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INDENTURE
among
THORNBURG MORTGAGE SECURITIES TRUST 2007-3,
Issuer,
LASALLE BANK NATIONAL ASSOCIATION,
Indenture Trustee
and
WELLS FARGO BANK, N.A.,
Securities Administrator
Dated as of July 1, 2007
THORNBURG MORTGAGE SECURITIES TRUST 2007-3
MORTGAGE-BACKED NOTES, SERIES 2007-3
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.................................................................................2
Section 1.02 Rules of Construction.......................................................................9
ARTICLE II THE NOTES
Section 2.01 Form.......................................................................................10
Section 2.02 Execution, Authentication and Delivery.....................................................11
Section 2.03 Limitations on Transfer of the Notes.......................................................14
Section 2.04 Registration; Registration of Transfer and Exchange........................................16
Section 2.05 Mutilated, Destroyed, Lost or Stolen Notes.................................................17
Section 2.06 Persons Deemed Owners......................................................................18
Section 2.07 Payment of Principal and Interest.........................................................18
Section 2.08 Cancellation...............................................................................20
Section 2.09 Release of Collateral......................................................................20
Section 2.10 Book-Entry Notes...........................................................................20
Section 2.11 Notices to Clearing Agency.................................................................21
Section 2.12 Definitive Notes...........................................................................21
Section 2.13 Tax Treatment..............................................................................22
Section 2.14 Restrictions on Transfer and Retention of Beneficial Ownership Interest in the
Privately Offered Notes....................................................................22
ARTICLE III COVENANTS
Section 3.01 Payment of Principal and Interest..........................................................23
Section 3.02 Maintenance of Office or Agency............................................................24
Section 3.03 Money for Payments to be Held in Trust.....................................................24
Section 3.04 Existence..................................................................................26
Section 3.05 Protection of Collateral...................................................................26
Section 3.06 Opinions as to Collateral..................................................................27
Section 3.07 Performance of Obligations.................................................................27
Section 3.08 Negative Covenants.........................................................................28
Section 3.09 Annual Statement as to Compliance..........................................................29
Section 3.10 Treatment of Notes as Debt for Tax Purposes................................................29
Section 3.11 No Other Business..........................................................................29
Section 3.12 No Borrowing...............................................................................29
Section 3.13 Guarantees, Loans, Advances and Other Liabilities..........................................30
Section 3.14 Capital Expenditures.......................................................................30
Section 3.15 Removal of Administrator...................................................................30
Section 3.16 Restricted Payments........................................................................30
Section 3.17 Notice of Events of Default................................................................30
Section 3.18 Further Instruments and Acts...............................................................30
Section 3.19 Covenants of the Issuer....................................................................30
Section 3.20 Representations and Warranties of the Issuer...............................................31
ARTICLE IV SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture....................................................32
Section 4.02 Application of Trust Money.................................................................33
Section 4.03 Repayment of Moneys Held by Paying Agent...................................................33
Section 4.04 Trust Money Received by Indenture Trustee..................................................33
ARTICLE V EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default..........................................................................33
Section 5.02 Acceleration of Maturity; Rescission and Annulment.........................................35
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..................35
Section 5.04 Remedies; Priorities.......................................................................38
Section 5.05 Optional Preservation of the Collateral....................................................39
Section 5.06 Limitation of Suits........................................................................39
Section 5.07 Unconditional Rights of Noteholders To Receive Principal and Interest......................40
Section 5.08 Restoration of Rights and Remedies.........................................................40
Section 5.09 Rights and Remedies Cumulative.............................................................41
Section 5.10 Delay or Omission Not a Waiver.............................................................41
Section 5.11 Control by Noteholders.....................................................................41
Section 5.12 Waiver of Past Defaults....................................................................41
Section 5.13 Undertaking for Costs......................................................................42
Section 5.14 Waiver of Stay or Extension Laws...........................................................42
Section 5.15 Action on Notes............................................................................42
Section 5.16 Performance and Enforcement of Certain Obligations.........................................43
ARTICLE VI THE INDENTURE TRUSTEE
Section 6.01 Duties of Indenture Trustee................................................................43
Section 6.02 Rights of Indenture Trustee................................................................45
Section 6.03 Individual Rights of Indenture Trustee.....................................................46
Section 6.04 Indenture Trustee's Disclaimer.............................................................46
Section 6.05 Notice of Defaults.........................................................................47
Section 6.06 Reports by Securities Administrator to Holders.............................................47
Section 6.07 Compensation and Indemnity.................................................................47
Section 6.08 Replacement of Indenture Trustee...........................................................48
Section 6.09 Successor Indenture Trustee by Merger......................................................48
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee..........................49
Section 6.11 Eligibility; Disqualification..............................................................50
Section 6.12 Representations and Warranties.............................................................50
Section 6.13 Preferential Collection of Claims Against Issuer...........................................51
Section 6.14 Reporting Requirements of the Commission...................................................51
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS
Section 7.01 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders.....................53
Section 7.02 Preservation of Information; Communications to Noteholders.................................53
Section 7.03 Reports by Issuer..........................................................................54
Section 7.04 Reports by Indenture Trustee...............................................................54
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money........................................................................55
Section 8.02 Note Payment Account and Certificate Distribution Account..................................55
Section 8.03 General Provisions Regarding Accounts......................................................55
Section 8.04 Release of Collateral......................................................................55
ARTICLE IX SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Noteholders.....................................56
Section 9.02 Supplemental Indentures with Consent of Noteholders........................................57
Section 9.03 Execution of Supplemental Indentures.......................................................58
Section 9.04 Effect of Supplemental Indenture...........................................................58
Section 9.05 Conformity with Trust Indenture Act........................................................59
Section 9.06 Reference in Notes to Supplemental Indentures..............................................59
Section 9.07 Amendments to Trust Agreement..............................................................59
Section 9.08 Opinion of Counsel.........................................................................59
ARTICLE X REDEMPTION OR CALL OF THE NOTES
Section 10.01 Redemption or Call of the Notes............................................................59
Section 10.02 Form of Redemption or Call Notice..........................................................60
Section 10.03 Notes Payable on Clean-Up Call Date or Optional Notes Purchase Date........................61
ARTICLE XI MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions, etc..................................................61
Section 11.02 Form of Documents Delivered to Indenture Trustee...........................................62
Section 11.03 Acts of Noteholders........................................................................63
Section 11.04 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies............................63
Section 11.05 Notices to Noteholders; Waiver.............................................................64
Section 11.06 Conflict with Trust Indenture Act..........................................................64
Section 11.07 Effect of Headings and Table of Contents...................................................64
Section 11.08 Successors and Assigns.....................................................................64
Section 11.09 Severability...............................................................................65
Section 11.10 Benefits of Indenture and Consents of Noteholders..........................................65
Section 11.11 Legal Holidays.............................................................................65
Section 11.12 Governing Law..............................................................................65
Section 11.13 Counterparts...............................................................................65
Section 11.14 Recording of Indenture.....................................................................65
Section 11.15 Trust Obligations..........................................................................65
Section 11.16 No Petition................................................................................66
Section 11.17 Inspection.................................................................................66
Section 11.18 Agreements of Noteholders..................................................................66
EXHIBITS
EXHIBIT A-1 Forms of Class A Notes
EXHIBIT A-2 Forms of Privately Offered Notes
EXHIBIT B-1 Form of Rule 144A (QIB) Investment Letter
EXHIBIT B-2 Form of Rule 501(a) Investment Letter
EXHIBIT C Form of ERISA Affidavit for Class A Notes
This INDENTURE, dated as of July 1, 2007, is by and among THORNBURG MORTGAGE SECURITIES TRUST 2007-3, a Delaware statutory
trust (the "Issuer"), LASALLE BANK NATIONAL ASSOCIATION, a national banking association, as indenture trustee and not in its
individual capacity (the "Indenture Trustee"), and WELLS FARGO BANK, N.A., a national banking association, as securities
administrator and not in its individual capacity (the "Securities Administrator").
Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of
the Issuer's Mortgage-Backed Notes, Series 2007-3 in the Classes specified herein:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on the Closing Date, for the benefit of the Holders of the Notes, all of
the Issuer's right, title and interest, whether now owned or hereafter acquired, in and to: (i) the Trust Estate (as defined in the
Sale and Servicing Agreement); (ii) the Issuer's rights and benefits but none of its obligations under the Sale and Servicing
Agreement (including the Issuer's right to cause the Initial Seller or the Seller to repurchase Mortgage Loans from the Issuer under
the circumstances described therein); (iii) the Yield Maintenance Agreements and all payments thereunder; (iv) the Issuer's rights
and benefits but none of its obligations under the Administration Agreement; (v) the Issuer's rights and benefits but none of its
obligations under the SAMI Mortgage Loan Purchase Agreement and the TMFI Mortgage Loan Purchase Agreement; (vi) the Issuer's rights
and benefits but none of its obligations under the Servicing Agreements; (vii) the Trust Accounts, all amounts and property in the
Trust Accounts from time to time; (viii) all other property of the Trust from time to time; and (ix) all present and future claims,
demands, causes of action and choses in action in respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of
or are included in the proceeds of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in
respect of, the Notes and to secure (i) the payment of all amounts due on the Notes in accordance with their terms, (ii) the payment
of all other sums payable under the Indenture with respect to the Notes and (iii) compliance with the provisions of this Indenture,
all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of the Notes, acknowledges such Grant and accepts the
trusts under this Indenture in accordance with its terms.
Each Holder, by acceptance of the Notes, and the Indenture Trustee agree and acknowledge that each item of Collateral that
is physically delivered to the Indenture Trustee or the Securities Administrator will be held by the Indenture Trustee (or its
custodian) or the Securities Administrator in trust for the benefit of the Noteholders under the terms of this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions. Except as otherwise specified herein or as the context may otherwise require, (i) capitalized
terms used but not otherwise defined herein shall have the respective meanings set forth in the Sale and Servicing Agreement for all
purposes of this Indenture and (ii) the following terms have the respective meanings set forth below for all purposes of this
Indenture.
Act: The meaning specified in Section 11.03(a).
Administration Agreement: The Administration Agreement dated as of July 1, 2007 among the Issuer, the Indenture Trustee,
the Securities Administrator, Wilmington Trust Company, as owner trustee, and the Depositor.
Affiliate: With respect to any specified Person, any other Person controlling or controlled by or under common control with
such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power
to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
Authorized Officer: With respect to the Issuer, any officer of the Owner Trustee who is authorized to act for the Owner
Trustee in matters relating to the Issuer and who is identified on the list of Authorized Officers delivered by the Owner Trustee to
the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter) and, so long as
the Administration Agreement is in effect, any Vice President, Assistant Vice President, Trust Officer or more senior officer of the
Securities Administrator who is authorized to act for the Securities Administrator in matters relating to the Issuer and to be acted
upon by the Securities Administrator pursuant to the Administration Agreement and who is identified on the list of Authorized
Officers delivered by the Securities Administrator to the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
Book-Entry Notes: Solely with respect to the Class A Notes, beneficial interests in Class A Notes, ownership and transfers
of which shall be evidenced or made through book entries by a Clearing Agency as described in Section 2.10; provided, that after the
occurrence of a condition whereupon Definitive Notes are to be issued to Note Owners of Class A Notes, such Class A Notes shall no
longer be "Book-Entry Notes."
Class: All Notes having the same class designation.
Class A Notes: Collectively, the Class 1A-1, Class 1A-2, Class 2A-1, Class 2A-2, Class 3A-1, Class 3A-2, Class 4A-1, Class
4A-2, Class 4A-3 and Class 4A-4 Notes.
Certificate of Trust: The certificate of trust of the Issuer substantially in the form of Exhibit B to the Trust Agreement.
Clearing Agency: An organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act, as
amended. As of the Closing Date, the Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank, other financial institution or other Person for whom from time to time
a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
Collateral: The meaning specified in the Granting Clause of this Indenture.
Commission: The Securities and Exchange Commission.
Corporate Trust Office: The principal office of the Indenture Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this Indenture is located at 135 S. LaSalle Street, Suite
1511, Chicago, IL 60603, Attention: Global Securities and Trust Services, Reference: Thornburg 2007-3, or at such other address as
the Indenture Trustee may designate from time to time by notice to the Noteholders, and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee at the address designated by such successor Indenture Trustee by notice to the Noteholders
and the Issuer.
Default: Any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default.
Definitive Notes: The meaning specified in Section 2.10.
Depository Institution: Any depository institution or trust company, including the Indenture Trustee and the Securities
Administrator, that (a) is incorporated under the laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c) has outstanding unsecured commercial paper or other
short-term unsecured debt obligations that are rated in the highest rating category by each Rating Agency, or is otherwise acceptable
to each Rating Agency.
DTC: The Depository Trust Company.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: The meaning specified in Section 5.01.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Executive Officer: With respect to any corporation or limited liability company, the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, President, Manager, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such entity; and with respect to any partnership, any general partner thereof.
Global Securities: The meaning specified in Section 2.01(a).
Grant: Mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create and grant a
lien upon and a security interest in and a right of set-off against, deposit, set over and confirm pursuant to this Indenture. A
Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give
receipt for principal and interest payments in respect of the Collateral and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in
the name of the granting party or otherwise and generally to do and receive anything that the granting party is or may be entitled to
do or receive thereunder or with respect thereto.
Holder or Noteholder: A Person in whose name a Note is registered on the Note Register except that, solely for the purposes
of taking any action or giving any consent pursuant to this Indenture, any Note registered in the name of the Indenture Trustee or
any Affiliate thereof shall be deemed not to be Outstanding in determining whether the requisite percentage necessary to effect any
such consent has been obtained, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such
consent, only Notes which a Responsible Officer of the Indenture Trustee knows to be so held shall be disregarded.
Independent: When used with respect to any specified Person, that such Person (a) is in fact independent of the Issuer, any
other obligor on the Notes, the Seller, the Initial Seller and any Affiliate of any of the foregoing Persons, (b) does not have any
direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Seller, the Initial
Seller or any Affiliate of any of the foregoing Persons and (c) is not connected with the Issuer, any such other obligor, the Seller,
the Initial Seller or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Independent Certificate: A certificate or opinion to be delivered to the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable requirements of Section 11.01, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Indenture Trustee or Securities Administrator, as applicable, in the exercise
of reasonable care, and such opinion or certificate shall state that the signer has read the definition of "Independent" in this
Indenture and that the signer is Independent within the meaning thereof.
Interest Only Notes: The Class A-X Notes.
Issuer: Thornburg Mortgage Securities Trust 2007-3, a Delaware statutory trust, or any successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the Notes.
Issuer Order or Issuer Request: A written order or request signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Indenture Trustee or Securities Administrator, as applicable.
Majority Priority Class Noteholders: On any date Holders of the Priority Class representing more than 50% of the aggregate
Class Principal Amount of the Priority Class Notes then outstanding.
Non-Priority Class Note: As of any date of determination, any Outstanding Note other than the Priority Class Notes.
Note: Any of the Class 1A-1, Class 1A-2, Class 2A-1, Class 2A-2, Class 3A-1, Class 3A-2, Class 4A-1, Class 4A-2, Class
4A-3, Class 4A-4, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and Class A-X Notes issued pursuant to this
Indenture, substantially in the forms attached hereto as Exhibit A.
Note Depository Agreement: The agreement dated July 31, 2007, between the Issuer and The Depository Trust Company, as the
initial Clearing Agency, relating to the Book-Entry Notes.
Note Owner or Owner: With respect to a Book-Entry Note, the Person that is the beneficial owner of such Book-Entry Note, as
reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly
as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency),
and with respect to a Definitive Note, the Person that is the registered owner of such Note as reflected in the Note Register.
Note Principal Amount: With respect to each Note of a given Class (other than the Class A-X Note) and any date of
determination, the product of (i) the Class Principal Amount of such Class and (ii) the applicable Percentage Interest of such Note.
Note Purchase Price: For each Class of Notes and any Optional Notes Purchase Date, an amount equal to the sum of (1) 100%
of the aggregate Class Principal Amount for such Class and such date, (2) the aggregate accrued and unpaid interest, less amounts of
interest and principal otherwise being paid to such Noteholders on such date and (3) any unreimbursed Class A Deferred Amounts.
Note Register and Note Registrar: The respective meanings specified in Section 2.04. The initial Note Registrar shall be
the Securities Administrator.
Officer's Certificate: A certificate signed by any Authorized Officer of the Issuer (or by an officer of the Depositor
under the Administration Agreement), under the circumstances described in, and otherwise complying with, the applicable requirements
of Section 11.01, and delivered to the Indenture Trustee and the Securities Administrator. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's Certificate of any Authorized Officer of the Issuer.
Opinion of Counsel: One or more written opinions of counsel who may, except as otherwise expressly provided in this
Indenture, be employees of or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee, the Note Registrar or the
Securities Administrator, as applicable, which opinion or opinions shall be addressed to the Indenture Trustee, as Indenture Trustee,
and shall comply with any applicable requirements of Section 11.01 and shall be in form and substance satisfactory to the Indenture
Trustee, the Note Registrar or the Securities Administrator, as applicable.
Optional Notes Purchase Date: Any Payment Date on which the Optional Notes Purchase Right is exercised.
Optional Notes Purchase Right: The option of TMI, or its assignee, to call the Notes on any Payment Date on which the
aggregate Scheduled Principal Balance of the Mortgage Loans is equal to or less than 20% of the aggregate Cut-off Date Balance.
Outstanding: With respect to any Note as of the date of determination, all Notes theretofore authenticated and delivered
under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to the Note Registrar for cancellation;
(ii) Notes, or portions thereof, the payment for which money in the necessary amount has been theretofore
deposited with the Securities Administrator or any Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision
for such notice has been made, satisfactory to the Securities Administrator); and
(iii) Notes or portions thereof in exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture unless proof satisfactory to the Securities Administrator is presented that any such
Notes are held by a bona fide purchaser;
provided, that in determining whether the Holders of the requisite Outstanding Balance of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any other Operative Agreement, Notes owned by the Issuer, any
other obligor upon the Notes, the Depositor, the Owner Trustee, the Indenture Trustee, a Servicer, the Securities Administrator or
any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Notes that a Responsible Officer of the Indenture Trustee or the Securities Administrator knows to be so owned shall
be so disregarded (unless such action requires the consent, waiver, request or demand of 100% of the Outstanding Balance represented
by a particular Class and 100% of the Outstanding Balance represented by such Class is registered in the name of one or more of the
foregoing entities). Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Securities Administrator the pledgee's right so to act with respect to such Notes and that the pledgee is
not the Issuer, any other obligor upon the Notes, the Depositor, the Owner Trustee, the Indenture Trustee, the Servicer, the
Securities Administrator or any Affiliate of any of the foregoing Persons.
Outstanding Balance: The aggregate principal or notional amount of the Notes Outstanding, or of all Notes of a Class, as
applicable, as of the date of determination.
Ownership Certificates: As defined in the Trust Agreement.
Paying Agent: Initially, the Securities Administrator or any other Person that meets the eligibility standards for the
Indenture Trustee specified in Section 6.11 and is authorized and appointed by the Issuer to make payments to and from the Note
Payment Account, including payments of principal of or interest on the Notes on behalf of the Issuer.
PCAOB: The Public Company Accounting Oversight Board.
Predecessor Note: With respect to any particular Note, every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section
2.05 in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.
Priority Class Notes: Until the Class Principal Amounts of the Class A Notes are reduced to zero and all sums payable to
the Holders of the Class A Notes have been paid in full, the Class A Notes acting as a single Class; when the Class Principal Amounts
of the Class A Notes are reduced to zero and all sums payable to the Holders of the Class A Notes have been paid in full, each
individual Class of Subordinate Notes consecutively in ascending order, starting with the Class of Subordinate Notes with the lowest
numerical designation, until the Class Principal Amounts of such Class of Subordinate Notes are reduced to zero and all sums payable
to the Holders thereof have been paid in full.
Privately Offered Notes: The Subordinated Notes and the Interest Only Notes.
Proceeding: Any suit in equity, action at law or other judicial or administrative proceeding.
Prospective Owner: Each prospective purchaser and any subsequent transferee of a Note.
Rating Agency Condition: With respect to any action to which the Rating Agency Condition applies, that each Rating Agency
shall have been given 10 days (or such shorter period as is acceptable to each Rating Agency) prior notice thereof and that each
Rating Agency shall have notified the Depositor, the Owner Trustee, the Securities Administrator and the Indenture Trustee in writing
that such proposed action will not result in a reduction or withdrawal of the then current rating of the applicable Class or Classes
of Notes.
Redemption Date: A Clean-Up Call Date or Optional Notes Purchase Date, as applicable.
Required Rating: The Notes have received, on the Closing Date, the following ratings from the Rating Agencies:
Class Moody's Rating S&P Rating
_________________________________________________
1A-1 Aaa AAA
1A-2 Aaa AAA
2A-1 Aaa AAA
2A-2 Aaa AAA
3A-1 Aaa AAA
3A-2 Aaa AAA
4A-1 Aaa AAA
4A-2 Aaa AAA
4A-3 Aaa AAA
4A-4 Aaa AAA
A-X Aaa AAA
B-1 Aa2 N/R
B-2 A2 N/R
B-3 Baa2 N/R
B-4 Ba2 N/R
B-5 B2 N/R
B-6 N/R N/R
N/R = Not rated by that Rating Agency
Responsible Officer: With respect to the Indenture Trustee, any Vice President, any Assistant Vice President, any Assistant
Secretary, or Assistant Treasurer in the corporate trust group or similar group of the Indenture Trustee customarily performing
functions similar to those performed by any of the above-designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. With
respect to the Securities Administrator, any officer in the corporate trust department or similar group of the Securities
Administrator with direct responsibility for the administration of this Indenture and also, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the
particular subject.
Retained Class A Note: Any of the Class 2A-2, Class 4A-2 and approximately 48.4217% of the Class 4A-4 Notes acquired by TMI
or an affiliate of TMI on the Closing Date.
Sale and Servicing Agreement: The Sale and Servicing Agreement dated as of July 1, 2007, among the Issuer, Structured Asset
Mortgage Investments II, Inc., as depositor, Thornburg Mortgage Home Loans, Inc., as initial seller and sponsor, Thornburg Mortgage
Funding, Inc., as seller, Wells Fargo Bank, N.A., as master servicer and securities administrator, and the Indenture Trustee, as such
may be amended, supplemented or otherwise modified from time to time.
Sponsor: Thornburg Mortgage Home Loans, Inc.
State: Any one of the 50 States of the United States of America or the District of Columbia.
Stated Maturity Date: With respect to each Class of Notes, the date set forth in Section 2.02.
Subordinated Notes: The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6 Notes.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939 as in force on the date hereof, unless otherwise specifically
provided.
Section 1.02. Incorporation by Reference of Trust Indenture Act. (a) Whenever this Indenture refers to a provision
of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other obligor on the indenture securities.
(b) All other TIA terms used in this Indenture that are defined in the TIA, defined by TIA reference to another statute or
defined by rule of the Securities and Exchange Commission have the respective 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;
(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;
(vii) terms defined in the UCC and not otherwise defined herein shall have the meaning assigned to them in the
UCC; and
(viii) "U.S. dollars," "dollars," or the sign "$" shall be construed as references to United States dollars which
are freely transferable by residents and non-residents of the United States of America and convertible by such persons into
any other freely convertible currency unless such transferability or convertibility is restricted by any law or regulation
of general application in which event references to "U.S. dollars," "dollars," or the sign "$" shall be construed as
references to such coin or currency of the United States of America as at the time of payment shall be legal tender for the
payment of public and private debts in the United States of America, and "cents" shall be construed accordingly.
ARTICLE II
THE NOTES
Section 2.01. Form. (a) The Notes shall be designated as the "Thornburg Mortgage Securities Trust 2007-3 Mortgage Backed
Notes, Series 2007-3." Each Class of Notes, together with the Securities Administrator's certificate of authentication, shall be in
substantially the forms set forth in Exhibits A-1 and A-2 with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Definitive Notes and the global certificates ("Global Securities") representing the Book-Entry Notes shall be
typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes.
The Notes shall be issued as registered Notes. Each Class of Class A Notes, except as otherwise provided by supplement to
this Indenture, shall be issued in a denomination of at least $25,000 in principal amount and any larger denomination that is an
integral multiple of $1 approved by the Issuer, such approval to be evidenced by the execution thereof; provided, however, one Note
may be issued in an amount less than the minimum denomination. Each Class of Privately Offered Notes, except as otherwise provided
by supplement to the Indenture, shall be issued in a denomination of at least $100,000 in principal amount or notional amount (in the
case of the Class A-X Notes), as applicable, and any larger denomination that is an integral multiple of $1 approved by the Issuer,
such approval to be evidenced by the execution thereof; provided, however, one Note of each Class may be issued in an amount less
than the minimum denomination. Privately Offered Notes may solely be issued, transferred and exchanged in the form of Definitive
Notes. If the Class A Notes are issuable in whole or in part as Book-Entry Notes, any such Class A Note may provide that it shall
represent the aggregate amount of Outstanding Notes of its Class from time to time endorsed thereon and may provide that the
aggregate amount of Outstanding Notes of its Class represented thereby may from time to time be reduced to reflect exchanges or
increased to reflect the issuance of an additional principal amount of Notes of such Class. Any endorsement of a Book-Entry Note to
reflect the amount, or any increase or decrease in the amount, of Outstanding Notes represented thereby shall be made in such manner
and by such Person or Persons, as shall be specified therein or in the Issuer Order of authentication delivered to the Securities
Administrator.
Each Note shall be dated the date of its authentication. The terms of the Notes set forth in Exhibit A-1 and A-2 are part
of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. (i) The Notes shall be executed on behalf of the Issuer by any
Authorized Officer of the Owner Trustee. The signature of any such Authorized Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were at any time Authorized Officers of the Owner Trustee
shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Notes or did not hold such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in this Section 2.02, the Securities Administrator shall, upon
Issuer Order, authenticate and deliver the Notes for original issue in the initial aggregate principal amounts or notional amount
with respect to each Class as specified below:
Class Principal
Class or Notional Amount Stated Maturity Date
________________________________________________________________________________________________
1A-1 $323,148,000 June 2047
1A-2 $56,850,000 June 2047
2A-1 $199,496,000 June 2047
2A-2 $10,471,000 June 2047
3A-1 $456,823,000 June 2047
3A-2 $23,977,000 June 2047
4A-1 $139,776,000 June 2047
4A-2 $7,336,000 June 2047
4A-3 $175,000,000 June 2047
4A-4 $19,388,000 June 2047
A-X $1,412,265,000* June 2047
B-1 $30,395,000 June 2047
B-2 $13,344,000 June 2047
B-3 $8,155,000 June 2047
B-4 $7,413,000 June 2047
B-5 $5,931,000 June 2047
B-6 $5,189,368 June 2047
___________________
* Notional Amount
The aggregate Class Principal Amounts (or Class Notional Amount) of such Classes of Notes outstanding at any time may not
exceed such respective amounts.
(b) Issuance of the Notes shall be conditioned upon receipt by the Indenture Trustee or the Securities Administrator, as
applicable, of the following:
(i) An Issuer Order authorizing the execution and authentication of such Notes;
(ii) All of the items of Collateral that are to be delivered to the Indenture Trustee or the Securities
Administrator, as provided herein or in the Servicing Agreement;
(iii) An executed counterpart from each party to each of the Trust Agreement, the Indenture, the Administration
Agreement and the Sale and Servicing Agreement, respectively, and a certified copy of the Certificate of Trust;
(iv) Except to the extent provided in subsection (c) below, Opinions of Counsel addressed to the Indenture
Trustee to the effect that:
(I) the Issuer has been duly formed and is validly existing as a statutory trust under the laws of
the State of Delaware, and has power, authority and legal right to execute and deliver this Indenture and
the other Operative Agreements to which it is a party;
(II)the issuance of the Notes has been duly and validly authorized by the Issuer;
(III) the Notes, when executed and authenticated in accordance with the provisions of this
Indenture and delivered against payment therefor, will be the legal, valid and binding obligations of the
Issuer pursuant to the terms of this Indenture and will be entitled to the benefits of this Indenture, and
will be enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent or preferential conveyance and other similar laws of general
application affecting the rights of creditors generally and to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(IV) assuming due authorization, execution and delivery thereof by the Indenture Trustee, this
Indenture has been duly executed and delivered by Issuer and constitutes the legal, valid and binding
obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent or preferential conveyance and
other similar laws of general application affecting the rights of creditors generally and to general
principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at
law);
(V) the Issuer is not required to be registered under the Investment Company Act of 1940, as
amended;
(VI)the Issuer will not be characterized as a taxable mortgage pool or an association (or publicly
traded partnership) taxable as a corporation;
(VII) the provisions of the Indenture are sufficient to create a valid security interest in
favor of the Indenture Trustee in the Collateral; and
(VIII) this Indenture has been duly qualified under the Trust Indenture Act.
(v) An Officer's Certificate of the Depositor on behalf of the Issuer complying with the requirements of
Section 11.01 and stating that:
(I) the Issuer is not in Default under this Indenture and the issuance of the Notes will not
result in any breach of any of the terms, conditions or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by
which it is bound, or any order of any court or administrative agency entered in any proceeding to which
the Issuer is a party or by which it may be bound or to which it may be subject;
(II) any form UCC-1 filed or to be filed against the Issuer for the benefit of the Indenture
Trustee with respect to the Collateral, shall contain a statement that a purchaser of a security interest
in any Collateral described in such financing statement will violate the rights of the Indenture Trustee,
as secured party, in such Collateral;
(III) attached thereto are true and correct copies of letters signed by the Rating Agencies to
the effect that each Class of Notes being rated by it has been assigned the Required Rating; and
(IV)all conditions precedent provided for in this Indenture relating to the authentication and
delivery of the Notes have been complied with.
(vi) A letter from each Rating Agency confirming the Required Rating of each Class of Notes rated by such Rating
Agency.
(c) The representations and warranties made pursuant to the Officer's Certificate delivered pursuant to subsection (b)(v)
above shall survive the discharge of this Indenture and may not be waived by any party hereto. The Opinions of Counsel to be
delivered pursuant to subsection (b)(iv) above may differ from the Opinions of Counsel described in such subsection so long as such
Opinions of Counsel so delivered are acceptable to the Rating Agencies and the Securities Administrator, which shall be conclusively
evidenced by the Securities Administrator's authentication and delivery of the Notes and the Rating Agencies' issuance of their
letters pursuant to subsection (b)(vi) above and such acceptable opinions shall be deemed to be the Opinions of Counsel required
pursuant to subsection (b)(iv) above.
(d) The Notes that are authenticated and delivered by the Securities Administrator to or upon the order of the Issuer on the
Closing Date shall be dated the Closing Date. All other Notes that are authenticated after the Closing Date as a result of transfer
or exchange or for any other purpose under the Indenture shall be dated the date of their authentication.
(e) 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. Limitations on Transfer of the Notes. (a) Except for a transfer made to TMI or an affiliate of TMI, no
Privately Offered Note may be offered, sold, delivered or transferred (including, without limitation, by pledge or hypothecation)
except (i) under Rule 144A under the Securities Act ("Rule 144A") to qualified institutional buyers or "QIBs" purchasing for their
own account or for the account of one or more QIBs, for whom they are authorized to act or (ii) to accredited investors or "AIs," as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("Rule 501(a)"), purchasing for their own account or for the
accounts of one or more AIs for whom they are authorized to act. Each Privately Offered Note shall bear a restrictive legend to the
foregoing effect substantially in the form of the legends on the face of the form of Note at Exhibit A-2.
(b) Except for a transfer made to TMI or an affiliate of TMI, (i) no transfer of a Privately Offered Note in the form of a
Definitive Note shall be made unless the Note Registrar shall have received a representation from the transferee of such Note,
acceptable to and in form and substance satisfactory to the Note Registrar and the Depositor (such requirement is satisfied only by
the Note Registrar's receipt of an investment letter from the transferee substantially in the form of Exhibit B-1 or Exhibit B-2, as
applicable, hereto), to the effect that such transferee is not acquiring such Note for, or with the assets of, an employee benefit
plan or other retirement arrangement that is subject to Section 406 of ERISA or to Section 4975 of the Code or to any substantially
similar law ("Similar Law"), or any entity deemed to hold the plan assets of the foregoing (collectively, "Benefit Plans"), (ii) no
transfer of a Class A Note (other than a Retained Class A Note) in the form of a Definitive Note shall be made unless the Note
Registrar shall have received a representation from the transferee of such Note, acceptable to and in form and substance satisfactory
to the Note Registrar and the Depositor (such requirement is satisfied only by the Note Registrar's receipt of a transfer affidavit
from the transferee substantially in the form of Exhibit C hereto) to the effect that its acquisition and holding of such Notes for,
or with the assets of, a Benefit Plan will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code which is not covered under Prohibited Transaction Class Exemption ("PTCE") 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60,
PTCE 96-23 (each, an "Investor-Based Exemption"), the non-fiduciary service provider exemption under Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code or some other applicable exemption, and will not result in a non-exempt violation of any Similar Law,
and in the case of a transfer of a Retained Class A Note to a transferee other than TMI or an affiliate of TMI, (iii) no transfer of
a Retained Class A Note in the form of a Definitive Note shall be made unless the Note Registrar shall have received a representation
from the transferee of such Note, acceptable to and in form and substance satisfactory to the Note Registrar and the Depositor (such
requirement is satisfied only by the Note Registrar's receipt of a transfer affidavit from the transferee substantially in the form
of Exhibit C hereto) to the effect that at the date of transfer, such Note is rated investment grade or better, such transferee
believes that such Note is properly treated as indebtedness with substantial equity features for purposes of the Plan Assets
Regulations (based in part on the issuance of an opinion of counsel of nationally recognized standing in the United States
experienced in such matters that, under the relevant facts and circumstances, such Note will be classified as debt instruments for
U.S. federal income tax purposes) and its acquisition and holding of such Note will not result in a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code which is not covered under an Investor-Based Exemption or some other
applicable statutory or administrative exemption, and will not cause a non-exempt violation of any Similar Law.
(c) In the case of a Class A Note that is a Book-Entry Note, for purposes of clauses (i), (ii) or (iii) of the preceding
paragraph, such representations shall be deemed to have been made to the Note Registrar by the transferee's acceptance of such Class
A Note that is also a Book-Entry Note (or the acceptance by a Note Holder of the beneficial interest in such Note).
To the extent permitted under applicable law (including, but not limited to, ERISA), none of the Indenture Trustee, the
Securities Administrator, the Note Registrar, the Issuer or the Depositor shall have any liability to any Person for any registration
of transfer of any Note that is in fact not permitted by this Section 2.03(c) or for the Paying Agent making any payments due on such
Note to the Holder thereof or taking any other action with respect to such Holder under the provisions of this Indenture so long as
such transfer was registered by the Note Registrar in accordance with the foregoing requirements. In addition, none of the Indenture
Trustee, the Securities Administrator, the Note Registrar or the Depositor shall be required to monitor, determine or inquire as to
compliance with the transfer restrictions with respect to any Note in the form of a Book-Entry Note, and none of the Indenture
Trustee, Securities Administrator, the Note Registrar or the Depositor shall have any liability for transfers of Class A Notes as
Book-Entry Notes or any interests therein made in violation of the restrictions on transfer described in this Section 2.03(c).
(d) In the event that a Note is transferred to a Person that does not meet the requirements of this Section 2.03, such
transfer shall be of no force and effect, shall be void ab initio, and shall not operate to transfer any rights to such Person,
notwithstanding any instructions to the contrary to the Issuer, the Note Registrar, the Indenture Trustee or any intermediary; and
the Paying Agent shall not make any payments on such Note for as long as such Person is the Holder of such Note.
(e) The Note Registrar on behalf of the Depositor shall provide to any Holder of a Privately Offered Note and any
prospective transferee designated by any such Holder, information regarding such Privately Offered Note and the Mortgage Loans and
such other information as shall be necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4) for transfer of any
such Note without registration thereof under the Securities Act pursuant to the registration exemption provided by Rule 144A. Each
Holder of a Privately Offered Note desiring to effect such a transfer shall, and does hereby agree to, indemnify the Issuer, the
Owner Trustee, the Indenture Trustee, the Note Registrar and the Depositor against any liability that may result if the transfer is
not so exempt or is not made in accordance with federal and state securities laws and any other restrictions specified in this
Section 2.03.
The Note Registrar shall cause each Note to contain a legend substantially similar to the applicable legend provided in
Exhibit A-1 or A-2 hereto, as applicable, stating that transfer of such Notes is subject to certain restrictions as set forth herein.
Section 2.04. Registration; Registration of Transfer and Exchange. The Issuer shall cause the Note Registrar to keep a
register (the "Note Register") in which, subject to such reasonable regulations as it may prescribe and the restrictions on transfers
of the Notes set forth herein, the Issuer shall provide for the registration of Notes and the registration of transfers of Notes.
The Securities Administrator initially shall be the "Note Registrar" for the purpose of registering Notes and transfers of Notes as
herein provided, and the Indenture Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain
copies thereof, and the Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by
a Responsible Officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts and number of such
Notes. Upon any resignation of any Note Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such
an appointment, assume the duties of Note Registrar.
If a Person other than the Securities Administrator is appointed by the Issuer as Note Registrar, the Issuer will give the
Indenture Trustee and the Securities Administrator prompt written notice of the appointment of such Note Registrar and of the
location, and any change in the location, of the Note Register, and the Indenture Trustee and the Securities Administrator shall have
the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee and the
Securities Administrator shall have the right to rely upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts or notional amounts, as
applicable, and number of such Notes.
Subject to Section 2.03, upon surrender for registration of transfer of any Note at the office or agency of the Issuer to be
maintained as provided in Section 3.02, the Issuer shall execute, and the Securities Administrator or the Note Registrar on its
behalf shall authenticate and the Noteholder shall be entitled to obtain from the Note Registrar on its behalf, in the name of the
designated transferee or transferees, one or more new Notes of the same Class in any authorized denominations, of a like aggregate
principal amount or Percentage Interest.
At the option of the Holder, Notes may be exchanged for other Notes of the same Class in any authorized denominations, of a
like aggregate principal amount or Percentage Interest, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute, and the Securities Administrator or the Note Registrar
on its behalf shall authenticate and the Noteholder shall be entitled to obtain from the Securities Administrator or the Note
Registrar on its behalf, the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of
transfer or exchange.
Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Note Registrar duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements
of the Note Registrar, which requirements include membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP.
No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Issuer or the
Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 2.05 or 9.06 not
involving any transfer.
The preceding provisions of this Section 2.04 notwithstanding, the Issuer shall not be required to make and the Note
Registrar need not register transfers or exchanges of Notes for a period of fifteen (15) days preceding the Payment Date for any
payment with respect to such Note.
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is surrendered to the Note
Registrar, or the Note Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there
is delivered to the Note Registrar such security or indemnity as may be required by it to hold the Issuer, the Indenture Trustee and
the Note Registrar harmless, then, in the absence of actual notice to the Issuer, the Note Registrar or the Indenture Trustee that
such Note has been acquired by a bona fide purchaser, and upon certification provided by the Holder of such Note that the
requirements of Section 8-405 of the Uniform Commercial Code are met, the Issuer shall execute, and upon its request the Securities
Administrator or the Note Registrar on its behalf shall authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class; provided, however, that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become or within seven days shall be due and payable, or shall have been called pursuant
to exercise of the Clean-up Call Right or the Optional Notes Purchase Right, instead of issuing a replacement Note, the Issuer may
pay such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date without surrender thereof. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a
bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note,
the Issuer and the Indenture Trustee or the Note Registrar on its behalf shall be entitled to recover such replacement Note (or such
payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon
the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer, the Indenture
Trustee or the Note Registrar in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer, the Indenture Trustee or the Note Registrar 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 or the Note
Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of any mutilated, destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. Persons Deemed Owners. Prior to due presentment for registration of transfer of any Note, the Issuer, the
Securities Administrator, the Indenture Trustee, the Note Registrar and any agent of the Issuer, the Securities Administrator, the
Indenture Trustee or the Note Registrar may treat the Person in whose name any Note is registered (as of the day of determination) as
the owner of such Note for the purpose of receiving payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the Issuer, the Securities Administrator, the Indenture Trustee
or any agent of the Issuer, the Securities Administrator, the Indenture Trustee or the Note Registrar shall be affected by notice to
the contrary.
Section 2.07. Payment of Principal and Interest. (a) Each Class of Notes shall accrue interest at its respective Note
Interest Rate as set forth in the Sale and Servicing Agreement, and such interest shall be payable on each Payment Date, subject to
Section 3.01. Interest shall be computed on each Class of Class A Notes on the basis of a 360-day year and the actual number of days
elapsed in each Accrual Period and in the case of the Privately Offered Notes, based on a 360-day year consisting of twelve (12)
thirty (30) day months. With respect to each outstanding Class of Class A Notes, the Securities Administrator shall determine
one-month LIBOR or one-year LIBOR, as applicable, for each applicable Accrual Period on the LIBOR Determination Date, in accordance
with the provisions of the Sale and Servicing Agreement. All interest payments on each Class of Notes shall be made pro rata to the
Noteholders of such Class entitled thereto and as among Classes of Notes shall be paid in the order of priority as set forth in
Section 5.01 of the Sale and Servicing Agreement. Any installment of interest or principal payable on any Note shall be paid on the
applicable Payment Date to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the Record Date by
check mailed first-class postage prepaid to such Person's address as it appears on the Note Register on such Record Date or, upon
written request made to the Paying Agent at least five Business Days prior to the related Record Date, by the Holder of a Note by
wire transfer in immediately available funds to an account specified in the request and at the expense of such Noteholder, except
that, unless Definitive Notes have been issued pursuant to Section 2.12(b), with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made by wire transfer in
immediately available funds to the account designated by such nominee, except for the final installment of principal payable with
respect to such Note on a Payment Date or on the applicable Stated Maturity Date for such Class of Notes (and except for the Clean-Up
Call Purchase Price for any Note called for redemption pursuant to Section 10.01(b) hereof or the Note Purchase Price for any Note
being purchased pursuant to the Optional Notes Purchase Right pursuant to Section 10.01(a) hereof), which shall be payable as
provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.03.
(b) The principal amount of the Notes (other than the Class A-X Notes) shall be payable in installments on each Payment Date
as provided herein and in such Notes, subject to Section 3.01. Notwithstanding the foregoing, the entire unpaid principal amount of
a Class of Notes, together with any unpaid Class A Deferred Amounts, shall be due and payable, if not previously paid, on the earlier
of (i) the applicable Stated Maturity Date, (ii) the Clean-Up Call Date, or (iii) the date on which an Event of Default shall have
occurred and be continuing, if the Indenture Trustee or the Majority Priority Class Noteholders shall have declared the Notes to be
immediately due and payable in the manner provided in Section 5.02 hereof. In addition, if the Optional Notes Purchase Right is
exercised, and the Note Purchase Price in connection therewith is provided to the Securities Administrator in accordance with Section
10.01(a) hereof, the then Holder of the Notes shall also receive its proportionate share of the Note Purchase Price as provided in
Section 10.03 hereof.
(c) All principal payments on each Class of Notes (other than the Class A-X Notes) shall be made pro rata to the Noteholders
of such Class entitled thereto based on their respective Note Principal Amounts immediately prior to that date and as among Classes
of Notes shall be paid in the order of priority set forth in Section 5.01 of the Sale and Servicing Agreement. The Paying Agent
shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Payment Date on
which the Issuer expects that the final installment of principal of and interest on such Note will be paid. Such notice shall be
mailed or transmitted by facsimile no later than five Business Days prior to such final Payment Date and shall specify that such
final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may
be presented and surrendered for payment of such installment. Notices in connection with redemptions of Notes or the exercise of the
Optional Notes Purchase Right shall be mailed to Noteholders as provided in Section 10.02.
Section 2.08. Cancellation. All Notes surrendered for payment, registration of transfer, exchange or redemption shall be
delivered to the Note Registrar and shall be promptly cancelled by the Note Registrar. The Issuer may at any time deliver to the
Note Registrar for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Note Registrar. No Notes shall be authenticated in
lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All
cancelled Notes may be held or disposed of by the Note Registrar in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it; provided, that such
Issuer Order is timely and the Notes have not been previously disposed of by the Note Registrar.
Section 2.09. Release of Collateral. (a) Except as otherwise provided in subsection (b) of this Section and the other
Operative Agreements, the Indenture Trustee shall release property from the lien of this Indenture only upon receipt by it of an
Issuer Request accompanied by (i) an Officer's Certificate, (ii) an Opinion of Counsel, (iii) certificates in accordance with TIA
Sections 314(c) and (d)(1), and (iv)(A) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or (B) an
Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent
Certificates; provided that no such Independent Certificates or Opinion of Counsel in lieu of such Independent Certificates shall be
necessary in respect of property released from the lien of the Indenture in accordance with the provisions hereof if such property
consists solely of cash.
(b) A Servicer (or if such Servicer does not do so, the Master Servicer), on behalf of the Issuer, shall be entitled to
obtain a release from the lien of this Indenture for any Mortgage Loan and the related Mortgaged Property at any time (i) after a
payment by the Seller, the Initial Seller or TMI of the Purchase Price of the Mortgage Loan, (ii) after a Qualified Substitute
Mortgage Loan is substituted for such Mortgage Loan and payment of the Substitution Amount, if any, has been received by the Issuer,
(iii) after liquidation of the Mortgage Loan in accordance with the Sale and Servicing Agreement and the deposit of all Liquidation
Proceeds, Condemnation Proceeds and Insurance Proceeds in the Collection Account, (iv) upon the termination of a Mortgage Loan (due
to, among other causes, a prepayment in full of the Mortgage Loan and sale or other disposition of the related Mortgaged Property),
or (v) as contemplated by Article III of the Sale and Servicing Agreement. The Indenture Trustee shall release any such Collateral
upon a request to release executed by the Master Servicer or a Servicer, as applicable, and an Officer's Certificate to the effect
that the requirements for release have been met.
(c) The Indenture Trustee shall, if requested by a Servicer or the Master Servicer, temporarily release or cause the
Custodian temporarily to release to such party the Mortgage File pursuant to the provisions of Section 3.07 of the Sale and Servicing
Agreement.
Section 2.10. Book-Entry Notes. Each Class of Class A Notes will be issued in the form of typewritten Notes or Global
Securities representing Book-Entry Notes, to be delivered to the Note Registrar, as custodian for the initial Clearing Agency, by, or
on behalf of, the Issuer. The Book-Entry Notes shall be registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Owner of Book-Entry Notes thereof will receive a Definitive Note representing such
Note Owner's interest in such Book-Entry Note, except as provided in Section 2.12. Unless and until definitive, fully registered
Notes (the "Definitive Notes") have been issued to such Note Owners of Book-Entry Notes pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar, the Indenture Trustee and the Securities Administrator shall be entitled to deal with
the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Book-Entry
Notes and the giving of instructions or directions hereunder) as the sole holder of the Book-Entry Notes, and shall have no
obligation to the Owners of Book-Entry Notes;
(iii) to the extent that the provisions of this Section conflict with any other provisions of this Indenture, the
provisions of this Section shall control;
(iv) the rights of Owners of Book-Entry Notes shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such Owners of Book-Entry Notes and the Clearing Agency and/or
the Clearing Agency Participants pursuant to the Note Depository Agreement. Unless and until Definitive Notes are issued to
Holders of Class A Notes, pursuant to Section 2.12, neither the Indenture Trustee nor the Note Registrar shall register any
transfer of a beneficial interest in a Book-Entry Note; and the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit payments of principal of and interest on the Book-Entry Notes to
such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of
Holders of Class A Notes evidencing a specified percentage of the Outstanding Balance of the Notes (or the Priority Class
Notes), the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received
instructions to such effect from Owners of Book-Entry Notes and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the Book-Entry Notes and has delivered such
instructions to the Note Registrar.
Section 2.11. Notices to Clearing Agency. Whenever a notice or other communication to the Noteholders is required under
this Indenture, unless and until Definitive Notes shall have been issued to such Owners of Book-Entry Notes pursuant to Section 2.12,
the Note Registrar shall give all such notices and communications specified herein to be given to Owners of Book-Entry Notes to the
Clearing Agency, and shall have no obligation to such Note Owners.
Section 2.12. Definitive Notes. (a) The Privately Offered Notes shall solely be issued in the form of Definitive Notes
and shall be registered initially in the Note Register in the name of TMI, or its designee.
(b) In addition, if (i) the Clearing Agency is no longer willing or able to properly discharge its responsibilities with
respect to Class A Notes held in the form of Book-Entry Notes and the Issuer is unable to locate a qualified successor or (ii) after
the occurrence of an Event of Default hereunder, Note Owners of the Book-Entry Notes representing beneficial interests aggregating at
least a majority of the Outstanding Balance of the Book-Entry Notes advise the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests of such Note Owners, then the Clearing Agency shall
notify all Owners of Book-Entry Notes and the Note Registrar of the occurrence of any such event and of the availability of
Definitive Notes to Owners of Book-Entry Notes requesting the same. Upon surrender to the Note Registrar of the typewritten Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Issuer shall execute and the
Securities Administrator shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of
the Issuer, the Note Registrar, the Securities Administrator or the Indenture Trustee shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in relying on, such instructions.
(c) Upon the issuance of Definitive Notes, the Indenture Trustee, the Securities Administrator and the Note Registrar shall
recognize the Holders of such Definitive Notes as Noteholders.
Section 2.13. Tax Treatment. The Issuer has entered into this Indenture, and the Notes will be issued, with the
intention that, for federal, state and local income, single business and franchise tax purposes, the Notes (other than the Privately
Offered Notes) will qualify as indebtedness of the Issuer secured by the Collateral. The Issuer, by entering into this Indenture,
and each Noteholder (other than a Holder of a Privately Offered Note), by its acceptance of a Note (and each applicable Note Owner by
its acceptance of an interest in the related Book-Entry Note), agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness of the Issuer.
Section 2.14. Restrictions on Transfer and Retention of Beneficial Ownership Interest in the Privately Offered Notes.
(a) TMI will be the initial Note Owner of a 100% Percentage Interest in each of the Privately Offered Notes and, pursuant to the
Trust Agreement, the initial "Certificateholder" (as such term is defined in the Trust Agreement) of a 100% Percentage Interest in
the Ownership Certificates. TMI (or any other Certificateholder or Holder of the Privately Offered Notes) is hereby prohibited from
transferring and agrees not to transfer any beneficial ownership interest in any Privately Offered Note or the Ownership
Certificates, except as provided in subsection (b) below.
(b) Any sale, transfer, pledge or other disposition of any beneficial ownership interest in (i) any Privately Offered Note
may only be effectuated in conjunction with a simultaneous sale, transfer, pledge or other disposition of an equal Percentage
Interest in (A) all other classes of Privately Offered Notes then Outstanding and (B) the Ownership Certificates, and (ii) the
Ownership Certificates may only be effectuated in conjunction with a simultaneous sale, transfer, pledge or other disposition of an
equal Percentage Interest in all classes of the Privately Offered Notes then Outstanding, unless in each case the prospective
transferee of such beneficial ownership interest furnishes to the Note Registrar an Opinion of Counsel concluding that such sale,
transfer, pledge or other disposition will not cause the Trust to become subject to federal income tax as a corporation. No sale,
transfer, pledge or other disposition of any beneficial ownership interest in any Privately Offered Note shall be in respect of less
than a 10% Percentage Interest in such Privately Offered Note. TMI (or such other Holder of the Ownership Certificates) is hereby
required to notify the Indenture Trustee and the Note Registrar of any sale, transfer, pledge or other disposition or retention of
the Ownership Certificates or any Privately Offered Notes in contravention of these restrictions.
(c) In connection with any sale, transfer, pledge or other disposition of all or a portion of the Privately Offered Notes
pursuant to subsection (b) above, the transferee shall certify to the Note Registrar, the Indenture Trustee and the Securities
Administrator in an investment letter substantially in the form attached hereto as Exhibit B-1 or Exhibit B-2, as applicable, that
such transfer has been made in accordance with subsection (b) above and shall agree to indemnify the Issuer, the Indenture Trustee,
the Securities Administrator, the Note Registrar and the Depositor against any liability that may result if the transfer was made in
contravention of subsection (b) above.
(d) If any purported transferee shall become a Holder in violation of the provisions of this Section 2.14, then upon receipt
of written notice to the Note Registrar and the Paying Agent that the registration of transfer of the Privately Offered Notes to such
Holder was not in fact permitted by this Section, then the transfer to that Holder shall be void ab initio and the last preceding
Holder that was and that continues to be an eligible Holder in accordance with the provisions of this Section shall be restored to
all rights as Holder thereof retroactive to the date of such registration of transfer of such Privately Offered Notes. The Note
Registrar shall be under no liability to any Person for any registration of transfer of any Privately Offered Note that is in fact
not permitted by this Section, for making any payment due on any such Privately Offered Note to the Holder thereof or for taking any
other action with respect to such Holder under the provisions of this Indenture so long as the transfer relates to a simultaneous
transfer of an equal Percentage Interest in all Outstanding Classes of Privately Offered Notes and Ownership Certificates or the Note
Registrar receives the Opinion of Counsel described in subsection (b) above.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly and punctually pay (or will cause to be duly and
punctually paid) the principal of and interest on, and any other amounts due in respect of, the Notes in accordance with the terms of
the Notes, the Sale and Servicing Agreement and this Indenture. Without limiting the foregoing, unless the Notes have been declared
due and payable pursuant to Section 5.02 and monies collected by the Securities Administrator are being applied in accordance with
Section 5.04(b), subject to and in accordance with Section 8.02(c), the Issuer will cause to be distributed all amounts on deposit in
the Note Payment Account on a Payment Date and deposited therein pursuant to the Sale and Servicing Agreement for the benefit of the
Notes, to the Noteholders. Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest
and/or principal shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall be limited in right of payment to amounts available from
the Collateral as provided in this Indenture. The Issuer shall not otherwise be liable for payments of the Notes, and none of the
owners, agents, officers, directors, employees, trustees or successors or assigns of the Issuer shall be personally liable for any
amounts payable, or performance due, under the Notes or this Indenture. If any other provision of this Indenture shall be deemed to
conflict with the provisions of this Section 3.01, the provisions of this Section 3.01 shall control.
Section 3.02. Maintenance of Office or Agency. The Note Registrar on behalf of the Issuer will maintain an office or
agency where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer
in respect of the Notes and this Indenture may be served. As of the Closing Date, the Note Registrar designates the following office
for such purposes: Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.
Section 3.03. Money for Payments to be Held in Trust. As provided in Section 8.02, all payments of amounts due and
payable with respect to any Notes that are to be made from amounts withdrawn from the Note Payment Account pursuant to Section 5.01
of the Sale and Servicing Agreement shall be made on behalf of the Issuer by the Securities Administrator or by another Paying Agent,
and no amounts so withdrawn from the such account for payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On or before the Business Day preceding each Payment Date, the Issuer shall deposit or cause to be deposited in the Note
Payment Account an aggregate sum sufficient to pay the amounts then becoming due under the Notes, such sum to be held in trust for
the benefit of the Persons entitled thereto, and (unless the Paying Agent is the Securities Administrator) shall promptly notify the
Securities Administrator of its action or failure so to act.
The Securities Administrator is hereby appointed the initial Paying Agent. Any successor Paying Agent shall be appointed by
Issuer Order with written notice thereof to the Indenture Trustee and the Securities Administrator. Any successor Paying Agent
appointed by the Issuer shall be a Person that would be eligible to be the indenture trustee hereunder as provided in Section 6.11.
The Issuer shall not appoint any Paying Agent (other than the Indenture Trustee or the Securities Administrator) that is not, at the
time of such appointment, a Depository Institution. The Issuer shall give prior written notice to the Indenture Trustee of the
appointment of new or additional paying agents for the Notes, the location and any change in the location of any such office or
agency.
The Issuer shall cause each Paying Agent other than the Indenture Trustee or the Securities Administrator to execute and
deliver to the Indenture Trustee and the Securities Administrator an instrument in which such Paying Agent shall agree with the
Indenture Trustee (and if the Indenture Trustee or the Securities Administrator acts as Paying Agent, it hereby so agrees), subject
to the provisions of this Section, 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 and as is provided in the Sale and Servicing Agreement;
(ii) give the Indenture Trustee and Securities Administrator notice of any default by the Issuer of which the
Paying Agent has actual knowledge in the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee,
forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in
trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Paying Agent at the
time of its appointment; and
(v) comply with all requirements of the Code with respect to the withholding from any payments made by it on
any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in
connection therewith; provided, however, that with respect to reporting requirements applicable to original issue discount,
the accrual of market discount or the amortization of premium on the Notes, the Securities Administrator shall have first
provided the calculations pertaining thereto and the amount of any resulting withholding taxes to the Paying Agent.
The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other
purpose, by Issuer Order direct any Paying Agent to pay to the 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 two years after such amount has
become due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Request; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the
amounts so paid to the Issuer), and all liability of the Indenture Trustee, the Securities Administrator or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the Paying Agent, before being required to make any such
repayment, shall at the expense and direction of the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation in The City of New York (including, but not limited
to, The Bond Buyer), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The
Indenture Trustee, the Securities Administrator or Paying Agent shall also adopt and employ, at the expense and direction of the
Issuer, any other reasonable means of notification of such repayment (including, but not limited to, mailing notice of such repayment
to Holders whose Notes have been called but have not been surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture Trustee, the Securities Administrator or of any Paying
Agent, at the last address of record for each such Holder).
Section 3.04. Existence. (a) The Issuer will keep in full effect its existence, rights and franchises as a statutory
trust under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under
the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture,
the Notes, the Collateral and each other instrument or agreement included in the Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to Section 9.03 of the Trust Agreement shall be the successor
Owner Trustee under this Indenture without the execution or filing of any paper, instrument or further act to be done on the part of
the parties hereto.
(c) Upon any consolidation or merger of or other succession to the Owner Trustee, the Person succeeding to the Owner Trustee
under the Trust Agreement may exercise every right and power of the Owner Trustee under this Indenture with the same effect as if
such Person had been named as the Owner Trustee herein.
Section 3.05. Protection of Collateral. The Issuer will from time to time execute, deliver and file all such supplements
and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other
instruments solely at the expense of the Issuer, and will take such other action necessary or advisable to:
(i) provide further assurances with respect to the grant of all or any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and the priority thereof) of this Indenture or carry
out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the rights of the Indenture Trustee and the Noteholders in
such Collateral against the claims of all Persons and parties.
The Issuer hereby designates the Securities Administrator, its agent and attorney-in-fact to execute any financing
statement, continuation statement or other instrument provided to the Securities Administrator by the Depositor and required to be
executed pursuant to this Section 3.05.
Section 3.06. Opinions as to Collateral. On the Closing Date, the Issuer shall furnish to the Indenture Trustee an
Opinion of Counsel to the effect that either, 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 make effective the lien and
security interest of this Indenture, or stating that, in the opinion of such counsel, no such action is necessary to make such lien
and security interest effective. In addition to any other requirements under the Trust Indenture Act, the Issuer shall furnish to
the Securities Administrator, at least once every two years and six months after the Closing Date, an Opinion of Counsel to the
effect that either, in the opinion of such counsel, such action has been taken with respect to the recording, filing, refilling,
re-recording and refilling of this Indenture as is necessary to maintain the lien of this Indenture, or stating that, in the opinion
of such counsel, no such action is necessary to maintain such lien.
Section 3.07. Performance of Obligations. (a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from any of such Person's material covenants or obligations
under any instrument or agreement included in the Collateral or that would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly
provided in this Indenture, the Sale and Servicing Agreement or such other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of other Persons (including, without limitation, the
Administrator or the Depositor under the Administration Agreement) to assist it in performing its duties under this Indenture, and
any performance of such duties by a Person identified to the Securities Administrator in an Officer's Certificate of the Issuer shall
be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Securities Administrator and the Depositor
pursuant to the Administration Agreement to assist the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its obligations and agreements contained in this Indenture, the
other Operative Agreements to which it is a party and in the instruments and agreements included in the Collateral, including but not
limited to filing or causing to be filed all financing statements and continuation statements required to be filed by the terms of
this Indenture and the Sale and Servicing Agreement in accordance with and within the time periods provided for herein and therein
and recording or causing to be recorded all Mortgages, Assignments of Mortgage, all intervening Assignments of Mortgage and all
assumption and modification agreements required to be recorded by the terms of the Sale and Servicing Agreement, in accordance with
and within the time periods provided for in this Indenture and/or the Sale and Servicing Agreement, as applicable. Except as
otherwise expressly provided therein, the Issuer shall not waive, amend, modify, supplement or terminate any Operative Agreement or
any provision thereof without the consent of the Indenture Trustee and the Holders of a majority of the Outstanding Balance of the
Notes.
(d) If a responsible officer of the Owner Trustee shall have written notice or actual knowledge of the occurrence of an
Event of Default under the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture Trustee and the Securities
Administrator and each Rating Agency thereof, and shall specify in such notice the actions, if any, the Issuer is taking with respect
to such default.
(e) As promptly as possible after the giving of notice of termination to the Master Servicer of the Master Servicer's rights
and powers pursuant to Section 7.01 of the Sale and Servicing Agreement, the Indenture Trustee shall proceed in accordance with
Sections 7.01 and 7.02 of the Sale and Servicing Agreement
(f) Without derogating from the absolute nature of the assignment granted to the Indenture Trustee under this Indenture or
the rights of the Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the prior written consent of the
Indenture Trustee and the Securities Administrator or the Holders of at least a majority in Outstanding Balance or Percentage
Interest of the Noteholders affected thereby, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any Collateral or the Operative Agreements (except to the
extent otherwise provided in any such Operative Agreement), or waive timely performance or observance by any of the Securities
Administrator, the Master Servicer or the Depositor of its respective duties under the Sale and Servicing Agreement; and (ii) that
any such amendment shall not (A) increase or reduce in any manner the amount of, or accelerate or delay the timing of, payments that
are required to be made for the benefit of the Noteholders or (B) reduce the aforesaid percentage of the Notes that is required to
consent to any such amendment, without the consent of the Holders of all the Outstanding Notes affected thereby. If any such
amendment, modification, supplement or waiver shall be so consented to by the Indenture Trustee or such Holders, the Issuer agrees,
promptly following a request by the Indenture Trustee to do so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Securities Administrator may deem necessary or appropriate in the
circumstances.
Section 3.08. Negative Covenants. So long as any Notes are Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, the Trust Agreement, the Mortgage Loan Purchase Agreements
or the Sale and Servicing Agreement, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the
Issuer, including those included in the Collateral, unless directed to do so by the Securities Administrator;
(ii) claim any credit on, or make any deduction from the principal, interest or other amounts 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 Collateral;
(iii) engage in any business or activity other than as permitted by the Trust Agreement or the Sale and Servicing
Agreement or other than in connection with, or relating to, the issuance of Notes pursuant to this Indenture, or take any
action under Section 5.06 of the Trust Agreement that requires prior written consent of the Noteholders without such consent;
(iv) (A) permit the validity or effectiveness of this Indenture to be impaired, or permit the lien of this
Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or burden the Collateral or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics' liens and other liens that arise by operation of
law, in each case with respect to any Collateral and arising solely as a result of an action or omission of a borrower or as
otherwise permitted in the Sale and Servicing Agreement) or (C) permit the lien of this Indenture not to constitute a valid
first priority (other than with respect to any such tax, mechanics' or other lien or as otherwise permitted in the Sale and
Servicing Agreement) security interest in the Collateral;
(v) remove the Securities Administrator without cause unless the Rating Agency Condition shall have been
satisfied in connection with such removal; or
(vi) take any action or fail to take any action that would result in an imposition of tax on the Issuer.
Section 3.09. Annual Statement as to Compliance. So long as the Notes are outstanding, the Issuer will deliver to the
Securities Administrator, within 120 days after the end of each fiscal year of the Issuer (commencing with the fiscal year 2007), an
Officer's Certificate stating, as to the Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and of its performance under this Indenture has
been made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such review, the Issuer has complied with all
conditions and covenants under this Indenture throughout such year or, if there has been a default in its compliance with
any such condition or covenant, specifying each such default known to such Authorized Officer and the nature and status
thereof.
Section 3.10. Treatment of Notes as Debt for Tax Purposes. The Issuer shall, and shall cause the Securities
Administrator and the Indenture Trustee to, treat the Notes (other than the Privately Offered Notes) as indebtedness for all federal,
state and local tax purposes (except that any Class A Note held by a person that, for federal income tax purposes, owns or is treated
as owning a 100% Percentage Interest of the Ownership Certificates shall not be treated as outstanding indebtedness for such
purposes).
Section 3.11. No Other Business. The Issuer shall not engage in any business other than financing, purchasing, owning,
selling and managing the Collateral in the manner contemplated by this Indenture and the other Operative Agreements and activities
incidental thereto.
Section 3.12. No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any indebtedness other than the Notes.
Section 3.13. Guarantees, Loans, Advances and Other Liabilities. Except as contemplated by the Sale and Servicing
Agreement or this