Exhibit 10.1

 

INDENTURE

 

DATED AS OF APRIL 25, 2016

 

 

 

BETWEEN

 

MBC FUNDING II CORP.,

AS ISSUER,

 

MANHATTAN BRIDGE CAPITAL, INC.

AND

 

WORLDWIDE STOCK TRANSFER, LLC,

 

AS INDENTURE TRUSTEE

 

SENIOR SECURED NOTES

 

 

 

  

TABLE OF CONTENTS

 

    Page       ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
2       Section 1.01 Definitions 2 Section 1.02 Rules of Construction 22      
ARTICLE II THE NOTES 23       Section 2.01 Forms; Denominations 23 Section 2.02
Execution, Authentication, Delivery and Dating 23 Section 2.03 Certification of
Receipt of the Collateral 24 Section 2.04 Repurchase or Transfer and Exchange of
Mortgage Loans for Document Defects and Breaches of Representations and
Warranties 25 Section 2.05 The Notes Generally 26 Section 2.06 Registrar and
Paying Agent 27 Section 2.07 Registration of Transfer and Exchange of Notes 28
Section 2.08 CUSIP Number 29 Section 2.09 Deposit of Moneys 29 Section 2.10
Book-Entry Notes 29 Section 2.11 Mutilated, Destroyed, Lost or Stolen Notes 31
Section 2.12 Noteholder Lists 31 Section 2.13 Persons Deemed Owners 32 Section
2.14 Payment Account 32 Section 2.15 Payments on the Notes 32 Section 2.16 Final
Payment Notice 34 Section 2.17 Compliance with Withholding Requirements 35
Section 2.18 Cancellation 35 Section 2.19 Tax Treatment of the Notes and the
Issuer 35 Section 2.20 Representations and Warranties with Respect to the Issuer
35 Section 2.21 Representations and Warranties With Respect to Mortgaged
Properties and Mortgage Loans 38       ARTICLE III SATISFACTION AND DISCHARGE 45
      Section 3.01 Satisfaction and Discharge of Indenture 45 Section 3.02
Application of Trust Money 46       ARTICLE IV EVENTS OF DEFAULT; REMEDIES 47  
    Section 4.01 Events of Default 47 Section 4.02 Acceleration of Maturity;
Rescission and Annulment 49 Section 4.03 Collection of Indebtedness and Suits
for Enforcement by Indenture Trustee 50 Section 4.04 Remedies 51 Section 4.05
Application of Money Collected 52

 

 -i- 

 

  

Section 4.06 Limitation on Suits, 53 Section 4.07 Unconditional Right of
Noteholders to Receive Principal and Interest 53 Section 4.08 Restoration of
Rights and Remedies 53 Section 4.09 Rights and Remedies Cumulative 54 Section
4.10 Delay or Omission Not Waiver 54 Section 4.11 Control by Requisite Majority
54 Section 4.12 Waiver of Past Defaults 54 Section 4.13 Undertaking for Costs 55
Section 4.14 Waiver of Stay or Extension Laws 55 Section 4.15 Sale of Collateral
55 Section 4.16 Action on Notes 57       ARTICLE V THE INDENTURE TRUSTEE 57    
  Section 5.01 Certain Duties and Responsibilities 57 Section 5.02 Notice of
Defaults 60 Section 5.03 Certain Rights of Indenture Trustee 60 Section 5.04
Compensation; Reimbursement; Indemnification 62 Section 5.05 Representations and
Warranties of Indenture Trustee 64 Section 5.06 Merger, Conversion,
Consolidation or Succession to Business 65 Section 5.07 Resignation and Removal;
Appointment of Successor 65 Section 5.08 Acceptance of Appointment by Successor
66 Section 5.09 Unclaimed Funds 67 Section 5.10 Illegal Acts 67 Section 5.11
Communications by the Indenture Trustee 67 Section 5.12 Separate Indenture
Trustees and Co-Trustees 67       ARTICLE VI REPORTS TO NOTEHOLDERS 69      
Section 6.01 Reports to Noteholders and Others 69 Section 6.02 Access to Certain
Information 70       ARTICLE VII REDEMPTION 71       Section 7.01 Optional
Redemption 71 Section 7.02 Purchase of Notes at Holders’ Option 73       ARTICLE
VIII SUPPLEMENTAL INDENTURES; AMENDMENTS 74       Section 8.01 Supplemental
Indentures or Amendments Without Consent of Noteholders   Section 8.02
Supplemental Indentures With Consent 75 Section 8.03 Delivery of Supplements and
Amendments 76 Section 8.04 Execution of Supplemental Indentures, Etc 76      
ARTICLE IX COVENANTS; WARRANTIES 77       Section 9.01 Maintenance of Office or
Agency 77 Section 9.02 Existence and Good Standing 77 Section 9.03 Payment of
Taxes and Other Claims 77

 

 -ii- 

 

  

Section 9.04 Title to the Collateral; Lien 78 Section 9.05 Protection of
Collateral Pool 78 Section 9.06 Limitation on Sales of Assets 79 Section 9.07
Repurchase at the Option of Holders upon Change of Control 82 Section 9.08
Covenants 83 Section 9.09 Statement as to Compliance 84 Section 9.10 Reports by
Independent Public Accountants 85 Section 9.11 Reports to the Indenture Trustee
85 Section 9.12 Mergers and Consolidations 87 Section 9.13 Litigation 87 Section
9.14 Notice of Default 87 Section 9.15 Cooperate in Legal Proceedings 87 Section
9.16 Insurance Benefits 87 Section 9.17 Costs of Enforcement 88 Section 9.18
Performance of Issuer’s Duties by MBC 88 Section 9.19 Payment of Debts 88
Section 9.20 Capitalization of the Issuer 88 Section 9.21 Employees 88 Section
9.22 Performance by the Issuer 88 Section 9.23 Use of Proceeds 89 Section 9.24
Other Rights, Etc 89 Section 9.25 Books and Records 89 Section 9.26 Overhead
Expenses 89       ARTICLE X COVENANTS REGARDING MORTGAGE LOANS 89       Section
10.01 Collection of Mortgage Loan Payments; Collection Account; Release Account
 89 Section 10.02 Withdrawals From the Collection Account 90 Section 10.03
Investment of Funds in the Collection Account 91 Section 10.04 Mortgage Loans 92
Section 10.05 Compliance With Laws 93 Section 10.06 Other Rights, Etc 93 Section
10.07 Right to Release Any Portion of the Collateral Pool 93 Section 10.08
Mortgage Loan Matters 94 Section 10.09 Perfection of Security Interest 95      
ARTICLE XI TRANSFERS AND EXCHANGES OF MORTGAGE LOANS; RELEASE OF MORTGAGE LOANS
96       Section 11.01 Exchange of Mortgage Loans 96 Section 11.02 Release of
Mortgaged Property by the Issuer 97 Section 11.03 Mortgage Loan Substitution 97
Section 11.04 Release, Sale and Exchange of Defaulted Mortgage Loans 98 Section
11.05 Servicing Agent 99 Section 11.06 Servicing 101 Section 11.07 Termination
of Servicing Duties 102

 

 

 

 

ARTICLE XII COSTS 102       Section 12.01 Performance at the Issuer’s Expense
102       ARTICLE XIII   MISCELLANEOUS 103       Section 13.01 Execution
Counterparts 103 Section 13.02 Compliance Certificates and Opinions, Etc 103
Section 13.03 Form of Documents Delivered to Indenture Trustee 103 Section 13.04
No Oral Change 104 Section 13.05 Acts of Noteholders 104 Section 13.06
Computation of Percentage of Noteholders 105 Section 13.07 Notice to the
Indenture Trustee, the Issuer and Certain Other Persons 105 Section 13.08
Notices to Noteholders; Notification Requirements and Waiver 105 Section 13.09
Successors and Assigns 106 Section 13.10 Interest Charges; Waivers 106 Section
13.11 Severability Clause 106 Section 13.12 Governing Law 106 Section 13.13
WAIVER OF JURY TRIAL 107 Section 13.14 Effect of Headings and Table of Contents
107 Section 13.15 Benefits of Indenture 107 Section 13.16 Trust Obligation 107
Section 13.17 Inspection 107 Section 13.18 Method of Payment 108 Section 13.19
Trust Indenture Act Controls 108 Section 13.20 Intercreditor Agreement 108

 

Exhibits

 

Exhibit A Mortgage Loan Schedule Exhibit B-1 Form of Global Senior Secured Note
Exhibit B-2 Form of Definitive Global Senior Secured Note Exhibit C Form of
Interim Receipt Exhibit D Form of Receipt of Collateral Exhibit E Form of
Transferor Certificate Exhibit F List of Authorized Signatories Exhibit G Form
of Trustee Report Exhibit H Form of Servicer Notice

 

 -iii- 

 

  

INDENTURE, dated as of April 25, 2016, between MBC FUNDING II CORP., a New York
corporation, as issuer, MANHATTAN BRIDGE CAPITAL, INC., a New York corporation,
and WORLDWIDE STOCK TRANSFER, LLC, a New Jersey limited liability company, not
in its individual capacity, but solely as Indenture Trustee under this
Indenture.

 

PRELIMINARY STATEMENT

 

The Issuer (as defined herein) has duly authorized the execution and delivery of
this Indenture to provide for the issuance of the Senior Secured Notes
(collectively, the “Notes”), to be issued pursuant to this Indenture.

 

All things necessary to make the Notes, when the Notes are executed by the
Issuer, authenticated by the Authenticating Agent and delivered by the Indenture
Trustee hereunder and duly issued by the Issuer, the valid and legally binding
obligations of the Issuer enforceable in accordance with their terms, and to
make this Indenture a valid and legally binding agreement of the Issuer
enforceable in accordance with its terms, have been done.

 

GRANTING CLAUSE

 

The Issuer hereby Grants to the Indenture Trustee on the applicable Transfer
Date, as applicable, for the benefit of the Indenture Trustee and the
Noteholders, all of the Issuer’s right, title and interest in and to the assets
of the Issuer (individually, the “Collateral” and, collectively, the “Collateral
Pool”), including, without limitation, (a) all Receivables; (b) all general
intangibles; (c) all contract rights, rights of payment which have been earned
under a contract right, instruments, investment property, documents, chattel
paper, warehouse receipts, deposit accounts, money and securities; (d) all
Mortgage Loan Collateral and all payments required thereunder on and after such
Transfer Date, as applicable; (e) all Securities; (f) all Leasehold Interests;
(g) all commercial tort claims; (h) any guarantees of and security for the
Mortgagor Customers’ obligations under the Mortgage Loans, including any
security deposits thereunder; (i) all of the Issuer’s rights (but none of its
obligations) under the Asset Transfer Agreements; (j) the Collection Account,
the Payment Account and any other accounts established under the Transaction
Documents for purposes of receiving, retaining and distributing amounts received
in respect of the Collateral Pool and making payments to the Holders of the
Notes and making distributions to the Holders of the Notes, and all funds as may
from time to time be deposited therein; (k) all present and future claims,
demands and causes of action in respect of the foregoing; (l) all additional
amounts due to the Issuer from any Mortgagor Customer relating to the
Receivables, (m) if and when obtained by the Issuer, all real and personal
property of third parties in which the Issuer has been granted a lien or
security interest as security for the payment or enforcement of Receivables, (n)
all supporting obligations that secure payment or performance of any account,
chattel paper, document, general intangible, instrument or investment property,
(o) all Extraordinary Receipts, (p) any other goods, personal property or real
property now owned or hereafter acquired in which the Issuer has expressly
granted a security interest or may in the future grant a security interest to
the Indenture Trustee hereunder, or in any amendment or supplement hereto or
thereto, or under any other agreement between the Indenture Trustee and the
Issuer and (q) any and all indebtedness owing to the Issuer and any and all
Collateral securing such indebtedness; (r) all of the Issuer’s ledger sheets,
ledger cards, files, correspondence, records, books of account, business papers,
computers, computer software (owned by the Issuer or in which it has an
interest), computer programs, tapes, disks and documents relating to clauses (a)
through (q) hereof; and (s) all proceeds of the foregoing of every kind and
nature whatsoever, including, without limitation, all proceeds of the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind and other
forms of obligations and receivables, insurance proceeds (including hazard,
flood and credit insurance), security agreements, documents, eminent domain
proceeds, condemnation proceeds, tort claim proceeds, instruments and other
property that at any time constitute all or part of or are included in the
proceeds of the foregoing.

 

 -2- 

 

 

The foregoing Grants are made in trust to secure the payment of principal of and
interest on, and any other amounts owing in respect of, the Notes, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.

 

GENERAL COVENANT

 

IT IS HEREBY COVENANTED AND DECLARED that the Notes are to be authenticated by
the Authenticating Agent and delivered by the Indenture Trustee on the Closing
Date, that the Collateral is to be held by or on behalf of the Indenture Trustee
and that moneys in or from the Collateral Pool are to be applied by the
Indenture Trustee for the benefit of the Noteholders, subject to the further
covenants, conditions and trusts hereinafter set forth, and the Issuer does
hereby represent and warrant, and covenant and agree, to and with the Indenture
Trustee, for the equal and proportionate benefit and security of each
Noteholder, as follows:

 

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 1.01        Definitions.

 

Whenever used in this Indenture, including in the Preliminary Statement, the
Granting Clause and the General Covenant hereinabove set forth, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Section 1.01.

 

“1933 Act”: The Securities Act of 1933, as amended, and the rules, regulations
and published interpretations of the SEC promulgated thereunder from time to
time.

 

“1939 Act”: The Trust Indenture Act of 1939, as amended, and the rules,
regulations and published interpretations of the SEC promulgated thereunder from
time to time.

 

“1940 Act”: The Investment Company Act of 1940, as amended, and the rules,
regulations and published interpretations of the SEC promulgated thereunder from
time to time.

 

“Account Control Agreement”: An agreement with respect to a deposit account or a
securities account, in form and substance satisfactory to the Indenture Trustee,
pursuant to which the institution at which such account is maintained agrees to
follow the instructions or entitlement orders, as the case may be, of the
Indenture Trustee with respect thereto.

 

 -3- 

 

 

“Accrual Period”: With respect to the Notes and any Payment Date, the period
from and including the immediately preceding Payment Date (or, with respect to
the initial Accrual Period, from and including the May 16, 2016) to, but
excluding, such Payment Date.

 

“Act”: As defined in Section 13.05.

 

“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.

 

“ALTA”: The American Land Title Association.

 

“Applicable Laws”: As defined in Section 10.05(a).

 

“Appraised Value”: With respect to a Mortgaged Property, the value set forth in
an appraisal made in connection with the origination of the related Mortgage
Loan as the value of such Mortgaged Property.

 

“Asset Sale”: Any direct or indirect sale, conveyance, transfer, lease (that has
the effect of a disposition) or other disposition (including, without
limitation, any merger, consolidation or sale/leaseback transaction or upon any
condemnation, eminent domain or similar proceedings) to any Person other than
the Issuer, MBC or their respective wholly-owned subsidiaries, in one
transaction or a series of related transactions, of:

 

(i)            any Capital Stock of any subsidiary;

 

(ii)          any assets of the Issuer or MBC or any of their respective
subsidiaries which constitute substantially all of an operating unit or line of
business of the applicable transferor; or

 

(iii)          any other assets or asset (including, without limitation, any
Mortgage Loans or intellectual property) of the Issuer or MBC;

 

in each case, other than:

 

(1)          sales of property or equipment that, in the reasonable
determination of the Issuer, MBC or any such subsidiary, as the case may be, has
become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Issuer, MBC or such subsidiary;

 

(2)          with respect to MBC, any transaction between or among MBC and one
or more of its subsidiaries, but not including a sale of assets by the Issuer to
MBC; or

 

(3)any transaction constituting a Change of Control.

 -4- 

 

 

“Asset Purchase Agreement”: The Asset Purchase Agreement dated as of the Closing
Date between MBC and the Issuer, pursuant to which MBC shall transfer (whether
by sale or contribution) to the Issuer Eligible Mortgage Loans on the Closing
Date and may from time to time transfer (whether by sale or contribution) to the
Issuer Eligible Mortgage Loans after the Closing Date.

 

“Authenticating Agent”: As defined in Section 2.02(b).

 

“Authorized Officer”: With respect to the Issuer, any Person who is authorized
to act for the Issuer and who is identified on the list delivered by the Issuer
to the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).

 

“Authorized Persons”: As defined in Section 5.03(p).

 

“Available Amount”: The Available Amount for any Payment Date will consist of
(a) all amounts received in respect of the Collateral Pool during the related
Collection Period, (b) all amounts on deposit in the Collection Account on the
related Determination Date, including amounts earned, if any, on the investment
of funds on deposit in the Collection Account and the Release Account during the
related Collection Period, (c) Unscheduled Proceeds, (d) amounts received on
account of payments under any Mortgage Loan Guaranties, and (e) amounts received
on account of payments under the Guaranty, which amounts Indenture Trustee shall
promptly deposit into the Collection Account to the extent received from the
Guarantor under the Guaranty, and amounts received in connection with a
Redemption Payment; provided, however, that the following amounts will be
excluded from Available Amount: (i) amounts on deposit in the Release Account
and not transferred to the Collection Account for such Payment Date and
(ii) amounts withdrawn from the Collection Account to reimburse the Indenture
Trustee for any unreimbursed expenses.

 

“Best’s”: Best’s Key Rating Guide, as the same shall be amended from time to
time.

 

“Board of Directors”: With respect to any Person, (a) in the case of any
corporation, the board of directors of such Person, (b) in the case of any
limited liability company, the board of managers, if any, of such Person, (c) in
the case of any partnership, the Board of Directors of the general partner of
such Person and (d) in any other case, the functional equivalent of the
foregoing.

 

“Book-Entry Custodian”: Initially, the Indenture Trustee and thereafter, such
other bank or trust company as the Indenture Trustee shall appoint pursuant to
Section 2.10(a).

 

“Book-Entry Note”: Any Note registered in the name of the Depository or its
nominee.

 

“Business Day”: Any day other than a Saturday, a Sunday or a day on which
banking institutions are authorized or obligated by law or executive order to
remain closed in New York, New York or any other city in which the principal
office of the Issuer or the Indenture Trustee’s Office is located.

 

 -5- 

 

 

“Capital Stock”: Any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interests in (however
designated) corporate stock or other equity participations, including
partnership interests, whether general or limited, in any Person, including any
Capital Stock which is preferred as to the payment of dividends or
distributions, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over Capital Stock of any
other class in such Person and any right or interest which is classified as
equity in accordance with GAAP, but excluding any debt securities convertible
into Capital Stock, whether or not such debt securities include any right of
participation with Capital Stock.

 

“Cash”: Coin or currency of the United States or immediately available federal
funds, including such funds delivered by wire transfer.

 

“Change of Control” means the occurrence of any of the following events:

 

(a)        any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have beneficial ownership of all shares that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of Voting Stock representing 50% or
more of the total voting power of all outstanding Voting Stock of the Issuer,
MBC or any of its subsidiaries; or

 

(b)        the Issuer or MBC consolidates with, or merges with or into, another
Person (other than with or into the Issuer, MBC or a wholly-owned subsidiary of
the Issuer or MBC) other than any such transaction where immediately after such
transaction the Person or Persons that “beneficially owned” (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) immediately prior to such transaction,
directly or indirectly, Voting Stock representing 50% or more of the total
voting power of all outstanding Voting Stock of the Issuer, MBC or any of its
subsidiaries “beneficially own or owns” (as so determined), directly or
indirectly, Voting Stock representing 50% or more of the total voting power of
all outstanding Voting Stock of the surviving Person;

 

(c)        MBC, directly or indirectly through its subsidiaries, sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets (determined on a consolidated basis) to any Person (other than the
Issuer, MBC or a wholly owned subsidiary of the Issuer or MBC), other than any
such transaction where immediately after such transaction the Person or Persons
that “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) immediately prior to such transaction, directly or indirectly,
Voting Stock representing 50% or more of the total voting power of all
outstanding Voting Stock of the Issuer, “beneficially own or owns” (as so
determined), directly or indirectly, Voting Stock representing 50% or more of
the total voting power of all outstanding Voting Stock of the transferee Person;
or

 

(d)        during any consecutive two-year period, the Continuing Directors
cease for any reason to constitute a majority of the Board of Directors of the
Issuer, MBC or any such subsidiary; or

 

(e)         the adoption of a plan of liquidation or dissolution of the Issuer
or MBC.

 

 -6- 

 

 

“Change of Control Date”: As defined in Section 9.07(a).

 

“Change of Control Offer”: As defined in Section 9.07(a).

 

“Change of Control Purchase Date”: As defined in Section 9.07(a).

 

“Change of Control Purchase Price”: As defined in Section 9.07(b).

 

“Closing Date”: April 25, 2016.

 

“Code”: The Internal Revenue Code of 1986, as amended.

 

“Collateral”: As defined in the Granting Clause hereto.

 

“Collateral Assignment”:        A collateral assignment by a Mortgagor Customer
to the Issuer of all rents, issues and profits of the related Mortgaged
Property.

 

“Collateral Defect”: As defined in Section 2.04(a).

 

“Collateral Pool”: As defined in the Granting Clause hereto.

 

“Collateral Transfer”: Any voluntary or involuntary sale, transfer, exchange,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of
any options with respect to, or any other transfer or disposition of (directly
or indirectly, voluntarily or involuntarily, by operation of law or otherwise,
and whether or not for consideration or of record).

 

“Collection Account”: The segregated account or accounts created and maintained
by the Issuer pursuant to Section 10.01(b) and, in each case, pledged to the
Indenture Trustee for the benefit of the Noteholders, which shall be entitled
“MBC Funding II Corp., Blocked Collection Account”.

 

“Collection Period”: With respect to any Payment Date, the period commencing on
the day immediately following the preceding Determination Date (or, in the case
of the initial Payment Date, commencing immediately following the Closing Date)
and ending on and including the related Determination Date.

 

“Condemnation Proceeds”: All proceeds received in connection with any
condemnation or eminent domain proceeding with respect to any Mortgaged Property
other than proceeds applied to the restoration of such Mortgaged Property or
released to the related Mortgagor Customer.

 

“Continuing Directors”: As of any date of determination with respect to any
Person, any member of the Board of Directors of such Person who was (a) a member
of such Board of Directors on the Closing Date or (b) nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election.

 -7- 

 

 

“Control Person”: With respect to any Person, any other Person that constitutes
a “controlling person” within the meaning of Section 15 of the 1933 Act.

 

“Default”: Any event which is, or after notice, or direction of the Requisite
Majority or lapse of time would become, an Event of Default with respect to the
Notes.

 

“Defaulted Mortgage Loan”: A Mortgage Loan with respect to which a Mortgage Loan
Payment is overdue for more than 90 consecutive days (without taking into
account the required giving of notices under such Mortgage Loan).

 

“Definitive Note”: As defined in Section 2.10(a).

 

“Department of Labor Regulations”: Regulations at 29 C.F.R. 2510.3-101.

 

“Depository”: The Depository Trust Company or any successor depository hereafter
named as contemplated by Section 2.08. The nominee of the initial Depository,
for purposes of registering such Notes that are Book-Entry Notes, is Cede & Co.
The Depository shall at all times be a “clearing corporation” as defined in
Section 8-102(4) of the Uniform Commercial Code of the State of New York and a
“clearing agency” registered pursuant to the provisions of Section 17A of the
Exchange Act.

 

“Depository Participant”: A broker, dealer, bank or other financial institution
or other Person for whom from time to time the Depository effects book-entry
transfers and pledges of securities deposited with the Depository.

 

“Designated Participation Loan”: Any Mortgage Loan (a) with respect to which
participations have been sold or which the Issuer own less than 100% and (b) in
aggregate principal amount of not more than $4,000,000 as of the Closing Date.

 

“Determination Date”: As to any Payment Date, the 4th Business Day preceding
such Payment Date.

 

“Determination Date Report”: As defined in Section 9.11(a).

 

“Document Defect”: As defined in Section 2.03(e).

 

“Early Amortization Period”: An Early Amortization Period will commence as of
any Determination Date if an Event of Default, after giving effect to any grace
period, shall have occurred and shall not have been cured or waived in
accordance with the terms hereof.

 

“Eligible Account”: Any of (a) a segregated account maintained with a federal-
or state- chartered depository institution or trust company, the long-term
deposit or long-term unsecured debt obligations of which (or of such
institution’s parent holding company) are rated “AA-” or better by S&P, if the
deposits are to be held in the account for more than 30 days, or the short- term
deposit or short-term unsecured debt obligations of which (or of such
institution’s parent holding company) are rated “A-1” by S&P if the deposits are
to be held in the account for 30 days or less, in any event at any time funds
are on deposit therein, or (b) a segregated trust account maintained with a
federal- or state-chartered depository institution or trust company acting in
its fiduciary capacity, which, in the case of a state-chartered depository
institution or trust company is subject to regulations regarding fiduciary funds
on deposit therein substantially similar to 12 C.F.R. § 9.10(b), and which, in
either case, has a combined capital and surplus of at least $50,000,000 and is
subject to supervision or examination by federal or state authority; provided,
that in the event that any of the accounts no longer qualifies as an Eligible
Account under this definition, the Issuer shall promptly, and in no event later
than thirty (30) calendar days following such account failing to qualify as an
Eligible Account, direct the Indenture Trustee to remit all funds in such
account to a specified Eligible Account. Eligible Accounts may bear interest.

 

 -8- 

 

 

“Eligible Mortgage Loans”: Mortgage Loans secured by a first mortgage lien on
real property, (a) as to which the representations and warranties in Section
2.21 are correct, and (b) as to which the Mortgage Loan File has been delivered
to Indenture Trustee; provided that, in no event shall (i) any Eligible Mortgage
Loan be a security for purposes of any securities or blue- sky laws, and (ii)
any Defaulted Mortgage Loan or Designated Participation Loan be an Eligible
Mortgage Loan.

 

“Embargoed Person”: As defined in Section 2.20(n).

 

“Environmental Laws”: Any and all local, state, federal or other governmental
authority, statute, ordinance, code, order, decree, law, rule or regulation
pertaining to or imposing liability or standards of conduct concerning
environmental regulation, contamination or clean-up including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, the Resource Conservation and Recovery Act, as amended, the
Emergency Planning and Community Right-to-Know Act of 1986, as amended, the
Hazardous Substances Transportation Act, as amended, the Solid Waste Disposal
Act, as amended, the Clean Water Act, as amended, the Clean Air Act, as amended,
the Toxic Substance Control Act, as amended, the Safe Drinking Water Act, as
amended, the Occupational Safety and Health Act, as amended, any state
super-lien and environmental statutes and all rules and regulations adopted in
respect to the foregoing laws whether presently in force or coming into being
and/or effectiveness hereafter.

 

“ERISA”: The Employee Retirement Income Security Act of 1974, as amended.

 

“Event of Default”: As defined in Section 4.01.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Exchanged Loan” or “Exchanged Loans”: A Mortgage Loan or Mortgage Loans that
are exchanged for a Qualified Substitute Loan or Qualified Substitute Loans, in
each case, in a transaction with a third party or MBC and subject to the
conditions and limitations described in this Indenture.

 

“Extraordinary Receipts”: Any cash proceeds received by the Issuer not in the
ordinary course of business, including, without limitation, (a) foreign, United
States, state or local tax refunds, (b) judgments, proceeds of settlements or
other consideration of any kind in connection with any cause of action, (c)
condemnation awards (and payments in lieu thereof), (d) indemnity payments and
(e) any adjustment received in connection with any purchase price in respect of
an acquisition.

 

 -9- 

 

 

“Fair Market Value”: At any time, with respect to any Mortgage Loan, a price
determined by Issuer in accordance with the Servicing Standard to be the most
probable price which such Mortgage Loan should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and the seller
each acting prudently and knowledgeably, and assuming the price is not affected
by undue stimulus. In making any such determination, the Issuer may obtain an
MAI appraisal of the related Mortgaged Property and shall assume the
consummation of a sale as of a specified date and the passing of title from the
seller to the buyer under conditions whereby: (a) the buyer and the seller are
typically motivated; (b) both parties are well informed or well advised, and
acting in what they consider their best interests; (c) payment is made in terms
of cash in United States dollars or in financial arrangements comparable
thereto; and (d) the price represents the normal consideration for such
Mortgaged Property unaffected by special or creative financing or sales
concessions granted by anyone associated with the sale.

 

“FDIC”: Federal Deposit Insurance Corporation or any successor.

 

“FHLMC”: The Federal Home Loan Mortgage Corporation, or any successor thereto.

 

“Final Payment Date”: With respect to the Notes, the Payment Date on which the
final payment on the Notes is made hereunder by reason of all principal,
interest and other amounts due and payable on the Notes having been paid.

 

“FNMA”: The Federal National Mortgage Association, or any successor thereto.

 

“Foreclosure Proceeding”: Any proceeding, non-judicial sale or power of sale or
other proceeding (judicial or non-judicial) for the foreclosure, sale or
assignment of any Mortgaged Property or Mortgage Loan or any other Collateral
under any Mortgage.

 

“GAAP”: Such accounting principles as are generally accepted in the United
States.

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.

 

“Grant”: To mortgage, pledge, bargain, sell, warrant, alienate, demise, convey,
assign, transfer, create and grant a security interest in and right of set-off
against, deposit, set over and confirm. A Grant of Collateral shall include all
rights, powers and options (but none of the obligations) of the granting party
thereunder, including, without limitation, the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such Collateral and all other moneys and proceeds 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 which the granting party is or may be entitled to do or
receive thereunder or with respect thereto.

 -10- 

 

 

“Guarantor” shall mean any Person who may hereafter guarantee payment or
performance of the whole or any part of the Issuer’s obligations under this
Indenture, the Notes or any other Transaction Document.

 

“Guaranty” shall mean any guaranty of the payment or performance of the whole or
any part of Issuer’s obligations under this Indenture, the Notes or any other
Transaction Document, in whole or in part, executed at any time by a Guarantor
in favor of the Indenture Trustee for the ratable benefit of the Noteholders.

 

“Hazardous Substances”: Any hazardous and/or toxic, dangerous and/or regulated,
substances, wastes, materials, raw materials which include hazardous
constituents, pollutants or contaminants including without limitation,
petroleum, tremolite, anthlophylie, actinolite or polychlorinated biphenyls and
any other substances or materials which are included under or regulated by
Environmental Laws or which are considered by scientific opinion to be otherwise
dangerous in terms of the health, safety and welfare of humans.

 

“Indenture”: This instrument as originally executed or as it may be supplemented
or amended from time to time by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof.

 

“Indenture Trustee”: Worldwide Stock Transfer, LLC, a New Jersey limited
liability company, in its capacity as trustee under this Indenture, or its
successor in interest, or any successor trustee appointed as provided in this
Indenture.

 

“Indenture Trustee Fee”: With respect to any Determination Date, an amount on a
monthly basis equal to the amount set forth in a fee agreement between Indenture
Trustee and the Issuer.

 

“Indenture Trustee’s Office”: The corporate trust office of the Indenture
Trustee at which at any particular time this Indenture shall be administered,
which office at the date of the execution of this Indenture is located at One
University Plaza, Suite 505, Hackensack, New Jersey 07601, Attention: Jonathan
Gellis, or at such other address as the Indenture Trustee or Note Registrar may
designate from time to time.

 

“Independent”: When used with respect to any specified Person, any such Person
who (a) is in fact independent of the Indenture Trustee, the Issuer and any and
all Affiliates thereof, (b) does not have any direct financial interest in or
any material indirect financial interest in any of the Indenture Trustee, the
Issuer or any Affiliate thereof, and (c) is not connected with the Indenture
Trustee, the Issuer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the
Indenture Trustee or the Issuer or any Affiliate thereof merely because such
Person is the beneficial owner of 2% or less of any class of securities issued
by the Indenture Trustee, the Issuer or any Affiliate thereof, as the case may
be. The Indenture Trustee may rely, in the performance of any duty hereunder,
upon the statement of any Person contained in any certificate or opinion that
such Person is Independent according to this definition.

 

“Initial Principal Balance”: $6,000,000.

 

 -11- 

 

 

“Insurance Proceeds”: Proceeds paid under any Property Insurance Policy, to the
extent such proceeds are not applied to the restoration of the related Mortgaged
Property in accordance with the related Mortgage Loan.

 

“Interested Person”: The Issuer, MBC or an Affiliate of any such Person.

 

“Issuer”: MBC Funding II Corp., a New York corporation.

 

“Issuer Order”: A written order signed in the name of the Issuer by a
Responsible Officer.

 

“Issuer Request”: A written request signed in the name of the Issuer by a
Responsible Officer.

 

“Issuer’s Office”: The principal office of the Issuer, located at 60 Cutter Mill
Road, Suite 205, Great Neck, New York 11021, or at such other address as the
Issuer may designate from time to time.

 

“Leasehold Interests” shall mean all of the Issuer’s right, title and interest
in and to any real property owned by a Person other than the Issuer, whether as
tenant, lessee, licensee, operator or otherwise.

 

“Legal Requirements”: With respect to each Mortgaged Property, all federal,
state, county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting such Mortgaged Property or any part thereof, or the
construction, use, alteration or operation thereof, or any part thereof, whether
now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto.

 

“Letter of Representations”: With respect to the Notes, the Letter of
Representations, dated the Closing Date, among the Depository, the Indenture
Trustee and the Issuer.

 

“Liquidation Proceeds”: All net proceeds realized by the Issuer in respect of
the purchase or sale of a Mortgage Loan.

 

“LTV”: With respect to any Mortgage Loan, the ratio of the original outstanding
principal amount of such Mortgage Loan to (a) in the case of a Mortgage Loan the
proceeds of which were used to acquire the related Mortgaged Property, the
lesser of (i) the Appraised Value of the related Mortgaged Property at
origination or (ii) if such Mortgaged Property was purchased within 12 months of
the origination of such Mortgage Loan, the purchase price of such Mortgaged
Property and (b) in the case of a Mortgage Loan the proceeds of which were used
to finance construction of the related Mortgaged Property, the related
construction costs.

 

“MAI”: A designation signifying that the designee is a Member of the Appraisal
Institute.

 

 -12- 

 

 

“Mandatory Principal Payment”: With respect to each Payment Date, an amount
equal to the result of (a) 120% of the Outstanding Principal Balance as of the
last Business Day of the most recently completed calendar month preceding such
Payment Date, minus (b) the sum of the aggregate principal amount of Eligible
Mortgage Loans plus amounts on deposit in the Collection Account and other
deposit accounts of the Issuer subject to Account Control Agreements, in each
case as of such last Business Day; provided that if such result is less than
zero, the Mandatory Principal Payment for such Payment Date shall be zero.

 

“Maturity”: With respect to any Note, the date as of which the principal of and
interest on such Note has become due and payable as herein provided, whether on
the Final Payment Date, by acceleration or otherwise.

 

“MBC”: Manhattan Bridge Capital, Inc., a New York corporation.

 

“Mortgage”: With respect to any Mortgaged Property, a mortgage (or deed of trust
or deed to secure debt), assignment of Mortgage Loans and rents, security
agreement and fixture filing or similar document executed by a Mortgagor
Customer pursuant to which such Mortgagor Customer grants a lien on its interest
in such Mortgaged Property in favor of the Issuer (whether as assignee of MBC or
otherwise).

 

“Mortgage Interest Rate”: With respect to a Mortgage Note, the annual rate of
interest borne on such Mortgage Note.

 

“Mortgage Loan”: A mortgage loan provided to a Mortgagor Customer and which
mortgage loan includes, without limitation, (a) a Mortgage Note, the related
Mortgage and all other Mortgage Loan Documents and (b) all right, title and
interest of the Issuer in and to the Mortgaged Property covered by such
Mortgage.

 

“Mortgage Loan Collateral”: All of the Issuer’s right, title and interest in, to
and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located:

 

(a)        all Mortgage Loans;

 

(b)        all Mortgage Loan Documents, including without limitation all
promissory notes, and all Servicing Records (as defined in Section 11.06(b)),
servicing agreements and any other collateral pledged or otherwise relating to
such Mortgage Loans, together with all files, documents, instruments, surveys,
certificates, correspondence, appraisals, computer programs, computer storage
media, accounting records and other books and records relating thereto;

 

(c)        all mortgage guaranties and insurance (issued by governmental
agencies or otherwise) and any mortgage insurance certificate or other document
evidencing such mortgage guaranties or insurance relating to any Mortgage Loan
and all claims and payments thereunder;

 

(d)        all other insurance policies and insurance proceeds relating to any
Mortgage Loan or the related Mortgaged Property;

 

(e)        all interest rate protection agreements, relating to or constituting
any and all of the foregoing;

 

 -13- 

 

 

(f)        all deposit accounts or collection accounts to which payments on
account of any Mortgage Loan are deposited or remitted and all monies from time
to time on deposit therein;

 

(g)        all “general intangibles”, “accounts” and “chattel paper” as defined
in the Uniform Commercial Code relating to or constituting any and all of the
foregoing; and

 

(h)        any and all replacements, substitutions, distributions on or proceeds
of any and all of the foregoing.

 

“Mortgage Loan Documents”: With respect to a Mortgage Loan, the documents
comprising the Mortgage Loan File for such Mortgage Loan.

 

“Mortgage Loan File”: For any Mortgage Loan, (a) the original Mortgage Note
bearing all intervening endorsements, duly endorsed to the Indenture Trustee,
(b) the original Mortgage(s) securing each Mortgage Note with evidence of
recording thereon or copies certified by the related recording office, (c) the
Collateral Assignment, if any, executed in connection with such Mortgage(s), (d)
any original stock certificates (accompanied by applicable stock powers),
instruments, chattel paper or other collateral securing any Mortgage Loan in
which the perfection of the Issuer’s lien is based upon the Issuer’s possession
thereof, (e) the valuation or appraisal, if any, of the subject Mortgaged
Property prepared by a third party valuation or appraisal service, (f) the
Related Title Policy, (g) the evidence of liability and property/casualty
coverage relating to the Mortgaged Property, and (h) an opinion, if any, of
counsel, addressed to the Issuer (or its predecessor in interest) that the
Mortgage Note, the Mortgage(s) and the Collateral Assignments, if any, are the
valid and binding obligations of the parties thereto enforceable in accordance
with their terms and have been duly and validly endorsed or assigned to the
Issuer (or its predecessor in interest).

 

“Mortgage Loan Guarantor”: Any guarantor under any Mortgage Loan Guaranty.

 

“Mortgage Loan Guaranty”: With respect to any Mortgage Loan, the guaranty
related to such Mortgage Loan executed by an Affiliate or parent of the related
Mortgagor Customer in favor of MBC or the Issuer.

 

“Mortgage Loan Payment”: With respect to a Mortgage Loan, the scheduled payment
of principal and/or interest on such Mortgage Loan required to be made pursuant
to the provisions of the related Mortgage Note.

 

“Mortgage Loan Schedule”: The list of Mortgage Loans attached as Exhibit A
hereto setting forth the following information with respect to each Mortgage
Loan:

 

(i)        the Mortgagor Customer;

 

(ii)        the termination or maturity date for such Mortgage Loan;

 

(iii)        the street address (including city, state and zip code) of the
Mortgaged Property;

 

 -14- 

 

 

(iv)        the applicable Mortgaged Property number as it appears on the tax
maps of the municipality in which such Mortgaged Property is situated;

 

(v)         the Appraised Value, if available, of such Mortgaged Property;

 

(vi)        the initial principal amount and the then current outstanding
principal amount of such Mortgage Loan;

 

(vii)       the Mortgage Interest Rate at which such Mortgage Loan accrues
interest; and

 

(viii)      the monthly interest payment with respect to such Mortgage Loan.

 

“Mortgage Note”: The original executed promissory note or other evidence of the
indebtedness of a Mortgagor Customer with respect to a Mortgage Loan.

 

“Mortgaged Property”: The real property (including all improvements, buildings,
fixtures, building equipment and personal property thereon and all additions,
alterations and replacements made at any time with respect to the foregoing) and
all other collateral securing repayment of the debt evidenced by a Mortgage
Note.

 

“Mortgagor Customer”: With respect to each Mortgage Loan, the obligor on the
related Mortgage Note.

 

“Net Cash Proceeds”: The aggregate proceeds in the form of cash or Permitted
Investments received by the Issuer, MBC or their respective subsidiaries in
respect of any Asset Sale, including all cash or Permitted Investments received
upon any sale, liquidation or other exchange of proceeds of Asset Sales received
in a form other than cash or Permitted Investments, net of:

 

(i)           the direct costs relating to such Asset Sale (including, without
limitation, reasonable legal, accounting and investment banking fees, brokerage
fees and sales commissions) and any relocation expenses incurred as a result
thereof;

 

(ii)          taxes paid or payable directly as a result thereof;

 

(iii)        with respect to an Asset Sale by MBC, amounts required to be
applied to the repayment of indebtedness secured by a lien on the asset or
assets that were the subject of such Asset Sale; and

 

(iv)        amounts deemed, in good faith, by the Board of Directors of the
Issuer or MBC, as the case may be (or a duly authorized committee thereof), to
be set aside as a reserve, in accordance with GAAP, against any liabilities
associated with such assets which are the subject of such Asset Sale; provided
that the amount of any such reserves shall be deemed to constitute Net Cash
Proceeds at the time such reserves shall have been released or are not otherwise
required to be retained as a reserve.

 

 -15- 

 

 

“Net Investment Earnings”: The amount by which the aggregate of all interest and
other income realized during such Collection Period on funds held in the
Collection Account, Release Account and any other accounts established from time
to time, if any, exceeds the aggregate of all losses, if any, incurred during
such Collection Period in connection with the investment of such funds in
accordance with Section 10.03.

 

“Net Proceeds Offer”: As defined in Section 9.06(e).

 

“Net Proceeds Offer Payment Date”: As defined in Section 9.06(e).

 

“Net Proceeds Trigger Date”: As defined in Section 9.06(e).

 

“Note”: Any of the Issuer’s Senior Secured Notes, executed, authenticated and
delivered hereunder, substantially in the forms attached as Exhibit B hereto.

 

“Note Interest”: On any Payment Date, the interest accrued during the related
Accrual Period at the Note Rate, applied to the Outstanding Principal Balance of
the Notes before giving effect to any payments of principal on such Payment
Date. The Note Interest with respect to the Notes will be calculated on an
actual/360 basis.

 

“Note Owner”: With respect to a Book-Entry Note, the Person who is the
beneficial owner of such Note as reflected on the books of the Depository, a
Depository Participant or an indirect participating brokerage firm for which a
Depository Participant acts as agent. With respect to a Definitive Note, the
Person who is the holder of such Note as reflected on the Note Register.

 

“Note Rate”: With respect to the Notes, six percent (6.0%) per annum.

 

“Note Register”: As defined in Section 2.06(a).

 

“Note Registrar”: Initially, the Indenture Trustee and thereafter, such other
bank or trust company as the Indenture Trustee shall appoint pursuant to Section
2.06(a).

 

“Noteholder” or “Holder”: With respect to any Note, the Person in whose name
such Note is registered on the Note Register maintained pursuant to Section
2.06. All references herein to “Noteholders” shall reflect the rights of Note
Owners as they may indirectly exercise such rights through the Depository and
the Depository Participants, except as otherwise specified herein; provided,
however, that the parties hereto shall be required to recognize as a
“Noteholder” or “Holder” only the Person in whose name a Note is registered in
the Note Register as of the related Record Date.

 

“Notice of Default”: As defined in Section 5.02.

 

“Officer’s Certificate”: A certificate signed by any Responsible Officer of the
Issuer or of the Indenture Trustee, as the case may be.

 

 -16- 

 

 

“Opinion of Counsel”: A written opinion of counsel (which shall be rendered by
counsel that is Independent) in form and substance reasonably acceptable to and
delivered to the addressees thereof.

 

“Outstanding”: When used with respect to Notes, means, as of any date of
determination, any Note theretofore authenticated and delivered under this
Indenture, except:

 

(i)        Notes theretofore canceled by the Note Registrar or delivered to the
Note Registrar for cancellation (other than any Note as to which any amount that
has become due and payable in respect thereof has not been paid in full); and

 

(ii)        Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, other than any such
Notes in respect of which there shall have been presented to the Note Registrar
proof satisfactory to it that such Notes are held by a bona fide purchaser in
whose hands such Notes are valid obligations of the Issuer;

 

provided, however, that in determining whether the Holders of the requisite
amount or percentage have given any request, demand, authorization, vote,
direction, notice, consent or waiver hereunder, Notes owned by an Interested
Person shall be disregarded and deemed not to be Outstanding (other than with
respect to a request for consent pursuant to Section 8.02 or unless any such
Person or Persons owns all such Notes), 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 which the Note
Registrar knows to be so owned shall be so disregarded. Notes owned by an
Interested Person which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Note Registrar
in its sole discretion the pledgee’s right to act with respect to such Notes and
that the pledgee is not an Interested Person.

 

“Outstanding Principal Balance”: With respect to the Notes and any date of
determination, the Initial Principal Balance less the sum of all principal
payments actually distributed to the Holders of the Notes as of such date of
determination.

 

“Ownership Interest”: As to any Note, any ownership or security interest in such
Note as held by the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.

 

“Patriot Act” The USA Patriot Act Title III of 107 Public Law 56 (October 26,
2001) and in other statutes and all orders, rules and regulations of the United
States government and its various executive departments, agencies and 150
offices, related to the subject matter thereof, including Executive Order 13224
effective September 24, 2001.

 

“Payment Account”: The segregated account established in the name of the
Indenture Trustee pursuant to Section 2.14(a).

 

“Payment Date”: The 15th day of each calendar month, commencing on June 15,
2016; provided that if such 15th day is not a Business Day, the Payment Date
shall be the next succeeding Business Day.

 -17- 

 

 

“Paying Agent”: As defined in Section 2.06(b).

 

“Payoff Amount”: With respect to any Released Loan, an amount equal to the then
current unpaid principal amount thereof, plus interest thereon, related to such
Released Loan.

 

“Permitted Encumbrances”: As defined in Section 2.21(i).

 

“Permitted Investments”: Any one or more of the following obligations or
securities:

 

(i)        direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America or any agency
or instrumentality thereof, provided that such obligations are backed by the
full faith and credit of the United States of America and have a predetermined,
fixed amount of principal due at maturity (that cannot vary or change) and that
each such obligation has a fixed interest rate or has its interest rate tied to
a single interest rate index plus a single fixed spread;

 

(ii)        obligations of agencies or instrumentalities of the United States of
America that are not backed by the full faith and credit of the United States of
America, provided that such obligations have a predetermined, fixed amount of
principal due at maturity (that cannot vary or change), do not have an “r”
highlight attached to any rating and that each such obligation has a fixed
interest rate or has its interest rate tied to a single interest rate index plus
a single fixed spread;

 

(iii)        uncertificated certificates of deposit, time deposits, bankers’
acceptances and repurchase agreements having maturities of not more than 365
days, of any bank or trust company organized under the laws of the United States
of America or any state thereof, provided that such items are rated in the
highest short-term debt rating category of the applicable Rating Agencies (or,
if not rated by the applicable Rating Agency, have a comparable rating from
another nationally recognized statistical rating organization), do not have an
“r” highlight affixed to its rating and have a predetermined fixed amount of
principal due at maturity (that cannot vary or change);

 

(iv)        commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United States of
America or any state thereof (or of any corporation not so incorporated,
provided that the commercial paper is denominated in United States dollars and
amounts payable thereunder are not subject to any withholding imposed by any
non-United States jurisdiction) that is rated in the highest short-term debt
rating category of the applicable Rating Agencies, does not have an “r”
highlight affixed to its rating, has a predetermined fixed amount of principal
due at maturity (that cannot vary or change) and has a fixed interest rate or
has its interest rate tied to a single interest rate index plus a single fixed
spread, or any demand notes that constitute vehicles for commercial paper rated
in the highest unsecured commercial or finance company paper rating category of
the applicable Rating Agencies;

 

(v)        units of money market funds that have as one of their investment
objectives the maintenance of a constant net asset value and that are rated in
the highest applicable rating category of the applicable Rating Agencies; and

 

 -18- 

 

 

(vi)        repurchase agreements collateralized by United States Treasury
securities or securities guaranteed by FNMA or FHLMC with any registered
broker/dealer subject to SIPC jurisdiction or any commercial bank insured by the
FDIC, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
obligation rated by the applicable Rating Agencies in their highest short-term
category.

 

“Person”: Any individual, corporation, partnership, limited liability company,
joint venture, joint-stock company, estate, trust, association, unincorporated
organization, or any federal, state, county or municipal government or any
political subdivision thereof.

 

“Plan”: Any one of: (a) (i) an “employee benefit plan”, as defined in Section
3(3) of ERISA that is subject to the provisions of Title I of ERISA, or (ii) a
“plan”, as defined in Section 4975 of the Code, that is subject to the
provisions of Section 4975 of the Code; (b) an entity whose underlying assets
include assets of any such employee benefit plan or plan as set forth in clause
(a) of this definition by reason of an investment in such entity by such
employee benefit plan or plan; or (c) a governmental or church plan that is
subject to any federal, state or local law that is materially similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code.

 

“Prime Rate”: The “prime rate” published in the “Money Rates” section of The
Wall Street Journal, as such “prime rate” may change from time to time. If The
Wall Street Journal ceases to publish the “prime rate,” then the Indenture
Trustee shall select an equivalent publication that publishes such “prime rate”;
and if such “prime rate” is no longer generally published or is limited,
regulated or administered by a governmental or quasi-governmental body, then the
Indenture Trustee shall select a comparable interest rate index. In either case,
such selection shall be made by the Indenture Trustee in its sole discretion and
the Indenture Trustee shall notify the Issuer in writing of its selection.

 

“Proceeding”: Any suit in equity, action at law or other judicial or
administrative proceeding.

 

“Property Insurance Policy”: With respect to any Mortgaged Property, any hazard
insurance policy, flood insurance policy, or other insurance policy that is
maintained from time to time in respect of such Mortgaged Property (including,
without limitation, any blanket insurance policy maintained by or on behalf of
the applicable Mortgagor Customer).

 

“Prospectus”: Collectively, the preliminary Prospectus dated March 22, 2016, the
final Prospectus dated April 15, 2016 and the amended final Prospectus dated
April 22, 2016, in each case with respect to the Notes.

 

“Put Right Purchase Date”: As defined in Section 7.02(a)(a).

 

“Put Right Purchase Price”: As defined in Section 7.02(a)(a).

 

“Qualified Insurer”: With respect to any Mortgaged Property, an insurance
company duly qualified as such under the laws of the states in which such
Mortgaged Property is located, duly authorized and licensed in such states to
transact the applicable insurance business and to write the insurance provided,
and approved as an insurer by FNMA and FHLMC and whose claims paying ability is
rated in the two highest rating categories by any of the rating agencies with
respect to primary mortgage insurance and in the two highest rating categories
by Best’s with respect to hazard and flood insurance.

 

 -19- 

 

 

“Qualified Substitute Loan”: (a) A Mortgage Loan acquired by the Issuer in
substitution for any Exchanged Loan that, on the date of such substitution, (i)
has an Outstanding Principal Balance that, when combined with the Outstanding
Principal Balance of all other Qualified Substitute Loans to be acquired by the
Issuer on such date of substitution, is at least equal to the Outstanding
Principal Balance of all Exchanged Loans on the date of substitution, (ii)
complies, in all material respects, with all of the representations and
warranties made with respect to Mortgage Loans under this Indenture (with each
date therein referring to the date of substitution), and (iii) has the same or
greater Mortgage Interest Rate as the Exchanged Loans, or (b) a Mortgage Loan
acquired by the Issuer with proceeds deposited in the Release Account that, on
the date of such acquisition, complies, in all material respects, with all of
the representations and warranties made with respect to Mortgage Loans under
this Indenture (with each date therein referring to the date of acquisition).

 

“Rating Agency”: S&P, any other nationally recognized statistical rating
organization and their respective successors in interest.

 

“Receivables” shall mean and include, as to the Issuer, all of the Issuer’s
accounts, contract rights, instruments (including those evidencing indebtedness
owed to the Issuer by its Affiliates), documents, chattel paper (including
electronic chattel paper), general intangibles relating to accounts, drafts and
acceptances (including payment intangibles), and all other forms of obligations
owing to the Issuer arising out of or in connection with a Mortgage Loan, all
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically assigned to the
Indenture Trustee hereunder.

 

“Record Date”: As to any Payment Date with respect to Book-Entry Notes, the
Business Day immediately preceding such Payment Date. As to any Payment Date
with respect to Definitive Notes, the last Business Day of the prior calendar
month or, in the case of the initial Payment Date, the Closing Date.

 

“Redemption Date”: As defined in Section 7.01.

 

“Redemption Payment”: A Mandatory Principal Payment, Voluntary Prepayment,
Change of Control Purchase Price or payment in connection with a Net Proceeds
Offer.

 

“Related Business” means those businesses in which the Issuer or MBC is engaged
on the Closing Date, or that are reasonably related, ancillary, incidental or
complementary thereto, as determined by the Issuer’s or MBC’s, as the case may
be, board of directors.

 

“Related Title Policy”: with respect to a Mortgaged Property, a policy of title
insurance insuring the first priority of a Mortgage, in the form described in
Section 2.21(n).

 

“Release Account”: The segregated account established and maintained by the
Issuer for the deposit of cash proceeds from the sale of any Mortgage Loan.

 

 -20- 

 

 

“Release Price”: With respect to any Mortgage Loan, an amount equal to (a) with
respect to any Defaulted Mortgage Loan or any Released Loan, the greater of (i)
the Fair Market Value of such Mortgage Loan and (ii) the outstanding principal
amount of such Mortgage Loan, (b) the Payoff Amount with respect to any
Mortgaged Property released due to a Collateral Defect, or (c) the Fair Market
Value for any Released Loan sold to a third party; provided that the Release
Price for a Mortgage Loan that has been paid in full shall be zero if all
payments on account of such Mortgage Loan have been deposited to the Collection
Account.

 

“Released Loan”: As defined in Section 11.02(a).

 

“Remittance Date”: The Business Day preceding each Payment Date.

 

“Removed Mortgage Loan”: A Released Loan or Exchanged Loan that has either been
released or substituted that is removed from the Collateral pursuant to Section
2.04 and ARTICLE XI.

 

“Required Conditions”: With respect to any proposed substitution, release,
exchange or lease transfer of a Mortgage Loan, the Required Conditions will be
satisfied if the Issuer shall submit to the Indenture Trustee, not less than ten
(10) days prior to the date of such release, a release of lien of the Mortgage
for such Mortgage Loan for execution by the Indenture Trustee. Such release
shall be in a form appropriate in each jurisdiction in which the Mortgage Loan
is located. In addition, the Issuer shall provide all other documentation that
is reasonably required to be delivered by any party hereto in connection with
such substitution, release, exchange or lease transfer, together with an
Officer’s Certificate certifying that such documentation (a) is in compliance
with all Legal Requirements, and (b) will effect such release in accordance with
the terms of this Indenture.

 

“Requisite Majority”: The Noteholders representing more than 50% of the
Outstanding Principal Balance; provided that Interested Persons shall not be
considered Noteholders and the Outstanding Principal Balance shall be reduced by
the principal amount of Notes owned by Interested Persons in each case for
purposes of this definition.

 

“Resolution”: With respect to the Issuer, a copy of a resolution certified by an
Authorized Officer to have been duly adopted by the Issuer and to be in full
force and effect on the date of such certification.

 

“Responsible Officer”: With respect to the Indenture Trustee, any officer of the
Indenture Trustee customarily performing functions with respect to corporate
trust matters and having direct responsibility for the administration of this
Indenture and, with respect to a particular corporate trust matter under this
Indenture, any other officer to whom such matter is referred because of such
officer’s knowledge of and familiarity with the particular subject, in each
case, having direct responsibility for the administration of this Indenture;
and, with respect to the Issuer, any officer or number of officers or other
Person or number of Persons duly authorized to perform the indicated action on
behalf of the Issuer.

 

“S&P”: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.

 -21- 

 

 

“SEC”: The Securities and Exchange Commission.

 

“Securities”: All marketable securities and investment property owned by the
Issuer, whether now existing or hereafter created, including any held by any
intermediary in any “street” name, pursuant to any custody arrangement or
otherwise.

 

“Servicing Standard”: To service the Mortgage Loans in the same manner in which,
and with the same care, skill, prudence and diligence with which, MBC or the
Issuer, as the case may be, services and administers similar Mortgage Loans for
their own account and the account of their Affiliates or any third-party
portfolios, to the extent applicable, in material compliance with all applicable
laws, but without regard to (i) any known relationship that MBC or the Issuer,
an Affiliate of MBC or the Issuer may have with any Mortgagor Customer, any of
their respective Affiliates or any other party to the Transaction Documents or
(ii) the ownership, or servicing or management for others, by MBC of any other
Mortgage Loans or real properties.

 

“Taxes”: As defined in Section 9.03(a).

 

“Transaction Documents”: This Indenture, the Asset Transfer Agreements, the
organizational documents of the Issuer, each Account Control Agreement, each
Guaranty, the Webster Guaranty and any related supplements or amendments to the
Transaction Documents, and any and all other agreements, documents and
instruments executed and delivered by or on behalf or in support of the Issuer
with respect to the issuance and sale of the Notes, as the same may from time to
time be amended, modified, supplemented or renewed.

 

“Transfer”: Any direct or indirect transfer, sale, pledge, hypothecation or
other form of assignment of any Ownership Interest in a Note.

 

“Transfer Date”: The Closing Date and any date thereafter on which a Mortgaged
Loan is acquired by the Issuer.

 

“Treasury Regulations”: Temporary, final or proposed regulations (to the extent
that by reason of their proposed effective date such proposed regulations would
apply to the Issuer) of the United States Department of the Treasury.

 

“Trustee Report”: As defined in Section 6.01(a).

 

“UCC”: The Uniform Commercial Code as in effect in any applicable jurisdiction.

 

“UCC Financing Statement”: A financing statement executed and in form sufficient
for filing pursuant to the UCC, as in effect in the relevant jurisdiction.

 

“Underwriter”: Aegis Capital Corp.

 

“Unscheduled Principal Payment”: On any Payment Date, the Unscheduled Proceeds
deposited into the Collection Account for such Payment Date.

 

 -22- 

 

 

“Unscheduled Proceeds”: Collectively, without duplication, Liquidation Proceeds,
Condemnation Proceeds, Insurance Proceed, and Payoff Amounts received in
connection with releases and sales of Mortgage Loans and related Mortgaged
Properties.

 

“Unutilized Net Cash Proceeds”: As defined in Section 9.06(e).

 

“Voluntary Prepayment”: Any voluntary prepayment of the Notes, in whole or in
part, in accordance with the procedures set forth in Section 7.01.

 

“Voting Stock”: Capital Stock in a corporation or other Person with voting power
under ordinary circumstances entitling the holders thereof to elect the Board of
Directors or other comparable governing body of such corporation or Person.

 

“Webster”: Webster Business Credit Corporation.

 

“Webster Credit Agreement”: The Credit and Security Agreement dated as of
February 27, 2015 between MBC and Webster.

 

“Webster Guaranty”: The guaranty made by the Issuer for the benefit of Webster
with respect the obligations of MBC under the Webster Credit Agreement.

 

Section 1.02        Rules of Construction.

 

For all purposes of this Indenture, except as otherwise expressly provided or
unless the context otherwise requires:

 

(a)        the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;

 

(b)        all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP, and, except as otherwise herein
expressly provided, the terms “generally accepted accounting principles” or
“GAAP” with respect to any computation required or permitted hereunder means
such accounting principles as are generally accepted in the United States;

 

(c)        the word “including” shall be construed to be followed by the words
“without limitation”;

 

(d)        article and section headings are for the convenience of the reader
and shall not be considered in interpreting this Indenture or the intent of the
parties hereto;

 

(e)        the definition of or any reference to any agreement, document or
instrument herein shall be construed as referring to such agreement, document or
instrument as from time to time amended, restated, supplemented or otherwise
modified;

 

(f)        references to any law, constitution, statute, treaty, regulation,
rule or ordinance, including any section or other part thereof, shall refer to
such law, constitution, statute, treaty, regulation, rule or ordinance as
amended from time to time, and shall include any successor thereto;

 

 -23- 

 

 

(g)        references herein to any Person shall be construed to include such
Person’s successors and permitted assigns;

 

(h)        the words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Indenture as a whole and not to any particular
article, section or other subdivision; and

 

(i)        the pronouns used herein are used in the masculine and neuter genders
but shall be construed as feminine, masculine or neuter, as the context
requires.

 

ARTICLE II

THE NOTES

 

Section 2.01        Forms; Denominations.

 

(a) The Notes shall be designated as the “Senior Secured Notes”. The Notes may
be issued 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 consistent herewith, as determined by the officers
executing the Notes, as evidenced by their execution thereof. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note. The number of Notes which may be
created by this Indenture is not limited.

 

Section 2.02        Execution, Authentication, Delivery and Dating.

 

(a)        The Notes shall be executed by manual or facsimile signature on
behalf of the Issuer by any Authorized Officers of the Issuer. Notes bearing the
manual or facsimile signatures of individuals who were at any time the
Authorized Officers of the Issuer shall be entitled to all benefits under this
Indenture, subject to the following sentence, 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. No Note shall be entitled to any benefit under this
Indenture, or be valid for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Indenture Trustee by manual signature, and such certificate of
authentication upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
All Notes shall be dated the respective dates of their authentication.

 

(b)        At the election of the Indenture Trustee, the Indenture Trustee may
appoint one or more agents (each, an “Authenticating Agent”) with power to act
on its behalf and subject to its direction in the authentication of Notes in
connection with transfers and exchanges under Section 2.06 and Section 2.11, as
fully to all intents and purposes as though each such Authenticating Agent had
been expressly authorized under those Sections to authenticate the Notes. For
all purposes of this Indenture, the authentication of Notes by an Authenticating
Agent shall be deemed to be the authentication of such Notes “by the Indenture
Trustee.”        The Indenture Trustee shall be the initial Authenticating
Agent.

 

 -24- 

 

 

Any corporation, bank, trust company or association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation, bank, trust company or association resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation, bank, trust company or association
succeeding to the corporate trust business of any Authenticating Agent, shall be
the successor of such Authenticating Agent hereunder, without the execution or
filing of any further act on the part of the parties hereto or such
Authenticating Agent or such successor corporation, bank, trust company or
association.

 

Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Indenture Trustee and the Issuer. The Indenture Trustee may
at any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and the Issuer. Upon
receiving such notice of resignation or upon such a termination, the Indenture
Trustee may promptly appoint a successor Authenticating Agent, and give written
notice of such appointment to the Issuer and to the Noteholders. Upon the
resignation or termination of the Authenticating Agent and prior to the
appointment of a successor, the Indenture Trustee shall act as Authenticating
Agent.

 

Each Authenticating Agent shall be entitled to all limitations on liability,
rights of reimbursement and indemnities that the Indenture Trustee is entitled
to hereunder as if it were the Indenture Trustee.

 

(c)        The Indenture Trustee shall upon Issuer Request authenticate and
deliver Notes for original issue in an aggregate amount equal to the Initial
Principal Balance.

 

Section 2.03        Certification of Receipt of the Collateral.

 

(a)        The Indenture Trustee, by its execution and delivery of this
Indenture, acknowledges receipt by it of all assets Granted to it and included
in the Collateral Pool, in good faith and without notice of any adverse claim,
and declares that it holds and will hold such assets on behalf of the present
and future Noteholders.

 

(b)        In addition, with respect to the Notes, the Indenture Trustee hereby
certifies to the Issuer and the Noteholders that, except as specifically
identified in the Schedule of Mortgage Loan Exceptions attached to the Interim
Receipt (in the form attached as Schedule C hereto), as of each Transfer Date
(i) the Mortgage Loan Files of each related Mortgage Loan are in its possession
and (ii) such Mortgage Loan Files appear regular on their face and appear to
relate to the Mortgage Properties included in the Collateral. Not later than the
15th day following each Transfer Date, the Indenture Trustee shall deliver to
the Issuer an executed certificate in the form of Exhibit D to the effect that,
except as specifically identified in the Schedule of Mortgage Loan Exceptions
attached as a schedule thereto, and other than any Mortgage Loan that has become
a Liquidated Mortgage Loan or any Mortgage Loan specifically identified in any
exception report annexed thereto as not being covered by such certification, (i)
the original or a physical or electronic copy (certified to be true, correct and
complete by the Issuer) of each Mortgage Loan is in its possession and (ii) such
Mortgage Loan has been reviewed by it, appears regular on its face and appear to
relate to such Mortgage Loan. Not later than the 75th day following each
Transfer Date (and if any exceptions are noted, again not later than the first
anniversary of such Transfer Date), the Indenture Trustee shall deliver to the
Issuer an executed certificate in the form of Exhibit D to the effect that, as
to each Mortgage Loan listed on the Mortgage Loan Schedule, except as
specifically identified in the Schedule of Mortgage Loan Exceptions attached as
a schedule thereto, and other than any Mortgage Loan specifically identified in
any exception report annexed thereto as not being covered by such certification,
(i) all documents specified in the definition of “Mortgage Loan File” are in its
possession, (ii) all such documents received by it with respect to such Mortgage
Loan have been reviewed by it, appear to be regular on their face and appear to
relate to such Mortgage Loan, and (iii) based on the examinations referred to in
this Section 2.03 and only as to the foregoing documents, the information set
forth in such Mortgage Loan Schedule accurately reflects the information set
forth in the Mortgage Loan File.

 

 -25- 

 

 

(c)        The Indenture Trustee shall not be under any duty or obligation to
inspect, review or examine any of the documents, instruments, certificates or
other papers relating to the Mortgage Loans delivered to it to determine that
the same are valid, legal, effective, genuine, enforceable, in recordable form,
sufficient or appropriate for the represented purpose or that they are other
than what they purport to be on their face.

 

(d)        The Indenture Trustee shall not assign, sell, dispose of or transfer
any interest in the Mortgaged Properties or Mortgage Loans or any other asset
(except as expressly provided herein) or knowingly permit the Mortgaged
Properties or Mortgage Loans or any other asset included in the Collateral to be
subjected to any lien, claim or encumbrance arising by, through or under the
Indenture Trustee or any Person claiming by, through or under the Indenture
Trustee other than the liens created pursuant to the Mortgages and this
Indenture.

 

(e)        If any party hereto discovers that any document constituting a part
of a Mortgage Loan File has not been properly executed, is missing, contains
information that does not conform in any respect with the corresponding
information set forth in the Mortgage Loan Schedule (and the terms of such
document have not been modified by written instrument contained in the Mortgage
Loan File) or does not appear to be regular on its face (each, a “Document
Defect”), such party shall give prompt written notice thereof to the other
parties thereto. If the Issuer does not correct any Document Defect within 90
days of its receipt of such notice and such Document Defect materially and
adversely affects the value of, or the interests of the Issuer in, the related
Mortgage Loan or Mortgaged Property, the Issuer shall, subject to the provisions
of Section 2.04 (to the same extent as if such Document Defect were a Collateral
Defect), exercise such rights and remedies as the Issuer has under Section 2.04
with respect to such Document Defect. Notwithstanding the foregoing, the
delivery of a commitment to issue a policy of owner’s title insurance in lieu of
the delivery of the actual policy of owner’s title insurance shall not be
considered a Document Defect with respect to any Mortgage Loan File if such
actual policy of insurance is delivered to the Indenture Trustee not later than
270 days after the applicable Transfer Date.

 

 -26- 

 

 

Section 2.04 Repurchase or Transfer and Exchange of Mortgage Loans for Document
Defects and Breaches of Representations and Warranties.

 

(a)        If any party hereto discovers or receives notice that any required
document is missing or of a breach of any representation or warranty relating to
any Mortgage Loan or Mortgaged Property set forth in Section 2.21 that
materially and adversely affects (i) the interests of the Issuer in, or the
value of, such Mortgage Loan or the related Mortgaged Property or (ii) the
collectability or enforceability of such Mortgage Loan (a “Collateral Defect”),
the party discovering such Collateral Defect shall give prompt written notice
thereof to the other parties hereto. Promptly upon becoming aware of any such
Collateral Defect, the Issuer, not later than 60 days from the receipt by the
Issuer of such notice or the Issuer’s knowledge of such Collateral Defects, as
applicable, shall (1) cure such Collateral Defect in all material respects, (2)
cause such Mortgage Loan to be released from the Collateral in accordance with
Section 11.02, or (3) substitute one or more Qualified Substitute Loans for the
subject Mortgage Loan in accordance with the procedures set forth in Section
11.01; provided that if (A) such Collateral Defect is capable of being cured but
not within such 60-day period, (B) the Issuer has commenced and is diligently
proceeding with the cure of such Collateral Defect within such 60-day period,
and (C) the Issuer shall have delivered to the Indenture Trustee a certification
executed on behalf of Issuer by an officer thereof setting forth the reason such
Collateral Defect is not reasonably capable of being cured within an initial
60-day period and what actions the Issuer is pursuing in connection with the
cure thereof and stating that the Issuer anticipates that such Collateral Defect
will be cured within an additional period not to exceed 60 more days, then
Issuer shall have up to an additional 60 days commencing on the 61st day from
receipt by Issuer of such request to complete such cure.

 

(b)        If the Issuer has elected to release or to substitute one or more of
the Mortgage Loans and the Issuer has delivered the Officer’s Certificates
referenced in Section 11.01 and Section 11.02, respectively, the Issuer shall
prepare, execute and deliver the endorsements, assignments and other documents
contemplated by Section 11.01 or Section 11.02 necessary to effectuate an
exchange or release pursuant to Section 2.04(a). In connection with any such
release or substitution by the Issuer, the Indenture Trustee shall concurrently
deliver the related Mortgage Loan File to the Issuer.

 

Section 2.05        The Notes Generally.

 

(a)        Each Note shall rank pari passu with each other Note and be equally
and ratably secured by the Collateral included in the Collateral Pool. All Notes
shall be substantially identical except as to denominations and as expressly
permitted in this Indenture.

 

(b)        This Indenture, together with the related Mortgages, shall evidence a
continuing lien on and security interest in the Collateral Granted hereunder or
subsequently included in the Collateral Pool to secure the full payment of the
principal, interest and other amounts on the Notes, which shall in all respects
be equally and ratably secured hereby for payment as provided herein, and
without preference, priority or distinction on account of the actual time or
times of the authentication and delivery of the Notes, all in accordance with
the terms and provisions of this Indenture.

 

(c)        The issuance of the Notes shall be subject to the satisfaction of the
following conditions:

 

 -27- 

 

 

(i)        receipt by the Indenture Trustee of the Issuer Order authorizing the
execution and authentication of the Notes;

 

(ii)        receipt by the Indenture Trustee of the Transaction Documents duly
executed and delivered by the parties thereto and being in full force and
effect, free of any breach or waiver;

 

(iii)        all Mortgage Loan Files with respect to the Collateral Pool, as set
forth herein, shall have been delivered to the Indenture Trustee or a custodian
on its behalf together with all UCC Financing Statements, documents of similar
import in other jurisdictions, and other documents reasonably necessary to
perfect the Indenture Trustee’s security interest in such Collateral for the
benefit of the Noteholders;

 

(iv)        receipt by the Indenture Trustee of Opinions of Counsel relating to
(1) corporate and enforceability matters, as well as securities law matters,
reasonably acceptable to the Underwriter and its counsel and (2) the creation
and perfection of the Indenture Trustee’s security interest; and

 

(v)        receipt by the Indenture Trustee of an Officer’s Certificate from the
Issuer, upon which the Indenture Trustee shall be permitted to fully rely and
shall not have any liability for so relying, stating that the conditions
precedent to such issuance have been fulfilled.

 

Section 2.06        Registrar and Paying Agent.

 

(a)        At all times during the term of this Indenture, there shall be
maintained at the office of the Note Registrar a “Note Register” in which,
subject to such reasonable regulations as the Note Registrar may prescribe, the
Note Registrar shall provide for the registration of Notes and of transfers and
exchanges of Notes as herein provided. The offices of the Note Registrar shall
be initially located (as of the Closing Date) at Worldwide Stock Transfer, LLC,
One University Plaza, Suite 505, Hackensack, New Jersey 07601, Attention:
Jonathan Gellis. The Indenture Trustee is hereby initially appointed (and hereby
agrees to act in accordance with the terms hereof) as “Note Registrar” for the
purpose of registering Notes and transfers and exchanges of Notes as herein
provided. The Indenture Trustee may appoint, by a written instrument delivered
to the Issuer, any other bank or trust company to act as Note Registrar under
such conditions as the predecessor Indenture Trustee may prescribe; provided,
that the Indenture Trustee shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment. If the Indenture
Trustee resigns or is removed in accordance with the terms hereof, the successor
trustee shall immediately succeed to its predecessor’s duties as Note Registrar.
The Issuer and the Indenture Trustee shall have the right to inspect the Note
Register or to obtain a copy thereof at all reasonable times, and to rely
conclusively upon a certificate of the Note Registrar as to the information set
forth in the Note Register. Upon written request of any Noteholder made for
purposes of communicating with other Noteholders with respect to their rights
under this Indenture, the Note Registrar shall promptly furnish such Noteholder
with a list of the other Noteholders of record identified in the Note Register
at the time of the request.

 -28- 

 

 

(b)        The Issuer shall maintain an office or agency where Notes may be
presented for payment (the “Paying Agent”) and an office or agency where notices
and demands to or upon the Issuer, if any, in respect of the Notes and this
Indenture may be served. The Issuer may have one or more additional Paying
Agents. The term “Paying Agent” includes any additional Paying Agent. Neither
the Issuer nor any Affiliate thereof may act as Paying Agent. The Issuer may
change the Paying Agent without prior notice to the Holders. The Issuer
initially appoints the Indenture Trustee as Paying Agent and agent for service
of notices and demands in connection with the Notes and this Indenture.

 

(c)        The Issuer shall enter into an appropriate agency agreement, which
shall incorporate the provisions of the 1939 Act, with any Agent that is not a
party to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Issuer shall notify the Trustee of the
name and address of any such Agent. If the Issuer fails to maintain a Registrar
or Paying Agent or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with this
Indenture.

 

Section 2.07        Registration of Transfer and Exchange of Notes.

 

(a)        A Noteholder or Note Owner may Transfer a Book-Entry Note or
Ownership Interest therein only in accordance with the rules and procedures of
the Depository and the Depository Participants.

 

(b)        If any Transfer of a Note or an Ownership Interest therein is to be
held by the related transferee in the form of a Definitive Note, then the Note
Registrar shall refuse to register such Transfer unless it receives (and, upon
receipt, may conclusively rely upon) an executed transferor certificate from the
transferor substantially in the form attached as Exhibit E (subject to Section
13.03).

 

(c)        Subject to the preceding provisions of this Section 2.07, upon
surrender for registration of transfer of any Note at the offices of the Note
Registrar maintained for such purpose, the Issuer shall execute, and the
Indenture Trustee shall cause to be authenticated and delivered, in the name of
the designated transferee or transferees, one or more new Notes.

 

(d)        Every Note presented or surrendered for transfer or exchange shall
(if so required by the Note Registrar) be duly endorsed by, or be accompanied by
a written instrument of transfer in the form satisfactory to the Note Registrar
duly executed by, the Holder thereof or his attorney duly authorized in writing.

 

(e)        No service charge shall be imposed for any transfer or exchange of
Notes, but the Indenture Trustee 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 transfer or exchange of Notes.

 

(f)        All Notes surrendered for transfer and exchange shall be physically
canceled by the Note Registrar, and the Note Registrar shall dispose of such
canceled Notes in accordance with its customary procedures.

 -29- 

 

 

(g)        The Note Registrar or the Indenture Trustee shall provide to the
Issuer upon reasonable written request and at the expense of the requesting
party a current copy of the Note Register.

 

(h)        Each transferee of a Note or an Ownership Interest therein will be
deemed to have represented, warranted and agreed (or, in the case of Definitive
Notes, shall represent, warrant and agree) that either (i) such transferee is
not, and is not purchasing such Note on behalf of, as a fiduciary of, as trustee
of, or with the assets of, a Plan or (ii) (1) such transferee believes that such
Note is properly treated as indebtedness without substantial equity features for
purposes of Department of Labor Regulations, as modified by ERISA, and agrees to
so treat such Note and (2) such transferee’s acquisition and continued holding
of such Note or Ownership Interest therein will not give rise to a non-exempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code (or any law materially similar to Section 4975 of the Code or Section 406
of ERISA).

 

Section 2.08        CUSIP Number.

 

The Issuer in issuing the Notes may use one or more “CUSIP” numbers, and if so,
such CUSIP numbers shall be included in notices of redemption or exchange as a
convenience to Holders; provided, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP numbers
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuer shall promptly
notify the Indenture Trustee of any such CUSIP numbers used by the Issuer in
connection with the issuance of the Notes and of any change in the CUSIP
numbers.

 

Section 2.09        Deposit of Moneys.

 

Prior to 10:00 a.m., New York City time, on each Payment Date, the Issuer shall
have deposited to such account as directed by the Paying Agent immediately
available funds in an amount sufficient to make cash payments, if any, due on
such Payment Date. The principal and interest on Book-Entry Notes shall be
payable to the Depository or its nominee, as the case may be, as the sole
registered owner and the sole Holder of the Book-Entry Notes represented
thereby. The principal and interest on Definitive Notes shall be payable, either
in person or by mail, at the office of the Paying Agent.

 

 -30- 

 

 

Section 2.10        Book-Entry Notes.

 

(a)        The Book-Entry Notes shall be delivered as one or more Notes held by
the Book- Entry Custodian or, if appointed to hold such Notes as provided below,
the Depository, and registered in the name of the Depository or its nominee and,
except as otherwise provided in Section 2.10(c), transfer of such Notes may not
be registered by the Note Registrar unless such transfer is to a successor
Depository that agrees to hold such Notes for the respective Note Owners with
Ownership Interests therein. Except as provided in Section 2.10(c), such Note
Owners shall hold and transfer their respective Ownership Interests in and to
such Notes through the book-entry facilities of the Depository and, except as
provided in Section 2.10(c), shall not be entitled to definitive, fully
registered Notes (“Definitive Notes”) in respect of such Ownership Interests.
All transfers by Note Owners of their respective Ownership Interests in the
Book-Entry Notes to be held by the related transferees as Book-Entry Notes shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing each such Note Owner. Each Depository
Participant shall only transfer the Ownership Interests in the Book-Entry Notes
of Note Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository’s normal procedures. The Indenture Trustee is
hereby initially appointed as the Book-Entry Custodian and hereby agrees to act
as such in accordance herewith and in accordance with the agreement that it has
with the Depository authorizing it to act as such. Neither the Indenture Trustee
nor the Note Registrar shall have any responsibility to monitor or restrict the
transfer of any Book-Entry Note transferable through the book-entry facilities
of the Depository. The Book-Entry Custodian may, and, if it is no longer
qualified to act as such, the Book-Entry Custodian shall, appoint, by a written
instrument delivered to the Issuer, and, if the Indenture Trustee is not the
Book-Entry Custodian, the Indenture Trustee, any other transfer agent (including
the Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe; provided, that the predecessor
Book-Entry Custodian shall not be relieved of any of its duties or
responsibilities by reason of any such appointment other than with respect to an
appointment of the Depository. If the Indenture Trustee resigns or is removed in
accordance with the terms hereof, the successor trustee or, if it so elects, the
Depository shall immediately succeed to its predecessor’s duties as Book-Entry
Custodian. The Issuer shall have the right to inspect, and to obtain copies of,
any Notes held as Book-Entry Notes by the Book-Entry Custodian.

 

(b)        The Issuer, the Indenture Trustee and the Note Registrar may for all
purposes, including the making of payments due on the Book-Entry Notes, deal
with the Depository as the Noteholder and the authorized representative of the
Note Owners with respect to such Notes for the purposes of exercising the rights
of Noteholders hereunder. The rights of Note Owners with respect to the
Book-Entry Notes shall be limited to those established by law and agreements
between such Note Owners and the Depository Participants and brokerage firms
representing such Note Owners. Multiple requests and directions from, and votes
of, the Depository as holder of the Book-Entry Notes with respect to any
particular matter shall not be deemed inconsistent if they are made with respect
to different Note Owners. The Indenture Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
Noteholders and shall give notice to the Depository of such record date.

 

(c)        If (i) the Issuer advises the Indenture Trustee and the Note
Registrar in writing that the Depository is no longer willing or able to
properly discharge its responsibilities with respect to the Book-Entry Notes (or
any portion thereof), and (ii) the Issuer is unable to locate a qualified
successor, the Note Registrar shall notify all affected Note Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Notes to such Note Owners requesting the same. Upon surrender to the
Note Registrar of the Book-Entry Notes (or any portion thereof) by the
Book-Entry Custodian or the Depository, as applicable, and the delivery of
registration instructions from the Depository for registration of transfer, the
Issuer shall execute, and the Indenture Trustee shall cause to be authenticated
and delivered, the Definitive Notes in respect of such Notes to the Note Owners
identified in such instructions. None of the Issuer, the Indenture Trustee or
the Note Registrar 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.

 

 -31- 

 

 

(d)        Upon the issuance of Definitive Notes, for purposes of evidencing
ownership of any Notes, the registered holders of such Definitive Notes shall be
recognized as Noteholders hereunder and, accordingly, shall be entitled directly
to receive payments on, to exercise voting and consent rights with respect to,
and to transfer and exchange such Definitive Notes.

 

(e)        The Issuer shall provide an adequate inventory of Definitive Notes to
the Indenture Trustee.

 

Section 2.11        Mutilated, Destroyed, Lost or Stolen Notes.

 

If any mutilated Note is surrendered to the Note Registrar, the Issuer shall
execute and the Indenture Trustee shall cause to be authenticated and delivered,
in exchange therefor, a new Note of the same principal amount and bearing a
number not contemporaneously outstanding.

 

If there shall be delivered to the Issuer, the Indenture Trustee and the Note
Registrar (i) evidence to their satisfaction of the destruction (including
mutilation tantamount to destruction), loss or theft of any Note and the
ownership thereof, and (ii) indemnity as may be reasonably required by them to
hold each of them and any of their agents harmless, then, in the absence of
notice to the Issuer or the Note Registrar that such Note has been acquired by a
bona fide purchaser, the Issuer shall execute and the Indenture Trustee shall
cause to be authenticated and delivered, in lieu of any such destroyed, lost or
stolen Note, a new Note of the same tenor and denomination registered in the
same manner, dated the date of its authentication and bearing a number not
contemporaneously outstanding.

 

Upon the issuance of any new Note under this Section 2.11, the Issuer, the
Indenture Trustee and the Note Registrar may require the payment by the
Noteholder of an amount sufficient to pay or discharge any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the reasonable fees and expenses of the
Authenticating Agent and the Indenture Trustee) in connection therewith.

 

Every new Note issued pursuant to this Section 2.11 in lieu of any destroyed,
mutilated, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, mutilated,
lost or stolen Note shall be at any time enforceable by any Person, and such new
Note shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

 

The provisions of this Section 2.11 are exclusive and shall preclude (to the
extent permitted by applicable law) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

 

Section 2.12        Noteholder Lists.

 

The Note Registrar shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Noteholders, which list, upon request, will be made available to the
Indenture Trustee insofar as the Indenture Trustee is no longer the Note
Registrar. Upon written request of any Noteholder made for purposes of
communicating with other Noteholders with respect to their rights under this
Indenture, the Note Registrar shall promptly furnish such Noteholder at such
Noteholder’s expense with a list of the Noteholders of record identified in the
Note Register at the time of the request. Every Noteholder, by receiving such
access, or by receiving a Note or an interest therein, agrees with the Note
Registrar that the Note Registrar will not be held accountable in any way by
reason of the disclosure of any information as to the names and addresses of any
Noteholder regardless of the source from which such information was derived.

 

 -32- 

 

 

Section 2.13        Persons Deemed Owners.

 

The Issuer, the Indenture Trustee, the Note Registrar and any of their agents,
may treat the Person in whose name a Note is registered as the owner of such
Note as of the related Record Date for the purpose of receiving payments of
principal, interest and other amounts in respect of such Note and for all other
purposes, whether or not such Note shall be overdue, and none of the Issuer, the
Indenture Trustee, the Note Registrar or any agents of any of them, shall be
affected by notice to the contrary.

 

Section 2.14        Payment Account.

 

(a)        On or prior to the Closing Date, the Indenture Trustee shall
establish and maintain one or more segregated trust accounts (collectively, the
“Payment Account”) at Bank of America, N.A. (or at such other financial
institution as necessary to ensure that the Payment Account is at all times an
Eligible Account or a sub-account of an Eligible Account), in its name, as
Indenture Trustee, bearing a designation clearly indicating that such account
and all funds deposited therein are held for the exclusive benefit of the
Noteholders and the Issuer as their interests may appear. On each Remittance
Date, the Issuer shall deposit or cause to be deposited in the Payment Account
the Available Amount for such Payment Date, such Available Amount to be held by
the Indenture Trustee for the benefit of the Noteholders and the Issuer as
herein provided. Except as provided in this Indenture, the Indenture Trustee, in
accordance with the terms of this Indenture, shall have exclusive control and
sole right of withdrawal with respect to the Payment Account. Funds in the
Payment Account shall not be commingled with any other moneys.

 

(b)        Amounts in the Payment Account shall be held uninvested.

 

(c)        The Indenture Trustee is authorized to make withdrawals from the
Payment Account to make payments on the Notes and to other parties as set forth
in the priorities of payments pursuant to Section 2.15(b) of this Indenture.

 

(d)        Upon the satisfaction and discharge of this Indenture pursuant to
Section 3.01, the Indenture Trustee shall pay to the Issuer all amounts, if any,
held by it remaining as part of the Collateral Pool.

 

Section 2.15        Payments on the Notes.

 

(a)        Subject to Section 2.15(b), the Issuer agrees to pay:

 

(i)        on each Payment Date prior to the Final Payment Date (but only to the
extent of the Available Amount pursuant to Section 2.15(b)), interest on and, to
the extent payable on such Payment Date pursuant to the terms of this Indenture
or the Notes, principal of such Notes in the amounts and in accordance with the
priorities set forth in Section 2.15(b); and

 

 -33- 

 

 

(ii)        on the Final Payment Date, the entire Outstanding Principal Balance,
together with all accrued and unpaid interest thereon.

 

Amounts properly withheld under the Code by any Person from a payment to any
Holder of a Note of interest, principal or other amounts, or any such payment
set aside on the Final Payment Date for such Note as provided in Section
2.15(b), shall be considered as having been paid by the Issuer to such
Noteholder for all purposes of this Indenture.

 

(b)        With respect to each Payment Date, any interest, principal and other
amounts payable on the Notes shall be paid to each Person that is a registered
holder thereof at the close of business on the related Record Date; provided,
however, that interest, principal and other amounts payable at the Final Payment
Date of any Note shall be payable only against surrender thereof at the
Indenture Trustee’s Office or such other address as may be specified in the
notice of final payment. Payments of interest, principal and other amounts on
the Notes to be made on any Payment Date other than the Final Payment Date shall
be made, subject to applicable laws and regulations, by wire transfer to such
accounts as each such Noteholder shall designate by written instruction received
by the Indenture Trustee not later than the Record Date related to such Payment
Date or otherwise by check mailed on or before such Payment Date to the Person
entitled thereto at such Person’s address appearing on the Note Register as of
the related Record Date. The Indenture Trustee shall pay each Note in whole or
in part as provided herein on its Final Payment Date in immediately available
funds from funds in the Payment Account as promptly as possible after
presentation to the Indenture Trustee of such Note at the Indenture Trustee’s
Office, but in no event later than the next Business Day after the day of such
presentation. If presentation is made after 3:30 p.m., New York City time, on
any day, such presentation shall be deemed to have been made on the immediately
succeeding Business Day.

 

Each payment with respect to a Book-Entry Note shall be paid to the Depository,
as holder thereof, and the Depository shall be responsible for crediting the
amount of such payment to the accounts of its Depository Participants in
accordance with its normal procedures. Each Depository Participant shall be
responsible for disbursing such payments to the related Note Owners that it
represents and to each indirect participating brokerage firm for which it acts
as agent. Each brokerage firm shall be responsible for disbursing funds to the
related Note Owners that it represents. None of the parties hereto shall have
any responsibility therefor except as otherwise provided by this Indenture or
applicable law. The Issuer and the Indenture Trustee shall perform their
respective obligations under each Letter of Representations.

 

Except as provided in the following sentence, if a Note is issued in exchange
for any other Note during the period commencing at the close of business at the
office or agency where such exchange occurs on any Record Date and ending before
the opening of business at such office or agency on the related Payment Date, no
interest, principal or other amounts will be payable on such Payment Date in
respect of such new Note, but will be payable on such Payment Date only in
respect of the prior Note. Interest, principal and other amounts payable on any
Note issued in exchange for any other Note during the period commencing at the
close of business at the office or agency where such exchange occurs on the
Record Date immediately preceding the Final Payment Date and ending on the Final
Payment Date, shall be payable to the Person that surrenders the new Note as
provided in this Section 2.15(b).

 

 -34- 

 

 

All payments of interest, principal and other amounts made with respect to the
Notes will be allocated pro rata among the Outstanding Notes as set forth below.

 

If any Note on which the final payment was due is not presented for payment on
the Final Payment Date, then the Indenture Trustee shall set aside such payment
in a segregated, non- interest bearing account (and shall remain uninvested)
separate from the Payment Account (but which may be a sub-account thereof) but
which constitutes an Eligible Account (or a sub-account of an Eligible Account),
and the Indenture Trustee and the Issuer shall act in accordance with Section
5.09 in respect of the unclaimed funds.

 

On each Payment Date, the Available Amount for such Payment Date will be applied
by the Indenture Trustee in the following manner and order of priority:

 

(1)        to the Indenture Trustee, the earned and unpaid Indenture Trustee
Fee;

 

(2)        to the Noteholders, the Note Interest, plus unpaid Note Interest from
any prior Payment Date, together with interest on any such unpaid Note Interest
at the Note Rate;

 

(3)        (I) for so long as no Early Amortization Period has commenced or
Event of Default has occurred and is continuing, to the Noteholders (until the
Outstanding Principal Balance of the Notes has been reduced to zero), an amount
up to the sum of the Mandatory Principal Payment allocable to the Notes for such
Payment Date; or (II) if an Early Amortization Period has commenced or Event of
Default has occurred and is continuing, to the Noteholders, all remaining
Available Amounts until the Outstanding Principal Balance of the Notes has been
reduced to zero;

 

(4)         to the Issuer, all remaining Available Amounts.

 

Notwithstanding the provisions of this Section 2.15(b), the Issuer may, subject
to Section 9.06, at any time advance funds to the Indenture Trustee for the
purpose of allowing the Indenture Trustee to make required payments on the Notes
without right of reimbursement.

 

(c)        In connection with making any payments pursuant to Section 2.15(b),
the Indenture Trustee shall make available to the Issuer on the related Payment
Date via the Indenture Trustee’s internet website specified in Section 6.01(a),
a written statement detailing the amounts so paid; provided, that if such
information is not so available on the Indenture Trustee’s internet website for
any reason, the Indenture Trustee shall provide the Issuer with such written
statement by facsimile transmission, confirmed in writing by first class mail or
overnight courier.

 

 -35- 

 

 

Section 2.16        Final Payment Notice

 

(a)        Notice of final payment under Section 2.15(b) shall be given by the
Indenture Trustee as soon as practicable, but not later than two (2) Business
Days prior to the Final Payment Date, to each Noteholder as of the close of
business on the Record Date in the calendar month preceding the Final Payment
Date at such Noteholder’s address appearing in the Note Register and to the
Issuer.

 

(b)        All notices of final payment in respect of the Notes shall state (i)
the Final Payment Date, (ii) the amount of the final payment for the Notes and
(iii) the place where the Notes are to be surrendered for payment.

 

(c)        Notice of final payment of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Indenture Trustee. Failure to give
notice of final payment, or any defect therein, to any Noteholder shall not
impair or affect the validity of the final payment of any other Note.

 

Section 2.17        Compliance with Withholding Requirements.

 

Notwithstanding any other provision of this Indenture, the Indenture Trustee
shall comply with all federal withholding requirements with respect to payments
to Noteholders of interest, original issue discount, or other amounts that the
Indenture Trustee reasonably believes are applicable under the Code or any other
applicable federal law. The consent of Noteholders shall not be required for any
such withholding.

 

Section 2.18        Cancellation.

 

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
canceled by the Note Registrar.

 

All Notes delivered to the Indenture Trustee for payment shall be forwarded to
the Note Registrar. All such Notes and all Notes surrendered for transfer and
exchange in accordance with the terms hereof shall be canceled and disposed of
by the Note Registrar in accordance with its customary procedures.

 

Section 2.19        Tax Treatment of the Notes and the Issuer.

 

The Issuer has entered into this Indenture, and the Notes will be issued, with
the intention that, for purposes of any federal, state and local income or
franchise tax and any other taxes imposed on or measured by income, the Notes
will qualify as indebtedness of the Issuer. The Issuer, by entering into this
Indenture, each Noteholder, by acceptance of its Note, and each Note Owner, by
purchasing or otherwise acquiring an Ownership Interest in a Note, agree to
treat the Notes and such Ownership Interests for purposes of any federal, state
and local income or franchise tax and any other taxes imposed on or measured by
income, as indebtedness of the Issuer.

 

Section 2.20        Representations and Warranties with Respect to the Issuer.

 

The Issuer hereby represents and warrants to the other parties hereto as
follows:

 

 -36- 

 

 

(a)        The Issuer is a corporation duly created and validly existing in good
standing under the laws of the State of New York and has full power, authority
and legal right to execute and deliver the Indenture and the other Transaction
Documents to which the Issuer is a party, to issue the Notes, to pledge the
Collateral included in the Collateral Pool to the Indenture Trustee and to
perform its obligations under the Indenture and the other Transaction Documents
to which it is a party.

 

(b)        The execution and delivery by the Issuer of the Indenture and the
performance by the Issuer of its obligations under the Indenture and the other
Transaction Documents to which the Issuer is a party has been duly and validly
authorized and will not violate the organizational documents of the Issuer, nor
will such execution, delivery or performance require the authorization, consent
or approval of, the giving of notice to, the filing or registration with, or the
taking of any other action by, any arbitrator, court or other Governmental
Authority (other than the SEC) or conflict with, or result in a breach or
violation of, any provision of any law or regulation governing the Issuer or any
order, writ, judgment or decree of any arbitrator, court or other Governmental
Authority applicable to the Issuer or any of its assets, any indenture,
mortgage, deed of trust, partnership agreement or other agreement or instrument
to which the Issuer is a party or by which the Issuer or all or any portion of
the Collateral is bound, which breach or violation would materially adversely
affect either the ability of the Issuer to perform its obligations under this
Indenture and the other Transaction Documents to which it is a party or the
financial condition of the Issuer or the value of any Mortgaged Property as
security for the Notes.

 

(c)        The Issuer has requisite power and authority to own the Mortgage
Loans and other Collateral and to transact the businesses in which it is now
engaged. The Issuer is duly qualified to do business and is in good standing in
each jurisdiction where it is required to be so qualified in connection its
business and operations. The Issuer possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own the
Mortgage Loans and to transact the businesses in which it is now engaged, the
failure of which to obtain would result in a material adverse effect on either
the ability of the Issuer to perform its obligations under this Indenture and
the other Transaction Documents to which it is a party or the financial
condition of the Issuer or the value of any Mortgage Loan as security for the
Notes.

 

(d)        This Indenture and the other Transaction Documents (including the
Notes when issued) have been duly executed and delivered by the Issuer and,
assuming due authorization, execution and delivery by each of the other parties
hereto and thereto, constitutes (and the Notes when issued will constitute) a
valid, legal and binding obligation of the Issuer, enforceable against the
Issuer in accordance with the terms hereof, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors’ rights generally and (ii) general principles of
equity, regardless of whether such enforcement is considered in a proceeding in
equity or at law.

 

(e)        The Issuer has no employee benefit plans and is not required to make
any contributions to any Plans.

 

 -37- 

 

 

(f)        The Issuer (i) has not entered into the Indenture or any of the other
Transaction Documents with the actual intent to hinder, delay, or defraud any
creditor and (ii) has received reasonably equivalent value in exchange for its
obligations under the Indenture. Giving effect to the issuance of the Notes, the
fair saleable value of all of the Issuer’s assets will, immediately following
the execution and delivery of the Transaction Documents, exceed the Issuer’s
total liabilities, including, without limitation, subordinated, unliquidated,
disputed or contingent liabilities. The fair saleable value of the Issuer’s
assets will, immediately following the execution and delivery of the Transaction
Documents, be greater than the Issuer’s probable liabilities, including the
maximum amount of its contingent liabilities or debts as such debts become
absolute and mature. The Issuer’s assets immediately following the execution and
delivery of the Transaction Documents will not constitute unreasonably small
capital to carry out its business as conducted or as proposed to be conducted.
The Issuer does not intend to, and does not believe that it will, incur debts
and liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
the Issuer).

 

(g)        The Issuer is not: (i) an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the 1940 Act;
(ii) a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of either a “holding company” or a “subsidiary company” within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (iii)
subject to any other federal or state law or regulation which prevents the
Issuer from entering into the Indenture. As of the Closing Date, this Indenture
is not required to be qualified under the 1939 Act.

 

(h)        The Transaction Documents and the Prospectus do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make statements contained herein or therein not misleading.

 

(i)        No Default or Event of Default under the Indenture has occurred and
is continuing.

 

(j)        Neither the Issuer nor MBC is contemplating the filing of a petition
by the Issuer or MBC, as applicable, under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of the Issuer’s or
MBC’s assets or property, and the Issuer has no knowledge of any Person
contemplating the filing of any such petition against the Issuer or MBC.

 

(k)        The Issuer is not a “foreign person” within the meaning of Section
1445(f)(3) of the Code and the related Treasury Regulations, including temporary
regulations.

 

(l)        The Issuer has not incurred any indebtedness, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any
obligation), that has not been repaid in full, other than (i) the Notes, (ii)
trade and operational debt incurred in the ordinary course of business with
trade creditors and in amounts as are normal and reasonable under the
circumstances (including the expenses relating to the transactions contemplated
by this Indenture) and (iii) the Webster Guaranty.

 

 -38- 

 

 

(m)        The Issuer has good title to, and is the sole owner of, all
Collateral included in the Collateral Pool, free and clear of any pledge, lien,
encumbrance or security interest other than Permitted Encumbrances and the liens
created hereby. This Indenture creates a valid and continuing security interest
in each such item of the Collateral Pool in which a security interest may be
created under Article 9 of the UCC in favor of the Indenture Trustee. The Issuer
has caused the filing of an appropriate financing statement with the Secretary
of State of the State of New York in order to perfect the security interests in
the Collateral granted to the Indenture Trustee hereunder. Upon the issuance of
the Notes and the proper filing of such financing statements, the Indenture
Trustee will have a valid and enforceable perfected lien or perfected security
interest, as applicable, in the Collateral, which lien or security interest is
prior to all other liens, encumbrances and security interests, other than
Permitted Encumbrances, and is enforceable as such against creditors of and
purchasers from the Issuer.

 

(n)        As of the Closing Date and at all times throughout the term of the
Notes, (i) none of the funds or other assets of the Issuer constitute property
of, or are beneficially owned, directly or indirectly, by any Person subject to
trade restrictions under U.S. law, including but not limited to, the Patriot Act
(including the anti-terrorism provisions thereof), the International Emergency
Economic Powers Act, 50 U.S.C. Sections 1701, et seq., The Trading with the
Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder (such person, an “Embargoed Person”), with the result
that the investment in the Notes (whether directly or indirectly) is prohibited
by law, (ii) no Embargoed Person has any interest of any nature whatsoever in
the Issuer, with the result that the investment in the Notes (whether directly
or indirectly) is prohibited by law, and (iii) none of the funds of the Issuer
have been derived from any unlawful activity with the result that the investment
in the Issuer (whether directly or indirectly) is prohibited by law.

 

(o)        No part of the proceeds of the Notes will be used for the purpose of
purchasing or acquiring any “margin stock” within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or for any other purpose
which would be inconsistent with such Regulation U or any other Regulations of
such Board of Governors, or for any purposes prohibited by Legal Requirements or
by the terms and conditions of the Indenture or the other Transaction Documents.

 

Section 2.21 Representations and Warranties With Respect to Mortgaged Properties
and Mortgage Loans.

 

The Issuer shall make the following representations and warranties, as of each
Transfer Date with respect to the Mortgage Loans (and the related Mortgage,
Mortgage Note, Collateral Assignment, if any, and Mortgaged Property) added to
the Collateral Pool by the Issuer in connection with the issuance of the Notes
or at any time after the Closing Date:

 

(a)        The information set forth in the Mortgage Loan Schedule with respect
to the Mortgage Loans is complete, true and correct in all material respects.

 

(b)        All payments made with respect to the Mortgage Loans under the terms
of the applicable Mortgage Notes have been properly applied to the amount
intended to be paid by the related Mortgagor Customers. No payment required
under any Mortgage Loan is more than 60 days past due nor has any payment under
any Mortgage Loan been more than 60 days past due at any time since the
origination of such Mortgage Loan. The first Mortgage Loan Payment shall be
made, or shall have been made, with respect to each Mortgage Loan on its due
date or within the grace period, all in accordance with the terms of the related
Mortgage Note.

 

 -39- 

 

 

(c)        Neither MBC, the Issuer nor any Affiliate of either thereof has
advanced funds to, or induced, solicited or knowingly received any advance of
funds from a party other than the applicable Mortgagor Customer, directly or
indirectly, for the payment of any amount required under the related Mortgage
Loan.

 

(d)        The terms of the Mortgage Notes and Mortgages have not been waived,
altered or modified in any respect, from the date of origination, except by a
written instrument which has been recorded, if necessary to protect the
interests of the Indenture Trustee and the Noteholders, and which has been
delivered to the Indenture Trustee and the terms of which are reflected in the
Mortgage Loan Schedule. No Mortgagor Customer in respect of a Mortgage Loan has
been released, in whole or in part, except in connection with an assumption
agreement, which assumption agreement is part of the Mortgage Loan File
delivered to the Indenture Trustee and the terms of which are reflected in the
Mortgage Loan Schedule.

 

(e)        No Mortgagor Customer has asserted any right of rescission, set-off,
counterclaim or defense, including without limitation the defense of usury with
respect to the related Mortgage Loan. No Mortgagor Customer in respect of any
Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency
proceeding at the time such Mortgage Loan was originated or is a debtor in any
state or federal bankruptcy or insolvency proceeding.

 

(f)        Each Mortgaged Property is insured by a fire and extended perils
insurance policy, issued by a Qualified Insurer, and such other hazards as are
customary in the area where such Mortgaged Property is located in an amount not
less than the outstanding principal balance of such Mortgage Loan. If any
portion of such Mortgaged Property is in an area identified by any federal
Governmental Authority as having special flood hazards, and flood insurance is
available, a flood insurance policy meeting the current guidelines of the
Federal Emergency Management Agency is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the lesser
of (1) the outstanding principal balance of the Mortgage Loan and (2) the
maximum amount of insurance available under the National Flood Insurance Act of
1968, as amended by the Flood Disaster Protection Act of 1974. All such
insurance policies (collectively, the “hazard insurance policy”) contain a
standard mortgagee clause naming the Issuer, its successors and assigns
(including without limitation, subsequent owners of the Mortgage Loan), as
mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior
written notice to the mortgagee. No such notice has been received by MBC or
Funding. All premiums on such insurance policy have been paid. The related
Mortgage obligates the related Mortgagor Customer to maintain all such insurance
and, at such Mortgagor Customer’s failure to do so, authorizes the mortgagee to
maintain such insurance at such Mortgagor Customer’s cost and expense and to
seek reimbursement therefor from such Mortgagor Customer. Where required by
state law or regulation, the Mortgagor Customer has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy is not
a “master” or “blanket” hazard insurance policy covering a condominium, or any
hazard insurance policy covering the common facilities of a planned unit
development. Neither MBC nor the Issuer has engaged in, and has no knowledge of
any Mortgagor Customer’s having engaged in, any act or omission which would
impair the coverage of any such policy, the benefits of the endorsement provided
for herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by the Issuer.

 

 -40- 

 

 

(g)          Any and all requirements of any federal, state or local law
applicable to the Mortgage Loans have been complied with in all material
respects, including the Patriot Act and the rules and regulations of the U.S.
Treasury Department’s Office of Foreign Assets Control.

 

(h)          The Mortgage has not been satisfied, canceled, subordinated or
rescinded, in whole or in part, and the related Mortgaged Property has not been
released from the lien of the related Mortgage, in whole or in part, nor has any
instrument been executed that would affect any such release, cancellation,
subordination or rescission. Neither MBC nor the Issuer has waived the
performance by any Mortgagor Customer of any action, if such Mortgagor
Customer’s failure to perform such action would cause the related Mortgage Loan
to be in default, nor has MBC or the Issuer waived any default resulting from
any action or inaction by any Mortgagor Customer.

 

(i)             Each Mortgage is a valid, enforceable and perfected first lien,
on the related Mortgaged Property, including all buildings on such Mortgaged
Property and all installations and mechanical, electrical, plumbing, heating and
air conditioning systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with respect to the
foregoing. The lien of each Mortgage is subject only to:

 

(i)        in the case of a construction loan, the lien of the Issuer (or its
predecessor in interest) on such Mortgaged Property securing the Mortgage Loan
made to the related Mortgagor Customer the proceeds of which were used to
acquire such Mortgaged Property;

 

(ii)        any lien for real property taxes and assessments with respect to
which a notice of lien has not been filed against such Mortgaged Property;

 

(iii)        covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording acceptable to
prudent mortgage lending institutions generally and specifically referred to in
the lender’s title insurance policy delivered to the originator of the related
Mortgage Loan; and

 

(iv)        other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to be
provided by such Mortgage or the use, enjoyment, value or marketability of such
Mortgaged Property (any of the foregoing described in subparagraph (i), (ii),
(iii) or (iv), a “Permitted Encumbrance” and, collectively, the “Permitted
Encumbrances”).

 

(j)        Each Mortgage Note, each Mortgage and any other agreement executed
and delivered by a Mortgagor Customer or a Mortgage Loan Guarantor, if
applicable, in connection with a Mortgage Loan is genuine, is the legal, valid
and binding obligation of the maker thereof enforceable in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law. All parties to
each Mortgage Note, each Mortgage and any other such related agreement had legal
capacity to enter into the related Mortgage Loan and to execute and deliver such
Mortgage Note, such Mortgage and any such other agreements, and such Mortgage
Note, such Mortgage and any other such agreements have been duly and properly
executed by such parties. No fraud, error, omission, misrepresentation,
negligence or similar occurrence with respect to any Mortgage Loan has taken
place on the part of any Person, including, without limitation, the Mortgagor
Customer or any other party involved in the origination of the related Mortgage
Loan. MBC or the Issuer has reviewed all of the documents constituting the
Mortgage Loan File and has made such inquiries as it deems necessary to make and
confirm the accuracy of the representations set forth herein.

 

 -41- 

 

 

(k)        Each Mortgage Loan has been closed and the proceeds of such Mortgage
Loan have been fully disbursed and there is no further requirement for future
advances thereunder, except in the case of construction loans. All costs, fees
and expenses incurred in making or closing each Mortgage Loan and the recording
of the related Mortgage were paid, and the related Mortgagor Customer is not
entitled to any refund of any amounts paid or due under the related Mortgage
Note or such Mortgage.

 

(l)        The Issuer is the sole owner and holder of each Mortgage Loan. No
Mortgage Loan has been assigned or pledged by the Issuer, and the Issuer has
good, indefeasible and marketable title thereto, and has full right and
authority to transfer, pledge and assign each Mortgage Loan pursuant to this
Indenture to the Indenture Trustee free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest, and
following the pledge of each Mortgage Loan pursuant to this Indenture, the
Indenture Trustee will hold such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest.

 

(m)        No Mortgage Loan has an LTV greater than (i) in the case of a
Mortgage Loan the proceeds of which were used to acquire the related Mortgaged
Property, 75% and (ii) in the case of a Mortgage Loan the proceeds of which were
used to finance construction of the related Mortgaged Property, 80%.

 

(n)        Each Mortgage Loan is covered by either an ALTA lender’s title
insurance policy or other generally acceptable form of policy or insurance
acceptable to FNMA or FHLMC and each such title insurance policy is issued by a
title insurer acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where such Mortgaged Property is located, insuring the Issuer (or
its predecessor in interest), its successors and assigns, as to the first
priority lien of the related Mortgage in the original principal amount of such
Mortgage Loan (or to the extent the related Mortgage Note provides for negative
amortization, the maximum amount of negative amortization in accordance with
such Mortgage), subject only to Permitted Encumbrances, and any other matters
that MBC or the Issuer agreed to allow to be outstanding against such Mortgaged
Property, provided that such matters, would not affect the recovery of funds in
the event of foreclosure, and in the case of adjustable rate Mortgage Loans,
against any loss by reason of the invalidity or unenforceability of the lien
resulting from the provisions of the Mortgage providing for adjustment to the
related Mortgage Interest Rate and the related Mortgage Loan Payment. Where
required by state law or regulation, each Mortgagor Customer has been given the
opportunity to choose the carrier of the related required mortgage title
insurance. Additionally, such lender’s title insurance policy affirmatively
insures ingress and egress and against encroachments by or upon the related
Mortgaged Property or any interest therein. Such lender’s title insurance policy
does not contain any special exceptions (other than the standard exclusions) for
zoning and uses. The Issuer (or its predecessor in interest), its successors and
assigns, are the sole insureds of such lender’s title insurance policy, and such
lender’s title insurance policy is valid and remains in full force and effect
and will be in force and effect upon the consummation of the transactions
contemplated by this Indenture. No claims have been made under such lender’s
title insurance policy, and no prior holder or servicer of the related Mortgage,
including MBC or the Issuer, has done, by act or omission, anything which would
impair the coverage of such lender’s title insurance policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by the Issuer.

 

 -42- 

 

 

(o)        Neither MBC nor the Issuer has knowledge of any mechanics’ or similar
liens or claims which have been filed for work, labor or material (and to their
knowledge no rights are outstanding that under the law could give rise to such
liens) affecting any Mortgaged Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage.

 

(p)        Each Mortgage Note has a stated maturity. The stated maturity of each
Mortgage Note does not exceed twelve (12) months and does not provide for, or
have, any extension beyond forty-eight (48) months from the original due date of
such Mortgage Note. Each Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the related Mortgaged Property of the benefits of the
security provided thereby. Upon default by a Mortgagor Customer on a Mortgage
Loan and foreclosure on, or trustee’s sale of, the related Mortgaged Property
pursuant to the proper procedures, the holder of such Mortgage Loan will be able
to deliver good and marketable title to such Mortgaged Property. There is no
homestead or other exemption available to a Mortgagor Customer which would
interfere with the right to sell the related Mortgaged Property at a trustee’s
sale or the right to foreclose the related Mortgage.

 

(q)        Each Mortgage Loan was underwritten in the ordinary course of
business of MBC or the Issuer, as the case may be. Neither MBC nor the Issuer
has made any representations to a Mortgagor Customer that are inconsistent with
the mortgage instruments used.

 

(r)        To the best of MBC’s and the Issuer’s knowledge, all permits,
licenses and other governmental authorizations necessary for the renovation or
construction of any building on each Mortgaged Property have been obtained by
the related Mortgagor Customer or by any Person managing such renovation or
construction. Neither MBC nor the Issuer has received notification from any
Governmental Authority that any such renovation or construction is in material
non- compliance with any applicable law, ordinance, regulation, standard,
permit, license or other governmental authorization which the related Mortgagor
Customer is not endeavoring to cure.

 

(s)        The Mortgage Note, the Mortgage and any other documents required to
be delivered under this Indenture for each Mortgage Loan have been delivered to
the Indenture Trustee. The Issuer or its agent is in possession of a complete,
true and accurate Mortgage Loan File for each Mortgage Loan, except for such
documents the originals of which have been delivered to Indenture Trustee.

 

 -43- 

 

 

(t)        Each Mortgage contains an enforceable provision for the acceleration
of the payment of the unpaid principal balance of the related Mortgage Loan in
the event that the related Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.

 

(u)        No Mortgage Loan contains provisions pursuant to which Mortgage Loan
Payments are paid or partially paid with funds deposited in any separate account
established by the Issuer, the Mortgagor Customer or anyone on behalf of the
Issuer or the Mortgagor Customer, or paid by any source other than the Mortgagor
Customer, nor does any Mortgage Loan contain any other similar provisions which
may constitute a “buydown” provision. No Mortgage Loan is a graduated payment
mortgage loan and no Mortgage Loan has a shared appreciation or other contingent
interest feature.

 

(v)        All advances made to a Mortgagor Customer with respect to a
construction loan are evidenced by a single Mortgage Note in the stated
principal amount equal to the maximum amount of advances such Mortgagor Customer
is permitted to borrow under the related Mortgage Loan and all such advances are
secured by the related Mortgage and bear a single interest rate and single
repayment term. The lien of the related Mortgage securing the consolidated
principal amount is expressly insured as having first lien priority, subject
only to any acquisition loan made to such Mortgagor Customer with respect to the
same Mortgaged Property, by a title insurance policy, an endorsement to the
policy insuring the mortgagee’s consolidated interest or by other title evidence
acceptable to FNMA and FHLMC.

 

(w)      There have not been any condemnation proceedings with respect to any
Mortgaged Property.

 

(x)        The origination and collection practices used by MBC and the Issuer
with respect to each Mortgage Loan have been in all respects in compliance with
applicable laws and regulations, and have been in all respects legal and proper
and in the ordinary course of business. All Mortgage Interest Rate adjustments
have been made in strict compliance with state and federal law and the terms of
the related Mortgage Note. Any interest required to be paid pursuant to state,
federal and local law has been properly paid and credited.

 

(y)        No Mortgage Note by its terms provides for the capitalization or
forbearance of interest.

 

(z)        No document relating to any Mortgage Loan provides for any contingent
or additional interest in the form of participation in the cash flow of the
related Mortgaged Property or a sharing in the appreciation of the value of such
Mortgaged Property. The indebtedness evidenced by each Mortgage Note is not
convertible to an ownership interest in the related Mortgaged Property or the
related Mortgagor Customer and neither MBC nor the Issuer has financed nor does
MBC or the Issuer own, directly or indirectly, any equity of any form in such
Mortgaged Property or such Mortgagor Customer.

 -44- 

 

 

(aa)   The proceeds of the Mortgage Loans have not been and shall not be used to
satisfy, in whole or in part, any debt owed or owing by the related Mortgagor
Customers to MBC, the Issuer or any Affiliate of MBC or the Issuer.

 

(bb)   Each Mortgage either has been or will promptly be submitted for
recordation in the appropriate governmental recording office of the jurisdiction
where the related Mortgaged Property is located.

 

(cc)   Except as previously disclosed to the Indenture Trustee by the Issuer and
approved by Indenture Trustee in writing, no Mortgage Loan has been rejected for
purchase by a whole loan buyer.

 

(dd)   To the best of MBC’s and the Issuer’s knowledge, each Mortgaged Property
is free from any and all Hazardous Substances and there exists no violation of
any Environmental Laws.

 

(ee)   Neither MBC nor the Issuer has knowledge of any circumstances existing
that should reasonably be expected to adversely affect the value or the
marketability of any Mortgaged Property or any Mortgage Loan.

 

(ff)   No Mortgage Loan is (i) subject to the provisions of the Homeownership
and Equity Protection Act of 1994 as amended (“HOEPA”), (ii) a “high cost”
mortgage loan, “covered” mortgage loan or “predatory” mortgage loan or any other
comparable term, no matter how defined under any federal, state or local law, or
(iii) subject to any comparable federal, state or local statutes or regulations
or any other statute or regulation providing assignee liability to holders of
such mortgage loans.

 

(gg)   No predatory, abusive or deceptive lending practices, including but not
limited to, the extension of credit to a Mortgagor Customer without regard for
such Mortgagor Customer’s ability to repay the related Mortgage Loan and the
extension of credit to such Mortgagor Customer which has no tangible net benefit
to such Mortgagor Customer, were employed in connection with the origination of
such Mortgage Loan.

 

(hh) The principal amount of each Mortgage Loan is less than One Million Five
Hundred Thousand Dollars ($1,500,000); provided, that (i) up to three (3)
Mortgage Loans originated in any calendar year may be in a principal amount not
to exceed Two Million Dollars ($2,000,000.00) and (ii) the aggregate principal
amount of all Eligible Mortgage Loans owing at any time by any Mortgagor
Customer (together with Affiliates of such Mortgagor Customer (including common
Mortgage Loan Guarantors and/or related entities)) to the Issuer or any
Affiliate of the Issuer shall not exceed Three Million Dollars ($3,000,000).

 

(ii)        To the best of MBC’s and the Issuer’s knowledge, there is no pending
action or proceeding involving any Mortgaged Property in which the compliance
with any lead paint law, rule or regulation is an issue. Nothing further remains
to be done to satisfy in full all requirements of each such law, rule or
regulation that constitutes a prerequisite to the use and enjoyment of such
property.

 -45- 

 

 

(jj) To the best of MBC’s and the Issuer’s knowledge, there are no pending
actions, suits or proceedings, arbitrations or governmental investigations
against any Mortgagor Customer or any Mortgaged Property, an adverse outcome of
which would materially affect (i) such Mortgagor Customer’s performance under
the related Mortgage Note and other related Mortgage Loan Documents, or the use
of such Mortgaged Property for the use currently being made thereof, the
operation of such Mortgaged Property as currently being operated or the value of
such Mortgaged Property or (ii) the collectability or enforceability of the
related Mortgage with respect to such Mortgaged Property or the related Mortgage
Loan.

 

(kk) To the best of MBC’s and the Issuer’s knowledge, no asbestos is located on
any Mortgaged Property except as may have been disclosed in the Phase I
environmental reports delivered to the Indenture Trustee.

 

(ll) All transfer taxes, deed stamps, intangible taxes or other amounts in the
nature of transfer taxes required to be paid by any Person under applicable law
in connection with the transfer of the Mortgage Loans and Mortgage Loan
Documents to the Issuer have been paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable law in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Mortgage Loan Documents,
including, without limitation, the Mortgages, have been paid.

 

(mm) Each Mortgagor Customer under a Mortgage Loan or related Mortgage Loan
Documents (which document does not negate other representations and warranties
set forth herein) has been instructed to make payments directly to the
Collection Account; provided that, with respect to any Mortgage Loan acquired by
the Issuer from MBC pursuant to the Asset Transfer Agreement, the Issuer shall
have ten (10) days after the date of such acquisition to direct, in writing,
each related Mortgagor Customer to make payments directly to the Collection
Account and a breach of this subsection (mm) with respect to such Mortgage Loan
shall occur only if such written direction is not so delivered to such Mortgagor
Customer.

 

(nn) The obligations of each Mortgagor Customer under the related Mortgage Note
and other Mortgage Loan Documents are not affected by reason of: (i) any damage
to or destruction of any portion of a related Mortgaged Property; (ii) any
taking of such Mortgaged Property; or (iii) any prohibition, limitation,
interruption, cessation, restriction, prevention or interference of such
Mortgagor Customer’s use, occupancy or enjoyment of such Mortgaged Property.

 

ARTICLE III

SATISFACTION AND DISCHARGE

 

Section 3.01        Satisfaction and Discharge of Indenture.

 

This Indenture shall cease to be of further effect except as to (a) any
surviving rights herein expressly provided for, (b) in the case of clause (1)(B)
below, the rights of the Noteholders hereunder to receive payment of the
Outstanding Principal Balance of and interest on the Notes and any other rights
of the Noteholders hereunder, and (c) the provisions of Section 3.02, when:

 -46- 

 

 

(1)        either: (A) all Notes theretofore authenticated and delivered (other
than (I) Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.11 and (II) Notes for which payment of
money has theretofore been deposited in the Payment Account by the Indenture
Trustee and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 5.09) have been delivered to the Note Registrar for
cancellation; or (B) all such Notes not theretofore delivered to the Note
Registrar for cancellation (I) have become due and payable or (II) will become
due and payable on the next Payment Date, and in the case of clause (B)(I) or
(B)(II) above, cash in an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Note Registrar for
cancellation or sufficient to pay the Outstanding Principal Balance thereof and
any interest thereon accrued to the date of such deposit (in the case of Notes
which have become due and payable) or to the end of the related Accrual Period
for the next Payment Date has been deposited with the Indenture Trustee as trust
funds in trust for these purposes;

 

(2)        the Issuer has paid or caused to be paid all other sums payable or
reasonably expected to become payable by the Issuer to the Indenture Trustee,
each of the other Persons to which amounts are payable hereunder and each of the
Noteholders (in each case, if any); and

 

(3)        the Issuer has delivered to the Indenture Trustee an Officer’s
Certificate of the Issuer (upon which the Indenture Trustee may rely) stating
that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with;

 

provided, however, that if, at any time after the payment that would have
otherwise resulted in the satisfaction and discharge of this Indenture and such
obligations, such payment is rescinded or must otherwise be returned for any
reason, effective upon such rescission or return such satisfaction and discharge
of this Indenture and such obligations shall automatically be deemed never to
have occurred and this Indenture and such obligations shall be deemed to be in
full force and effect.

 

Notwithstanding the foregoing, the obligations of the Issuer to the Indenture
Trustee under Section 5.04 and the obligations of the Indenture Trustee to the
Noteholders under Section 3.2     shall survive satisfaction and discharge of
this Indenture.

 

Section 3.02        Application of Trust Money.

 

Subject to the provisions of Section 2.15, Section 5.09 and Section 7.01, all
Cash deposited with the Indenture Trustee pursuant to Section 3.01 shall be held
in the Payment Account and applied by the Indenture Trustee, in accordance with
the provisions of the Notes and this Indenture, to pay to the Persons entitled
thereto the amounts to which such Persons are entitled pursuant to the
provisions hereof.

 

 -47- 

 

 

ARTICLE IV

EVENTS OF DEFAULT; REMEDIES

 

Section 4.01        Events of Default.

 

“Event of Default,” wherever used herein with respect to the Notes, means any
one of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

 

(a)        the failure of the Issuer to pay interest on the Notes on any Payment
Date or any other amount on account of the Notes (other than a payment default
under subsection (b)) and such failure continues unremedied for a period of
thirty (30) days;

 

(b)        the failure of the Issuer to pay any Redemption Payment or retire the
Notes on the Final Payment Date;

 

(c)        (i) any material default in the observance or performance of any
material covenant or agreement of the Issuer or MBC made in this Indenture or
any other Transaction Documents to which it is a party (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section 4.01 specifically dealt with), which default shall continue
unremedied for a period of thirty (30) days after there shall have been given to
the Issuer by the Indenture Trustee, or to the Issuer and the Indenture Trustee
by the Noteholders holding at least 25% of the Outstanding Principal Balance, a
written notice specifying such default and requiring it to be remedied; (ii) any
monetary default by the Issuer under any Transaction Document, other than this
Indenture or the Notes, which monetary default continues beyond any applicable
cure period set forth in such Transaction Document, or if no cure period is set
forth in such document, such default continues unremedied for a period of thirty
(30) days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Issuer by the Indenture
Trustee; or (iii) any material default in the observance or performance of any
non-monetary covenant or agreement on the part of the Issuer or MBC contained in
any Transaction Document, other than this Indenture or the Notes, which
continues unremedied for a period of thirty (30) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Issuer by the Indenture Trustee, provided, however, if such
default under this clause (iii) is reasonably susceptible of cure, but not
within such thirty (30) day period, then the Issuer or MBC, as applicable, shall
have an additional forty-five (45) days to cure such default provided the Issuer
or MBC, as applicable, diligently and continuously pursues such cure;

 

(d)        (i) the impairment of the validity or effectiveness of this Indenture
or the material impairment of the validity or effectiveness of any other
security document purporting to grant a lien to the Indenture Trustee, the
subordination of the lien of the Indenture Trustee on any part of the Collateral
Pool, the creation of any lien or other encumbrance on any part of the
Collateral Pool in addition to the lien of the Indenture Trustee or the failure
of the lien of the Indenture Trustee to constitute a valid first priority
perfected security interest in the Collateral included in the Collateral Pool,
in each case, that has a material adverse effect with respect to the Collateral
Pool, subject to Permitted Encumbrances; provided, that if susceptible of cure,
no Event of Default shall arise pursuant to this subsection (d) until the
continuation of any such default unremedied for a period of thirty (30) days
after receipt by the Issuer of notice thereof; or (ii) the creation of any
mechanic’s, materialman’s or other lien or encumbrance, other than a Permitted
Encumbrance, on any part of the Collateral, which lien is not removed of record
or otherwise insured over to Indenture Trustee’s satisfaction within forty-five
(45) days of the filing or recording of such lien;

 

 -48- 

 

 

(e)        a material breach of the representations and warranties of the Issuer
contained in the Indenture (other than as set forth in Section 2.21) that
materially and adversely affects the interests of the Indenture Trustee, on
behalf of the Noteholders, which continues unremedied for a period of fifteen
(15) days after the date on which written notice of such breach, requiring the
same to be remedied, shall have been given to the Issuer by the Indenture
Trustee;

 

(f)        a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future federal
or state bankruptcy, insolvency or similar law or appointing a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities and reorganization or similar proceedings, or for the
winding up or liquidation of its affairs, shall have been entered against the
Issuer or MBC and such decree or order shall have remained in force undischarged
or unstayed for a period of ninety

(90) days;

 

(g)        the Issuer or MBC shall voluntarily file a petition for bankruptcy,
reorganization, assignment for the benefit of creditors or similar proceeding or
consent to the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities, or
similar proceedings of, or relating to, the Issuer or MBC or of, or relating to,
all or substantially all of the assets of the Issuer or MBC;

 

(h)        any Collateral is subject to a Collateral Transfer other than as
provided in this Indenture;

 

(i)        any default under any other Transaction Document (that is deemed an
“Event of Default under the Indenture” pursuant to the terms of such other
Transaction Document);

 

(j)        a Guaranty ceases to be in full force and effect or is declared to be
null and void and unenforceable or a Guaranty is found to be invalid or a
Guarantor denies its liability under its Guaranty or gives notice to that effect
(other than by reason of release of the Guarantor in accordance with the terms
of this Indenture);

 

(k)        the rendering of a final judgment or judgments (not subject to
appeal) of a court of competent jurisdiction against the Issuer or MBC which
could be reasonably expected to have a material adverse effect on (i) the
condition, operations, assets, business or prospects of the Issuer or MBC, as
applicable, (ii) the Issuer’s ability to make any payments under this Indenture,
the Notes or the other Transaction Document in accordance with the terms hereof
or thereof, (iii) MBC’s ability to make payments under the Guaranty, (iv) the
value of the Collateral, or the Indenture Trustee’s liens on the Collateral or
the priority of any such lien or (v) the practical realization of the benefits
of the Indenture Trustee’s rights and remedies under this Indenture and the
Transaction Documents;

 

 -49- 

 

 

(l)        MBC or any Guarantor shall fail to pay any principal or interest,
regardless of amount, due in respect indebtedness exceeding $250,000 when and as
the same shall become due and payable, or any other event or circumstance which
would permit the holder of any such indebtedness to accelerate such indebtedness
(and/or the obligations of MBC or such Guarantor thereunder) prior to the
scheduled maturity or termination thereof, shall occur (regardless of whether
the holder of such indebtedness shall actually accelerate, terminate or
otherwise exercise any rights or remedies with respect to such indebtedness); or

 

(m)        the Issuer or MBC shall cease doing business as conducted on the
Closing Date.

 

Section 4.02        Acceleration of Maturity; Rescission and Annulment.

 

If an Event of Default (other than with respect to clause (f), clause (g) or
clause (i) of the definition thereof) should occur and be continuing, at the
written direction of Noteholders representing at least 30% of the Outstanding
Principal Balance (which shall have the right, but not the obligation, to direct
the Indenture Trustee to accelerate the Notes and, subject to the provisions of
this Indenture, cause the foreclosure and sale of the Collateral included in the
Collateral Pool), the Indenture Trustee shall declare all of the Notes to be
immediately due and payable; provided that the Indenture Trustee shall not
declare all of the Notes to be immediately due and payable if the Requisite
Majority rescind the direction of such Noteholders in a written notice delivered
to the Indenture Trustee. If an Event of Default specified in clause (f), clause
(g) or clause (i) of the definition thereof occurs, the unpaid Outstanding
Principal Balance of such Notes, together with all accrued interest thereon
through the date of acceleration, shall automatically become due and payable in
full without any declaration or other act on the part of the Indenture Trustee
or any Noteholder.

 

At any time after such declaration of acceleration has been made and before a
judgment or decree for payment of the money due in respect of the Notes has been
obtained by the Indenture Trustee as hereinafter provided in this ARTICLE IV,
the Requisite Majority may rescind and annul such declaration and its
consequences if:

 

(a)        the Issuer has paid to or deposited with the Indenture Trustee a sum
sufficient to

pay:

 

(i)        all payments of principal of and interest on the Notes and all other
amounts that would, in each case, then be due hereunder or upon the Notes if the
Event of Default giving rise to such acceleration had not occurred; and

 

(ii)        all sums paid or advanced by the Indenture Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and counsel; and

 

(b)        all Events of Default, other than the nonpayment of the principal of
the Notes that has become due solely by virtue of such acceleration, have been
cured or waived as provided in Section 4.12.

 -50- 

 

 

No such rescission and annulment shall affect any subsequent default or impair
any right consequent thereto.

 

Section 4.03        Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.

 

(a)        If the Issuer fails to pay all amounts due upon an acceleration of
the Notes under Section 4.02 forthwith upon demand and such declaration and its
consequences shall not have been rescinded and annulled, the Indenture Trustee,
in its capacity as Indenture Trustee and as trustee of an express trust, shall,
if directed by the Requisite Majority (which will have the right, but not the
obligation, to direct the Indenture Trustee to cause the foreclosure and sale of
the Collateral in the Collateral Pool), institute a judicial proceeding for the
collection of the sums so due and unpaid, prosecute such proceeding to judgment
or final decree and enforce the same against the Issuer or any other obligor
upon such Notes and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the Collateral, wherever situated, or may
institute and prosecute such non-judicial proceedings in lieu of judicial
proceedings as are then permitted by applicable law.

 

(b)        If an Event of Default occurs and is continuing, the Indenture
Trustee may, in its discretion and in any order, proceed to protect and enforce
its rights and the rights of the Noteholders by such appropriate proceedings as
the Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or any Mortgage or by law.

 

(c)        In case (i) there shall be pending, relative to the Issuer, MBC or
any Person having or claiming an interest in the Collateral Pool, proceedings
under Title 11 of the United States Code or any other applicable federal or
state bankruptcy, insolvency or other similar law, (ii) a receiver, assignee,
debtor-in-possession or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or shall have
taken possession of the Issuer or MBC or their respective property or (iii)
there shall be pending a comparable judicial proceeding brought by creditors of
the Issuer or MBC or affecting the property of the Issuer or MBC, the Indenture
Trustee, irrespective of whether the principal of or interest on any Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:

 

(iv)        to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee (including any claim for reasonable compensation
to the Indenture Trustee and each predecessor Indenture Trustee, and their
respective attorneys, and for reimbursement of all reasonable expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of willful misconduct,
negligence or bad faith of the Indenture Trustee or any predecessor Indenture
Trustee, as applicable) and of the Noteholders allowed in such proceedings;

 

 -51- 

 

 

(v)        unless prohibited by applicable law and regulations, to vote on
behalf of the Noteholders in any election of a trustee, a standby trustee or
Person performing similar functions in any such proceedings;

 

(vi)        to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on their
and its behalf; and

 

(vii)        to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture Trustee
or the Noteholders allowed in any judicial proceedings relative to the Issuer or
MBC, their respective creditors and their respective property;

 

and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of Noteholders to make payments
to the Indenture Trustee, and, in the event that the Indenture Trustee shall
consent to the making of payments directly to such Noteholders to pay to the
Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective attorneys, and all other expenses and liabilities incurred, and
all advances made, by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of willful misconduct, negligence or bad faith of the
Indenture Trustee or predecessor Indenture Trustee.

 

(d)        Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of the Noteholder or to authorize
the Indenture Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.

 

(e)        In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such proceedings.

 

(f)        All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Indenture Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Indenture Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its counsel, be for the
ratable benefit of the Noteholders in respect of which such judgment has been
recovered, subject to the payment priorities of Section 2.15(b).

 

 -52- 

 

 

Section 4.04        Remedies.

 

If an Event of Default has occurred and is continuing, and the Notes have been
declared due and payable pursuant to Section 4.02 and such declaration and its
consequences shall not have been rescinded and annulled, the Indenture Trustee
shall, at the written direction of the Requisite Majority, in addition to
performing any tasks as provided in Section 4.03, do one or more of the
following:

 

(a)        institute, or cause to be instituted, Proceedings for the collection
of all amounts then payable on or under the Collateral or this Indenture with
respect to the Notes, whether by declaration of acceleration or otherwise, of
the sums due and unpaid, prosecute such Proceedings, enforce any judgment
obtained and collect from the Collateral included in the Collateral Pool the
moneys adjudged to be payable;

 

(b)        liquidate, or cause to be liquidated, all or any portion of the
Collateral Pool at one or more public or private sales called and conducted in
any manner permitted by applicable laws; provided, however, that the Indenture
Trustee shall give the Issuer written notice of any private sale called by or on
behalf of the Indenture Trustee pursuant to this Section 4.04(b) at least 10
days prior to the date fixed for such private sale;

 

(c)        institute, or cause to be instituted, Foreclosure Proceedings with
respect to all or part of the Collateral included in the Collateral Pool;

 

(d)        exercise, or cause to be exercised, any remedies of a secured party
under the UCC;

 

(e)        maintain the lien of this Indenture over the Collateral included in
the Collateral Pool and, in its own name or in the name of the Issuer or
otherwise, collect and otherwise receive in accordance with is Indenture any
money or property at any time payable or receivable on account of or in exchange
for the Mortgaged Properties and Mortgage Loans in the Collateral Pool;

 

(f)        take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee hereunder; and

 

(g)        exercise, or cause to be exercised, any remedies contained in any
Mortgage;

 

provided, however, that the Indenture Trustee shall not, unless required by law,
sell or otherwise liquidate all or any portion of the Collateral Pool following
any Event of Default except in accordance with Section 4.15; provided, further,
that, with respect to instituting any remedies pursuant to this Section 4.04 in
any state wherein the law prohibits more than one “judicial action” or “one form
of action” to enforce a mortgage obligation, the Indenture Trustee shall enforce
any of the Indenture Trustee’s rights hereunder with respect to any Mortgaged
Properties in accordance with the directions of the Requisite Majority.

 

In the event that the Indenture Trustee, following an Event of Default
hereunder, institutes Foreclosure Proceedings, the Indenture Trustee shall
promptly give a notice to that effect to the Issuer.

 

 -53- 

 

 

Section 4.05          Application of Money Collected.

 

Any money collected by the Indenture Trustee pursuant to this Article shall be
deposited in the Payment Account and, on each Payment Date, shall be applied in
accordance with Section 2.15 and, in case of the distribution of such money on
account of the principal of or interest on the Notes, upon presentation and
surrender of the Notes if fully paid.

 

Section 4.06          Limitation on Suits,

 

Except as provided in Section 4.07, no Noteholder shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:

 

(1)        such Noteholder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;

 

(2)        the Requisite Majority shall have made written request to the
Indenture Trustee to institute proceedings in respect of such Event of Default
in its own name as Indenture Trustee hereunder;

 

(3)        such Noteholder has offered to the Indenture Trustee adequate
indemnity or security satisfactory to the Indenture Trustee against the costs,
expenses and liabilities to be incurred in compliance with such request;

 

(4)        the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity or security has failed to institute any such
proceeding; and

 

(5)        an Event of Default shall have occurred and be continuing;

 

it being understood and intended that no one or more of such Noteholders shall
have any right in any manner whatever by virtue of, or by availing itself or
themselves of, any provision of this Indenture to affect, disturb or prejudice
the rights of any other of such Noteholders, or to obtain or to seek to obtain
priority or preference over any other of such Noteholders or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all of such Noteholders. Subject to the foregoing
restrictions, the Noteholders may exercise their rights under this Section 4.06
independently.

 

Section 4.07        Unconditional Right of Noteholders to Receive Principal and
Interest.

 

Notwithstanding any other provision in this Indenture, the Holder of any Note at
Maturity shall have the right, which is absolute and unconditional, to receive
payments of interest, principal and other amounts then due on such Note (subject
to Section 2.15) and to institute suit for the enforcement of any such payment
(subject to Section 4.06), and such rights shall not be impaired without the
consent of such Noteholder, unless a non-payment has been cured pursuant to the
second paragraph of Section 4.02. The Issuer shall, however, be subject to only
one consolidated lawsuit by the Noteholders, or by the Indenture Trustee on
behalf of the Noteholders, for any one cause of action arising under this
Indenture or otherwise.

 

 -54- 

 

 

Section 4.08        Restoration of Rights and Remedies.

 

If the Indenture Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued, waived, rescinded or abandoned for any reason, or has been
determined adversely to the Indenture Trustee or to such Noteholder, then and in
every such case, subject to any determination in such proceeding, the Issuer,
the Indenture Trustee and the Noteholders shall be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall continue as though
no such proceeding had been instituted.

 

Section 4.09        Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in Section 2.11, no right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

Section 4.10        Delay or Omission Not Waiver.

 

No delay or omission of the Indenture Trustee or any Noteholder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Indenture or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, to the extent permitted by applicable law,
by the Indenture Trustee or the Noteholders, as the case may be.

 

Section 4.11        Control by Requisite Majority.

 

The Requisite Majority shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Indenture Trustee
under Section 4.04, or exercising any trust or power conferred on the Indenture
Trustee (including, without limitation, the exercise of its rights under any
Account Control Agreement); provided, that such direction shall not be in
conflict with any rule of law or with this Indenture or involve the Indenture
Trustee in personal liability; provided, further, that the Indenture Trustee may
take any other action deemed proper by the Indenture Trustee which is not
inconsistent with such direction.

 

Section 4.12        Waiver of Past Defaults.

 

Prior to the acceleration of the Maturity of the Notes, the Requisite Majority
may waive any past default hereunder and its consequences, except a default:

 

(1)        in the distribution of principal or interest on any Note, for which a
waiver shall require the consent of Noteholders holding 100% of the Outstanding
Principal Balance of all Notes affected thereby;

 

 -55- 

 

 

(2)        in respect of a covenant or provision hereof which under ARTICLE VIII
cannot be modified or amended without the consent of the Holder of each Note
affected thereby, for which a waiver shall require the consent by each such
Holder;

 

(3)        depriving the Indenture Trustee of a lien on any part the Collateral,
for which a waiver shall require the consent of the Indenture Trustee; or

 

(4)        depriving the Indenture Trustee of any fees, reimbursement, or
indemnification, to which the Indenture Trustee is entitled, for which a waiver
shall require the written consent of the Indenture Trustee.

 

Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom (and any Early Amortization Period resulting
therefrom) shall be deemed to have been cured, for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon. Any costs or expenses incurred by the
Indenture Trustee in connection with such waiver shall be reimbursable to the
Indenture Trustee from amounts on deposit in the Payment Account.

 

Section 4.13        Undertaking for Costs.

 

All parties to this Indenture agree, and each Noteholder and Note Owner by its
acceptance of such Note or an Ownership Interest therein shall be deemed to have
agreed, that in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Indenture Trustee for any action taken,
suffered or omitted by it as Indenture Trustee, a court in its discretion may
require, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees and expenses, against any
party litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant. The provisions of this
Section 4.13 shall not apply to any suit instituted by the Indenture Trustee, to
any suit instituted by any Noteholder or group of Noteholders holding in the
aggregate at least 25% of the Outstanding Principal Balance, or to any suit
instituted by any Noteholder pursuant to Section 4.07.

 

Section 4.14        Waiver of Stay or Extension Laws.

 

The Issuer covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim to take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of such law and covenants that it will
not hinder, delay or impede the exercise of any power herein granted to the
Indenture Trustee, but will suffer and permit the exercise of every such power
as though no such law had been enacted.

 

 -56- 

 

 

Section 4.15        Sale of Collateral.

 

(a)        The power to effect any public or private sale of any portion of the
Collateral Pool pursuant to Section 4.03 or Section 4.04 shall not be exhausted
by any one or more sales as to any portion of the Collateral remaining unsold,
but shall continue unimpaired until either the entirety of the Collateral Pool
shall have been sold or all amounts payable on the Notes and under this
Indenture with respect thereto shall have been paid. The Indenture Trustee may
from time to time postpone any sale by public announcement made at the time and
place of such sale. The Indenture Trustee hereby expressly waives its right to
any amount fixed by law as compensation for any such sale but such waiver does
not apply to any amounts to which the Indenture Trustee is otherwise entitled
under Section 5.04.

 

(b)        Subject to Section 4.15(c), the Indenture Trustee shall not sell the
Collateral included in the Collateral Pool pursuant to Section 4.03 or Section
4.04, unless:

 

(i)        the Requisite Majority consents to or directs the Indenture Trustee
to make the related sales; or

 

(ii)        the proceeds of such liquidation would be greater than or equal to
the Outstanding Principal Balance.

 

The foregoing provisions of this Section 4.15 shall not preclude or limit the
ability of the Indenture Trustee or its designee to purchase all or any portion
of the Collateral at any sale, public or private, and the purchase by the
Indenture Trustee or its designee of all or any portion of the Collateral at any
sale shall not be deemed a sale or disposition thereof for purposes of this
Section 4.15(b).

 

(c)           In the event that the Notes is not fully paid on the Final Payment
Date, the Noteholders holding more than 25% of the Outstanding Principal Balance
shall have the right to require the sale of the Collateral, subject to Section
4.15(b) and Section 4.15(d).

 

(d)           In connection with a sale of all or any portion of the Collateral
Pool:

 

(i)        any Holder or Holders of Notes may bid for and purchase the property
offered for sale, and upon compliance with the terms of sale may hold, retain
and possess and dispose of such property, without further accountability, and
may, in paying the purchase money therefor, deliver any Outstanding Notes or
claims for interest thereon in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
Notes, in case the amounts so payable thereon shall be less than the amount due
thereon, shall be returned to the Holders thereof after being appropriately
stamped to show such partial payment;

 

(ii)        the Indenture Trustee shall execute and deliver, without recourse,
an appropriate instrument of conveyance transferring its interest in any portion
of the Collateral Pool in connection with a sale thereof;

 

(iii)        the Indenture Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to transfer and convey any the Issuer’s interest
in any portion of the Collateral Pool in connection with a sale thereof, and to
take all action necessary to effect such sale;

 

 -57- 

 

 

(iv)        no purchaser or transferee at such a sale shall be bound to
ascertain the Indenture Trustee’s authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys; and

 

(v)        no purchaser or transferee at such a sale shall have been a prior
owner of such Collateral if such prior owner was MBC or an Affiliate thereof.

 

Section 4.16        Action on Notes.

 

The Indenture Trustee’s right to seek and recover judgment on the Notes or under
this Indenture shall not be affected by the seeking, obtaining or application of
any other relief under or with respect to this Indenture. Neither the lien of
this Indenture nor any rights or remedies of the Indenture Trustee or the
Noteholders shall be impaired by the recovery of any judgment by the Indenture
Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Collateral Pool.

 

ARTICLE V

THE INDENTURE TRUSTEE

 

Section 5.01        Certain Duties and Responsibilities.

 

(a)        The Issuer hereby irrevocably constitutes and appoints the Indenture
Trustee, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in place and stead of
the Issuer and in the name of the Issuer or in its own name or in the name of a
nominee, from time to time in the Indenture Trustee’s discretion, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Indenture, all as set forth in this Section 5.01.

 

(b)        The rights, duties and liabilities of the Indenture Trustee in
respect of this Indenture shall be as follows:

 

(i)        The Indenture Trustee shall have the full power and authority to do
all things not inconsistent with the provisions of this Indenture that it may
deem advisable in order to enforce the provisions hereof or to take any action
with respect to a default or an Event of Default hereunder, or to institute,
appear in or defend any suit or other proceeding with respect hereto, or to
protect the interests of the Noteholders. The Issuer shall prepare and file or
cause to be filed, at the Issuer’s expense, a UCC Financing Statement and any
continuation statements, describing the Issuer as debtor, the Indenture Trustee
as secured party and the Collateral included in the Collateral Pool as the
collateral, in all appropriate locations in the State of New York promptly
following the issuance of the Notes, and within six months prior to each fifth
anniversary of the original filing. The Indenture Trustee is hereby authorized
and obligated to make, at the expense of the Issuer, all required filings and
refilings with respect to which the Indenture Trustee receives written direction
from the Issuer, necessary to preserve the liens created by this Indenture as
provided herein. The Indenture Trustee shall not be required to take any action
to exercise or enforce the trusts hereby created which, in the opinion of the
Indenture Trustee, shall be likely to involve expense or liability to the
Indenture Trustee, unless the Indenture Trustee shall have received an agreement
satisfactory to it in its reasonable discretion to indemnify it against such
liability and expense. Except as otherwise expressly provided herein, the
Indenture Trustee shall not be required to ascertain or inquire as to the
performance or observance of any of the covenants or agreements contained
herein, or in any other instruments to be performed or observed by the Issuer.

 

 -58- 

 

 

(ii)        Subject to the other provisions of this ARTICLE V, the Indenture
Trustee, upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments furnished to the Indenture
Trustee that are specifically required to be furnished pursuant to any
provisions of this Indenture, shall examine them to determine whether they are
on their face in the form required by this Indenture to the extent expressly set
forth herein. If any such instrument is found on its face not to conform to the
requirements of this Indenture in a material manner, the Indenture Trustee shall
take such action as it deems appropriate to have the instrument corrected. The
Indenture Trustee shall not incur any liability in acting upon any signature,
notice, request, consent, certificate, opinion, or other instrument reasonably
believed by it to be genuine. In administering the trusts hereunder, the
Indenture Trustee may execute any of the trusts or powers hereunder directly or
through its agents or attorneys; provided, that it shall remain liable for the
acts of all such agents and attorneys. The Indenture Trustee may, at its own
expense (except as otherwise provided in Section 5.04), consult with counsel,
accountants and other professionals to be selected and employed by it, and the
Indenture Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the advice of any such Person nor for any
error of judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Indenture Trustee was negligent in ascertaining the pertinent
facts.

 

(iii)        The Indenture Trustee shall not, except as otherwise provided in
Section 5.01(b)(i), have any duty to make, arrange or ensure the completion of
any recording, filing or registration of any instrument or other document
(including any UCC Financing Statements), or any amendments or supplements to
any of said instruments or to determine if any such instrument or other document
is in a form suitable for recording, filing or registration, and the Indenture
Trustee shall not have any duty to make, arrange or ensure the completion of the
payment of any fees, charges or taxes in connection therewith.

 

(iv)        Whenever in performing its duties hereunder, the Indenture Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Indenture
Trustee may, in the absence of bad faith on the part of the Indenture Trustee,
rely upon (unless other evidence in respect thereof be specifically prescribed
herein) an Officer’s Certificate of the Issuer and such Officer’s Certificate
shall be full warrant to the Indenture Trustee for any action taken, suffered or
omitted by it on the faith thereof.

 

 -59- 

 

 

(v)        The Indenture Trustee shall not have any obligation to see to the
payment or discharge of any liens (other than the liens of this Indenture and
the Mortgages) upon the Collateral included in the Collateral Pool, or to see to
the application of any payment of the principal of or interest on any Note
secured thereby or to the delivery or transfer to any Person of any property
released and from any such lien, or to give notice to or make demand upon any
mortgagor, mortgagee, trustor, beneficiary or other Person for the delivery or
transfer of any such property. The Indenture Trustee (and any successor trustee
or co-trustee in its individual capacity) nevertheless agrees that it will, at
its own cost and expense, promptly take all action as may be necessary to
discharge any liens or encumbrances on the Collateral included in the Collateral
Pool, arising as a result of the Indenture Trustee (or such successor trustee or
co-trustee, as the case may be) acting negligently, in bad faith or with willful
misconduct in its capacity as Indenture Trustee (or such successor trustee or
co-trustee, as the case may be).

 

(vi)        The Indenture Trustee shall not be concerned with or accountable to
any Person for the use or application of any deposited moneys or of any property
or securities or the proceeds thereof that shall be released or withdrawn in
accordance with the provisions hereof or of any property or securities or the
proceeds thereof that shall be released from the lien hereof or thereof in
accordance with the provisions hereof or thereof and the Indenture Trustee shall
not have any liability for the acts of other parties that are not in accordance
with the provisions hereof.

 

(c)        The rights, duties and liabilities of the Indenture Trustee in
respect of the Collateral Pool and this Indenture, in addition to those set
forth in Section 5.01(a), shall be as follows:

 

(i)        except during the continuance of an Event of Default with respect to
the Notes, the Indenture Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Indenture Trustee;
and

 

(ii)        the Indenture Trustee may, in the absence of bad faith on its part,
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this Indenture or any
other Transaction Document, as applicable; but in the case of any such
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Indenture Trustee, the Indenture Trustee shall be under a
duty to examine the same to determine whether or not they conform on their face
to the requirements of this Indenture, to the extent expressly set forth herein.

 

(d)        Subject to Section 4.12, in case an Event of Default known to the
Indenture Trustee with respect to the Notes has occurred and is continuing, the
Indenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his own affairs.

 

(e)        No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

 

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(i)        this subsection shall not be construed to limit the effect of
subsections (b), (c) or (d) of this Section 5.01;

 

(ii)        the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts;

 

(iii)        the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
directions of any applicable party pursuant to a Transaction Document, the
Requisite Majority (unless a lower or higher percentage of Noteholders is
expressly permitted or required to authorize such action hereunder, in which
case such lower or higher percentage) of the Outstanding Principal Balance, as
the case may be, relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising or
omitting exercise any trust or power conferred upon the Indenture Trustee, under
this Indenture with respect to the Notes; and

 

(iv)        the Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of a default in the observance of any
covenant contained in Section 9.06 or ARTICLE X unless either (1) a Responsible
Officer of the Indenture Trustee shall have actual knowledge of such default or
(2) written notice of such default shall have been given by the Issuer or by any
Noteholder to and received by a Responsible Officer of the Indenture Trustee. In
the absence of receipt of such notice or actual knowledge the Indenture Trustee
may conclusively assume that there is no default or Event of Default.

 

The Indenture Trustee shall perform the duties and obligations specified to be
performed by the Indenture Trustee in this Indenture and in the other
Transaction Documents.

 

Section 5.02        Notice of Defaults.

 

The Indenture Trustee, promptly but not later than two (2) Business Days after a
Responsible Officer of the Indenture Trustee acquires actual knowledge of the
occurrence of any default under this Indenture, shall notify the Issuer and the
Noteholders of any such default (a “Notice of Default”), unless all such
defaults known to the Indenture Trustee shall have been cured before the giving
of such notice or unless the same is rescinded and annulled, or waived by the
Requisite Majority pursuant to Section 4.02 or Section 4.12. For the purpose of
this Section 5.02, the term “default” means any event which is, or after notice,
or direction of the Requisite Majority or lapse of time would become, an Event
of Default with respect to the Notes.

 

Section 5.03        Certain Rights of Indenture Trustee.

 

Subject to the provisions of Section 5.01, in connection with this Indenture:

 

(a)        the Indenture Trustee may request and rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties as may be required by such party or
parties pursuant to the terms of this Indenture or any other Transaction
Document, as applicable;

 

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(b)        any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by the Issuer Request or Issuer Order and any resolution
of the board of directors of the Issuer may be sufficiently evidenced by a
Resolution;

 

(c)        whenever in the administration of this Indenture the Indenture
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Indenture Trustee
(unless other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer’s Certificate;

 

(d)        the Indenture Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel rendered thereby shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;

 

(e)        the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other paper or
document, but the Indenture Trustee in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Indenture Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent or attorney;

 

(f)        the Indenture Trustee may, at its own expense (except as otherwise
provided in Section 5.04), execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys of the Indenture Trustee; provided, that it shall remain liable for
the acts of all such attorneys and agents;

 

(g)        the Indenture Trustee shall not be required to provide any surety or
bond of any kind in connection with the execution or performance of its duties
hereunder;

 

(h)        except with respect to the representations made by it in Section
5.05, the Indenture Trustee shall not make any representations as to the
validity or sufficiency of this Indenture;

 

(i)        the Indenture Trustee shall not at any time have any responsibility
or liability with respect to the legality, validity or enforceability of the
Collateral included in the Collateral Pool other than its failure to act in
accordance with the terms of this Indenture;

 

(j)        the Indenture Trustee shall be under no obligation to exercise any of
the powers vested in it by this Indenture or any other Transaction Document, as
applicable, or to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of any of the Noteholders,
pursuant to the provisions of this Indenture, unless such Noteholders shall have
offered to the Indenture Trustee security or indemnity satisfactory to the
Indenture Trustee against the costs, expenses and liabilities which may be
incurred therein or thereby (which in the case of the Requisite Majority will be
deemed to be satisfied by a letter agreement with respect to such costs from
such Noteholders); nothing contained herein shall, however, relieve the
Indenture Trustee of the obligation, upon the occurrence of an Event of Default
of which a Responsible Officer of the Indenture Trustee shall have actual
knowledge, and such Event of Default having not been cured, to exercise such of
the rights and powers vested in it by this Indenture, and to use the same degree
of care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person’s own affairs;

 

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(k)        the Indenture Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or the rights and powers conferred upon it
by this Indenture;

 

(l)        the right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and the Indenture
Trustee shall not be answerable for other than its own negligence or willful
misconduct in the performance of such act;

 

(m)        the Indenture Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not assured to it;

 

(n)        the right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and Indenture
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;

 

(o)        to help the U.S. government fight the funding of terrorism and money
laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an
account. When an account is opened, the Indenture Trustee will ask for
information that will allow the Indenture Trustee to identify relevant parties.
The parties hereto hereby acknowledge such information disclosure requirements
and agree to comply with all such information disclosure requests from time to
time from the Indenture Trustee; and

 

(p)        the Indenture Trustee shall have the right to require that any
directions, instructions or notices provided to it by any Noteholder be signed
by an Authorized Person (as hereinafter defined), be provided on corporate
letterhead, be notarized or contain a medallion signature guarantee, or contain
such other evidence as may be reasonably requested by the Indenture Trustee to
establish the identity and/or signatures thereon. The identity of such
Authorized Persons, as well as their specimen signatures, title, telephone
number and e-mail address, shall be delivered to the Indenture Trustee in the
list of authorized signers form as set forth on Exhibit F and shall remain in
effect until the applicable party, or an entity acting on its behalf, notifies
the Indenture Trustee of any change thereto (the person(s) so designated from
time to time, the “Authorized Persons”).

 

Section 5.04        Compensation; Reimbursement; Indemnification.

 

(a)        The Issuer hereby agrees:

 

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(1)        to pay or cause to be paid to the Indenture Trustee, in accordance
with the terms of this Indenture, monthly, the related Indenture Trustee Fee as
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and

 

(2)        to reimburse, indemnify or cause to be indemnified and hold harmless
the Indenture Trustee and its directors, officers, employees, agents, Affiliates
and Control Persons for any loss, liability, claim, expense or disbursements
(including without limitation costs and expenses of litigation, and of
investigation, reasonable counsel fees, damages, judgments and amounts paid in
settlement): (A) incurred in connection with any act (including any actions
taken by the Indenture Trustee or its agents pursuant to ARTICLE IV) or omission
on the part of the Indenture Trustee with respect to this Indenture (and the
transactions contemplated in connection herewith), any other Transaction
Documents, the Collateral Pool (including but not limited to protecting its
interest in such Collateral or collecting any amount payable thereunder or in
enforcing its rights with respect to such Collateral, whether or not any legal
proceeding is commenced hereunder or under the Mortgages) or the Notes, in each
case, other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Indenture
Trustee’s obligations or duties under this Indenture; (B) arising out of or in
any way relating to any one or more of the following: (I) any accident, injury
to or death of persons or loss of or damage to property occurring in, on or
about any Mortgaged Property or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (II) any
use, non-use or condition in, on or about any Mortgaged Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (III) performance of any labor or services or
the furnishing of any materials or other property in respect of any Mortgaged
Property or any part thereof; and (IV) any failure of any Mortgaged Property to
be in compliance with any Applicable Laws; or (C) arising out of or in any way
relating to any tax on the making and/or recording of any Mortgage.

 

With respect to any third party claim:

 

   (ii)        the Indenture Trustee shall give the Issuer written notice
thereof promptly after the Indenture Trustee shall have knowledge thereof;

 

 (iii)        while maintaining control over its own defense, the Indenture
Trustee shall cooperate and consult fully with the Issuer in preparing such
defense; and

 

 (iv)        notwithstanding the foregoing provisions of this Section 5.04(a),
the Indenture Trustee shall not be entitled to reimbursement out of the Payment
Account for settlement of any such claim by the Indenture Trustee entered into
without the prior written consent of the Issuer, which consent shall not be
unreasonably withheld.

 

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The provisions of this Section 5.04(a) shall survive the termination of this
Indenture and the resignation or termination of the Indenture Trustee.

 

The Indenture Trustee agrees to fully perform its duties under this Indenture
notwithstanding any failure on the part of any of the Issuer to make any
payments, reimbursements or indemnifications to the Indenture Trustee pursuant
to this Section 5.04(a); provided, however, that (subject to Section 5.04(b))
nothing in this Section 5.04 shall be construed to limit the exercise by the
Indenture Trustee of any right or remedy permitted under this Indenture in the
event of any the Issuer’s failure to pay any sums due the Indenture Trustee
pursuant to this Section 5.04.

 

(b)        The Indenture Trustee shall not institute any proceeding seeking the
enforcement of any lien against the Collateral Pool unless (i) such proceeding
is in connection with a proceeding in accordance with ARTICLE IV for enforcement
of the lien of this Indenture for the benefit of the Noteholders after the
occurrence of an Event of Default (other than an Event of Default due solely to
a breach of this Section 5.04) and a resulting declaration of acceleration of
such Notes that has not been rescinded and annulled, or (ii) such proceeding
does not and will not result in or cause a sale or other disposition of the
Collateral included in the Collateral Pool.

 

Section 5.05        Representations and Warranties of Indenture Trustee.

 

The Indenture Trustee represents and warrants as follows:

 

(a)        it is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of New Jersey, and is
authorized under such laws and its constituting documents to execute and deliver
this Indenture and the Transaction Documents to which it is a party, and to
perform its obligations hereunder and under such Transaction Documents;

 

(b)        it has the full limited liability company power and authority to
execute and deliver this Indenture and such Transaction Documents, and to
perform its obligations hereunder and under such Transaction Documents, and this
Indenture and such Transaction Documents have been duly executed and delivered
by the Indenture Trustee;

 

(c)        the execution and delivery of this Indenture and such Transaction
Documents by the Indenture Trustee and the performance of its obligations
hereunder and thereunder has been duly authorized and approved by its board of
managers or other governing body and does not require any consent, approval,
authorization or order of, filing with or notice to any Governmental Authority
or any other Person under any statute or regulation applicable to the Indenture
Trustee;

 

(d)        this Indenture and such Transaction Documents valid and legal binding
obligations of the Indenture Trustee, enforceable against it in accordance with
their respective Indenture’s terms, as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally;

 

(e)        the execution and delivery of this Indenture and such Transaction
Documents by the Indenture Trustee and the performance of its obligations
hereunder and thereunder will not result in any breach or violation of its
constituting documents, any statute or regulation of the United States or the
States of New Jersey or New York applicable to the Indenture Trustee; and

 

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(f)        the Notes have been duly authenticated and delivered by the Indenture
Trustee in accordance with this Indenture.

 

Section 5.06        Merger, Conversion, Consolidation or Succession to Business.

 

Any corporation, bank, trust company or association into which the Indenture
Trustee may be merged or converted or with which it may be consolidated, or any
corporation, bank, trust company or association resulting from any merger,
conversion or consolidation to which the Indenture Trustee shall be a party, or
any corporation, bank, trust company or association succeeding to all or
substantially all the corporate trust business of the Indenture Trustee, shall
be the successor of the Indenture Trustee hereunder; provided, that such
corporation, bank, trust company or association shall be otherwise qualified and
eligible under this ARTICLE V, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.

 

Section 5.07        Resignation and Removal; Appointment of Successor.

 

(a)           No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this ARTICLE V shall
become effective until (i) the acceptance of appointment by the successor
Indenture Trustee in accordance with the applicable requirements of Section 5.08
and (ii) payment to the predecessor Indenture Trustee of all unpaid fees and
expenses.

 

(b)          Subject to Section 5.07(a), the Indenture Trustee may be removed at
any time with respect to the Notes by the Requisite Majority and notice of such
action by the Noteholders shall be delivered to the Indenture Trustee and the
Issuer.

 

(c)           If at any time:

 

(i)        the representations of the Indenture Trustee in Section 5.05 shall
prove to be untrue in any material respect, and the Indenture Trustee shall fail
to resign after written request therefor by the Issuer or the Noteholders of 10%
of the Outstanding Principal Balance; or

 

(ii)        the Indenture Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Indenture Trustee or of
its property shall be appointed or any public officer shall take charge or
control of the Indenture Trustee or its property or affairs for the purpose of
rehabilitation, conservation or liquidation;

 

then, in either such case, (1) the Issuer, may, by written notice, remove the
Indenture Trustee, or (2) subject to Section 4.13, any Noteholder may, on its
own behalf and on behalf of all others similarly situated, petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.

 

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(d)          If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Indenture
Trustee for any reason (including removal), the Issuer, with the consent of the
Requisite Majority, shall promptly appoint a successor Indenture Trustee, who
shall comply with the applicable requirements of Section 5.08. If, within 60
days after such resignation, or incapacity, or the occurrence of such vacancy, a
successor Indenture Trustee shall not have been appointed by the Issuer, and
shall not have accepted such appointment in accordance with the applicable
requirements of Section 5.08, then a successor Indenture Trustee shall be
appointed by act of the Requisite Majority delivered to the Issuer and the
retiring Indenture Trustee, and the successor Indenture Trustee so appointed
shall, forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 5.08, become the successor Indenture Trustee
with respect to the Notes. If the Indenture Trustee shall resign pursuant to
this Section 5.07, then such resigning Indenture Trustee must pay all costs and
expenses associated with the transfer of its duties. If the Indenture Trustee
shall be removed pursuant to this Section 5.07, then the party requesting such
removal of the Indenture Trustee shall pay all costs and expenses associated
with the transfer of its duties.

 

If, within 120 days after such resignation, removal or incapacity, or the
occurrence of such vacancy, no successor Indenture Trustee shall have been so
appointed and accepted appointment in the manner required by Section 5.08, the
resigning Indenture Trustee may, on its own behalf, petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.

 

(e)          The Issuer shall give notice of any resignation or removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee by giving
notice of such event to the Noteholders. Each notice shall include the name of
the successor Indenture Trustee and the address of its corporate trust office.

 

Section 5.08         Acceptance of Appointment by Successor.

 

In case of the appointment hereunder of a successor Indenture Trustee, the
successor Indenture Trustee so appointed shall execute, acknowledge and deliver
to the Issuer and to the retiring Indenture Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Indenture
Trustee shall become effective and such successor Indenture Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Indenture Trustee; but, on the request
of the Issuer or the successor Indenture Trustee, such retiring Indenture
Trustee shall, upon payment of its fees, execute and deliver an instrument
transferring to such successor Indenture Trustee all the rights, powers and
trusts of the retiring Indenture Trustee, shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by such
retiring Indenture Trustee hereunder, and shall take such action as may be
requested by the Issuer to provide for the appropriate interest in the
Collateral Pool (including, without limitation, the Mortgages) to be vested in
such successor Indenture Trustee, but shall not be responsible for the recording
of such documents and instruments as may be necessary to give effect to the
foregoing.

 

Upon request of any such successor Indenture Trustee, the Issuer shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Indenture Trustee all such rights, powers and trusts referred
to in this Section.

 

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No successor Indenture Trustee shall accept its appointment unless at the time
of such acceptance such successor Indenture Trustee shall be qualified and
eligible under this Article.

 

Section 5.09         Unclaimed Funds.

 

The Indenture Trustee is required to hold any payments received by it with
respect to the Notes that are not paid to the Noteholders in trust for the
Noteholders. Notwithstanding the foregoing, at the expiration of three years
following the Final Payment Date for the Notes any moneys set aside in
accordance with Section 2.15(b) for payment of principal, interest and other
amounts on such Notes remaining unclaimed by any lawful owner thereof, and, to
the extent required by applicable law, any accrued interest thereon shall be
remitted to the Issuer, as their interest may appear, to be held in trust by the
Issuer for the benefit of the applicable Noteholder until distributed in
accordance with applicable law, and all liability of the Indenture Trustee with
respect to such money shall thereupon cease; provided, that the Indenture
Trustee, before being required to make any such remittance, may, at the expense
of the applicable Noteholder, payable out of such unclaimed funds, to the extent
permitted by applicable law, and otherwise at the expense of the Issuer payable
out of the Collateral Pool, cause to be published at least once but not more
than three times in two newspapers in the English language customarily published
on each Business Day and of general circulation in New York, New York, a notice
to the effect that such moneys remain unclaimed and have not been applied for
the purpose for which they were deposited, and that after a date specified
therein, which shall be not less than 30 days after the date of first
publication of said notice, any unclaimed balance of such moneys then remaining
in the hands of the Indenture Trustee will be paid to the Issuer upon their
written directions to be held in trust for the benefit of the applicable
Noteholder until distributed in accordance with applicable law. Any successor to
the Issuer through merger, consolidation or otherwise or any recipient of
substantially all the assets of the Issuer in a liquidation of the Issuer shall
remain liable for the amount of any unclaimed balance paid to the Issuer
pursuant to this Section 5.09.

 

Section 5.10         Illegal Acts.

 

No provision of this Indenture or any amendment or supplement hereto shall be
deemed to impose any duty or obligation on the Indenture Trustee to do any act
in the performance of its duties hereunder or to exercise any right, power, duty
or obligation conferred or imposed on it, which under any present or future law
shall be unlawful, or which shall be beyond the corporate powers, authorization
or qualification of the Indenture Trustee.

 

Section 5.11         Communications by the Indenture Trustee.

 

The Indenture Trustee, if any principal of or interest on any Notes due and
payable hereunder is not paid, shall send to the Issuer, within one (1) Business
Day after such payment was due, a written demand for payment thereon.

 

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Section 5.12         Separate Indenture Trustees and Co-Trustees.

 

(a)          Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting legal requirements applicable to it in the
performance of its duties hereunder, the Indenture Trustee shall have the power
to, and shall execute and deliver all instruments to, appoint one or more
Persons to act as separate trustees or co-trustees hereunder, jointly with the
Indenture Trustee, of any portion of the Collateral Pool subject to this
Indenture, and any such Persons shall be such separate trustee or co-trustee,
with such powers and duties consistent with this Indenture as shall be specified
in the instrument appointing such Person but without thereby releasing the
Indenture Trustee from any of its duties hereunder. If the Indenture Trustee
shall request the Issuer to do so, the Issuer shall join with the Indenture
Trustee in the execution of such instrument, but the Indenture Trustee shall
have the power to make such appointment without making such request.

 

(b)          Every separate trustee and co-trustee shall, to the extent not
prohibited by law, be subject to the following terms and conditions:

 

(i)          the rights, powers, duties and obligations conferred or imposed
upon such separate or co-trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate or co-trustee
jointly, as shall be provided in the appointing instrument, except to the extent
that under any law of any jurisdiction in which any particular act is to be
performed any nonresident trustee shall be incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Indenture Trustee;

 

(ii)         all powers, duties, obligations and rights conferred upon the
Indenture Trustee, in respect of the custody of all cash deposited hereunder
shall be exercised solely by the Indenture Trustee; and

 

(iii)        the Indenture Trustee may at any time by written instrument accept
the resignation of or remove any such separate trustee or co-trustee, and, upon
the request of the Indenture Trustee, the Issuer shall join with the Indenture
Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to make effective such resignation or removal,
but the Indenture Trustee shall have the power to accept such resignation or to
make such removal without making such request. A successor to a separate trustee
or co-trustee so resigning or removed may be appointed in the manner otherwise
provided herein.

 

(c)          Such separate trustee or co-trustee, upon acceptance of such trust,
shall be vested with the estates or property specified in such instruments,
jointly with the Indenture Trustee, and the Indenture Trustee shall take such
action as may be necessary to provide for (i) the appropriate interest in the
Collateral Pool to be vested in such separate trustee or co-trustee, and (ii)
the execution and delivery of any transfer documentation or bond powers that may
be necessary to give effect to the transfer of the lien of this Indenture and
the Mortgages to the co-trustee. Any separate trustee or co-trustee may, at any
time, by written instrument constitute the Indenture Trustee, its agent or
attorney-in-fact with full power and authority, to the extent permitted by law,
do all acts and things and exercise all discretion authorized or permitted by
it, for and on behalf of it and in its name. If any separate trustee or
co-trustee shall be dissolved, become incapable of acting, resign, be removed or
die, all the estates, property, rights, powers, trusts, duties and obligations
of said separate trustee or co-trustee, so far as permitted by law, shall vest
in and be exercised by the Indenture Trustee, without the appointment of a
successor to said separate trustee or co-trustee, until the appointment of a
successor to said separate trustee or co- trustee is necessary as provided in
this Indenture.

 

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(d)          Any notice, request or other writing, by or on behalf of any
Noteholder, delivered to the Indenture Trustee shall be deemed to have been
delivered to all separate trustees and co- trustees.

 

(e)          Although co-trustees may be jointly liable, no co-trustee or
separate trustee shall be severally liable by reason of any act or omission of
the Indenture Trustee or any other such trustee hereunder.

 

(f)          No appointment of a separate trustee or co-trustee pursuant to this
Section 5.12 shall relieve the Indenture Trustee of any of its obligations,
duties or responsibilities hereunder in any way or to any degree.

 

ARTICLE VI

REPORTS TO NOTEHOLDERS

 

Section 6.01         Reports to Noteholders and Others.

 

(a)          Based on information with respect to the Mortgaged Properties and
Mortgage Loans provided to the Indenture Trustee by MBC and the Issuer pursuant
to this Indenture (and the Indenture Trustee’s calculations based on such
information and the Indenture Trustee’s records with respect to the Notes), the
Indenture Trustee shall prepare, or cause to be prepared, and make available
either in electronic format or by first class mail on each Payment Date, or as
soon thereafter as is practicable, to the Issuer, the Underwriter, each
Noteholder and any other Person upon the direction of the Issuer a statement in
respect of the payments made on such Payment Date setting forth the information
set forth in Exhibit G hereto (the “Trustee Report”). The Indenture Trustee’s
internet website will be located at www.wwstr.com or at such other address as
the Indenture Trustee shall notify the parties hereto from time to time. For
assistance with the Indenture Trustee’s internet website, Noteholders may call
(201) 820-2008.

 

The Indenture Trustee shall not be liable for having disseminated information in
accordance with this Indenture.

 

The Indenture Trustee shall be entitled to rely on and shall not be responsible
for the content or accuracy of any information provided by third parties for
purposes of preparing the Trustee Report and may affix thereto any disclaimer it
deems appropriate in its reasonable discretion (without suggesting liability on
the part of any other party hereto).

 

(b)          Within a reasonable period of time after the end of each calendar
year (but in no event more than 60 days following the end of such calendar
year), the Indenture Trustee shall prepare, or cause to be prepared, and make
available either in electronic format or by first class mail to each Person who
at any time during the calendar year was a Noteholder (i) a statement containing
the aggregate amount of principal and interest payments on the Notes for such
calendar year or applicable portion thereof during which such person was a
Noteholder and (ii) such other customary information as the Indenture Trustee
deems necessary or desirable for Noteholders to prepare their federal, state and
local income tax returns including, without limitation (and to the extent
provided to it by the Issuer which shall so cause such information to be
provided), the amount of original issue discount accrued on the Notes, if
applicable. The obligations of the Indenture Trustee in the immediately
preceding sentence shall be deemed to have been satisfied to the extent that
substantially comparable information has been provided by the Indenture Trustee.

 

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Section 6.02         Access to Certain Information.

 

(a)          The Indenture Trustee shall afford to the Noteholders, the Issuer,
and any regulatory authority that may exercise authority over any Noteholder,
access to any documentation regarding the Collateral Pool within its control.
Such access shall be afforded without charge but only upon reasonable prior
written request and during normal business hours at the offices of the Indenture
Trustee designated by it.

 

(b)          The Indenture Trustee shall maintain at its office primarily
responsible for administration of the Collateral Pool and shall deliver to the
Issuer and, subject to the succeeding paragraph, any Noteholder or Note Owner or
Person identified to the Indenture Trustee as a prospective transferee of a Note
or an Ownership Interest therein (at the reasonable request and expense of the
requesting party), copies of the following items (to the extent that such items
have been delivered to the Indenture Trustee or the Indenture Trustee can cause
such items to be delivered to it without unreasonable burden or expense): (i)
the Prospectus, in the form most recently provided to the Indenture Trustee by
the Issuer or by any Person designated by the Issuer; (ii) this Indenture, any
Asset Purchase Agreement and any amendments hereto or thereto; (iii) all reports
prepared by, and all reports delivered to, the Indenture Trustee since the
Closing Date; (iv) all Officer’s Certificates delivered by the Issuer since the
Closing Date pursuant to Section 9.09 and all Officer’s Certificates delivered
by the Issuer since the Closing Date pursuant to Section 9.09; (v) all
accountants’ reports caused to be delivered by the Issuer since the Closing Date
pursuant to Section 9.10; (vi) all Determination Date Reports since the Closing
Date prepared pursuant to Section 9.11(a); and (vii) the Mortgage Loan Files,
including any and all modifications, waivers and amendments of the terms of each
Mortgage Loan entered into or consented to by the Issuer and delivered to the
Indenture Trustee pursuant to Section 10.08(c) or otherwise. The Indenture
Trustee shall make available copies of any and all of the foregoing items upon
written request of any party set forth in the previous sentence. However, the
Indenture Trustee shall be permitted to require of such party the payment of a
sum sufficient to cover the reasonable costs and expenses of providing such
copies as are requested by such party.

 

The Indenture Trustee will make available, upon reasonable advance notice and at
the expense of the requesting party, copies of the above items to any Noteholder
or Note Owner and to prospective purchasers of Notes.

 

(c)          The Indenture Trustee shall not be liable for any dissemination of
information made in accordance with Section 6.02(a) or Section 6.02(b).

 

(d)          The Issuer shall permit agents, representatives and employees of
the Indenture Trustee to inspect the Mortgaged Properties or any part thereof at
reasonable hours upon reasonable advance notice, subject to the applicable
Mortgage Loans.

 

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ARTICLE VII

REDEMPTION

 

Section 7.01         Optional Redemption.

 

(a)          The Issuer, at its option, may redeem the Notes, in whole or in
part, on any Payment Date on or after April 22, 2019 (any such Payment Date, the
“Redemption Date”) at the redemption prices (expressed as percentages of
principal amount), set forth below, plus accrued and unpaid interest thereon up
to, but not including, the Redemption Date (subject to the right of Noteholders
of record on the relevant Record Date to receive interest due on the relevant
Payment Date), if redeemed during the periods set forth below:

 

Redemption Date occurs:  Redemption Price:        On or after April 22,2019 but
prior to April 22, 2020   103.0%        On or after April 22, 2020 but prior to
April 22, 2021   101.5%        On and after April 22, 2021   100.0%

 

(b)          In the event that less than all of the Notes are to be redeemed at
any time pursuant to an optional redemption, selection of such Notes for
redemption will be made by the Indenture Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not then listed on a national securities
exchange, on a pro rata basis, unless prohibited by stock exchange or other
applicable rule or regulation, and if pro rata redemption is so prohibited, by
lot or by such method as the Indenture Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part.

 

(c)          At least 10 days, and no more than 20 days, before a Redemption
Date, the Issuer shall mail, or cause to be mailed, a notice of redemption by
first-class mail to each Holder of Notes to be redeemed at his or her last
address as the same appears on the registry books maintained by the Registrar
pursuant to Section 2.06(a) or otherwise delivered within such period in
accordance with the applicable procedures of the Depository.

 

The notice shall identify the Notes to be redeemed (including the CUSIP numbers
thereof) and shall state:

 

(i)          the Redemption Date;

 

(ii)         the redemption price and the amount of premium and accrued interest
to be paid;

 

(iii)        if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the Redemption Date and upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion will be issued;

 

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(iv)        the name and address of the Paying Agent;

 

(v)         that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;

 

(vi)        that unless the Issuer defaults in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date;

 

(vii)       the provision of the Notes pursuant to which such Notes called for
redemption are being redeemed; and

 

(viii)      the aggregate principal amount of Notes that are being redeemed.

 

(d)          At the Issuer’s written request made at least five (5) Business
Days prior to the date on which notice is to be given, the Indenture Trustee
shall give the notice of redemption in the Issuer’s name and at the Issuer’s
sole expense. Notices of redemption may not be conditional.

 

(e)          Once the notice of redemption described in Section 7.01(c) is
mailed, Notes called for redemption shall become due and payable on the
Redemption Date and at the redemption price, including any premium, plus
interest accrued to, but not including, the Redemption Date. Upon surrender to
the Paying Agent, such Notes shall be paid at the redemption price, including
any premium, plus interest accrued up to, but not including, the Redemption
Date; provided that if the Redemption Date is after a regular Record Date and on
or prior to the Payment Date, the accrued interest shall be payable to the
Holder of the redeemed Notes registered on the relevant Record Date, and
provided, further, that if a Redemption Date is not a Business Day, payment
shall be made on the next succeeding Business Day and no interest shall accrue
for the period from such Redemption Date to such succeeding Business Day.

 

(f)          On or prior to 10:00 a.m., New York City time, on each Redemption
Date, the Issuer shall deposit with the Paying Agent in immediately available
funds money sufficient to pay the redemption price of, including premium, if
any, and accrued interest on all Notes to be redeemed on that date other than
Notes or portions thereof called for redemption on that date which have been
delivered by the Issuer to the Indenture Trustee for cancellation.

 

On and after any Redemption Date, if money sufficient to pay the redemption
price of, including premium, if any, and accrued interest on Notes called for
redemption shall have been made available in accordance with the preceding
paragraph, the Notes called for redemption will cease to accrue interest and the
only right of the Holders of such Notes will be to receive payment of the
redemption price of and, subject to the first proviso in Section 7.01(e),
accrued and unpaid interest on such Notes up to, but not including, the
Redemption Date. If any Note surrendered for redemption shall not be so paid,
interest will be paid, from the Redemption Date until such redemption payment is
made, on the unpaid principal of the Note and any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in the
Notes.

 

(g)          Upon surrender of a Note that is redeemed in part, the Indenture
Trustee shall authenticate for the Holder thereof a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.

 

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Section 7.02         Purchase of Notes at Holders’ Option.

 

(a)          Notes shall be purchased in cash in whole or in part (provided that
no Notes of a principal amount of $1,000 or less shall be redeemed in part) by
the Issuer, at the option of Holders, in accordance with the provisions of this
Section 7.02, on April 22, 2021 the “Put Right Purchase Date”), for cash at a
purchase price equal to 100% of the principal amount of the Notes surrendered
plus accrued and unpaid interest thereon up to, but not including, the Put Right
Purchase Date (the “Put Right Purchase Price”); provided that if the Put Right
Purchase Date falls after a Record Date and on or before the related Payment
Date, then interest on the Notes payable on such Payment Date will instead be
payable to the Holders in whose names the Notes are registered at the close of
business on such Record Date.

 

(b)          To exercise its rights pursuant to this Section 7.02, the Holder
shall deliver to the Paying Agent a properly completed put right purchase notice
(each, a “Put Right Purchase Notice”) at any time from the opening of business
on the date that is six (6) months prior to the Put Right Purchase Date until
the close of business on the date that is four (4) months prior to the Put Right
Purchase Date stating:

 

(i)          if Definitive Notes have been issued, the certificate number of the
Note that the Holder will deliver for repurchase (or if the Notes are not
Definitive Notes, the Put Right Purchase Notice must comply with the rules and
procedures of the Depositary to the extent applicable),

 

(ii)         the portion of the Note which the Holder will deliver to be
purchased, provided that that no Notes of a principal amount of $1,000 or less
shall be redeemed in part, and

 

(iii)        that such Note shall be purchased as of the Put Right Purchase Date
pursuant to the terms and conditions in this Section 7.02 and the Notes.

 

(c)          The Issuer shall pay the Put Right Purchase Price for all Notes
with respect to which a Put Right Purchase Notice is given and not validly
withdrawn, on the Put Right Purchase Date. Surrender by a Holder of its Notes to
be purchased shall be a condition to receipt by such Holder of the Put Right
Purchase Price therefor. The Put Right Purchase Price shall be paid pursuant to
this Section 7.02 only if the Note delivered to the Paying Agent conforms in all
respects to the description thereof in the related Put Right Purchase Notice, as
determined by the Issuer.

 

(d)          Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Put Right Purchase Notice contemplated by
this Section 7.02 shall have the right to withdraw such Put Right Purchase
Notice in whole or in part at any time prior to the close of business on the
Business Day immediately preceding the Put Right Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent specifying:

 

(i)          the aggregate principal amount the Notes with respect to which such
notice of withdrawal is being submitted,

 

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(ii)         the certificate number, if any, of the Notes in respect of which
such notice of withdrawal is being submitted (or, if the Notes are not
Definitive Notes, the withdrawal notice must comply with the rules and
procedures of the Depositary to the extent applicable), and

 

(iii)        the aggregate principal amount, if any, of such Notes which remains
subject to the original Put Right Purchase Notice and which has been or will be
delivered for purchase by the Issuer.

 

(e)          The Paying Agent shall promptly notify the Issuer of the receipt by
it of any Put Right Purchase Notice or written notice of withdrawal thereof.

 

(f)          On or before 10:00 a.m. New York City time on the Put Right
Purchase Date, the Issuer shall deposit with the Indenture Trustee or with the
Paying Agent an amount of immediately available funds sufficient to pay the
aggregate Put Right Purchase Price of all the Notes or portions thereof which
are to be purchased as of the Put Right Purchase Date.

 

(g)          If the Indenture Trustee or the Paying Agent holds, in accordance
with the terms hereof, immediately available funds sufficient to pay the Put
Right Purchase Price of any Note for which a Put Right Notice has been tendered
and not withdrawn, then, from and after the Put Right Purchase Date, such Note
will cease to be Outstanding, and interest shall cease to accrue, whether or not
such Note is delivered to the Paying Agent, and the rights of the Holder in of
such Notes shall terminate (other than the right to receive the Put Right
Purchase Price as aforesaid).

 

(h)          The Put Right Purchase Price shall be paid to such Holder with
respect to Notes for which a Put Right Purchase Notice has been tendered and not
validly withdrawn, subject to receipt of funds by the Indenture Trustee or the
Paying Agent, promptly after the later of (i) the Put Right Purchase Date
(provided that the conditions in Section 7.02(b) have been satisfied) and (ii)
the time of delivery of such Note to the Paying Agent by the Holder thereof in
the manner required by Section 7.02(b).

 

(i)          No Notes may be purchased by the Issuer at the option of Holders on
a Put Right Purchase Date if there has occurred and is continuing a Default or
an Event of Default with respect to the Notes, other than a Default in the
payment of the Put Right Purchase Price with respect to such Notes.

 

ARTICLE VIII

SUPPLEMENTAL INDENTURES; AMENDMENTS

 

Section 8.01 Supplemental Indentures or Amendments Without Consent of
Noteholders.

 

Without the consent of any Noteholder, the parties to each agreement listed
below, at any time and from time to time, may enter into one or more indentures
supplemental hereto, or one or more amendments hereto or to the Notes, any
Guaranty or any other Transaction Documents, as applicable, for any of the
following purposes:

 

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(1)         to correct any typographical error or cure any ambiguity, or to
cure, correct, amend or supplement any provision herein or in the Notes, any
Guaranty or any other Transaction Document; provided, that such action shall not
adversely affect the interests of the Noteholders in any material respect;

 

(2)         to convey, transfer, assign, mortgage or pledge any property to the
Indenture Trustee so long as the interests of the Noteholders would not be
adversely affected in any material respect;

 

(3)         to correct any manifestly incorrect description, or amplify the
description, of any property subject to the lien of this Indenture;

 

(4)         to modify the Indenture, any Guaranty or any other Transaction
Documents as required or made necessary by any change in applicable law, so long
as the interests of the Noteholders would not be adversely affected in any
material respect;

 

(5)         to add to the covenants of the Issuer, or any other party for the
benefit of the Noteholders, or to surrender any right or power conferred upon
the Issuer under this Indenture, any Asset Purchase Agreement or any Guaranty;

 

(6)         to add any additional Events of Default hereunder; provided, that
such action shall not adversely affect the interests of the Noteholders in any
material respect; or

 

(7)         to evidence and provide for the acceptance of appointment by a
successor Indenture Trustee.

 

Without the consent of any Noteholder, the Issuer and the Indenture Trustee, at
any time and from time to time, may enter into one or more amendments to any
Account Control Agreement.

 

Section 8.02         Supplemental Indentures With Consent.

 

With the consent of Requisite Majority, the parties to the agreements listed
below may enter into one or more indentures supplemental hereto, or one or more
amendments hereto or to the Notes, any Guaranty or any other Transaction
Document for the purpose of adding any provisions hereto or thereto, changing in
any manner or eliminating any of the provisions hereof or thereof or modifying
in any manner the rights of the Noteholders hereunder or thereunder; provided,
that no such supplemental indenture or amendment may, without the consent of the
Noteholders of 100% of the Outstanding Principal Balance of the Outstanding
Notes affected thereby:

 

(1)         change the Final Payment Date or the Payment Date of any principal,
interest or other amount on any Note;

 

(2)         reduce the Outstanding Principal Balance of a Note or the applicable
Note Rate;

 

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(3)         authorize the Indenture Trustee to agree to delay the timing of, or
reduce the payments to be made on or in respect of, the Mortgaged Properties or
the Mortgage Loans, except as provided in this Indenture or in any Asset
Transfer Agreement;

 

(4)         change the coin or currency in which the principal of any Note or
interest thereon is payable;

 

(5)         impair the right to institute suit for the enforcement of any such
payment on or after the Final Payment Date;

 

(6)         reduce the percentage of the then Outstanding Principal Balance, the
consent of whose Holders is required for any supplemental indenture or
amendment, or the consent of whose Holders is required for any waiver of
defaults under this Indenture and their consequences provided for in this
Indenture, or for any other reason under this Indenture;

 

(7)         change any obligation of the Issuer to maintain an office or agency
in the places and for the purposes set forth in this Indenture;

 

(8)         except as otherwise expressly provided in this Indenture or in any
Asset Purchase Agreement, deprive the Indenture Trustee of the benefit of a
first priority security interest in the Collateral included in the Collateral
Pool;

 

(9)         modify Section 2.15; or

 

(10)        release from the lien of any Asset Purchase Agreement and this
Indenture (except as specifically permitted under this Indenture or such Asset
Transfer Agreement) all or any portion of the Collateral Pool.

 

It shall not be necessary for the consent of the Noteholders under this Section
8.02 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such consent shall approve the substance thereof.

 

Section 8.03         Delivery of Supplements and Amendments.

 

Promptly after the execution by the Issuer and the Indenture Trustee (and any
other party, if required) of any supplemental indenture or amendment pursuant to
the provisions hereof, the Indenture Trustee, at the expense of the Issuer,
payable out of the Collateral Pool pursuant to Section 5.04, shall furnish a
notice setting forth in general terms the substance of such supplemental
indenture or amendment to each Noteholder at the address for such Noteholder set
forth in the Note Register.

 

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Section 8.04         Execution of Supplemental Indentures, Etc.

 

In executing, or accepting the additional trusts created by, any supplemental
indenture or amendment permitted by this Article or in accepting the
modifications thereby of the trusts created by this Indenture or in giving any
consent to any modification of any Mortgage Loan pursuant to this Indenture, the
Indenture Trustee shall be entitled to receive, at the Issuer’s expense payable
out of the Collateral Pool pursuant to Section 5.04, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture, amendment or modification is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture or amendment or consent
to any such modification which affects the Indenture Trustee’s own rights,
duties or immunities under this Indenture or otherwise.

 

ARTICLE IX

COVENANTS; WARRANTIES

 

Section 9.01         Maintenance of Office or Agency.

 

The Issuer shall maintain or cause to be maintained an office or agency in the
continental United States where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer shall give
prompt written notice to the Indenture Trustee and the Noteholders of the
location, and any change in the location, of such office or agency.

 

Section 9.02         Existence and Good Standing.

 

Subject to Section 9.11, the Issuer shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence,
rights, licenses, permits and corporate franchises and comply in all material
respects with all Legal Requirements applicable to it and the Collateral. There
shall never be committed by the Issuer or MBC any act or omission affording any
Governmental Authority the right of forfeiture as against any Collateral or any
part thereof or any moneys paid in performance of the Issuer’s obligations under
any of the Transaction Documents. The Issuer hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording such right of
forfeiture. The Issuer shall at all times maintain, preserve and protect, or
cause to be maintained, preserved and protected, all franchises and trade names
and preserve all the remainder of its property required for the conduct of its
business and shall keep (or cause the Mortgagor Customers under each applicable
Mortgage Loan to keep) the Mortgaged Properties in good working order and
repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto.
The Issuer shall keep (or cause the Mortgagor Customers under each applicable
Mortgage Loan to keep) the Mortgaged Properties insured at all times by
financially sound and reputable insurers, to such extent and against such risks,
and maintain liability and such other insurance, as is more fully provided in
this Indenture.

 

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Section 9.03         Payment of Taxes and Other Claims.

 

(a)          The Issuer shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, all applicable taxes,
assessments and governmental charges (the “Taxes”) levied or imposed upon the
Issuer or upon the income, profits or property of the Issuer, or shown to be due
on the tax returns filed by the Issuer, except as set forth in Section 9.03(b);
provided, that the Issuer’s failure to pay or discharge Taxes will not cause a
forfeiture of, or a lien (other than a Permitted Encumbrance) to encumber, any
property included in the Collateral. Upon the written direction of the Issuer,
the Indenture Trustee is authorized to pay out of the Payment Account, prior to
making payments on the Notes, any such taxes, assessments, governmental charges
or claims which, if not paid, would cause a forfeiture or sale of, or a lien
(other than a Permitted Encumbrance) to encumber, any property included in the
Collateral.

 

(b)          After prior written notice to the Indenture Trustee, the Issuer, at
its own expense, may in good faith contest by appropriate Proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any applicable Taxes; provided,
that: (i) such Proceeding shall not be precluded by, and be conducted in
accordance with the provisions of, any other instrument to which the Issuer is
subject and shall not constitute a default thereunder and such Proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
(ii) no Collateral nor any part thereof or interest therein will be in danger of
being sold, forfeited, terminated, canceled or lost; (iii) the Issuer shall
promptly upon final determination thereof pay, or cause to be paid, the amount
of any such Taxes, together with all costs, interest and penalties which may be
payable in connection therewith; (iv) such Proceeding shall suspend the
collection of such contested Taxes from the Collateral; and (v) the Issuer shall
furnish such security and/or reserves as may be required in the Proceeding as
required in accordance with GAAP, to insure the payment of any such Taxes,
together with all interest and penalties thereon.

 

Section 9.04         Title to the Collateral; Lien.

 

(a) The Issuer shall ensure that all cash at any time owned by the Issuer and
held as part of the Collateral Pool is deposited and maintained in the
Collection Account, Payment Account or any other account subject to an Account
Control Agreement. The Issuer shall not consent to the bank or securities
intermediary maintaining any such account to comply with instructions or
entitlement orders of any person other than the Indenture Trustee. The Issuer
will ensure that the bank or securities intermediary maintaining the Collection
Account, the Payment Account or any other account held as part of the Collateral
Pool, on or promptly after the establishment of such account, executes and
delivers to the Indenture Trustee an Account Control Agreement with respect to
such account.

 

Section 9.05         Protection of Collateral Pool.

 

The Issuer, and, to the extent directed by the Issuer or the Requisite Majority,
the Indenture Trustee, will, at the Issuer’s expense, and without expense to the
Indenture Trustee, from time to time execute and deliver all such amendments and
supplements hereto (subject to Section 8.01 and Section 8.02) and all such
financing statements, continuation statements, instruments of further assurance
and other instruments (provided, however, that the Indenture Trustee will not be
obligated to prepare or file any such supplements, statements or other
instruments), and will take such other action necessary or advisable to:

 

(a)          Grant more effectively all or any portion of the Collateral Pool;

 

(b)          maintain or preserve the lien (and the priority thereof) of this
Indenture or carry out more effectively the purposes hereof;

 

(c)          perfect, publish notice of, or protect the validity of any Grant
made or to be made by or in this Indenture;

 

 -79- 

 

  

(d)          enforce any of the Mortgage Loans included in the Collateral Pool;

 

(e)          preserve and defend title to the Collateral included in the
Collateral Pool and the rights of the Indenture Trustee in such Collateral
against the claims of all Persons and parties; or

 

(f)          for carrying out the intention or facilitating the performance of
the terms of this Indenture.

 

The Issuer will promptly execute and deliver and hereby authorizes the Indenture
Trustee to execute in the name of the Issuer or without the signature of the
Issuer to the extent the Indenture Trustee may lawfully do so, one or more
financing statements or other instruments, to evidence more effectively the
security interest of the Indenture Trustee in the Collateral.

 

The Issuer grants to the Indenture Trustee an irrevocable power of attorney
coupled with an interest for the purpose of exercising and perfecting any and
all rights and remedies available to the Indenture Trustee at law and in equity,
including, without limitation, such rights and remedies available to the
Indenture Trustee pursuant to this Section 9.05, including for the purpose of
executing and delivering any financing statement, continuation statement or
other instrument required pursuant to this Section 9.05; provided, that, subject
to and consistent with Section 5.01, the Indenture Trustee will not be obligated
to prepare or file any such statements or instruments.

 

Section 9.06         Limitation on Sales of Assets.

 

(a)          Neither the Issuer nor MBC shall, directly or indirectly, make any
Asset Sale, unless:

 

(i)          the Issuer or MBC, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
assets sold or otherwise disposed of, and

 

(ii)         at least 75% of such consideration received by the Issuer or MBC
consists of (1) cash or Permitted Investments, (2) assets (other than
securities) to be used in a Related Business, (3) with respect to an Asset Sale
by MBC, the Capital Stock of any Person engaged in a Related Business that is,
or as a result of or in connection with the acquisition of such Capital Stock by
MBC becomes a subsidiary of MBC or (4) a combination of cash, Permitted
Investments, such assets and such Capital Stock.

 

(b)          The amount of any notes or other obligations received by the Issuer
or MBC from such transferee that are converted, sold or exchanged within one (1)
year of the related Asset Sale by the Issuer or MBC into cash or Permitted
Investments shall be deemed to be cash, in an amount equal to the net cash
proceeds or the Fair Market Value of the Permitted Investments realized upon
such conversion, sale or exchange for purposes of determining the percentage of
the consideration received by the Issuer or MBC in cash or Permitted
Investments.

 

(c)          Except as provided in Section 9.06(b), if at any time any non-cash
consideration received by the Issuer or MBC, as the case may be, in connection
with any Asset Sale is converted into or sold or otherwise disposed of for cash
(other than interest received with respect to any such non-cash consideration),
then such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof shall be applied in accordance with
the provisions of this Section 9.06.

 

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(d)          The Issuer or MBC, as the case may be, may apply an amount equal to
the Net Cash Proceeds of any Asset Sale within 120 days of receipt thereof to:

 

(i)          with respect to an Asset Sale by MBC, repay secured indebtedness
outstanding under any credit facility or any other secured indebtedness of MBC
(and to cause a corresponding reduction in commitments if such repaid
indebtedness was outstanding under the revolving portion of a credit facility),
other than Indebtedness owed to the Issuer or an Affiliate of MBC; or

 

(ii)         make an investment in or expenditures for Mortgage Loans or, with
respect to an Asset Sale by MBC, acquire the Capital Stock of any Person engaged
in a Related Business.

 

Pending the final application of any such Net Cash Proceeds, MBC may temporarily
reduce revolving credit borrowings to the extent not prohibited by the terms of
this Indenture.

 

(e)          To the extent all or part of the Net Cash Proceeds of any Asset
Sale are not applied or committed within 120 days of such Asset Sale as
described in Section 9.06(d)(i) or Section 9.06(d)(ii) (the “Net Proceeds
Trigger Date” and such Net Cash Proceeds, the “Unutilized Net Cash Proceeds”),
the Issuer shall, within 20 days after such 120th day, make an offer to purchase
(a “Net Proceeds Offer”) all outstanding Notes up to an aggregate maximum
principal amount of Notes equal to such Unutilized Net Cash Proceeds, at a
purchase price in cash equal to 100% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, up to, but not including, the
purchase date thereof).

 

The Issuer shall mail a notice of a Net Proceeds Offer by first-class mail,
postage prepaid, to the record Holders as shown on the register of Holders
within 20 days following the Net Proceeds Offer Trigger Date, with a copy to the
Indenture Trustee, containing all instructions and materials necessary to enable
such Holders to tender Notes pursuant to the Net Proceeds Offer and shall state
the following terms:

 

(1)         that the Net Proceeds Offer is being made pursuant to this Section
9.06, that all Notes tendered will be accepted for payment and that the Net
Proceeds Offer shall remain open for a period of 20 Business Days or such longer
periods as may be required by law;

 

(2)         the offer price (including the amount of accrued interest) and the
Net Proceeds Offer date of payment (the “Net Proceeds Offer Payment Date”)
(which shall be not less than 30 nor more than 45 days following the
commencement of the Net Proceeds Offer and which shall be at least five (5)
Business Days after the Indenture Trustee receives notice thereof from the
Issuer);

 

(3)         that any Note not tendered will continue to accrue interest;

 

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(4)         that, unless the Issuer defaults in making payment therefor, any
Note accepted for payment pursuant to the Net Proceeds Offer shall cease to
accrue interest from and after the Net Proceeds Offer Payment Date;

 

(5)         that Holders electing to have a Note purchased pursuant to a Net
Proceeds Offer will be required to surrender such Note, with the form entitled
“Option of Holder to Elect Purchase” on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the Business Day prior to the Net Proceeds Offer Payment Date;

 

(6)         that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the second Business Day prior to the Net
Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of the Notes such
Holder delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note purchased; and

 

(7)         that Holders whose Notes are purchased only in part will be issued
new Notes in a principal amount equal to the unpurchased portion of the Note
surrendered; provided, however, that no Notes of a principal amount of $1,000 or
less shall be purchased in part.

 

On or before the Net Proceeds Offer Payment Date, the Issuer shall (i) accept
for payment Notes or portions thereof (provided that no Notes of a principal
amount of $1,000 or less shall be purchased in part) validly tendered pursuant
to the Net Proceeds Offer, (ii) deposit with the Paying Agent, in accordance
with Section 2.09, immediately available funds in an amount sufficient to pay
the purchase price plus accrued and unpaid interest, if any, of all Notes to be
purchased and (iii) deliver to the Indenture Trustee an Officers’ Certificate
describing the Notes or portions thereof being purchased by the Issuer. Upon
receipt by the Paying Agent of the monies specified in clause (ii) of the
preceding sentence and a copy of the Officers’ Certificate specified in clause
(iii) of the preceding sentence, the Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price
plus accrued and unpaid interest, if any, out of the funds deposited with the
Paying Agent in accordance with the preceding sentence. The Indenture Trustee
shall promptly authenticate and mail to such Holders new Notes equal in
principal amount to any unpurchased portion of the Notes surrendered. Upon the
payment of the purchase price for the Notes accepted for purchase, the Indenture
Trustee shall return the Notes purchased to the Issuer for cancellation. Any
monies remaining after the purchase of Notes pursuant to a Net Proceeds Offer
shall be returned within three (3) Business Days by the Indenture Trustee to the
Issuer except with respect to monies owed as obligations to the Indenture
Trustee pursuant to this Indenture. For purposes of this Section 9.06, the
Indenture Trustee shall act as the Paying Agent.

 

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(f)          With respect to any Net Proceeds Offer effected pursuant to this
Section 9.06, to the extent the aggregate principal amount of Notes exceeds the
Unutilized Net Cash Proceeds to be applied to the repurchase thereof, such Notes
shall be purchased pro rata based on the aggregate principal amount of such
Notes tendered by each Holder thereof (provided that no Notes of a principal
amount of $1,000 or less shall be purchased in part). To the extent the
Unutilized Net Cash Proceeds exceed the aggregate amount of Notes tendered by
the holders thereof pursuant to such Net Proceeds Offer (such excess
constituting an “Excess”), the Issuer may retain and utilize such Excess for any
general corporate purposes. Upon the completion of a Net Proceeds Offer, the
amount of Unutilized Net Cash Proceeds shall be reset to zero.

 

(g)          If the Issuer makes a Net Proceeds Offer, the Issuer will comply
with all applicable tender offer laws and regulations, including, to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act and any other
applicable federal or state securities laws and regulations and any applicable
requirements of any securities exchange on which the Notes are listed, and any
violation of the provisions of this Section 9.06 relating to such Net Proceeds
Offer occurring as a result of such compliance shall not be deemed a Default or
an Event of Default.

 

Section 9.07         Repurchase at the Option of Holders upon Change of Control.

 

(a)          In the event of the occurrence of a Change of Control (the date of
such occurrence being the “Change of Control Date”), the Issuer shall, within 30
days after the occurrence of such Change of Control, make an offer (the “Change
of Control Offer”) to all Holders to purchase all outstanding Notes properly
tendered pursuant to such offer, and within 60 days after the occurrence of the
Change of Control, all Notes properly tendered pursuant to such offer shall be
accepted for purchase (the date of such purchase, the “Change of Control
Purchase Date”) for a cash price equal to 101% of the principal amount thereof
as of the Change of Control Purchase Date, plus accrued and unpaid interest up
to, but not including, the date of purchase.

 

(b)          In order to effect the Change of Control Offer, the Issuer shall
mail a notice to each Holder with a copy to the Indenture Trustee stating:

 

(i)          that a Change of Control has occurred and that each Holder has the
right to require the Issuer to purchase such Holder’s Notes at a purchase price
(the “Change of Control Purchase Price”) in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest up to, but not including, the
date of purchase;

 

(ii)         the purchase date, which shall be a Business Day no earlier than 30
days nor later than 60 days from the date such notice is mailed or otherwise
delivered in accordance with the applicable procedures of the Depository;

 

(iii)        that, unless the Issuer defaults in the payment of the purchase
price, any Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest from and after the Change of Control Purchase
Date; and

 

(iv)        the procedures determined by the Issuer, consistent with this
Indenture, that a Holder must follow in order to have its Notes purchased.

 

Alternatively, the Issuer will not be required to make a Change of Control Offer
as provided above, if, in connection with or in contemplation of any Change of
Control, the Issuer has made an offer to purchase (an “Alternate Offer”) any and
all Notes validly tendered at a cash price equal to or higher than the Change of
Control Purchase Price and has purchased all Notes properly tendered in
accordance with the terms of such Alternate Offer so long as the terms and
conditions of such contemplated Change of Control are described in reasonable
detail to the Holders in the notice delivered in connection with such Alternate
Offer.

 

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The Issuer will not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in a
manner, at the times and otherwise in compliance with the requirements
applicable to a Change of Control Offer made by the Issuer or makes an Alternate
Offer and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer or Alternate Offer.

 

(c)          If the Issuer makes a Change of Control Offer or Alternate Offer,
the Issuer will comply with all applicable tender offer laws and regulations,
including, to the extent applicable, Section 14(e) and Rule 14e-1 under the
Exchange Act, and any other applicable federal or state securities laws and
regulations and any applicable requirements of any securities exchange on which
the Notes are listed, and any violation of the provisions of this Indenture
relating to such Change of Control Offer occurring as a result of such
compliance shall not be deemed a Default or an Event of Default.

 

Section 9.08         Covenants.

 

For so long as the Notes are outstanding, the Issuer shall not:

 

(a)          cause or permit any Collateral Transfer of a legal or beneficial
interest in any Mortgage Loan or any part thereof or any legal or beneficial
interest therein or any other part of the Collateral Pool, except as expressly
permitted by this Indenture;

 

(b)          dissolve or liquidate in whole or in part;

 

(c)          engage, directly or indirectly, in any business other than that the
business of making and holdings Mortgage Loans, ;

 

(d)          incur, create or assume any indebtedness for borrowed money other
than the Notes or otherwise pursuant to this Indenture and the Webster Guaranty;

 

(e)          voluntarily file a petition for bankruptcy or reorganization, make
an assignment for the benefit of creditors or commence any similar proceeding;

 

(f)          change its state of organization, name, identity or organizational
status, or otherwise amend the organizational documents of the Issuer, without
notifying the Indenture Trustee of such change in writing at least thirty (30)
days prior to the effective date of such change and, in the case of a change in
the Issuer’s organizational status or any such amendment, without first
obtaining the prior written consent of the Indenture Trustee;

 

(g)          withdraw or direct any party to withdraw any funds from the
Collection Account, other than in accordance with the terms of this Indenture;

 

(h)          engage in any business or activity other than as permitted under
the organizational documents of the Issuer and this Indenture;

 

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(i)          except as contemplated by the Transaction Documents, commingle its
funds or assets with those of any other Person and shall not participate in any
cash management system with any other Person, provided that the Issuer may
participate in MBC’s cash management system;

 

(j)          pledge its assets to or for the benefit of any other Person except
to the Indenture Trustee, for the benefit of the Noteholders to secure the
Notes;

 

(k)          enter into or be a party to, any transaction with any of its
partners, members, shareholders or Affiliates except in the ordinary course of
its business and on terms which are commercially reasonable terms comparable to
those of an arm’s-length transaction with an unrelated third party; or

 

(l)          indemnify its partners, officers, directors or members, as the case
may be, in each case unless such an obligation or indemnification is fully
subordinated to the Notes and shall not constitute a claim against it in the
event that its cash flow is insufficient to pay the Notes.

 

(m)          engage in any business other than for the purpose of acquiring,
owning, holding, selling, transferring, exchanging, managing and operating the
Mortgage Loans, entering into and performing its obligations under the
Transaction Documents and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing;

 

(n)          have any assets other than the Mortgage Loans, the related Mortgage
Notes and personal property necessary or incidental to its ownership and
operation of such Mortgage Loans; and

 

(o)          directly or indirectly, (i) declare or pay any dividend or any
other distribution on any Capital Stock of the Issuer or make any payment or
distribution to the direct or indirect holders (in their capacities as such) of
Capital Stock of the Issuer, (ii) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of the Issuer or (iii) make any Investment in
any Person (other than Permitted Investments), provided that the Issuer may make
such payments described in clause (i) if (1) no Default or Event of Default
shall have occurred and be continuing at the time or immediately after giving
effect to such payment, and (2) immediately after giving effect to such payment,
(A) the aggregate outstanding principal amount of Eligible Mortgage Loans plus
the aggregate amount on deposit in the Collection Account and any other deposit
account of the Issuer subject to an Account Control Agreement is equal to not
less than 120% of the Outstanding Principal Balance and (B) Available Amounts on
deposit in the Collection Account are not less than the amount required to be
paid pursuant to Section 2.15(b) on the immediately succeeding Payment Date.

 

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Section 9.09         Statement as to Compliance.

 

(a)          The Issuer shall deliver to the Indenture Trustee, within 120 days
after the end of each fiscal year commencing with 2016, an Officer’s Certificate
of the Issuer stating that, in the course of the performance by the officer
executing such Officer’s Certificate of such officer’s present duties as an
officer of the Issuer, such officer would normally obtain knowledge or have made
due inquiry of employees of the Issuer and the Issuer’s Affiliates as to the
existence of any condition or event which would constitute an Event of Default
after notice or lapse of time or both and that to the best of the officer’s
knowledge, (i) the Issuer has fulfilled all of its obligations under this
Indenture in all material respects throughout such year, or, if there has been
an Event of Default in the fulfillment of any such obligation in any material
respect, specifying each such default known to such officer and the nature and
status thereof, and (ii) no Event of Default has occurred and is continuing and
no condition or event that would constitute an Event of Default after notice or
lapse of time or both has occurred, or, if such an event has occurred and is
continuing, specifying each such event known to such officer and the nature and
status thereof.

 

(b)          The Issuer shall deliver to the Indenture Trustee, within 60 days
after the end of each calendar quarter, an Officer’s Certificate stating that
(i) a review of the activities of the Issuer throughout the preceding calendar
quarter, and of its performance under this Indenture has been made under such
officer’s supervision, (ii) to such officer’s knowledge, based on such review,
the Issuer has fulfilled in all material respects throughout such period its
obligations under this Indenture or, if there was a default in the fulfillment
of any such obligation in any material respect, such Officer’s Certificate shall
specify each such default known to such officer and the nature and status
thereof.

 

Section 9.10         Reports by Independent Public Accountants.

 

If this Indenture is required to be qualified under the 1939 Act, on or before
September 30 of each year, beginning the September 30 following the first year
in which this Indenture is required to be so qualified, the Issuer, at its
expense, shall cause a firm of independent public accountants (which may also
render other services to MBC or the Issuer) to furnish to the Indenture Trustee
a report containing such firm’s opinion that, on the basis of an examination
conducted by such firm substantially in accordance with standards established by
the American Institute of Certified Public Accountants, the assertion made
pursuant to Section 9.09 regarding compliance by the Issuer with the minimum
Servicing Standards identified in the Uniform Single Attestation for Mortgage
Bankers (to the extent applicable to residential or commercial properties)
during the preceding fiscal year is fairly stated in all material respects,
subject to such exceptions and other qualifications that, in the opinion of such
firm, such institute’s standards require it to report.

 

Section 9.11         Reports to the Indenture Trustee.

 

(a)          Not later than 4:00 p.m., New York City time, three (3) Business
Days prior to each Payment Date, the Issuer shall deliver to the Indenture
Trustee a report (the “Determination Date Report”) in a mutually agreeable
electronic format, reflecting as of the close of business on the last day of the
related Collection Period, the information required for purposes of making the
payments required by Section 2.15(b) and the calculations and reports referred
to in Section 6.01. The Issuer shall also provide to the Indenture Trustee the
wire instructions for the relevant parties to which payments under Section
2.15(b) will be made. The Determination Date Report shall also contain a
certification by the Issuer that (1) on the date of such report and immediately
after giving effect to such payments, the aggregate outstanding principal amount
of Eligible Mortgage Loans plus the aggregate amount on deposit in the
Collection Account and any other deposit account of the Issuer subject to an
Account Control Agreement is equal to not less than 120% of the Outstanding
Principal Balance and (2) no Default or Event of Default has occurred and is
continuing on such date or would result from such payments. Such information
shall be delivered by the Issuer in such form as may be reasonably acceptable to
Indenture Trustee.

 

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(b)          The Issuer shall deliver to the Indenture Trustee:

 

(i)          within forty-five (45) days after the end of each calendar quarter
the following items, each executed by a the Issuer as being true and correct:
(1) a certificate dated as of the last day of each such calendar quarter
identifying for each of the Mortgage Loans the respective termination or
maturity dates, Mortgage Loan Payments required to be paid, and identifying any
defaults under a Mortgage Loan with respect to which it has knowledge, and (2)
statements of the financial affairs and condition of MBC and its subsidiaries on
a consolidated basis, including a balance sheet, a cash flow summary report, a
statement of profit and loss for MBC and its subsidiaries on a consolidated
basis and an operating statement including detailed income and expense
statement, in each case in such detail as the Indenture Trustee may request for
MBC for the immediately preceding calendar quarter, which statements shall be
prepared by MBC;

 

(ii)         within one hundred twenty (120) days after the end of each calendar
year, statements of the financial affairs and condition of MBC and its
subsidiaries on a consolidated basis, including a balance sheet, a cash flow
summary report, a statement of profit and loss for MBC and its subsidiaries on a
consolidated basis and an operating statement including detailed income and
expense statement, audited in conjunction with the audit of MBC by a or another
independent certified public accountant reasonably acceptable to the Indenture
Trustee, for the immediately preceding calendar year; and

 

(iii)        copies of notices of defaults under, or any material modifications
to, any of the Mortgage Loans; and

 

(iv)        at any time and from time to time such other financial data as the
Indenture Trustee or its agents shall reasonably request with respect to MBC or
the Issuer or any of their respective Affiliates.

 

(c)          The Indenture Trustee shall have the right, at any time and from
time to time when an Event of Default exists, upon reasonable notice to the
Issuer and MBC and during normal business hours at the Issuer’s or MBC’s
principal place of business, to conduct an inspection or review, at the Issuer’s
expense, of the Issuer’s or MBC’s, as applicable, books and records. The Issuer
and MBC shall cooperate, and shall cause their respective agents and employees
to cooperate in the conduct of any such inspection or review.

 

(d)          On or before 1:00 p.m. on the Business Day following each
Determination Date, the Issuer shall determine whether the Available Amount
distributable on such Payment Date pursuant to (and subject to the priorities
set forth in) Section 2.15(b) will be sufficient to pay the obligations under
this Indenture on such Payment Date. In the event the Issuer determines that the
Available Amount distributable on such Payment Date pursuant to (and subject to
the priorities set forth in) Section 2.15(b) will not be sufficient to pay the
obligations under this Indenture on such Payment Date (a “Deficiency”) the
Issuer shall notify the Indenture Trustee in writing of such Deficiency, which
written notice shall be delivered on or before 1:00 p.m. New York City time on
the third Business Day before such Payment Date.

 

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Section 9.12         Mergers and Consolidations.

 

The Issuer may not consolidate with or merge with or into (whether or not the
Issuer is the surviving entity) any other entity, unless:

 

(a)          either (i) the Issuer shall be the surviving entity or (ii) the
surviving entity (if other than the Issuer) shall be a Person organized and
validly existing under the laws of the United States of America or any State
thereof or the District of Columbia, and shall, in any such case, expressly
assume by a supplemental indenture, the due and punctual payment of the
principal of, premium, if any, and interest on all the Notes and the performance
and observance of every covenant of this Indenture and the other Transaction
Documents to be performed or observed on the part of the Issuer; provided, that
in the case where the surviving entity is not a corporation, there is a
co-obligor of the Notes that is a corporation; and

 

(b)          immediately thereafter, after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.

 

Section 9.13         Litigation.

 

The Issuer shall give prompt written notice to the Indenture Trustee of any
Proceedings pending against the Issuer which could reasonably be expected to
materially and adversely affect the Issuer’s condition (financial or otherwise)
or business or any Mortgaged Property.

 

Section 9.14         Notice of Default.

 

The Issuer shall promptly advise the Indenture Trustee of any material adverse
change in the Issuer’s condition, financial or otherwise not otherwise reported,
or of the occurrence of any material Event of Default of which the Issuer has
knowledge.

 

Section 9.15         Cooperate in Legal Proceedings.

 

The Issuer shall cooperate fully with the Indenture Trustee with respect to any
Proceedings before any court, board or other Governmental Authority which may in
any way affect the rights of the Indenture Trustee hereunder or any rights
obtained by the Indenture Trustee under any of the other Transaction Documents
and, in connection therewith, permit the Indenture Trustee, at its election, to
participate in any such Proceedings.

 

Section 9.16         Insurance Benefits.

 

The Issuer shall cooperate with the Indenture Trustee in obtaining for the
Indenture Trustee the benefits of any proceeds of the insurance policies
lawfully or equitably payable in connection with any applicable Mortgaged
Property, subject to the rights of Mortgagor Customers under the applicable
Mortgage Loans, and the Indenture Trustee shall be reimbursed for any expenses
incurred in connection therewith (including reasonable attorneys’ fees and
disbursements) out of such insurance proceeds.

 

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Section 9.17         Costs of Enforcement.

 

In the event (a) that any Mortgage encumbering any Mortgaged Property is
foreclosed in whole or in part or that any such Mortgage is put into the hands
of an attorney for collection, suit, action or foreclosure, (b) of the
foreclosure of any Mortgage in which Proceeding the Indenture Trustee is made a
party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar
Proceeding in respect of the Issuer or MBC or an assignment by the Issuer or MBC
for the benefit of its creditors, the Issuer, its successors or assigns, shall
be chargeable with and agrees to pay all reasonable costs of collection and
defense, including reasonable attorneys’ fees and costs, incurred by the
Indenture Trustee or the Issuer in connection therewith and in connection with
any appellate Proceeding or post-judgment action involved therein, together with
all required service or use taxes.

 

Section 9.18         Performance of Issuer’s Duties by MBC.

 

The duties of the Issuer required to be performed under this Indenture and the
other Transaction Documents will be performed on behalf of the Issuer by MBC.

 

Section 9.19         Payment of Debts.

 

The Issuer will use commercially reasonable efforts to remain solvent and the
Issuer will pay its debts and liabilities (including, as applicable, shared
personnel and overhead expenses) from its assets as the same shall become due.

 

Section 9.20         Capitalization of the Issuer.

 

The Issuer use commercially reasonable efforts to maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.

 

Section 9.21         Employees.

 

The Issuer shall pay its own liabilities and expenses, including, without
limitation, the salaries of its own employees, if any, out of its own funds and
assets and maintain a sufficient number of employees if any are required in
light of its contemplated business operations.

 

Section 9.22         Performance by the Issuer.

 

(a)          The Issuer shall observe, perform and satisfy all the terms,
provisions, covenants and conditions of, and shall pay when due all applicable
costs, fees and expenses to the extent required under, the Transaction Documents
executed and delivered by, or applicable to, the Issuer.

 

(b)          The Issuer shall in a timely manner observe, perform, enforce and
fulfill each and every covenant, term and provision of each Transaction Document
executed and delivered by, or applicable to, the Issuer, or recorded instrument
affecting or pertaining to the applicable Mortgaged Properties, to the extent
the failure to observe or perform the same would materially and adversely affect
the Issuer’s interest in such Mortgaged Properties, and shall not enter into or
otherwise suffer or permit any amendment, waiver, supplement, termination or
other modification of any Transaction Document executed and delivered by, or
applicable to, the Issuer except in accordance with the terms and provisions
thereof.

 

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Section 9.23         Use of Proceeds.

 

The Issuer shall use the proceeds of the Notes to purchase from MBC, pursuant to
the Asset Purchase Agreement, the Mortgage Loans and related assets set forth
therein.

 

Section 9.24         Other Rights, Etc.

 

It is agreed that the risk of loss or damage to any Collateral is on the Issuer,
and the Indenture Trustee shall have no liability whatsoever for decline in
value of the Collateral.

 

Section 9.25         Books and Records.

 

The Issuer will maintain all of its books, records, financial statements and
bank accounts separate from those of its Affiliates and any constituent party
and file its own tax returns (provided that the Issuer’s financial statements
and tax returns may be prepared on a consolidated basis with other entities
provided that such consolidated financial statements and tax returns indicate
the separate existence of the Issuer and its assets and liabilities). The Issuer
shall maintain its books, records, resolutions and agreements as official
records.

 

Section 9.26         Overhead Expenses.

 

The Issuer shall allocate fairly and reasonably overhead expenses, if any, that
are shared with an Affiliate, including paying for office space and services
performed by any employee of an Affiliate.

 

ARTICLE X

COVENANTS REGARDING MORTGAGE LOANS

 

Section 10.01   Collection of Mortgage Loan Payments; Collection Account;
Release Account.

 

(a)          The Issuer shall undertake reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans and
shall follow such collection procedures as are consistent with the Servicing
Standard.

 

(b)          The Issuer shall establish and maintain one segregated account in
the name of the Issuer for the benefit of the Indenture Trustee on behalf of the
Noteholders (the “Collection Account”), which shall be established in such
manner and with the type of depository institution (the “Collection Account
Bank”) specified in this Indenture. The Collection Account shall be an Eligible
Account. The Collection Account will be subject to an Account Control Agreement
among the Issuer, the Indenture Trustee and the Collection Account Bank in form
and substance reasonably satisfactory to the Indenture Trustee pursuant to which
the Collection Account Bank agrees to follow the instructions of the Indenture
Trustee with respect to the Collection Account and the amounts on deposit
therein, provided that the Indenture Trustee shall deliver such instructions
only after the occurrence of an Event of Default. Subject to Section 10.02,
neither MBC nor the Issuer will have any right of withdrawal from the Collection
Account and the Issuer hereby covenants and agrees that it shall not withdraw,
or direct any Person to withdraw, any funds from the Collection Account. The
Collection Account shall be maintained by the Issuer as a segregated account,
separate and apart from any other accounts of the Issuer.

 

 -90- 

 

  

(c)          The Issuer shall, not later than ten (10) days after the applicable
Transfer Date, instruct the Mortgagor Customers to make all Mortgage Loan
Payments to the Collection Account. The Issuer shall deposit or cause to be
deposited in the Collection Account, within two (2) Business Days after receipt,
the following payments and collections received or made by or on behalf of the
Issuer subsequent to such Transfer Date (other than payments due on or before
the Closing Date):

 

(i)          all payments on account of Mortgage Loan Payments;

 

(ii)         all payments of other amounts payable by the Mortgagor Customer on
the Mortgage Loans;

 

(iii)        all Insurance Proceeds, Condemnation Proceeds and Liquidation
Proceeds received in respect of any Mortgaged Property;

 

(iv)        the Release Price from the release of any Mortgage Loan to the
extent not deposited into the Release Account; and the Release Price from the
release of any Mortgage Loan transferred from the Release Account to the
Collection Account pursuant to this Indenture and all proceeds representing
earnings on investments in the Release Account (including interest on any
Permitted Investments) made with such proceeds;

 

(v)         any amounts paid by any party to indemnify the Issuer or the
Indenture Trustee pursuant to any provision of this Indenture;

 

(vi)        any amounts received on account of payments under the guaranties
provided by related Mortgage Loan Guarantors; and

 

(vii)       any other amounts required to be so deposited under this Indenture.

 

(d)          The Issuer shall establish and maintain at a bank designated by the
Indenture Trustee a Release Account. The Release Account shall be an Eligible
Account and shall be subject to an Account Control Agreement. The funds held in
the Release Account may be held as cash or invested in Permitted Investments in
accordance with the provisions of Section 10.03(a). The Issuer will deposit or
cause to be deposited in the Release Account, on the date of receipt, any cash
proceeds from the sale of any Mortgage Loan.

 

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Section 10.02   Withdrawals From the Collection Account.

 

The Account Control Agreement with respect to the Collection Account shall
provide that (a) on each Remittance Date the Collection Account Bank shall
deliver the Available Amount by wire transfer of immediately available funds for
deposit into the Payment Account for application by the Indenture Trustee to
make payments in accordance with the priorities set forth pursuant to Section
2.15(b) and (b) on any Business Day other than a Remittance Date the Collection
Account Bank shall remit to the Issuer or to the Issuer’s designee the amount
requested by the Issuer, provided that (i) the Issuer shall not request an
amount which, after giving effect to such remittance, would cause the remaining
Available Amount on deposit in the Collection Account to be less than the amount
required to be paid pursuant to Section 2.15(b) (excluding any remaining
Available Amounts to be paid to the Issuer) on the immediately succeeding
Payment Date and (ii) the Issuer shall have executed and delivered to the
Collection Account Bank and the Indenture Trustee a certificate stating that (1)
a copy of such certificate has simultaneously been delivered to the Indenture
Trustee, (2) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such payment,
and (3) immediately after giving effect to such payment (A) the aggregate
outstanding principal amount of Eligible Mortgage Loans plus the aggregate
amount on deposit in the Collection Account and any other deposit account of the
Issuer subject to an Account Control Agreement is equal to not less than 120% of
the Outstanding Principal Balance and (B) the remaining Available Amount on
deposit in the Collection Account is not less than the amount required to be
paid pursuant to Section 2.15(b) (excluding any remaining Available Amounts to
be paid to the Issuer) on the immediately succeeding Payment Date.

 

Section 10.03   Investment of Funds in the Collection Account.

 

(a)          At the Issuer’s direction, the Collection Account Bank shall invest
the funds held in the Collection Account in one or more Permitted Investments
selected by the Issuer bearing interest or sold at a discount, and maturing,
unless payable on demand, not later than the Business Day immediately preceding
the next succeeding Remittance Date. All such Permitted Investments shall be
held to maturity, unless payable on demand. Any investment of funds in the
Collection Account shall be made in the name of the Issuer for the benefit of
the Indenture Trustee (in its capacity as such). The Issuer shall promptly
deliver to the Indenture Trustee, and the Indenture Trustee shall maintain
continuous possession of, any Permitted Investment that is either (i) a
“certificated security,” as such term is defined in the Uniform Commercial Code,
or (ii) other property in which a secured party may perfect its security
interest by possession under the Uniform Commercial Code or any other applicable
law. If amounts on deposit in the Collection Account are at any time invested in
a Permitted Investment payable on demand, the Issuer shall:

 

(1)         consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Permitted Investment may
otherwise mature hereunder in an amount equal to the lesser of (A) all amounts
then payable thereunder and (B) the amount required to be withdrawn on such
date; and

 

(2)         demand payment of all amounts due thereunder promptly upon
determination by the Issuer that such Permitted Investment would not constitute
a Permitted Investment in respect of funds thereafter on deposit in the
Collection Account.

 

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(b)          In the event that the Issuer elects to remove a Mortgage Loan from
the Collateral Pool under Section 2.04 or Section 11.02, amounts deposited in
the Release Account shall be applied by the Issuer (or the Indenture Trustee
based solely on the instructions of the Issuer), first, to pay the expenses
related to such release and, second, either to acquire a Qualified Substitute
Loan or Qualified Substitute Loans within twelve (12) months following the
removal of such Released Loan. Any amounts remaining in the Release Account
following the twelve (12) month period from the related Release shall be
transferred as Unscheduled Proceeds into the Collection Account and applied as
Unscheduled Principal Payments on the following Payment Date. During an Early
Amortization Period, all amounts in the Release Account shall be deposited as
Unscheduled Proceeds into the Collection Account and will be included in the
Available Amount on the following Payment Date to be applied as Unscheduled
Principal Payments.

 

(a)          Whether or not the Issuer directs the investment of funds in the
Collection Account, interest and investment income realized on funds deposited
therein, to the extent of the Net Investment Earnings, if any, for the
Collection Account for each Collection Period, shall be added to the Available
Amount for such Collection Period.

 

(b)          Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate proceedings.

 

(c)          Notwithstanding the investment of funds held in the Collection
Account, for purposes of the calculations hereunder, including the calculation
of the Available Amount, the amounts so invested shall be deemed to remain on
deposit in the Collection Account.

 

(d)          Any actual losses sustained on the liquidation of a Permitted
Investment in the Collection Account shall be deposited by the Issuer
immediately, but in no event later than one Business Day following such
liquidation, into the Collection Account.

 

Section 10.04   Mortgage Loans.

 

With respect to each Mortgaged Property, the Issuer (a) shall observe and
perform all the obligations imposed upon it under the related Mortgage Loan and
shall not do or permit to be done anything to impair materially the value of
such Mortgaged Property or related Mortgage Loan as security, (b) shall promptly
send copies to the Indenture Trustee of all notices of event of default which
the Issuer shall send or receive under the related Mortgage Loan, (c) shall
notify the Indenture Trustee in writing of any material change in the status of
any Mortgagor Customer with respect to such Mortgaged Property, including,
without limitation, the vacating or surrender of any Mortgagor Customer, even if
such action is expressly permitted by the terms of such Mortgagor Customer’s
Mortgage Loan, (d) shall enforce all of the material terms, covenants and
conditions contained in a related Mortgage Loan upon the part of the Mortgagor
Customer thereunder to be observed or performed (including, without limitation,
collecting financial information from each Mortgagor Customer) consistent with
past practice of the Issuer or MBC, (e) shall not execute any assignment of the
Issuer’s interest in a related Mortgage Loan or the Mortgage Loan Payments, and
(f) shall not consent to any assignment of a related Mortgage Loan not in
accordance with its terms or as permitted thereunder. The Issuer shall not agree
to any material modification of a related Mortgage Loan, other than in the
ordinary course of business of the Issuer.

 

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Section 10.05   Compliance With Laws.

 

With respect to each Mortgaged Property:

 

(a)          The Issuer shall promptly comply, or cause the Mortgagor Customers
to comply, in all material respects with all federal, state and local laws,
orders, ordinances, governmental rules and regulations or court orders affecting
such Mortgaged Property, or the use thereof (“Applicable Laws”), currently
existing or enacted in the future.

 

(b)          The Issuer shall give prompt notice to the Indenture Trustee of the
receipt by the Issuer of any written governmental agency notice related to a
violation of any Applicable Laws and of the commencement of any governmental
agency proceedings or investigations which relate to compliance with Applicable
Laws.

 

(c)          After prior written notice to the Indenture Trustee, the Issuer, at
its own expense, may contest by appropriate Proceeding, promptly initiated and
conducted in good faith and with due diligence, the Applicable Laws affecting
any Mortgaged Property; provided, that (i) no Event of Default has occurred and
is continuing under this Indenture, (ii) the Issuer is not prohibited from doing
so under the provisions of any Mortgage Loan, (iii) none of such Mortgaged
Property, any part thereof or interest therein, any of the related Mortgagor
Customers or occupants thereof, or the Issuer shall be affected in any
materially adverse way as a result of such Proceeding, (iv) non-compliance with
the Applicable Laws shall not impose criminal liability on the Issuer or civil
or criminal liability on the Indenture Trustee, and (v) the Issuer shall have
furnished to the Indenture Trustee all other items reasonably requested by the
Indenture Trustee.

 

Section 10.06   Other Rights, Etc.

 

It is agreed that the risk of loss or damage to a Mortgaged Property is on the
Issuer, and the Indenture Trustee shall have no liability whatsoever for decline
in value of such Mortgaged Property, for failure to maintain insurance policies,
or for failure to determine whether insurance in force is adequate as to the
amount of risks insured. Possession by the Indenture Trustee shall not be deemed
an election of judicial relief, if any such possession is requested or obtained,
with respect to any Mortgaged Property or any other Collateral included in the
Collateral Pool and not in the Indenture Trustee’s possession.

 

Section 10.07   Right to Release Any Portion of the Collateral Pool.

 

The Indenture Trustee shall not release any portion of the Collateral Pool
except as expressly set forth in the terms and provisions of this Indenture and
the other Transaction Documents and shall release such portion without, as to
the remainder of such Collateral, in any way impairing or affecting the lien or
priority of this Indenture, or improving the position of any subordinate
lienholder with respect thereto, except to the extent that the obligations
hereunder shall have been reduced by the actual monetary consideration, if any,
received by the Indenture Trustee for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof, all in
accordance with the terms hereof. This Indenture shall continue as a lien and
security interest in the remaining portion of the Collateral Pool to which it
applies.

 

 -94- 

 

  

Section 10.08   Mortgage Loan Matters.

 

(a)          The Issuer may enter into renewals of Mortgage Loans and new
Mortgage Loans that are on commercially reasonable terms, provided any such
renewal and new Mortgage Loans are entered into in the ordinary course of
business consistent with past practices of the Issuer and MBC. The Issuer shall
execute and deliver, or cause to be executed and delivered, at the request of
any party hereto all such further assurances, confirmations and assignments in
connection with the Mortgage Loans as may be required by the Issuer.

 

(b)          Except as specifically set forth herein, the Issuer shall not (i)
amend or modify in any material respect, or terminate (other than in connection
with a bona fide default by the Mortgagor Customer thereunder beyond any
applicable notice or grace period), any Mortgage Loan other than in accordance
with the Servicing Standard, (ii) shall not collect any of the Mortgage Loan
Payments more than one (1) month in advance, and (iii) shall not execute any
other assignment of the Issuer’s interest in the Mortgage Loans or any other
Collateral (except as contemplated by the Transaction Documents). For the
purpose of this Section 10.08, without limiting the generality of the foregoing,
any extension of the term of a Mortgage Loan that does not reduce the Mortgage
Loan Payment payable thereunder shall be deemed not to be material and any
amendment or modification of a Mortgage Loan that reduces the term of such
Mortgage Loan or the Mortgage Loan Payment payable thereunder shall be deemed to
be material.

 

(c)          Notwithstanding the foregoing:

 

(i)          The Issuer may, consistent with the Servicing Standard, agree to
any modification, waiver or amendment of any term of, forgive any Mortgage Loan
Payment on, and permit the release of the related Mortgagor Customer or any
Mortgage Loan Guarantor (each, a “Mortgage Loan Amendment”) without the consent
of the Indenture Trustee, any Noteholder or any other Person, provided that the
Issuer certifies to the Indenture Trustee that:

 

(1)         such Mortgage Loan Amendment is entered into for a commercially
reasonable purpose in an arm’s-length transaction on market terms; and

 

(2)         in the reasonable judgment of the Issuer, such Mortgage Loan
Amendment is in the best interest of the Noteholders and will not have an
adverse effect on such Mortgage Loan or the Appraised Value of the related
Mortgaged Property.

 

(ii)         Any Mortgage Loan Amendment in connection with a bona fide default
by a Mortgagor Customer shall not be subject to the foregoing terms of this
Section 10.08. Regardless of whether any Mortgage Loan Amendment is material or
not, the Issuer will give the Indenture Trustee prompt written notice thereof
and shall indicate whether such action is being taken pursuant to the preceding
sentence and upon request will deliver a copy of any documents executed in
connection therewith to the Indenture Trustee.

 

 -95- 

 

  

(iii)        The limitations, conditions and restrictions set forth in Section
10.08(c)(i) shall not apply to the Issuer’s ability to terminate a Mortgage Loan
in accordance with the terms thereof.

 

(d)          The Issuer shall have no liability to the Indenture Trustee, the
Noteholders or to any other Person if its analysis and determination that the
Mortgage Loan Amendment or other action contemplated by Section 10.08(c) would
not materially reduce the likelihood of timely payment of amounts due thereon,
or that such Mortgage Loan Amendment or other action is reasonably likely to
produce a greater recovery to the Issuer on a present value basis than would
liquidation, should prove to be wrong or incorrect, so long as the analysis and
determination were made on a reasonable basis in accordance with the Servicing
Standard in good faith by the Issuer.

 

(e)          All modifications, waivers, amendments and other actions entered
into or taken in respect of a Mortgage Loan pursuant to this Section 10.08 shall
be in writing. The Issuer shall notify the Indenture Trustee, in writing, of any
modification, waiver, amendment or other action entered into or taken in respect
of any Mortgage Loan pursuant to this Section 10.08 and the date thereof, and
shall deliver to the Indenture Trustee for deposit in the related Mortgage Loan
File an original counterpart of the agreements relating to such modification,
waiver, amendment or other action, promptly (and in any event within 10 Business
Days) following the execution thereof. In addition, following any Mortgage Loan
Amendment, the issuer shall deliver to the Indenture Trustee an Officer’s
Certificate setting forth in reasonable detail the basis of the determinations
made by it pursuant to Section 10.08(c).

 

Section 10.09   Perfection of Security Interest.

 

The Issuer shall take all action that may be necessary or desirable, or that the
Indenture Trustee may request, so as at all times to maintain the validity,
perfection, enforceability and priority of the Indenture Trustee’s security
interest in the Collateral or to enable the Indenture Trustee to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to:

 

(a)          immediately discharging all liens other than Permitted
Encumbrances;

 

(b)          subject to any Permitted Encumbrances, warranting, defending and
preserving the validity and priority of the lien of any Collateral against the
claims of all Persons whomsoever.

 

(c)          obtaining landlords’ waivers and related agreements;

 

(d)          delivering to the Indenture Trustee, endorsed or accompanied by
such instruments of assignment as the Indenture Trustee may specify, and
stamping or marking, in such manner as the Indenture Trustee may specify, any
and all chattel paper, instruments, letters of credit and advices thereof and
documents evidencing or forming a part of the Collateral;

 

 -96- 

 

  

(e)          entering into warehousing, lockbox and other custodial arrangements
satisfactory to the Indenture Trustee;

 

(f)          executing (as appropriate) and delivering authorizations for the
recording of financing statements, instruments of pledge, notices and
assignments, in each case in form and substance satisfactory to the Indenture
Trustee, relating to the creation, validity, perfection, maintenance or
continuation of the Indenture Trustee’s security interest under the Uniform
Commercial Code or other applicable law;

 

(g)          obtaining “control” of any investment property, deposit account,
letter-of-credit right or electronic chattel paper (the term “control” as used
in respect of the foregoing types of Collateral having the meaning set forth in
Articles 8 and 9 of the UCC), with any agreements establishing such “control” to
be in form and substance satisfactory to the Indenture Trustee; and

 

(h)          if the Issuer at any time has or acquires a commercial tort claim,
promptly notifying the Indenture Trustee thereof, in writing, and granting a
specific collateral assignment of such claim to the Indenture Trustee as
additional Collateral.

 

ARTICLE XI

TRANSFERS AND EXCHANGES OF MORTGAGE LOANS; RELEASE OF MORTGAGE LOANS

 

Section 11.01   Exchange of Mortgage Loans.

 

(a)          The Issuer may remove an Exchanged Loan from the Collateral Pool in
exchange for the addition of one or more Qualified Substitute Loans to the
Collateral Pool. In addition, no exchange of a Mortgaged Loan to a third party
or to MBC or any Affiliate of MBC or of the Issuer may occur if an Early
Amortization Period exists or would occur as a result of such exchange.

 

(b)          In the event that the Issuer elects to substitute one or more
Qualified Substitute Loans pursuant to this Section 11.01, the Issuer shall
deliver to the Indenture Trustee (i) all documents as specified in the
definition of “Mortgage Loan File” with respect to each Qualified Substitute
Loan in accordance with this Indenture and (ii) a copy of the executed Sale
Assignment received by the Issuer with respect to such Qualified Substitute Loan
pursuant to the Asset Transfer Agreement. Mortgage Loan Payments due with
respect to Qualified Substitute Loans in the month of substitution shall not be
part of the Collateral and will be retained by the Issuer. For the month of
substitution, the Available Amount shall include the Mortgage Loan Payment due
on the Mortgage Loan for the Removed Mortgage Loan for such month and thereafter
the Issuer shall be entitled to retain all amounts received in respect of such
Removed Mortgage Loan. On or prior to the effective date of any such
substitution, the Issuer shall deliver to the Indenture Trustee an amended
Mortgage Loan Schedule reflecting the addition to the Collateral of each new
Qualified Substitute Loan and the removal from the Collateral of each Removed
Mortgage Loan. Upon such substitution, each Qualified Substitute Loan shall be
subject to the terms of this Indenture in all respects, and the Issuer shall be
deemed to have made the representations and warranties contained in Section 2.21
with respect to each Qualified Substitute Loan.

 

 -97- 

 

  

(c)          The Issuer shall effect such substitution by having each Qualified
Substitute Loan assigned to the Issuer and distributing or otherwise
transferring the Removed Mortgage Loan to MBC or the entity purchasing the
Removed Mortgage Loan and delivering to and depositing with the Indenture
Trustee (i) any transfer documents transferring such Qualified Substitute Loan
to the Issuer, (ii) any transfer documents transferring such Removed Mortgage
Loan to MBC or the entity purchasing the Removed Mortgage Loan and (iii) the
Mortgage Loan File for such Qualified Substitute Loan.

 

(d)          Upon receipt of an Officer’s Certificate from the Issuer to the
effect that all requirements with respect to any substitution pursuant to the
foregoing terms of this Section 11.1 have been satisfied, upon which the
Indenture Trustee shall be permitted to fully rely and shall have no liability
for so relying without any obligation to confirm or verify, (i) the Indenture
Trustee shall release or cause to be released to the Issuer’s designee the
related Mortgage Loan, the related Mortgage Note and the related Mortgage Loan
File for the Removed Mortgage Loan and (ii) each of the Indenture Trustee and
the Issuer shall execute and deliver such instruments of release, transfer or
assignment, in each case without recourse, as shall be provided to it and are
reasonably necessary to vest in the Issuer’s designee the ownership of the
Removed Mortgage Loan and to release other lien or security interest in such
Removed Mortgage Loan.

 

Section 11.02   Release of Mortgaged Property by the Issuer.

 

(a)          The Issuer shall have the right to have released from the lien of
this Indenture any Mortgage Loan (following such release, a “Released Loan”) by
depositing in the Release Account an amount equal to the Release Price in
immediately available funds for the Released Loan and satisfying the Required
Conditions. Upon the Indenture Trustee’s receipt of an Officer’s Certificate
from the Issuer certifying that all Required Conditions have been satisfied, the
Indenture Trustee shall release to the Issuer or its designee the related
Mortgage Loan File and execute and deliver such instruments of release, transfer
or assignment, in each case without recourse, that shall be provided to it by
the Issuer and are reasonably necessary to release any lien or security interest
in such Released Loan.

 

(b)          No sale of a Mortgage Loan to a third party or to MBC or any
Affiliate thereof may occur if an Early Amortization Period would occur as a
result of such purchase.

 

Section 11.03   Mortgage Loan Substitution.

 

(a)          The Issuer may remove a Mortgage Loan from the Collateral Pool in
exchange for the addition of one or more Qualified Substitute Loans to the
Collateral Pool pursuant to the provisions of Section 11.01 provided that the
Issuer determines, in its reasonable discretion, that there is a reasonable risk
of monetary default by the Mortgagor Customer under such Mortgage Loan (“Credit
Risk”).

 

(b)          The Issuer may remove a Mortgage Loan from the Collateral Pool in
exchange for the addition of one or more Qualified Substitute Loans to the
Collateral Pool pursuant to the provisions of Section 11.01 provided that the
Issuer determines, in its reasonable discretion, that such Mortgage Loan is no
longer an Eligible Mortgage Loan.

 

 -98- 

 

  

(c)          The Issuer shall, in connection with the removal of a Mortgage Loan
from the Collateral Pool and the addition of one or more Qualified Substitute
Loans to the Collateral Pool pursuant to the provisions of Section 11.03,
deliver to the Indenture Trustee and Officer’s Certificate from the Issuer
certifying (i) the reason for such removal, including an explanation of the
related Credit Risk (and a copy of any written communication from the Mortgagor
Customer related to such Credit Risk) or why such Mortgage Loan is no longer an
Eligible Mortgage Loan, as the case may be, or (ii) a summary description of the
anticipated Qualified Substitute Loans, (iii) that (1) immediately after giving
effect to such removal and substitution, the aggregate outstanding principal
amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the
Collection Account and any other deposit account of the Issuer subject to an
Account Control Agreement is equal to not less than 120% of the Outstanding
Principal Balance and (2) no Default or Event of Default has occurred and is
continuing on the date of such removal and substitution or would result
therefrom.

 

Section 11.04   Release, Sale and Exchange of Defaulted Mortgage Loans.

 

(a)          The Issuer shall exercise reasonable efforts, to the extent
consistent with the Servicing Standard, to enforce a Defaulted Mortgage Loan as
to which no satisfactory arrangements can be made for collection of delinquent
payments.

 

(b)          The Issuer may offer to sell a Defaulted Mortgage Loan pursuant to
this Section 11.04, for a fair price, free and clear of the lien of this
Indenture, if and when the Issuer determines that, consistent with the Servicing
Standard, such a sale would be in the best interests of the Noteholders. The
Issuer shall give the Indenture Trustee not less than twenty (20) Business Days’
prior written notice of its intention to sell any Defaulted Mortgage Loan
pursuant to this Section 11.04. No Interested Person shall be obligated to
submit a bid to purchase any such Defaulted Mortgage Loan. The Liquidation
Proceeds shall be deposited into the Collection Account and applied as set forth
herein.

 

(c)          If and when the Issuer deems it necessary and prudent for purposes
of establishing a fair price for any Defaulted Mortgage Loan for purposes of
conducting a sale of such Defaulted Mortgage Loan pursuant to Section 11.04(b),
the Issuer is authorized, at the Issuer’s cost, to have an appraisal conducted
by an Independent MAI-designated appraiser or other expert.

 

(d)          Whether any cash bid constitutes a fair price for any Defaulted
Mortgage Loan for purposes of Section 11.04(b) shall be determined by the Issuer
in its reasonable discretion or, if such cash bid is from an Interested Person,
by the Indenture Trustee. In determining whether any bid received from an
Interested Person represents a fair price for any Defaulted Mortgage Loan, the
Indenture Trustee shall be supplied with and may conclusively rely on the most
recent appraisal conducted in accordance with Section 11.04(c) within the
preceding 12-month period or, in the absence of any such appraisal, on a
narrative appraisal prepared by an Independent MAI-designated appraiser or other
expert retained by the Issuer, at the Issuer’s cost. Such appraiser shall be
selected by the Issuer. In determining whether any bid constitutes a fair price
for any such Defaulted Mortgage Loan, the Issuer shall take into account, among
other factors, the period and amount of any delinquency on the affected Mortgage
Loan, the occupancy status and physical condition of the related Mortgaged
Property and the state of the local economy.

 

 -99- 

 

  

(e)          The Issuer shall act on behalf of itself and the Indenture Trustee
in negotiating and taking any other action necessary or appropriate in
connection with the sale of any Defaulted Mortgage Loan, and the collection of
all amounts payable in connection therewith. In connection therewith, the Issuer
may charge prospective bidders fees that approximate the Issuer’s actual costs
in the preparation and delivery of information pertaining to such sales or
evaluating bids without obligation to deposit such amounts into the Collection
Account. Any sale of a Defaulted Mortgage Loan shall be free and clear of the
lien of this Indenture and shall be final and without recourse to the Issuer or
the Indenture Trustee. If such sale is consummated in accordance with the terms
of this Indenture, the Indenture Trustee shall not have any liability to the
Issuer or any Noteholder with respect to the purchase price therefor accepted by
the Issuer or the Indenture Trustee, as the case may be.

 

(f)          The Issuer shall accept the first (and, if multiple bids are
received contemporaneously, highest) cash bid received from any Person that
constitutes a fair price for such Defaulted Mortgage Loan. Notwithstanding the
foregoing, the Issuer shall not be obligated to accept the highest cash bid if
the Issuer determines, in accordance with the Servicing Standard, that rejection
of such bid would be in the best interests of the Noteholders, and the Issuer
may accept a lower cash bid if it determines, in accordance with the Servicing
Standard, that acceptance of such bid would be in the best interests of the
Noteholders (for example, if the prospective buyer making the lower bid is more
likely to perform its obligations or the terms offered by the prospective buyer
making the lower bid are more favorable).

 

(e)          At any time that a Defaulted Mortgage Loan has not already been
sold pursuant to the terms hereof, the Issuer may at its option (i) release such
Defaulted Mortgage Loan from the lien of this Indenture pursuant to Section
11.02 or (ii) exchange one or more Qualified Substitute Loans for the subject
Defaulted Mortgage Loan pursuant to Section 11.01.

 

(f)          The Issuer shall, and is hereby authorized and empowered by the
Indenture Trustee to, prepare, execute and deliver in its own name, on behalf of
the Issuer and the Indenture Trustee or any of them, the endorsements,
assignments and other documents necessary to effectuate a sale of a Defaulted
Mortgage Loan pursuant to this Section 11.04, and the Indenture Trustee shall
execute and deliver any limited powers of attorney necessary to permit the
Issuer to do so; provided, however, that the Indenture Trustee shall not be held
liable for any misuse of any such power of attorney by the Issuer and the Issuer
hereby agrees to indemnify the Indenture Trustee against, and hold the Indenture
Trustee harmless from, any loss or liability arising from any misuse or
negligence in the exercise of such power of attorney.

 

Section 11.05   Servicing Agent.

 

The Issuer shall, subject to the terms and conditions herein set forth, act as
servicing agent in connection with the Mortgage Loans, including performance of
the following services:

 

(a)          collect on a monthly basis all principal and interest due from each
Mortgagor Customer under the Mortgage Notes and any other Mortgage Loan
Document;

 

 -100- 

 

  

(b)          collect any other revenue due in connection with the Mortgage
Notes, and any other Mortgage Loan Document, and any other revenue due in
connection with matters relating to any Mortgaged Property, including, without
limitation, any rents, security deposits, additional rent, direct and indirect
operating costs, tenant improvement charges, and any amounts due in connection
with or as a result of any casualty or exercise of eminent domain;

 

(c)          except as otherwise provided herein, instruct all Mortgagor
Customers to remit all payments in respect of the Mortgage Notes to the
Collection Account;

 

(d)          cause each Mortgagor Customer to keep the Mortgaged Property owned
by such Mortgagor Customer insured in accordance with this Indenture;

 

(e)          immediately upon the filing of a notice of lien against any
Mortgaged Property, cause the applicable Mortgagor Customer to pay any and all
general and special city and county taxes of every kind and nature, any and all
real estate and ad valorem taxes, personal property taxes, assessments, water
rates, sewer rents, fines, impositions, levies, permits, inspection and license
fees, all special assessments for public improvements (without permitting any
improvement bond to be issued for special assessments) and all other charges now
or hereafter levied or imposed upon or assessed against such Mortgaged Property
or any part thereof by any municipality or other governmental authority or upon
the revenues, rents, issues, income and profits of such Mortgaged Property or
arising in respect of the occupancy, use or possession thereof or the use of
walks, chutes, areas and other space beyond the lot line of such Mortgaged
Property and on or abutting the public sidewalks and/or highways in front or
adjoining such Mortgaged Property or pursuant to any environmental protection
act for the use of any furnace, compactors, incinerators, parking areas or for
other matters covered by any such act, together with any penalties and interest
on any of the foregoing;

 

(f)          notify the Indenture Trustee of any monetary default or other
material default by any Mortgagor Customer under the terms, covenants and
conditions of any Mortgage Loan Collateral within five (5) days after the date
the Issuer discovers such default;

 

(g)          notify the appropriate Mortgagor Customer of any monetary default
or other material default under the terms of any Mortgage Loan Collateral in
accordance with the terms of the applicable Mortgage Loan Documents, and
otherwise communicate with such Mortgagor Customer on the Indenture Trustee’s
behalf as and when required pursuant to the terms of such Mortgage Loan
Documents;

 

(h)          notify the Indenture Trustee of (i) any abandonment by a Mortgagor
Customer of such Mortgaged Property; (ii) the Issuer’s receipt of a notice from
a Mortgagor Customer alleging that the Issuer is in default in the performance
of its obligations under the Mortgage Loan Collateral or that any other right,
entitlement, protection or condition for the benefit of a Mortgagor Customer is
not being observed, performed or satisfied; (iii) the Issuer’s receipt of any
notice of a proposed or threatened exercise of the right of eminent domain with
respect to the Mortgaged Property or any portion thereof; and (iv) any casualty,
damage or injury to the Mortgaged Property or a portion thereof which could
create a risk of a material, immediate diminution in the revenue earned by or
generated from the Mortgaged Property;

 

 -101- 

 

  

(i)          cooperate and assist in any legal proceedings by or against the
Indenture Trustee or any the Indenture Trustee with regard to the Mortgage Loan
Collateral or the Mortgaged Property and involving third parties;

 

(j)          following an event of a default by any Mortgagor Customer which is
not timely cured within any applicable notice and cure period, take such action
as may be necessary or appropriate with respect to such default, including,
without limitation, retaining counsel, at the Issuer’s sole cost and expense, to
foreclose the defaulting Mortgage Loan Collateral;

 

(k)          maintain and keep in good order separate, accurate and complete
accounts and records for the Indenture Trustee, and maintain orderly files
containing records of interest and principal paid, insurance policies, leases
and subleases, correspondence and all other documents and papers pertaining to
the Mortgage Loan Collateral and the Mortgaged Property or the operation
thereof;

 

(l)          at the Indenture Trustee’s option, either audit and verify the
accuracy of any statements and information required to be submitted by any
Mortgagor Customer with respect to its Mortgage Loan Collateral or refer said
matter to the Indenture Trustee’s accountants and cooperate with said
accountants in the conduct of any such audit;

 

(m)          take service, if requested, for the Indenture Trustee of legal
notices; advise the Indenture Trustee’s attorneys as promptly as possible of
such service; advise the Indenture Trustee of the receipt of information
concerning any claim of injury, damage or other liability against the Indenture
Trustee or any the Indenture Trustee and, to the extent available, other
relevant information concerning such claim; and provide copies of all relevant
legal papers to the Indenture Trustee’s attorneys. The Issuer will give notice
of claims and forward documents to the Indenture Trustee’s insurance carrier
whenever appropriate, and furnish the Indenture Trustee with copies of insurance
claims made against or on behalf of the Indenture Trustee; and

 

(n)          generally, do all things reasonably deemed necessary or desirable
for the proper servicing of Mortgage Loan Collateral.

 

Section 11.06   Servicing.

 

(a)          The Issuer covenants to maintain or cause the servicing of the
Mortgage Loans to be maintained in conformity with the Servicing Standard. In
the event that the preceding language is interpreted as constituting one or more
servicing contracts, each such servicing contract shall terminate automatically
upon the earliest of (i) an Event of Default, (ii) the date on which all the
Notes have been paid in full or (iii) the transfer of servicing.

 

(b)          If the Mortgage Loans are serviced by the Issuer, (i) the Issuer
agrees agree that the Indenture Trustee is the collateral assignee of all
servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Mortgage Loans (the “Servicing
Records”), and (ii) the Issuer grants the Indenture Trustee a security interest
in all servicing fees and rights relating to the Mortgage Loans and all
Servicing Records to secure the obligation of the Issuer or its designee to
service in conformity with this Section 11.06 and any other obligation of the
Issuer to the Indenture Trustee and the Noteholders. The Issuer covenants to
safeguard such Servicing Records and to deliver them promptly to the Indenture
Trustee or its designee at the Indenture Trustee’s request.

 

 -102- 

 

  

(c)          If the Mortgage Loans are serviced by a third party servicer (such
third party servicer, the “Servicer”), the Issuer (i) shall provide a copy of
the servicing agreement to the Indenture Trustee, which shall be in form and
substance acceptable to the Indenture Trustee (the “Servicing Agreement”), and
(ii) shall provide a Servicer Notice to the Servicer substantially in the form
of Exhibit H hereto (a “Servicer Notice”) and shall cause the Servicer to
acknowledge and agree to the same. Any successor or assignee of a Servicer shall
be approved in writing by the Indenture Trustee and shall acknowledge and agree
to a Servicer Notice prior to such successor’s assumption of servicing
obligations with respect to the Mortgage Loans.

 

(d)          If the servicer of the Mortgage Loans is the Issuer or the Servicer
is an Affiliate of the Issuer, such Person shall provide to the Indenture
Trustee a letter to the effect that upon the occurrence of an Event of Default,
the Indenture Trustee may terminate any Servicing Agreement and in any event
transfer servicing to the Indenture Trustee’s designee, at no cost or expense to
the Indenture Trustee, it being agreed that the Issuer will pay any and all fees
required to terminate the Servicing Agreement and to effectuate the transfer of
servicing to the designee of the Indenture Trustee.

 

(e)          In the event the Issuer or its Affiliate is servicing the Mortgage
Loans, the Issuer shall, and shall cause such Affiliate to, permit the Indenture
Trustee from time to time to inspect the Issuer’s or such Affiliate’s, as the
case may be, servicing facilities for the purpose of satisfying the Indenture
Trustee that the Issuer or such Affiliate, as the case may be, has the ability
to service the Mortgage Loans as provided in this Indenture.

 

Section 11.07   Termination of Servicing Duties.

 

At any time following an Event of Default, the Indenture Trustee may elect to
discontinue the Issuer’s duties pursuant to Section 11.06. Following any such
election by the Indenture Trustee, the Indenture Trustee shall designate and
retain a subsidiary, affiliate or agent of the Indenture Trustee (the “Indenture
Trustee’s Designee”) to perform said duties. Promptly after being discharged of
its duties in accordance with the terms of this Section 11.07, the Issuer shall
forward to the Indenture Trustee or the Indenture Trustee’s Designee any amounts
then being held by the Issuer in connection with the Mortgage Loan Collateral or
the Mortgaged Property.

 

ARTICLE XII

COSTS

 

Section 12.01   Performance at the Issuer’s Expense.

 

The Issuer acknowledges and confirms that it shall be responsible for the
payment of all costs of reappraisal of any Mortgaged Property or any part
thereof, whether required by law, regulation or any governmental or
quasi-governmental authority. The Issuer hereby acknowledges and agrees to pay,
immediately, upon demand, all fees of a type or nature which may reasonably be
imposed by the Indenture Trustee from time to time, in accordance with the
priorities set forth herein. Wherever it is provided for herein that the Issuer
pay any costs and expenses, such costs and expenses shall include, but not be
limited to, all reasonable legal fees and disbursements of the Indenture Trustee
in accordance with the priorities set forth herein.

 

 -103- 

 

  

ARTICLE XIII

MISCELLANEOUS

 

Section 13.01   Execution Counterparts.

 

This instrument may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

 

Section 13.02   Compliance Certificates and Opinions, Etc.

 

Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Indenture Trustee an Officer’s Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, except that, in the case of any such application
or request as to which the furnishing of such documents is specifically required
by any provision of this Indenture, no additional certificate or opinion need be
furnished.

 

Section 13.03   Form of Documents Delivered to Indenture Trustee.

 

In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.

 

Any certificate or opinion of an Authorized Officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Issuer stating
that the information with respect to such factual matters is in the possession
of the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.

 

Whenever this Indenture requires that a document or instrument (other than any
Note) be delivered in substantially the form attached hereto as an exhibit,
modifications and additions to and deletions from any such exhibit reflected in
such document or instrument as delivered hereunder shall not impair the validity
or acceptability of such document or instrument (nor shall any Person be
entitled to reject such document or instrument as a result thereof) to the
extent that such modifications, additions or deletions are approved by the
Issuer and are made in a manner consistent with applicable law (including
changes thereto).

 

 -104- 

 

  

Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.

 

Whenever in this Indenture, in connection with any application or certificate or
report to the Indenture Trustee, it is provided that any Person shall deliver
any document as a condition of the granting of such application, or as evidence
of such Person’s compliance with any term hereof, it is intended that the truth
and accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be), of the facts
and opinions stated in such document shall in such case be conditions precedent
to the right of such Person to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee’s right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in ARTICLE V.

 

Section 13.04   No Oral Change.

 

This Indenture, and any provisions hereof, may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of the Issuer or the Indenture Trustee, but only by an agreement
in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought and
otherwise in accordance herewith.

 

Section 13.05   Acts of Noteholders.

 

(a)          Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by the
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the “Act” or “Acts”
of the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 5.01)
conclusive in favor of the Indenture Trustee and the Issuer if made in the
manner provided in this Section 13.05. With respect to authorization to be given
or taken by Noteholders, the Indenture Trustee shall be authorized to follow the
written directions or the vote of the Requisite Majority, unless any greater or
lesser percentage is required by the terms hereunder.

 

(b)          The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.

 

(c)          The Outstanding Principal Balance and serial numbers of Notes held
by any Person, and the date of holding the same, shall be proved by the Note
Register.

 

 -105- 

 

  

(d)          Any request, demand, authorization, direction, notice, consent,
election, declaration, waiver or other act of any Noteholder shall bind every
future Noteholder of the same Note and the Noteholder of every Note issued upon
the transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, suffered or omitted to be done by the Indenture Trustee or the
Issuer in reliance thereon, whether or not notation of such action is made upon
such Note.

 

Section 13.06   Computation of Percentage of Noteholders.

 

Unless otherwise specified herein, whenever this Indenture states that any
action may be taken by a specified percentage of the Noteholders, such statement
shall mean that such action may be taken by the Noteholders of such specified
percentage of the Outstanding Principal Balance.

 

Section 13.07   Notice to the Indenture Trustee, the Issuer and Certain Other
Persons.

 

Any communication provided for or permitted hereunder shall be in writing and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given if delivered by courier or mailed by first class mail, postage prepaid, or
if transmitted by facsimile and confirmed in a writing delivered or mailed as
aforesaid, to: (a) in the case of the Issuer to MBC Funding II Corp., c/o
Manhattan Bridge Capital, Inc., 60 Cutter Mill Road, Suite 205, Great Neck, New
York 11021, Attention: Assaf Ran, and (b) in the case of the Indenture Trustee,
Worldwide Stock Transfer, LLC, One University Plaza, Suite 505, Hackensack, New
Jersey 07601, Attention: Jonathan Gellis, facsimile number: (201) 755-2597; or,
as to each such Person, such other address or facsimile number as may hereafter
be furnished by such Person to the parties hereto in writing.

 

Section 13.08   Notices to Noteholders; Notification Requirements and Waiver.

 

Where this Indenture provides for notice to Noteholders of any event, such
notice shall be sufficiently given if in writing and delivered by courier or
mailed by first class mail, postage prepaid to each Noteholder affected by such
event, at its address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is delivered or mailed in the
manner herein provided shall conclusively be presumed to have been duly given.

 

Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.

 

In case, by reason of the suspension of regular courier and mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.

 

 -106- 

 

 

 

Section 13.09 Successors and Assigns.

 

All covenants and agreements in this Indenture by the Issuer shall bind their
successors and permitted assigns, whether so expressed or not.

 

Section 13.10 Interest Charges; Waivers.

 

This Indenture is subject to the express condition that at no time shall the
Issuer be obligated or required to pay interest hereunder at a rate which could
subject the Indenture Trustee to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Issuer is permitted by
applicable law to contract or agree to pay. If by the terms of this Indenture,
the Issuer is at any time required or obligated to pay interest hereunder at a
rate in excess of such maximum rate, such rate shall be deemed to be immediately
reduced to such maximum rate and all previous payments in excess of the maximum
rate shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder.

 

The Issuer expressly waives presentment, demand, diligence, protest and all
notices of any kind whatsoever with respect to this Indenture, except for
notices expressly provided for in this Indenture or the Notes.

 

Section 13.11 Severability Clause.

 

In case any provision of this Indenture or of the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall, to the extent permitted by law, not in any way be
affected or impaired thereby.

 

Section 13.12 Governing Law.

 

(a)          THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES).

 

(b)          Any action or proceeding against any of the parties hereto relating
in any way to this Indenture or any Note or the Collateral included in the
Collateral Pool may be brought and enforced in the courts of the State of New
York sitting in the borough of Manhattan or of the United States District Court
for the Southern District of New York and each of the parties hereto irrevocably
submits to the jurisdiction of each such court in respect of any such action or
proceeding. Each of the parties hereto hereby waives, to the fullest extent
permitted by law, any right to remove any such action or proceeding by reason of
improper venue or inconvenient forum. As long as any of the Notes remain
Outstanding, service of process upon the Issuer shall, to the fullest extent
permitted by law, be deemed in every respect effective service in any such legal
action or proceeding.

 

 -107- 

 

 

Section 13.13 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS INDENTURE OR THE
TRANSACTIONS CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.

 

Section 13.14 Effect of Headings and Table of Contents.

 

The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

 

Section 13.15 Benefits of Indenture.

 

Nothing in this Indenture or in the Notes, express or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, the
Noteholders and any other party secured hereunder or named as a beneficiary of
any provision hereof, any benefit or any legal or equitable right, remedy or
claim under this Indenture.

 

Section 13.16 Trust Obligation.

 

No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (a) the Indenture Trustee in its individual capacity or

(b) any partner, owner, beneficiary, agent, officer, director, employee, agent
or Control Person of the Issuer, the Indenture Trustee, in its individual
capacity, any holder of a beneficial interest in the Issuer or of any successor
or assignee of the Issuer, the Indenture Trustee, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee does not
any such obligations in its individual capacity).

 

Section 13.17 Inspection.

 

The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the Issuer’s normal business
hours, to examine all the books of account, records, reports, and other papers
of the Issuer, to make copies and extracts therefrom and to discuss the Issuer’s
affairs, finances and accounts relating to the Issuer with the officers of MBC
on behalf of the Issuer and the Issuer’s employees and independent public
accounting firm, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) or the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.

 

 -108- 

 

 

Section 13.18 Method of Payment.

 

Except as otherwise provided in Section 2.15(b), all amounts payable or to be
remitted pursuant to this Indenture shall be paid or remitted or caused to be
paid or remitted in immediately available funds by wire transfer to an account
specified in writing by the recipient thereof.

 

Section 13.19 Trust Indenture Act Controls.

 

If this Indenture is required to be qualified under the 1939 Act:

 

(a)          if any provision of this Indenture limits, qualifies or conflicts
with another provision which is required to be included in this Indenture by the
1939 Act, the required provision shall control;

 

(b)          if any provision of this Indenture modifies any 1939 Act provision
that may be so modified, such 1939 Act provision shall be deemed to apply to
this Indenture as so modified;

 

(c)          if any provision of this Indenture excludes any 1939 Act provision
that may be so excluded, such 1939 Act provision shall be excluded from this
Indenture; and

 

(d)          the provisions of Sections 310 through 317 of the 1939 Act that
impose duties on any Person (including the provisions automatically deemed
included unless expressly excluded by this Indenture) shall be a part of and
shall govern this Indenture, whether or not physically contained herein.

 

Section 13.20 Intercreditor Agreement.

 

(a)          Each Noteholder, by its acceptance of Notes, (i) directs the
Indenture Trustee to enter into the Intercreditor Agreement and to perform its
obligations and exercise its rights thereunder in accordance therewith, subject
to the terms and conditions of this Indenture; (ii) consents to the restrictions
on Enforcement Actions (as defined therein) and to the treatment of liens as
described and provided for therein; and (iii) agrees that it will be bound by,
and will take no actions contrary to, the provisions of the Intercreditor
Agreement.

 

(b)          Upon receipt of evidence reasonably acceptable to the Indenture
Trustee of the replacement or refinancing of the Webster Credit Agreement with a
credit facility provided by another Person or Persons as lender or lenders
pursuant to an agreement substantially identical to the terms of the Webster
Credit Agreement, the Indenture Trustee shall, at the written request of MBC,
execute and deliver a new intercreditor agreement with such other Person or
Persons, provided that such new intercreditor agreement shall be in substance
identical to the Intercreditor Agreement (other than the description of the new
credit facility). Notwithstanding the foregoing, the Indenture Trustee shall not
be required to execute and deliver such intercreditor agreement which, in the
opinion of the Indenture Trustee, shall be likely to involve expense or
liability to the Indenture Trustee, unless the Indenture Trustee shall have
received an agreement satisfactory to it in its reasonable discretion to
indemnify it against such liability and expense.

 

 -109- 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, all as of the day and year first above written.

 

  MBC FUNDING II CORP., as the Issuer         By: /s/ Assaf Ran     Assaf Ran  
  Chief Executive Officer         MANHATTAN BRIDGE CAPITAL, INC.         By: /s/
Assaf Ran     Assaf Ran     Chief Executive Officer         WORLDWIDE STOCK
TRANSFER, LLC,   not in its individual capacity but solely as Indenture Trustee
        By: /s/ Yonah J. Kopstick     Name: Yonah J. Kopstick     Title: SVP

 

Signature Page to Indenture

 

 

 

 

EXHIBIT A

 

MORTGAGE LOAN SCHEDULE

 

 A-1-1 

 

 

SCHEDULE A

 

   Loan     Agreement  Maturity  Original Loan   Current Principal   Interest  
     No.  Name  Date  Date  Amount   Balance   Rate   Property Address 1  218 
1370 Bushwick Avenue LLC  01/29/13  07/28/16   250,000.00    250,000.00  
 12.00%  1370 Bushwick Avenue, Brooklyn NY 2  235  300 Great Neck Rd LLC 
05/14/13  11/11/16   1,000,000.00    1,000,000.00    12.00%  300 Great Neck Rd
Great Neck, NY 3  239  1237 Eastern Pkwy LLC  05/23/13  11/20/16   500,000.00  
 500,000.00    12.00%  1237 Eastern Parkway, Brooklyn NY 4  265  BA Home Group
Services Corp.  12/09/13  06/07/16   265,000.00    265,000.00    13.00%  215
Highland Blvd, Brooklyn NY 5  289  67 Jefferson Villa LLC  04/09/14  07/07/16 
 1,050,000.00    1,050,000.00    12.00%  67 Jefferson Avenue, Brooklyn NY 6 
351  647 New Jersey Corp  02/26/15  08/25/16   370,000.00    370,000.00  
 14.00%  647 New Jersey Avenue, Brooklyn NY 7  394  East 42nd Development Inc. 
10/08/15  10/07/16   450,000.00    450,000.00    12.00%  156-12 107 Avenue (Unit
1,2,3) & 156-14 107 Avenue (U 8  399  1460 East Gun Hill Road LLC  10/20/15 
10/19/16   300,000.00    300,000.00    12.00%  1460 East Gun Hill Road, Bronx NY
9  402  381 JEFF LLC  10/26/15  10/25/16   400,000.00    400,000.00    12.00% 
381 Jefferson Ave, Brooklyn NY 10  405  66 Pulaski LLC  11/06/15  11/05/16 
 260,000.00    260,000.00    12.00%  1483 East 53rd Street, Brooklyn NY 11  406 
Tokyo 143 LLC  11/10/15  11/09/16   370,000.00    370,000.00    12.00%  131-25
220th Street, Queens NY 12  407  Palisades Realty Holdings LLC  11/10/15 
11/09/16   72,500.00    72,500.00    12.00%  105 Palisades Avenue, Yonkers NY
13  408  DIDI Capital Corp  11/16/15  11/15/16   650,000.00    650,000.00  
 12.00%  696A Lexington Ave, Brooklyn NY 14  412  NSI 16 Corp  12/09/15 
12/08/16   580,000.00    580,000.00    12.00%  343 Winthrop Street, Brooklyn NY
15  416  B Q Invest Inc.  01/11/16  01/10/17   355,000.00    355,000.00  
 12.00%  903 Pine Street, Brooklyn NY 16  430  DSE Solutions Inc.  03/18/16 
03/17/17   110,000.00    110,000.00    12.00%  1276 Givan Ave, Bronx NY 17  431 
Rosedale Plaza Corp  03/22/16  03/21/17   150,000.00    150,000.00    13.00%  90
Rosedale Rd, Valley Stream NY 18  433  GME Marketing Group LLC  03/30/16 
03/29/17   110,000.00    110,000.00    12.00%  30 Liberty St, Patchogue NY & 35
Maple Ave, Shirley NY                 7,242,500.00    7,242,500.00         

 

 

 

 

EXHIBIT B-1

 

FORM OF GLOBAL SENIOR SECURED NOTE

 

Note Rate: 6%

Initial Principal Balance of this Note:

$[               ]

    Closing Date:  April 25, 2016 CUSIP No. 55280YAA8     First Payment Date:
June 15, 2016 ISIN No.              _     Issuer:  MBC Funding II Corp. Final
Payment Date:  April 22, 2026     Indenture Trustee: Worldwide Stock Transfer,
LLC Note No. 001

 

B-1-1 

 

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE INDENTURE TRUSTEE, THE
NOTE REGISTRAR OR ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
DISTRIBUTION, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE &CO., HAS AN INTEREST HEREIN.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR DEFINITIVE NOTES, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A
NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

 

THE HOLDER HEREOF, BY ACCEPTING THIS NOTE, AND EACH BENEFICIAL OWNER BY
PURCHASING OR OTHERWISE ACQUIRING A BENEFICIAL INTEREST IN THIS NOTE, EACH
AGREES TO TREAT THIS NOTE AND SUCH BENEFICIAL INTEREST FOR PURPOSES OF UNITED
STATES FEDERAL, STATE AND LOCAL INCOME OR FRANCHISE TAXES AND ANY OTHER TAXES
IMPOSED ON OR MEASURED BY INCOME, AS INDEBTEDNESS OF THE ISSUER AND TO REPORT
THIS NOTE AND SUCH BENEFICIAL INTEREST ON ALL APPLICABLE TAX RETURNS IN A MANNER
CONSISTENT WITH SUCH TREATMENT.

 

REDUCTIONS OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE MAY BE MADE
QUARTERLY AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ABOVE.

 

THE NOTES ARE SOLELY OBLIGATIONS OF THE ISSUER AND DO NOT REPRESENT OBLIGATIONS
OF ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, THE INDENTURE TRUSTEE, THE
UNDERWRITER OR ANY OF THEIR RESPECTIVE AFFILIATES. THE NOTES ARE NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

B-1-2 

 

 

The Issuer, a New York corporation, for value received, hereby promises to pay
to Cede & Co. or its registered assigns, upon presentation and surrender of this
Note (this “Note”), the principal sum of [                   ] United States
dollars ($[                   ]) on the Final Payment Date referred to above,
together with interest hereon from time to time in the amounts and at the times
specified in the Indenture referred to below.

 

This Note is issued by the Issuer pursuant to an Indenture, to be dated on or
about April 25, 2016 (as amended or supplemented thereafter, the “Indenture”),
between MBC FUNDING II CORP. (the “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and
WORLDWIDE STOCK TRANSFER, LLC, as indenture trustee (in such capacity, the
“Indenture Trustee”), and will be secured by the assets of the Issuer
(individually, the “Collateral” and, collectively, the “Collateral Pool”). To
the extent not defined herein, capitalized terms used herein have the respective
meanings assigned in the Indenture. This Note is issued under and is subject to
the terms, provisions and conditions of the Indenture, to which Indenture the
Holder of this Note by virtue of the acceptance hereof assents and by which such
Holder is bound.

 

Pursuant to the terms of the Indenture, payments of any interest and other
amounts payable on this Note, and, to the extent required by the terms of the
Indenture, payments of principal on this Note shall be made on the 15th day of
each calendar month, commencing on June 15, 2016, or, if any such day is not a
Business Day, then on the next succeeding Business Day (each, a “Payment Date”),
to the Person in whose name this Note is registered at the close of business on
the related Record Date. All payments made under the Indenture on this Note will
be made by the Indenture Trustee by wire transfer of immediately available funds
to the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Noteholder shall have provided the
Indenture Trustee with wiring instructions prior to the related Record Date
(which wiring instructions may be in the form of a standing order applicable to
all subsequent payments), or otherwise by check mailed to the address of such
Noteholder as it appears in the Note Register as of the related Record Date.
Notwithstanding the foregoing, the final payment on this Note on the Final
Payment Date will be made in like manner, but only upon presentation and
surrender of this Note at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Note that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.

 

Any payment to the Holder of this Note in reduction of the Outstanding Principal
Balance hereof is binding on such Holder and all future Holders of this Note and
any Note issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such payment is made upon this Note.

 

The Notes are issuable in fully registered form only without coupons in minimum
denominations specified in the Indenture.

 

B-1-3 

 

 

Each transferee of a Note or an Ownership Interest therein will be deemed to
have represented, warranted and agreed that either (i) such transferee is not,
and is not purchasing such Note on behalf of, as a fiduciary of, as trustee of,
or with the assets of, a Plan or (ii)(A) such Note is rated investment grade or
better as of the date of the purchase, (B) such transferee believes that such
Note is properly treated as indebtedness without substantial equity features for
purposes of Department of Labor Regulations, as modified by ERISA, and agrees to
so treat such Note and (C) such transferee’s acquisition and continued holding
of such Note or Ownership Interest therein will not give rise to a non-exempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code (or any law materially similar to Section 4975 of the Code or Section 406
of ERISA).

 

As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Note Register upon
surrender of this Note for registration of transfer at the offices of the Note
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Note Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Notes of the same authorized denominations evidencing the same Outstanding
Principal Balance will be issued to the designated transferee or transferees.

 

No service charge will be imposed for any transfer or exchange of this Note, but
the Indenture Trustee 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 transfer or exchange of this Note.

 

The Issuer, the Indenture Trustee, the Note Registrar and any agent of any
thereof may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, and none of the Issuer, the Indenture Trustee, the Note
Registrar or any such agent shall be affected by notice to the contrary.

 

The Indenture, any Asset Purchase Agreement and the Notes are subject to
amendment, including by supplemental indenture, from time to time in accordance
with the terms thereof, including in circumstances which do not require the
consent of any or all Noteholders.

 

Unless the certificate of authentication hereon has been executed by the
Indenture Trustee, by manual signature, the Note shall not be entitled to any
benefit under the Indenture or be valid for any purpose.

 

The Indenture Trustee makes no representation as to the validity or sufficiency
of this Note (other than as to its signature set forth hereon below).

 

This Note shall be governed by and construed in accordance with the laws of the
State of New York (including Section 5-1401 of the General Obligations Law of
the State of New York, but otherwise without regard to conflict of laws
principles).

B-1-4 

 

 

IN WITNESS WHEREOF, the Issuer have caused this instrument to be duly executed
by the Issuer.

 

Dated: [                 ], 2016

 

  MBC FUNDING II CORP.         By: Authorized Signatory

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

  WORLDWIDE STOCK TRANSFER, LLC,   not in its individual capacity but solely as
Indenture Trustee         By:       Authorized Signatory

 

B-1-5 

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

     

(please print or typewrite name and address including postal zip code of
assignee)

 

the within Senior Secured Note and hereby authorize(s) the registration of
transfer of such Note to assignee on the Note Register.

 

I (we) further direct the Note Registrar to issue a new Senior Secured Note of a
like Outstanding Principal Balance to the above named assignee and deliver such
Note to the following address:

     

 

Dated:  

 

      Signature by or on behalf of Assignor           Signature Guaranteed

 

PAYMENT INSTRUCTIONS

 

The Assignee should include the following for purposes of payment:

 

Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to                                   for the
account of
                                                                                                                                .

                                                                                                                                                                                                                          

Payments made by check (such check to be made payable to
                                                    ) and all applicable
statements and notices should be mailed to
                                                          .

 

This information is provided by                                           , the
Assignee named above, or                                                   , as
its agent.

 

B-1-6 

 

 

EXHIBIT B-2

 

FORM OF DEFINITIVE SENIOR SECURED NOTE

 

DEFINITIVE NOTE

 

Note Rate: 6%

Initial Principal Balance of this Note:

$[                        ]

    Closing Date:  April 25, 2016 CUSIP No. 55280YAA8     First Payment
Date:  June 15, 2016 ISIN No.              _     Issuer:  MBC Funding II Corp.
Final Payment Date:  April 22, 2026     Indenture Trustee: Worldwide Stock
Transfer, LLC Note No.         

 

B-2-1 

 

 

THE HOLDER HEREOF, BY ACCEPTING THIS NOTE, AGREES TO TREAT THIS NOTE FOR
PURPOSES OF UNITED STATES FEDERAL, STATE AND LOCAL INCOME OR FRANCHISE TAXES AND
ANY OTHER TAXES IMPOSED ON OR MEASURED BY INCOME, AS INDEBTEDNESS OF THE ISSUER
AND TO REPORT THIS NOTE ON ALL APPLICABLE TAX RETURNS IN A MANNER CONSISTENT
WITH SUCH TREATMENT.

 

REDUCTIONS OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.

 

THE NOTES ARE SOLELY OBLIGATIONS OF THE ISSUER AND DO NOT REPRESENT OBLIGATIONS
OF ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, THE INDENTURE TRUSTEE, THE
UNDERWRITER OR ANY OF THEIR RESPECTIVE AFFILIATES. THE NOTES ARE NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

 

B-2-2 

 

 

The Issuer, a New York corporation, for value received, hereby promises to pay
to [                               ] or its registered assigns, upon
presentation and surrender of this Note (this “Note”), the principal sum of [
                           ] United States dollars ($[              ]) on the
Final Payment Date referred to above, together with interest hereon from time to
time in the amounts and at the times specified in the Indenture referred to
below.

 

This Note is issued by the Issuer pursuant to an Indenture, to be dated on or
about April 25, 2016 (as amended or supplemented thereafter, the “Indenture”),
between MBC FUNDING II CORP. (as the Issuer “Issuer”), MANHATTAN BRIDGE CAPITAL,
INC. and WORLDWIDE STOCK TRANSFER, LLC, as indenture trustee (in such capacity,
the “Indenture Trustee”), and will be secured by the assets of the Issuer
(individually, the “Collateral” and, collectively, the “Collateral Pool”). To
the extent not defined herein, capitalized terms used herein have the respective
meanings assigned in the Indenture. This Note is issued under and is subject to
the terms, provisions and conditions of the Indenture, to which Indenture the
Holder of this Note by virtue of the acceptance hereof assents and by which such
Holder is bound.

 

Pursuant to the terms of the Indenture, payments of any interest and other
amounts payable on this Note and, to the extent required by the terms of the
Indenture, payments of principal on this Note shall be made on the 15th day of
each calendar month, commencing on June 15, 2016, or, if any such day is not a
Business Day, then on the next succeeding Business Day (each, a “Payment Date”),
to the Person in whose name this Note is registered at the close of business on
the related Record Date. All payments made under the Indenture on this Note will
be made by the Indenture Trustee by wire transfer of immediately available funds
to the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Noteholder shall have provided the
Indenture Trustee with wiring instructions prior to the related Record Date
(which wiring instructions may be in the form of a standing order applicable to
all subsequent payments), or otherwise by check mailed to the address of such
Noteholder as it appears in the Note Register as of the related Record Date.
Notwithstanding the foregoing, the final payment on this Note on the Final
Payment Date will be made in like manner, but only upon presentation and
surrender of this Note at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Note that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.

 

Any payment to the Holder of this Note in reduction of the Outstanding Principal
Balance hereof is binding on such Holder and all future Holders of this Note and
any Note issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such payment is made upon this Note.

 

The Notes are issuable in fully registered form only without coupons in minimum
denominations specified in the Indenture.

 

No transfer of this Note or any interest herein may be made unless that transfer
is made pursuant to an effective registration statement under the Securities
Act, and effective registration or qualification under applicable state
securities laws, or is made in a transaction that does not require such
registration or qualification. No person is obligated to register or qualify any
of the Notes under the Securities Act or any other securities law or to take any
action not otherwise required under the Indenture to permit the transfer of any
Note or interest therein without registration or qualification.

 

B-2-3 

 

 

 

Each transferee of a Note or an Ownership Interest therein shall represent,
warrant and agree that either (i) such transferee is not, and is not purchasing
such Note on behalf of, as a fiduciary of, as trustee of, or with the assets of,
a Plan or (ii)(A) such Note is rated investment grade or better as of the date
of the purchase, (B) such transferee believes that such Note is properly treated
as indebtedness without substantial equity features for purposes of Department
of Labor Regulations, as modified by ERISA, and agrees to so treat such Note and
(C) such transferee’s acquisition and continued holding of such Note or
Ownership Interest therein will not give rise to a non-exempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code (or
any law materially similar to Section 4975 of the Code or Section 406 of ERISA).

 

As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Note Register upon
surrender of this Note for registration of transfer at the offices of the Note
Registrar, duly endorsed by, or accompanied by a written instrument of transfer
in the form satisfactory to the Note Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Notes of the same authorized denominations evidencing the same Outstanding
Principal Balance will be issued to the designated transferee or transferees.

 

No service charge will be imposed for any transfer or exchange of this Note, but
the Indenture Trustee 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 transfer or exchange of this Note.

 

The Issuer, the Indenture Trustee, the Note Registrar and any agent of any
thereof may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, and none of the Issuer, the Indenture Trustee, the Note
Registrar or any such agent shall be affected by notice to the contrary.

 

The Indenture, any Asset Purchase Agreement and the Notes are subject to
amendment, including by supplemental indenture, from time to time in accordance
with the terms thereof, including in circumstances which do not require the
consent of any or all Noteholders.

 

Unless the certificate of authentication hereon has been executed by the Note
Registrar, by manual signature, the Note shall not be entitled to any benefit
under the Indenture or be valid for any purpose.

 

The Indenture Trustee makes no representation as to the validity or sufficiency
of this Note (other than as to its signature set forth hereon below).

 

This Note shall be governed by and construed in accordance with the laws of the
State of New York (including Section 5-1401 of the General Obligations Law of
the State of New York, but otherwise without regard to conflict of laws
principles).

 

B-2-4 

 

 

IN WITNESS WHEREOF, the Issuer have caused this instrument to be duly executed
by the Issuer.

 

Dated: [                     ], 2016

 

  MBC FUNDING II CORP.         By: Authorized Signatory

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

  WORLDWIDE STOCK TRANSFER, LLC,   not in its individual capacity, but solely
in  its capacity as Indenture Trustee         By:       Authorized Signatory

  

B-2-5 

 

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

     

(please print or typewrite name and address including postal zip code of
assignee)

 

the within Senior Secured Note and hereby authorize(s) the registration of
transfer of such Note to assignee on the Note Register.

 

I (we) further direct the Note Registrar to issue a new Senior Secured Note of a
like Outstanding Principal Balance to the above named assignee and deliver such
Note to the following address:

     

 

Dated:  

 

      Signature by or on behalf of Assignor           Signature Guaranteed

 

PAYMENT INSTRUCTIONS

 

The Assignee should include the following for purposes of payment:

 

Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to
                                                      for the account of
                                                                                                                                .

                                                                                                                                                                                                                          

Payments made by check (such check to be made payable to
                                                    ) and all applicable
statements and notices should be mailed to
                                                          .

 

This information is provided by                                           , the
Assignee named above, or                                                   , as
its agent.

 

B-2-6 

 

 

EXHIBIT C

 

FORM OF INTERIM RECEIPT

 

[DATE]

 

MBC Funding II Corp.

60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

 

Manhattan Bridge Capital, Inc.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

 

Aegis Capital Corp.

810 Seventh Avenue, 18th Floor
New York, New York 10019

 

RE:              Interim Receipt pursuant to Section 2.03(b) of the Indenture,
dated on or about _______________, 2016 (as amended or supplemented thereafter,
the “Indenture”), between MBC FUNDING II CORP. (the “Issuer”), MANHATTAN BRIDGE
CAPITAL, INC. and WORLDWIDE STOCK TRANSFER, LLC, as indenture trustee (in such
capacity, the “Indenture Trustee”)

 

Ladies and Gentlemen:

 

In accordance with Section 2.03(b) of the above-referenced Indenture, the
Indenture Trustee hereby certifies that, with respect to each Mortgage Loan File
related to the Mortgaged Properties listed on Schedule hereto, subject to any
exceptions set forth in Schedule hereto, and other than any Mortgage Loan or
Mortgaged Property specifically identified in any exception report annexed
thereto as not being covered by such certification, (i) the original or a
physical or electronic copy (certified to be true, correct and complete by the
Issuer) of each Mortgage Loan is in its possession and (ii) such Mortgage Loan
has been reviewed by it, appears regular on its face and appears to relate to a
Mortgaged Property included in the Collateral.

 

Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Indenture.

 

    WORLDWIDE STOCK TRANSFER, LLC

 

By:Name:   Title:

 

C-1-1 

 

 

EXHIBIT D

 

FORM OF RECEIPT OF COLLATERAL

 

[DATE]

 

MBC Funding II Corp.

60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

 

Manhattan Bridge Capital, Inc.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

 

Aegis Capital Corp.

810 Seventh Avenue, 18th Floor
New York, New York 10019

 

RE: Receipt of Collateral pursuant to Section 2.03(b) of the Indenture, dated on
or about                           , 2016 (as amended or supplemented
thereafter, the “Indenture”), between MBC FUNDING II CORP. (the “Issuer”),
MANHATTAN BRIDGE CAPITAL, INC. and WORLDWIDE STOCK TRANSFER, LLC, as indenture
trustee (in such capacity, the “Indenture Trustee”)

 

Ladies and Gentlemen:

 

In accordance with Section 2.03(b) of the above-referenced Indenture, the
Indenture Trustee hereby certifies that, with respect to each Mortgage Loan File
related to the Mortgaged Properties listed on Schedule hereto, subject to any
exceptions set forth in Schedule hereto, and other than with respect to any
Mortgage Loan or Mortgaged Property specifically identified in any exception
report annexed thereto as not being covered by such certification, (i) all
documents specified in the definition of “Mortgage Loan File” are in its
possession, (ii) all such documents received by it with respect to such Mortgage
Loan and the related Mortgaged Property have been reviewed by it, appear to be
regular on their face and appear to relate to such Mortgage Loan or the related
Mortgaged Property, and (iii) based on the examinations referred to in Section
2.03 of the Indenture and only as to the foregoing documents, the information
set forth in such Mortgage Loan Schedule with respect to the items specified in
clause (i) of the definition of “Mortgage Loan Schedule” accurately reflects the
information set forth in such Mortgage Loan File.

 

Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Indenture.

 

    Worldwide Stock Transfer, LLC

 

By:Name:   Title:

 

D-1-1 

 

 

EXHIBIT E

 

FORM OF TRANSFEROR CERTIFICATE

 

[Date]

 

Worldwide Stock Transfer, LLC
One University Plaza, Suite 505
Hackensack, New Jersey 07601
Attention: Jonathan Gellis

 

Re:MBC FUNDING II CORP., Senior Secured Notes (the “Notes”)

 

Ladies and Gentlemen:

 

This letter is delivered to you in connection with the transfer by
                   (the “Transferor”) to               (the “Transferee”) of
Notes having an initial Outstanding Principal Balance as of
                        , 2016 (the “Closing Date”) of $[             ] (the
“Transferred Notes”). The Notes, including the Transferred Notes, were issued
pursuant to an Indenture, to be dated on or about                    , 2016 (as
amended or supplemented thereafter, the “Indenture”), between MBC Funding II
Corp. (the “Issuer”), Manhattan Bridge Capital, Inc. and Worldwide Stock
Transfer, LLC, as indenture trustee (in such capacity, the “Indenture Trustee”).
All capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Indenture. The Transferor hereby certifies,
represents and warrants to you, as Note Registrar, and for the benefit of the
Issuer, the Indenture Trustee and the Transferee, that:

 

1.               The Transferor is the lawful owner of the Transferred Notes
with the full right to transfer such Notes free from any and all claims and
encumbrances whatsoever.

 

2.               The Transferor or a person acting on its behalf has furnished,
or caused to be furnished, to the Transferee all information regarding (a) the
Transferred Notes and payments thereon, (b) the nature and performance of the
Mortgage Loans and the Mortgaged Properties, (c) the Indenture and the
Collateral, and (d) any other information with respect to the Transferred Notes,
that the Transferee has requested.

 

  Very truly yours,               (Transferor)               By:     Name:    
Title:  

 

E-1-1 

 

 

EXHIBIT F

 

LIST OF AUTHORIZED SIGNATORIES

 

PLEDGOR           Specimen Signature Name       Title       Phone       E-mail
Address                               Name       Title       Phone       E-mail
Address               SECURED PARTY           Specimen Signature Name      
Title       Phone       E-mail Address               Name       Title      
Phone       E-mail Address      

 

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EXHIBIT G

 

FORM OF TRUSTEE REPORT

 

1.With respect to the current Payment Date, (A) the balances on deposit in the
Collection Account and any other Account established under the Indenture on the
Remittance Date immediately preceding the prior Payment Date (or, with respect
to the first Payment Date, on the Closing Date) (the “Preceding Remittance
Date”), (B) the aggregate amounts of deposits into and withdrawals from the
Collection Account and any other Account established under the Indenture from
but excluding the Preceding Remittance Date to and including the Remittance Date
immediately preceding the Payment Date (the “Current Remittance Date”) and (C)
the balances on deposit in the Collection Account and any other Account
established under the Indenture on the Current Remittance Date.

 

2.Analysis of Collection Account activity from the Preceding Remittance Date to
the Current Remittance Date:

 

a.Balance on the Preceding Remittance Date

b.Payments and other proceeds of the Collateral Pool from but excluding the
Preceding Remittance Date to and including the Current Remittance Date,
including Unscheduled Proceeds (“Current Collections”)

c.Payments on account of Guarantees

d.Aggregate Note payments from but excluding the Preceding Remittance Date to
and including the Current Remittance Date

e.Expense payments payable on the Current Remittance Date

f.Balance on the Current Remittance Date

 

3.Amount, if any, to be transferred from the Release Account to the Collection
Account with respect to the current Payment Date

 

4.Payments on the current Payment Date

 

a.Indenture Trustee fees and expenses

b.Note Interest

c.Mandatory Principal Payments

d.Payments on account the Outstanding Principal Balance of the Notes

 

5.Outstanding Principal Balance

 

a.Opening Outstanding Principal Balance

b.Principal payments, if any, made on the current Payment Date

c.Closing Outstanding Principal Balance

 

6.Amount distributed to the Issuer from the Collection Account, if any, with
respect to the current Payment Date

 

7.Amount distributed to the Issuer from the Release Account, if any, with
respect to the current Payment Date

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EXHIBIT H

 

FORM OF SERVICER NOTICE

 

[Date]

 

MBC Funding II Corp.

c/o Manhattan Bridge Capital, Inc. 60 Cutter Mill Road, Suite 205 Great Neck,
New York 11021 Attention: Assaf Ran

 

Worldwide Stock Transfer, LLC One University Plaza, Suite 505 Hackensack, New
Jersey 07601 Attention: Jonathan Gellis

 

Ladies and Gentlemen:

 

This notice is being delivered pursuant to Section 11.06(c) of a certain
Indenture, dated as of April 25, 2016 (as amended, supplemented or otherwise
modified from time to time, the “Indenture”), between MBC FUNDING II CORP., a
New York corporation, as issuer (the “Issuer”), MANHATTAN BRIDGE CAPITAL, INC.,
a New York corporation, and WORLDWIDE STOCK TRANSFER, LLC, a New Jersey limited
liability company, not in its individual capacity, but solely as indenture
trustee (the “Indenture Trustee”). Capitalized terms used but not otherwise
defined herein shall have respective meanings assigned to them in the Indenture.

 

Notice is hereby given that the Issuer has designated                    to
serve as the servicer (the “Servicer”) of the Collateral Pool under the
Indenture.

 

The designation of                               as Servicer will become final
if the Indenture Trustee delivers to Issuer written confirmation that such
person designated to become the Servicer is approved by the Indenture Trustee.
Accordingly, such approval is hereby requested as soon as possible.

 

The undersigned Servicer hereby agrees with all the other parties to the
Indenture that the undersigned shall serve as Servicer under the Indenture. The
undersigned Servicer hereby acknowledges that, as of the date hereof, it is and
shall be a party to the Indenture and bound thereby to the full extent indicated
therein in the capacity of Servicer.

 

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By signing the enclosed copies of this notice where indicated below and
returning them to each of the Issuer and the Servicer, the Indenture Trustee
approves the appointment of the Servicer.

 

  MBC FUNDING II CORP., as the Issuer         By: Name:     Title:

 

Acknowledged and agreed to:       [SERVICER]         By:       Name:     Title:
        Acknowledged and approved:         WORLDWIDE STOCK TRANSFER, LLC,   not
in its individual capacity but solely as Indenture Trustee         By:      
Name:     Title:  

 

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