) (A) the acquisition, holding and transfer of such Note will not give rise to a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code and (B) the Notes are rated investment grade
or better and such person believes that the Notes are properly treated as indebtedness without substantial equity
features for purposes of the Department of Labor ("DOL") regulation 29 C.F.R. § 2510.3-101, and agrees to so
treat the Notes. Alternatively, regardless of the rating of the Notes, such person may provide the Securities
Administrator with an Opinion of Counsel, which Opinion of Counsel will not be at the expense of the Trust, the
Issuing Entity, the Seller, the Depositor, the Underwriter, the Owner Trustee, the Indenture Tr