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EXHIBIT 4.1.3




SEQUOIA MORTGAGE TRUST 200_-_




Collateralized Mortgage Bonds




INDENTURE




Dated as of _______, 200_



[INDENTURE TRUSTEE]

Indenture Trustee



 









 






TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I
	 	 	 	 
	Definitions and Incorporation by Reference.

	 	 	2	 
	     SECTION 1.1. Definitions.

	 	 	2	 
	     SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.

	 	 	2	 
	     SECTION 1.3. Rules of Construction.

	 	 	2	 
	     SECTION 1.4. Action by or Consent of Bondholders and Residual Certificateholders.

	 	 	2	 
	     SECTION 1.5. Conflict with TIA.

	 	 	3	 
	ARTICLE II
	 	 	 	 
	The Bonds

	 	 	3	 
	SECTION 2.1. Form.

	 	 	3	 
	     SECTION 2.2. Execution, Authentication and Delivery.

	 	 	3	 
	     SECTION 2.3. Registration; Registration of Transfer and Exchange.

	 	 	4	 
	     SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Bonds.

	 	 	5	 
	     SECTION 2.5. Persons Deemed Owners.

	 	 	6	 
	     SECTION 2.6. Payment of Principal and Interest; Defaulted Interest.

	 	 	6	 
	     SECTION 2.7. Cancellation.

	 	 	7	 
	     SECTION 2.8. Release of Collateral.

	 	 	7	 
	     SECTION 2.9. Book-Entry Bonds.

	 	 	7	 
	     SECTION 2.10. Notices to Clearing Agency.

	 	 	8	 
	     SECTION 2.11. Definitive Bonds.

	 	 	8	 
	ARTICLE III
	 	 	 	 
	Covenants; Representations and Warranties of the Issuer

	 	 	8	 
	     SECTION 3.1. Payment of Principal and Interest.

	 	 	8	 
	     SECTION 3.2. Maintenance of Office or Agency.

	 	 	9	 
	     SECTION 3.3. Money for Payments to be Held in Trust.

	 	 	9	 
	     SECTION 3.4. Existence.

	 	 	10	 
	     SECTION 3.5. Protection of Trust Property.

	 	 	10	 
	     SECTION 3.6. Opinions as to Trust Property.

	 	 	11	 
	     SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.

	 	 	11	 
	     SECTION 3.8. Negative Covenants.

	 	 	12	 
	     SECTION 3.9. Annual Statement as to Compliance.

	 	 	12	 
	     SECTION 3.10. Issuer May Not Consolidate or Transfer Assets.

	 	 	13	 
	     SECTION 3.11. No Other Business.

	 	 	13	 
	     SECTION 3.12. No Borrowing.

	 	 	13	 
	     SECTION 3.13. Servicer’s Obligations.

	 	 	13	 
	     SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.

	 	 	13	 
	     SECTION 3.15. Capital Expenditures.

	 	 	13	 
	     SECTION 3.16. Compliance with Laws.

	 	 	14	 
	     SECTION 3.17. Restricted Payments.

	 	 	14	 
	     SECTION 3.18. Notice of Rapid Amortization Events and Events of Servicing Termination.

	 	 	14	 
	     SECTION 3.19. Further Instruments and Acts.

	 	 	14	 
	     SECTION 3.20. Amendments of Sale and Servicing Agreement and Trust Agreement.

	 	 	14	 
	     SECTION 3.21. Income Tax Characterization.

	 	 	14	 
	     SECTION 3.22. Representations and Warranties of the Issuer Regarding the Lien of the
Indenture Trustee.

	 	 	14	 






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	ARTICLE IV
	 	 	 	 
	Satisfaction and Discharge

	 	 	15	 
	     SECTION 4.1. Satisfaction and Discharge of Indenture.

	 	 	15	 
	     SECTION 4.2. Application of Trust Money.

	 	 	16	 
	     SECTION 4.3. Repayment of Monies Held by Bond Paying Agent.

	 	 	16	 
	ARTICLE V
	 	 	 	 
	Remedies

	 	 	16	 
	     SECTION 5.1. Remedies.

	 	 	16	 
	     SECTION 5.2. Limitation of Suits.

	 	 	17	 
	     SECTION 5.3. Unconditional Rights of Bondholders To Receive Principal and Interest.

	 	 	17	 
	     SECTION 5.4. Restoration of Rights and Remedies.

	 	 	17	 
	     SECTION 5.5. Rights and Remedies Cumulative.

	 	 	18	 
	     SECTION 5.6. Delay or Omission Not a Waiver.

	 	 	18	 
	     SECTION 5.7. Control by Insurer and Bondholders.

	 	 	18	 
	     SECTION 5.8. Undertaking for Costs.

	 	 	18	 
	     SECTION 5.9. Waiver of Stay or Extension Laws.

	 	 	19	 
	     SECTION 5.10. Action on Bonds.

	 	 	19	 
	     SECTION 5.11. Performance and Enforcement of Certain Obligations.

	 	 	19	 
	     SECTION 5.12. Subrogation.

	 	 	19	 
	     SECTION 5.13. Preference Claims.

	 	 	20	 
	     SECTION 5.14. Bondholder Rights.

	 	 	20	 
	     SECTION 5.15. Insurer’s Rights Regarding Actions, Proceedings or Investigations.

	 	 	21	 
	ARTICLE VI
	 	 	 	 
	The Indenture Trustee

	 	 	22	 
	     SECTION 6.1. Duties of Indenture Trustee.

	 	 	22	 
	     SECTION 6.2. Rights of Indenture Trustee.

	 	 	23	 
	     SECTION 6.3. Individual Rights of Indenture Trustee.

	 	 	24	 
	     SECTION 6.4. Indenture Trustee’s Disclaimer.

	 	 	24	 
	     SECTION 6.5. Notice of Rapid Amortization Events and Events of Servicing Termination.

	 	 	24	 
	     SECTION 6.6. Reports by Indenture Trustee to Holders.

	 	 	25	 
	     SECTION 6.7. Compensation and Indemnity.

	 	 	25	 
	     SECTION 6.8. Replacement of Indenture Trustee.

	 	 	25	 
	     SECTION 6.9. Successor Indenture Trustee by Merger.

	 	 	27	 
	     SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.

	 	 	27	 
	     SECTION 6.11. Eligibility; Disqualification.

	 	 	28	 
	     SECTION 6.12. Preferential Collection of Claims Against Issuer.

	 	 	28	 
	     SECTION 6.13. Appointment and Powers.

	 	 	28	 
	     SECTION 6.14. Performance of Duties.

	 	 	29	 
	     SECTION 6.15. Limitation on Liability.

	 	 	29	 
	     SECTION 6.16. Reliance Upon Documents.

	 	 	29	 
	     SECTION 6.17. Representations and Warranties of the Indenture Trustee.

	 	 	29	 
	     SECTION 6.18. Waiver of Setoffs.

	 	 	30	 
	     SECTION 6.19. Control by the Controlling Party.

	 	 	30	 
	     SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession of Bonds.

	 	 	30	 
	     SECTION 6.21. Suits for Enforcement.

	 	 	30	 
	     SECTION 6.22. Mortgagor Claims.

	 	 	30	 
	ARTICLE VII
	 	 	 	 
	Bondholders’ Lists and Reports

	 	 	31	 






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	     SECTION 7.1. Issuer To Furnish To Indenture Trustee Names and Addresses of
Bondholders.

	 	 	31	 
	     SECTION 7.2. Preservation of Information; Communications to Bondholders.

	 	 	31	 
	     SECTION 7.3. Reports by Issuer.

	 	 	32	 
	     SECTION 7.4. Reports by Indenture Trustee.

	 	 	32	 
	ARTICLE VIII
	 	 	 	 
	Payments and Statements to Bondholders and Residual Bondholders;
Accounts, Disbursements and Releases

	 	 	32	 
	     SECTION 8.1. Collection of Money.

	 	 	32	 
	     SECTION 8.2. Release of Trust Property.

	 	 	33	 
	     SECTION 8.3. Establishment of Accounts.

	 	 	33	 
	     SECTION 8.4. The Policy.

	 	 	33	 
	     SECTION 8.5. Indenture Trustee’s Annual Statement of Compliance.

	 	 	34	 
	     SECTION 8.6. Indenture Trustee’s Assessment of Compliance and Attestation Report.

	 	 	34	 
	     SECTION 8.7. Priority of Distributions.

	 	 	35	 
	     SECTION 8.8. Statements to Bondholders.

	 	 	36	 
	     SECTION 8.9. Indenture Trustee Annual Certification.

	 	 	38	 
	     SECTION 8.10. Rights of Bondholders and Residual Certificateholders.

	 	 	38	 
	     SECTION 8.11. Opinion of Counsel.

	 	 	39	 
	ARTICLE IX
	 	 	 	 
	Supplemental Indentures

	 	 	39	 
	     SECTION 9.1. Supplemental Indentures Without Consent of Bondholders.

	 	 	39	 
	     SECTION 9.2. Supplemental Indentures with Consent of Bondholders.

	 	 	40	 
	     SECTION 9.3. Execution of Supplemental Indentures.

	 	 	41	 
	     SECTION 9.4. Effect of Supplemental Indenture.

	 	 	41	 
	     SECTION 9.5. Reference in Bonds to Conformity with Trust Indenture Act.

	 	 	42	 
	     SECTION 9.6. Reference in Bonds to Supplemental Indentures.

	 	 	42	 
	ARTICLE X
	 	 	 	 
	Redemption of Bonds

	 	 	42	 
	     SECTION 10.1. Redemption.

	 	 	42	 
	     SECTION 10.2. Surrender of Bonds.

	 	 	42	 
	     SECTION 10.3. Form of Redemption Notice.

	 	 	43	 
	     SECTION 10.4. Bonds Payable on Redemption Date.

	 	 	44	 
	ARTICLE XI
	 	 	 	 
	Miscellaneous

	 	 	44	 
	     SECTION 11.1. Compliance Certificates and Opinions, etc.

	 	 	44	 
	     SECTION 11.2. Form of Documents Delivered to Indenture Trustee.

	 	 	44	 
	     SECTION 11.3. Acts of Bondholders.

	 	 	45	 
	     SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer, Insurer and Rating Agencies.

	 	 	46	 
	     SECTION 11.5. Notices to Bondholders; Waiver.

	 	 	46	 
	     SECTION 11.6. Alternate Payment and Notice Provisions.

	 	 	47	 
	     SECTION 11.7. Conflict with Trust Indenture Act.

	 	 	47	 
	     SECTION 11.8. Effect of Headings and Table of Contents.

	 	 	47	 
	     SECTION 11.9. Successors and Assigns.

	 	 	47	 
	     SECTION 11.10. Separability.

	 	 	47	 
	     SECTION 11.11. Benefits of Indenture.

	 	 	48	 
	     SECTION 11.12. Legal Holidays.

	 	 	48	 
	     SECTION 11.13. GOVERNING LAW.

	 	 	48	 






iii









 






	 	 	 	 	 
	     SECTION 11.14. Counterparts.

	 	 	48	 
	     SECTION 11.15. Recording of Indenture.

	 	 	48	 
	     SECTION 11.16. Trust Obligation.

	 	 	48	 
	     SECTION 11.17. No Petition.

	 	 	49	 
	     SECTION 11.18. Inspection.

	 	 	49	 
	     SECTION 11.19. Limitation of Liability.

	 	 	49	 
	ARTICLE XII
	 	 	 	 
	Rapid Amortization Events

	 	 	50	 
	     SECTION 12.1. Rapid Amortization Events.

	 	 	50	 






ANNEX A  —                            Defined Terms




EXHIBIT A —                          Form of Class A Bond




EXHIBIT B —                          Form of Opinion of Counsel




EXHIBIT C —                          Form of Certification to be provided to the Manager by the Indenture Trustee





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     INDENTURE, dated as of ___, 200___(the “Indenture”), between SEQUOIA MORTGAGE TRUST
200_-_, a Delaware statutory trust (the “Issuer”), and [INDENTURE TRUSTEE], as trustee (the
“Indenture Trustee”).



     Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Issuer’s Collateralized Mortgage Bonds (the “Bonds”).



     As security for the payment and performance by the Issuer of its obligations under this
Indenture and the Bonds, the Issuer has agreed to assign the Collateral (as defined below) to the
Indenture Trustee on behalf of the Bondholders and the Insurer.



     [Insurer] (the “Insurer”) has issued and delivered a financial guaranty insurance policy for
the Bonds, dated the Closing Date (the “Policy”), pursuant to which the Insurer guarantees the
Insured Amounts and Preference Amount (as defined in the Policy).



     As an inducement to the Insurer to issue and deliver the Policy, the Issuer and the Insurer
have executed and delivered the Insurance and Indemnity Agreement, dated as of ___, 200___(as
amended from time to time, the “Insurance Agreement”), among the Insurer, the Issuer,
[___], [___] and the Indenture Trustee.



     As an additional inducement to the Insurer to issue the Policy, and as security for the
performance by the Issuer of the Insurer Issuer Secured Obligations and as security for the
performance by the Issuer of the Indenture Trustee Issuer Secured Obligations, the Issuer has
agreed to grant and assign the Collateral (as defined below) to the Indenture Trustee for the
benefit of the Issuer Secured Parties, as their respective interests may appear.



GRANTING CLAUSE




     The Issuer hereby Grants to the Indenture Trustee at the Closing Date, for the benefit of the
Issuer Secured Parties all of the Issuer’s right, title and interest in and to: (i) a pool (the
“Pool”) of certain adjustable rate home equity revolving credit line loans (“HELOC Mortgage Loans”)
(including any Additional Balances related thereto) and second lien closed-end loans (“Closed End
Mortgage Loans”) (the “Mortgage Loans”) in each case as set forth in Exhibit A to the Sale and
Servicing Agreement; (ii) the collections in respect of the Mortgage Loans after the Cut-Off Date;
(iii) property that secured a Mortgage Loan that has been acquired by foreclosure or deed in lieu
of foreclosure; (iv) rights of the Depositor under hazard insurance policies covering the Mortgaged
Properties; (v) amounts on deposit from time to time in the Collection Account; (vi) all rights
under the Purchase Agreement assigned to the Issuer (including all representations and warranties
of the Seller contained therein) and all rights of the Issuer under the Sale and Servicing
Agreement; (vii) the Policy (solely for the benefit of the Bondholders); and (viii) any and all
proceeds of the foregoing (the items set forth in (i) through (vii) above, the “Collateral”).



     The foregoing Grant is made in trust to the Indenture Trustee, for the benefit first, of the
Holders of the Bonds, and second, for the benefit of the Insurer. The Indenture Trustee hereby
acknowledges such Grant, accepts the trusts under this Indenture in accordance with the provisions
of this Indenture and agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of such parties, recognizing the priorities of their
respective interests may be adequately and effectively protected.



     The Indenture Trustee hereby agrees that it will hold the Policy in trust and that it will
hold any proceeds of any claim made upon the Policy solely for the use and the benefit of the
Bondholders in accordance with the terms hereof and the terms of the Policy.



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     Neither the Indenture Trustee nor the Issuer assumes or shall assume any obligation under any
Credit Line Agreement that provides for the funding of future Draws to the Mortgagor thereunder,
and neither the Indenture Trustee nor the Issuer shall be obligated or permitted to fund any such
future Draws.



ARTICLE I




Definitions and Incorporation by Reference.




     SECTION 1.1. Definitions.



     Except as otherwise specified herein, the following terms have the respective meanings set
forth in Annex A to this Indenture.



     SECTION 1.2. Incorporation by Reference of the Trust Indenture Act.



     Whenever this Indenture refers to a provision of the Trust Indenture Act (“TIA”), the
provision is incorporated by reference in and made a part of this Indenture. The following TIA
terms used in this Indenture have the following meanings:



     “Commission” means the Securities and Exchange Commission.



     “Indenture securities” means the Bonds.



     “Indenture security holder” means a Holder of a Bond.



     “Indenture to be qualified” means this Indenture.



     “Indenture Trustee” or “institutional trustee” means the Indenture Trustee.



     “Obligor” on the indenture securities means the Issuer.



     All other TIA terms used in this Indenture that are defined by the TIA, or defined by
Commission rule have the meaning assigned to them by such definitions.



     SECTION 1.3. Rules of Construction.



     Unless the context otherwise requires:



     (i) a term has the meaning assigned to it;



     (ii) n accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect from time to
time;



     (iii) or” is not exclusive;



     (iv) including” means including without limitation; and



     (v) words in the singular include the plural and words in the plural include the
singular.



     SECTION 1.4. Action by or Consent of Bondholders and Residual Certificateholders.



     Whenever any provision of this Indenture refers to action to be taken, or consented to, by
Bondholders or Residual Certificateholders, such provision shall be deemed to refer to the
Bondholder or Residual Certificateholder, as the case may be, of record as of the Record Date
immediately preceding the



2









 







date on which such action is to be taken, or consent given, by Bondholders or Residual
Certificateholders. Solely for the purposes of any action to be taken, or consented to, by
Bondholders or Residual Certificateholders, any Bond or Residual Certificate registered in the name
of [Servicer] or any Affiliate thereof shall be deemed not to be outstanding; provided, however,
that, solely for the purpose of determining whether the Indenture Trustee or the Owner Trustee is
entitled to rely upon any such action or consent, only Bonds or Residual Certificates which the
Owner Trustee or the Indenture Trustee, respectively, knows to be so owned shall be so disregarded.



     SECTION 1.5. Conflict with TIA.



     If any provision hereof limits, qualifies or conflicts with a provision of the TIA that is
required under the TIA to be part of and govern this Indenture, the latter provision shall control
and all provisions required by the TIA are hereby incorporated by reference. If any provision of
this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded,
the latter provisions shall be deemed to apply to this Indenture as so modified or to be excluded,
as the case may be.



ARTICLE II




The Bonds




     SECTION 2.1. Form.



     The Class A Bonds, together with the Indenture Trustee’s certificate of authentication, shall
be in substantially the form set forth in Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by this Indenture and
may have such letters, numbers or other marks of identification and such legends or endorsements
placed thereon as may, consistently herewith, be determined by the officers executing such Bonds,
as evidenced by their execution of the Bonds. Any portion of the text of any Bonds may be set forth
on the reverse thereof, with an appropriate reference thereto on the face of the Bond.



     Each Bond shall be dated the date of its authentication. The terms of the Bonds set forth in
Exhibit A are part of the terms of this Indenture.



     SECTION 2.2. Execution, Authentication and Delivery.



     The Bonds shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Bonds may be original or facsimile.



     Bonds bearing the original or facsimile signature of individuals who were at any time
Authorized Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and delivery of such Bonds
or did not hold such offices at the date of such Bonds.



     The Indenture Trustee shall authenticate and deliver Class A Bonds for original issue in the
aggregate principal amount of $___. The Class A Bonds outstanding at any time may not
exceed such amounts.



     Each Bond shall be dated the date of its authentication. The Bonds shall be issuable as
registered Bonds in the minimum denomination of $1,000 and in integral multiples of $1,000 in
excess thereof.



     No Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for
any purpose, unless there appears attached to such Bond a certificate of authentication
substantially in the form provided for herein executed by the Indenture Trustee by the manual
signature of one of its



3









 







authorized signatories, and such certificate attached to any Bonds shall be conclusive
evidence, and the only evidence, that such Bonds have been duly authenticated and delivered
hereunder. Subject to Section 2.11, the Bonds shall be Book Entry Bonds.



     SECTION 2.3. Registration; Registration of Transfer and Exchange.



     The Issuer shall cause to be kept a register (the “Bond Register”) in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Bonds
and the registration of transfers of Bonds. The Indenture Trustee shall be “Bond Registrar” for
the purpose of registering Bonds and transfers of Bonds as herein provided. Upon any resignation
of any Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make
such an appointment, assume the duties of Bond Registrar.



     If a Person other than the Indenture Trustee is appointed by the Issuer as Bond Registrar, the
Issuer will give the Indenture Trustee and the Insurer prompt written notice of the appointment of
such Bond Registrar and of the location, and any change in the location, of the Bond Register, and
the Indenture Trustee and the Insurer shall have the right to inspect the Bond



     Register at all reasonable times and to obtain copies thereof. The Indenture Trustee shall
have the right to rely upon a certificate executed on behalf of the Bond Registrar by an Authorized
Officer thereof as to the names and addresses of the Holders of the Bonds and the principal amounts
and number of such Bonds.



     Upon surrender for registration or transfer of any Bond at the office or agency of the Issuer
to be maintained as provided in Section 3.2, and if the requirements of Section 8-401(1) of the UCC
are met, the Issuer shall execute or cause the Indenture Trustee to authenticate one or more new
Bonds, in any authorized denominations, of the same class and a like aggregate principal amount. A
Bondholder may also obtain from the Indenture Trustee, in the name of the designated transferee or
transferees one or more new Bonds, in any authorized denominations, of the same class and a like
aggregate principal amount. Such requirements shall not be deemed to create a duty in the
Indenture Trustee to monitor the compliance by the Issuer with Section 8-401 of the UCC.



     At the option of the Holder, Bonds may be exchanged for other Bonds in any authorized
denominations, of the same class and a like aggregate principal amount, upon surrender of the Bonds
to be exchanged at such office or agency. Whenever any Bonds are so surrendered for exchange, and
if the requirements of Section 8-401(1) of the UCC are met, the Issuer shall execute and upon its
request the Indenture Trustee shall authenticate the Bonds which the Bondholder making the exchange
is entitled to receive. Such requirements shall not be deemed to create a duty in the Indenture
Trustee to monitor the compliance by the Issuer with Section 8-401 of the UCC.



     All Bonds issued upon any registration of transfer or exchange of Bonds shall be the valid
obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Bonds surrendered upon such registration of transfer or exchange.



     Every Bond presented or surrendered for registration of transfer or exchange shall be (i) duly
endorsed by, or be accompanied by a written instrument of transfer in the form attached to Exhibit
A, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with
such signature guaranteed by an “eligible guarantor institution” meeting the requirements of the
Bond Registrar all in accordance with the Exchange Act, and (ii) accompanied by such other
documents as the Bond Registrar may require.



     No service charge shall be made to a Holder for any registration of transfer or exchange of
Bonds, but the Bond Registrar may require payment of a sum sufficient to cover any tax or other
governmental



4









 







charge that may be imposed in connection with any registration of transfer or exchange of
Bonds, other than exchanges pursuant to Section 2.4 or 9.6 not involving any transfer.



     The Bond Registrar shall not register the transfer of a Definitive Bond unless the Indenture
Trustee has received a representation letter (in form and substance satisfactory to the Indenture
Trustee) from the prospective transferee to the effect that either (a) such transferee is not an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA or a plan (as defined in Section 4975(e)(1) of the Code) that is subject to
Section 4975 of the Code (each, a “Benefit Plan”) and is not acting on behalf of or investing the
assets of a Benefit Plan or (b) the acquisition and continued holding of such Bond by the
transferee will be covered by a U.S. Department of Labor prohibited transaction class exemption.
Each Bond Owner, by acceptance of a beneficial interest in a Book-Entry Bond, will be deemed to
make one of the foregoing representations.



     SECTION 2.4. Mutilated, Destroyed, Lost or Stolen Bonds.



     If (i) any mutilated Bond is surrendered to the Bond Registrar, or the Bond Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any Bond, and (ii) there is
delivered to the Indenture Trustee and the Insurer such security or indemnity as may be required by
it to hold the Issuer, the Indenture Trustee and the Insurer harmless, then, in the absence of
notice to the Issuer, the Bond Registrar or the Indenture Trustee that such Bond has been acquired
by a bona fide purchaser, and provided that the requirements of Section 8-405 of the UCC are met,
the Issuer shall execute and upon its request the Indenture Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a replacement
Bond (such requirement shall not be deemed to create a duty in the Indenture Trustee to monitor the
compliance by the Issuer with Section 8-405); provided, however, that if any such destroyed, lost
or stolen Bond, but not a mutilated Bond, shall have become or within seven days shall be due and
payable, or shall have been called for redemption, the Issuer may, instead of issuing a replacement
Bond, direct the Indenture Trustee, in writing, to pay such destroyed, lost or stolen Bond when so
due or payable or upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Bond or payment of a destroyed, lost or stolen Bond pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Bond in lieu of which such replacement
Bond was issued presents for payment such original Bond, the Issuer, the Indenture Trustee and the
Insurer shall be entitled to recover such replacement Bond (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Bond from such Person to whom such
replacement Bond was delivered or any assignee of such Person, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer, the Indenture Trustee or the Insurer in
connection therewith.



     Upon the issuance of any replacement Bond under this Section, the Issuer may require the
payment by the Holder of such Bond of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee) connected therewith.



     Every replacement Bond issued pursuant to this Section in replacement of any mutilated,
destroyed, lost or stolen Bond shall constitute an original additional contractual obligation of
the Issuer, whether or not the mutilated, destroyed, lost or stolen Bond shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued hereunder.



     The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Bonds.



5









 





     SECTION 2.5. Persons Deemed Owners.



     Prior to due presentment for registration of transfer of any Bond, the Issuer, the Indenture
Trustee and the Insurer and any agent of the Issuer, the Indenture Trustee and the Insurer may
treat the Person in whose name any Bond is registered (as of the Record Date) as the owner of such
Bond for the purpose of receiving payments of principal of and interest, if any, on such Bond and
for all other purposes whatsoever, whether or not such Bond be overdue, and none of the Issuer, the
Insurer, the Indenture Trustee nor any agent of the Issuer, the Insurer or the Indenture Trustee
shall be affected by notice to the contrary.



SECTION 2.6. Payment of Principal and Interest; Defaulted Interest.




     (a) The Bonds shall accrue interest as provided herein, and such amount shall be payable on
each Payment Date as specified herein. Any installment of interest or principal, if any, payable
on any Bond which is punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Bond (or one or more Predecessor Bonds) is
registered on the Record Date, by check mailed first-class, postage prepaid, to such Person’s
address as it appears on the Bond Register on such Record Date, except that, unless Definitive
Bonds have been issued pursuant to Section 2.11, with respect to Bonds registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment will be made by wire transfer in immediately available funds to the account designated by
such nominee and except for the final installment of principal payable with respect to such Bond on
a Payment Date or on the Final Scheduled Payment Date (and except for the Redemption Price for any
Bond called for redemption pursuant to Section 10.1) which shall be payable as provided below. The
funds represented by any such checks returned undelivered shall be held in accordance with Section
3.3.



     (b) Upon written notice from the Issuer, the Indenture Trustee shall notify the Person in
whose name a Bond is registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of and interest on such
Bond will be paid. Such notice shall be mailed or transmitted by facsimile prior to such final
Payment Date and shall specify that such final installment will be payable only upon presentation
and surrender of such Bond and shall specify the place where such Bond may be presented and
surrendered for payment of such installment. Notices in connection with redemptions of Bonds shall
be mailed to Bondholders as provided in Section 10.2.



     (c) If the Issuer defaults in a payment of interest on the Bonds, the Issuer shall pay
defaulted interest (plus interest on such defaulted interest to the extent lawful) at the
applicable Bond Rate to the extent lawful. The Issuer may pay such defaulted interest to the
Persons who are Bondholders on a subsequent special Record Date, which date shall be at least five
Business Days prior to the Payment Date. The Issuer shall fix or cause to be fixed any such
special Record Date and Payment Date, and, at least 15 days before any such special Record Date,
the Issuer shall mail to each Bondholder, the Insurer and the Indenture Trustee a notice that
states the special Record Date, the Payment Date and the amount of defaulted interest to be paid.



     (d) Promptly following the date on which all principal of and interest on the Bonds has been
paid in full and the Bonds have been surrendered to the Indenture Trustee, the Indenture Trustee
shall, upon written notice from the Servicer of the amounts, if any, that the Insurer has paid in
respect of the Bonds under the Policy or otherwise which has not been reimbursed to the Insurer,
deliver such surrendered Bonds to the Insurer to the extent not previously canceled or destroyed.



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     SECTION 2.7. Cancellation.



     Subject to Section 2.6(d), all Bonds surrendered for payment, registration of transfer,
exchange or redemption shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.6(d), the Issuer may at any time deliver to the Indenture Trustee for
cancellation any Bonds previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Bonds so delivered shall be promptly canceled by the
Indenture Trustee. No Bonds shall be authenticated in lieu of or in exchange for any Bonds canceled
as provided in this Section, except as expressly permitted by this Indenture. Subject to Section
2.6(d), all canceled Bonds may be held or disposed of by the Indenture Trustee in accordance with
its standard retention or disposal policy as in effect at the time unless the Issuer shall direct
by an Issuer Order that they be returned to it; provided that such Issuer Order is timely and the
Bonds have not been previously disposed of by the Indenture Trustee.



     SECTION 2.8. Release of Collateral.



     The Indenture Trustee shall, on or after the Termination Date, release any remaining portion
of the Trust Property from the lien created by this Indenture and deposit in the Collection Account
any funds then on deposit in any other Account. The Indenture Trustee shall release property from
the lien created by this Indenture pursuant to this Section 2.8 only upon receipt of an Issuer
Request by it accompanied by an Officer’s Certificate and an Opinion of Counsel (which shall also
be addressed to the Insurer) and (if required by the TIA) Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.



     SECTION 2.9. Book-Entry Bonds.



     The Bonds, upon original issuance, will be issued in the form of typewritten Bonds
representing the Book-Entry Bonds, to be delivered to The Depository Trust Company or its
custodian, the initial Clearing Agency, by, or on behalf of, the Issuer. Such Bonds shall initially
be registered on the Bond Register in the name of Cede & Co., the nominee of the initial Clearing
Agency, and no Bond Owner will receive a Definitive Bond representing such Bond Owner’s interest in
such Bond, except as provided in Section 2.11. Unless and until definitive, fully registered Bonds
(the “Definitive Bonds”) have been issued to Bond Owners pursuant to Section 2.11:



     (i) the provisions of this Section shall be in full force and effect;



     (ii) the Bond Registrar and the Indenture Trustee shall be entitled to deal with the
Clearing Agency for all purposes of this Indenture (including the payment of principal
of and interest on the Bonds and the giving of instructions or directions hereunder) as
the sole Holder of the Bonds, and shall have no obligation to the Bond Owners;



     (iii) to the extent that the provisions of this Section conflict with any other
provisions of this Indenture, the provisions of this Section shall control;



     (iv) the rights of Bond Owners shall be exercised only through the Clearing Agency
and shall be limited to those established by law and agreements between such Bond
Owners and the Clearing Agency and/or the Clearing Agency Participants. Unless and
until Definitive Bonds are issued pursuant to Section 2.11, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Bonds to such Clearing Agency
Participants;



     (v) whenever this Indenture requires or permits actions to be taken based upon
instructions or directions of Holders of Bonds evidencing a specified percentage of the
Outstanding



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Amount of the Bonds, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such effect from
Bond Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the Bonds and
has delivered such instructions to the Indenture Trustee; and




     (vi) Bond Owners may receive copies of any reports sent to Bondholders pursuant to
this Indenture, upon written request, together with a certification that they are Bond
Owners and payment of reproduction and postage expenses associated with the
distribution of such reports, from the Indenture Trustee at the Corporate Trust Office.



     SECTION 2.10. Notices to Clearing Agency.



     Whenever a notice or other communication to the Bondholders is required under this Indenture,
unless and until Definitive Bonds shall have been issued to Bond Owners pursuant to Section 2.11,
the Indenture Trustee shall give all such notices and communications specified herein to be given
to Holders of the Bonds to the Clearing Agency, and shall have no obligation to the Bond Owners.



     SECTION 2.11. Definitive Bonds.



     If (i) the Servicer advises the Indenture Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities with respect to the Bonds, and
the Servicer is unable to locate a qualified successor, (ii) the Servicer at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing
Agency or (iii) after the occurrence of a Rapid Amortization Event, Bond Owners representing
beneficial interests aggregating at least a majority of the Outstanding Amount of the Bonds advise
the Indenture Trustee through the Clearing Agency in writing that the continuation of a book entry
system through the Clearing Agency is no longer in the best interests of the Bond Owners, then the
Clearing Agency shall notify all Bond Owners and the Indenture Trustee of the occurrence of any
such event and of the availability of Definitive Bonds to Bond Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Bond or Bonds representing the Book-Entry
Bonds by the Clearing Agency, accompanied by registration instructions, the Issuer shall execute
and the Indenture Trustee shall authenticate the Definitive Bonds in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Bond Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Bonds,
the Indenture Trustee shall recognize the Holders of the Definitive Bonds as Bondholders.



ARTICLE III




Covenants; Representations and Warranties of the Issuer




     SECTION 3.1. Payment of Principal and Interest.



     The Issuer will duly and punctually pay the principal of and interest on the Bonds in
accordance with the terms of the Bonds and this Indenture. The Bonds shall be debt obligations of
the Trust and shall be limited in right of payment to amounts available from the Trust as provided
in this Indenture and the Trust shall not otherwise be liable for payments on the Bonds. No person
shall be personally liable for any amounts payable under the Bonds. Amounts properly withheld under
the Code by any Person from a payment to any Bondholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Bondholder for all purposes of this Indenture.



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     SECTION 3.2. Maintenance of Office or Agency.



     The Issuer will maintain in [___], an office or agency where Bonds may be surrendered
for registration, transfer or exchange of the Bonds, and where notices and demands to or upon the
Issuer in respect of the Bonds and this Indenture may be served. The Issuer hereby initially
appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer will
give prompt written notice to the Indenture Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and
demands.



     SECTION 3.3. Money for Payments to be Held in Trust.



     The Issuer will cause each Bond Paying Agent other than the Indenture Trustee to execute and
deliver to the Indenture Trustee and the Insurer an instrument in which such Bond Paying Agent
shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Bond Paying Agent, it
hereby so agrees), subject to the provisions of this Section, that such Bond Paying Agent will:



     (i) hold all sums held by it for the payment of amounts due with respect to the
Bonds in trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and pay such sums to
such Persons as herein provided;



     (ii) give the Indenture Trustee and the Insurer written notice of any default by the
Issuer (or any other obligor upon the Bonds) of which it has actual knowledge in the
making of any payment required to be made with respect to the Bonds;



     (iii) at any time during the continuance of any such default, upon the written
request of the Indenture Trustee with the consent of the Insurer, if the Insurer is the
Controlling Party, forthwith pay to the Indenture Trustee all sums so held in trust by
such Bond Paying Agent;



     (iv) immediately resign as a Bond Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of Bonds if at any time it ceases
to meet the standards required to be met by a Bond Paying Agent at the time of its
appointment; and



     (v) comply with all requirements of the Code with respect to the withholding from
any payments made by it on any Bonds of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in connection
therewith.



     The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, by Issuer Order direct any Bond Paying Agent to pay to the
Indenture Trustee all sums held in trust by such Bond Paying Agent, such sums to be held by the
Indenture Trustee upon the same trusts as those upon which the sums were held by such Bond Paying
Agent; and upon such a payment by any Bond Paying Agent to the Indenture Trustee, such Bond Paying
Agent shall be released from all further liability with respect to such money.



     Subject to applicable laws with respect to the escheat of funds, any money held by the
Indenture Trustee or any Bond Paying Agent in trust for the payment of any amount due with respect
to any Bond and remaining unclaimed for two years after such amount has become due and payable
shall be discharged from such trust and be paid to the Issuer, with the prior consent of the
Insurer, on Issuer Request, and shall be deposited by the Indenture Trustee in the Collection
Account; and the Holder of



9









 







such Bond shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of
the Indenture Trustee, the Insurer or such Bond Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that if such money or any portion thereof had been previously
deposited by the Insurer with the Indenture Trustee for the payment of principal or interest on the
Bonds, to the extent any amounts are owing to the Insurer, such amounts shall be paid promptly to
the Insurer upon receipt of a written request by the Insurer to such effect.



     SECTION 3.4. Existence.



     The Issuer will keep in full effect its existence, rights and franchises as a statutory trust
under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of America, in which
case the Issuer will keep in full effect its existence, rights and franchises under the laws of
such other jurisdiction) and will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Trust Property, the Bonds, and each other instrument or
agreement included in the Trust Property.



     SECTION 3.5. Protection of Trust Property.



     The Issuer intends the security interest granted pursuant to this Indenture in favor of the
Issuer Secured Parties to be prior to all other liens in respect of the Trust Property and the
Issuer shall take all actions necessary to obtain and maintain, in favor of the Indenture Trustee,
for the benefit of the Issuer Secured Parties, a first lien on and a first priority, perfected
security interest in the Trust Property. The Issuer will from time to time prepare (or shall cause
to be prepared), execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:



     (i) grant more effectively all or any portion of the Trust Property;



     (ii) maintain or preserve the lien and security interest (and the priority thereof)
in favor of the Indenture Trustee for the benefit of the Issuer Secured Parties created
by this Indenture or carry out more effectively the purposes hereof;



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



     (iv) enforce any of the Collateral;



     (v) preserve and defend title to the Trust Property and the rights of the Indenture
Trustee in such Trust Property against the claims of all persons and parties; and



     (vi) pay all taxes or assessments levied or assessed upon the Trust Property when
due.



     The Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute
any financing statement, continuation statement or other instrument required pursuant to this
Section; provided that, such designation shall not be deemed to create a duty in the Indenture
Trustee to monitor the compliance of the Issuer with respect to its duties under this Section 3.5
or the adequacy of any financing statement, continuation statement or other instrument prepared by
the Issuer.



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     SECTION 3.6. Opinions as to Trust Property.



     (a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee and the Insurer an
Opinion of Counsel in the form of Exhibit B hereto, stating that, in the opinion of such counsel,
such actions have been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as are necessary to
perfect and make effective the first priority lien and security interest in favor of the Indenture
Trustee, for the benefit of the Issuer Secured Parties, created by this Indenture, subject to the
exceptions and qualifications set forth in such Opinion of Counsel.



     (b) Within 90 days after the beginning of each calendar year, beginning in 200_, the Issuer
shall furnish to the Indenture Trustee and the Insurer, an Opinion of Counsel either stating that,
in the opinion of such counsel, such actions have been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any financing statements and
continuation statements as are necessary to maintain the lien and security interest created by this
Indenture and reciting the details of such action or stating that in the opinion of such counsel,
no such action is necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the execution and filing of
any financing statements and continuation statements that will, in the opinion of such counsel, be
required to maintain the lien and security interest of this Indenture.



     SECTION 3.7. Performance of Obligations; Servicing of Mortgage Loans.



     (a) The Issuer will not take any action and will use its best efforts not to permit any action
to be taken by others that would release any Person from any of such Person’s material covenants or
obligations under any instrument or agreement included in the Trust Property or that would result
in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity
or effectiveness of, any such instrument or agreement, except as ordered by any bankruptcy or other
court or as expressly provided in this Indenture, the Basic Documents or such other instrument or
agreement.



     (b) The Issuer may contract with other Persons acceptable to the Insurer to assist it in
performing its duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee and the Insurer in an Officer’s Certificate of the Issuer shall
be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer
to assist the Issuer in performing its duties under this Indenture.



     (c) The Issuer will punctually perform and observe all of its obligations and agreements
contained in this Indenture, the Basic Documents and in the instruments and agreements included in
the Trust Property, including, but not limited to, preparing (or causing to be prepared) and filing
(or causing to be filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in accordance with and
within the time periods provided for herein and therein. Except as otherwise expressly provided
therein, the Issuer shall not waive, amend, modify, supplement or terminate any Basic Document or
any provision thereof without the consent of the Indenture Trustee and the Insurer.



     (d) If a Responsible Officer of the Owner Trustee shall have actual knowledge of the
occurrence of an Event of Servicing Termination under the Sale and Servicing Agreement, the Issuer
shall promptly notify the Indenture Trustee, the Insurer and the Rating Agencies thereof in
accordance with Section 11.4, and shall specify in such notice the action, if any, the Issuer is
taking at the direction of the Controlling Party in respect of such default. If an Event of
Servicing Termination shall arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement



11









 







with respect to the Mortgage Loans, the Issuer shall take all reasonable steps available to it
to remedy such failure.



     (e) The Issuer agrees that it will not waive timely performance or observance by the Servicer
or the Depositor of their respective duties under the Basic Documents (x) without the prior consent
of the Insurer or (y) if the effect thereof would adversely affect the Holders of the Bonds.



     SECTION 3.8. Negative Covenants.



     So long as any Bonds are Outstanding, the Issuer shall not:




	 	(i)	 	except as expressly permitted by this Indenture or the Basic Documents, sell,
transfer, exchange or otherwise dispose of any of the properties or assets of the
Issuer, including those included in the Trust Property (but excluding any Mortgage
Loans removed from the Pool pursuant to Section 2.07 of the Sale and Servicing
Agreement), without the consent of the Insurer (which consent may not be unreasonably
withheld) provided, that if an Insurer Default has occurred and is continuing the
Bondholders representing 66-2/3% of the Outstanding Amount may direct the Indenture
Trustee to sell or dispose of the Trust Property.
	 
	 	(ii)	 	claim any credit on, or make any deduction from the principal or interest
payable in respect of, the Bonds (other than amounts properly withheld from such
payments under the Code) or assert any claim against any present or former Bondholder
by reason of the payment of the taxes levied or assessed upon any part of the Trust
Property; or (iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien in favor of the Indenture Trustee created by this
Indenture to be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with respect to the
Bonds under this Indenture except as may be expressly permitted hereby, (B) permit any
lien, charge, excise, claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or otherwise arise upon
or burden the Trust Property or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics’ liens and other liens that arise by
operation of law, in each case on a Mortgaged Property and arising solely as a result
of an action or omission of the related obligor), (C) permit the lien of this Indenture
not to constitute a valid first priority (other than with respect to any such tax,
mechanics’ or other lien) security interest in the Trust Property or (D) amend, modify
or fail to comply with the provisions of the Basic Documents without the prior written
consent of the Insurer, which consent may not be unreasonably withheld.





SECTION 3.9. Annual Statement as to Compliance.




     The Issuer will deliver to the Indenture Trustee and the Insurer, within 90 days after the end
of each fiscal year of the Issuer (commencing with the fiscal year ended ___, 200_) and
otherwise in compliance with the requirements of TIA Section 314(a)(4), an Officer’s Certificate
stating, as to the Authorized Officer signing such Officer’s Certificate, that




	 	(i)	 	a review of the activities of the Issuer during such year and of performance
under this Indenture has been made under such Authorized Officer’s supervision; and
	 
	 	(ii)	 	to the best of such Authorized Officer’s knowledge, based on such review, the
Issuer has complied with all conditions and covenants under this Indenture throughout
such year, or, if there has been a default in the compliance of any such condition or
covenant,




12









 






	 	 	 	specifying each such default known to such Authorized Officer and the nature and
status thereof.;





     SECTION 3.10. Issuer May Not Consolidate or Transfer Assets.



     (a) The Issuer may not consolidate or merge with or into any other Person.



     (b) Except as otherwise provided in the Sale and Servicing Agreement, the Issuer shall not
convey or transfer all or substantially all of its properties or assets, including those included
in the Trust Property, to any Person.



     SECTION 3.11. No Other Business.



     The Issuer shall not engage in any business other than purchasing, owning, selling and
managing the Mortgage Loans and other assets in the manner contemplated by this Indenture and the
Basic Documents and activities incidental thereto.



     SECTION 3.12. No Borrowing.



     The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any Indebtedness or any certificates of beneficial interest except for (i) the
Residual Certificates, (ii) the Bonds, (iii) obligations owing from time to time to the Insurer
under the Insurance Agreement and (iv) any other indebtedness permitted by or arising under the
Basic Documents, except that the Issuer shall not incur any indebtedness that would cause it, or
any portion thereof, to be treated as a “taxable mortgage pool” under Section 7701 of the Code. The
proceeds of the Bonds and the Residual Certificates shall be used exclusively to fund the Issuer’s
purchase of the Mortgage Loans and the other assets specified in the Sale and Servicing Agreement
and to pay the Issuer’s organizational, transactional and start-up expenses.



     SECTION 3.13. Servicer’s Obligations.



     The Issuer shall cause the Servicer to comply with Sections 3.09, 3.10 and 4.01 of the Sale
and Servicing Agreement and Section 8.6 herein.



     SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.



     Except as contemplated by the Sale and Servicing Agreement or this Indenture, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument
having the effect of assuring another’s payment or performance on any obligation or capability of
so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in
connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations, assets or securities of, or any other
interest in, or make any capital contribution to, any other Person.



     SECTION 3.15. Capital Expenditures.



     The Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for
capital assets (either realty or personality).



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     SECTION 3.16. Compliance with Laws.



     The Issuer shall comply with the requirements of all applicable laws, the non-compliance with
which would, individually or in the aggregate, materially and adversely affect the ability of the
Issuer to perform its obligations under the Bonds, this Indenture or any Basic Document.



     SECTION 3.17. Restricted Payments.



     The Issuer shall not, directly or indirectly, (i) pay any dividend or make any distribution
(by reduction of capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or to the Servicer,
(ii) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest
or security or (iii) set aside or otherwise segregate any amounts for any such purpose; provided,
however, that the Issuer may make, or cause to be made, distributions to the Servicer, the Owner
Trustee, the Insurer, the Indenture Trustee and the Bondholders as permitted by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement, this Indenture, or
Trust Agreement. The Issuer will not, directly or indirectly, make payments to or distributions
from the Collection Account except in accordance with this Indenture and the Basic Documents.



     SECTION 3.18. Notice of Rapid Amortization Events and Events of Servicing Termination.



     Upon a Responsible Officer of the Owner Trustee having actual knowledge thereof, the Issuer
agrees to give the Indenture Trustee, the Insurer and the Rating Agencies prompt written notice of
each Rapid Amortization Event hereunder or Event of Servicing Termination under the Sale and
Servicing Agreement.



     SECTION 3.19. Further Instruments and Acts.



     Upon request of the Indenture Trustee or the Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.



     SECTION 3.20. Amendments of Sale and Servicing Agreement and Trust Agreement.



     The Issuer shall not agree to any amendment to Section 9.01 of the Sale and Servicing
Agreement or Section 12.1 of the Trust Agreement to eliminate the requirements thereunder that the
Indenture Trustee, the Insurer or the Holders of the Bonds consent to amendments thereto as
provided therein.



     SECTION 3.21. Income Tax Characterization.



     For purposes of federal income, state and local income and franchise and any other income
taxes, the Issuer and the Bondholders will treat the Bonds as indebtedness of the Depositor and
hereby instruct the Indenture Trustee to treat the Bonds as indebtedness of the Depositor for
federal and state tax reporting purposes.



     SECTION 3.22. Representations and Warranties of the Issuer Regarding the Lien of the Indenture
Trustee.



     With respect to the Collateral, the Issuer represents and warrants that, as of the Closing
Date:




	 	(i)	 	This Indenture creates a valid and continuing security interest (as such term
is defined in the UCC) in the Collateral in favor of the Indenture Trustee, which
security interest is






14









 







	 	 	 	prior to all other liens, and is enforceable as such against creditors of and purchasers from the Issuer;
	 
	 	(ii)	 	The Mortgage Notes constitute “instruments” within the meaning of the UCC;
	 
	 	(iii)	 	The Issuer owns or will own and has or will have good title to the Collateral
free and clear of any lien, claim or encumbrance of any Person;
	 
	 	(iv)	 	The Issuer has or will have received all consents and approvals required by the
terms of the Mortgage Loans to the pledge of the Mortgage Loans hereunder to the
Indenture Trustee;
	 
	 	(v)	 	All original executed copies of each Mortgage Loan have been or will be delivered
to the Custodian or the Indenture Trustee;
	 
	 	(vi)	 	The Issuer has or will have received a written acknowledgement from the Custodian
or the Indenture Trustee that the Custodian or Indenture Trustee is holding the Mortgage
Loans solely on behalf and for the benefit of the Indenture Trustee on behalf of the
Bondholders;
	 
	 	(vii)	 	Other than the security interest granted to the Indenture Trustee pursuant to
this Indenture, the Issuer has not pledged, assigned, sold, granted a security interest
in, or otherwise conveyed any of the Collateral. The Issuer has not authorized the
filing of and is not aware of any financing statement against the Issuer that includes a
description of any of the Collateral other than a financing statement relating to the
security interest granted to the Indenture Trustee hereunder or that has been
terminated. The Issuer is not aware of any judgment or tax lien filings against the
Issuer; and
	 
	 	(viii)	 	None of the Mortgage Notes has or will have any marks or notations indicating that it
has been pledged, assigned or otherwise conveyed to any Person other than the Indenture
Trustee.





ARTICLE IV




Satisfaction and Discharge




     SECTION 4.1. Satisfaction and Discharge of Indenture.



     Upon payment in full to the Insurer of amounts due to the Insurer and on the Bonds, this
Indenture shall cease to be of further effect with respect to the Bonds except as to (i) the rights
of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen
Bonds, (iii) the rights of Bondholders to receive payments of principal thereof and interest
thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12, 3.13, 3.20 and 3.21, (v) the rights,
obligations and immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee under Section 4.2)
and (vi) the rights of Bondholders and the Insurer as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the Bonds, when either




	 	(1)	 	all Bonds theretofore authenticated and delivered (other than (i) Bonds that have
been destroyed, lost or stolen and that have been replaced or paid as provided in
Section 4.5 of the Trust Agreement and (ii) Bonds for which payment money has
theretofore been




15









 






	 	 	 	deposited in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as provided in Section
3.3) have been delivered to the Indenture Trustee for cancellation and the Policy has
terminated and been returned to the Insurer for cancellation and all amounts owing to
the Insurer have been paid in full; or






	 	(2)	 	all Bonds not theretofore delivered to the Indenture Trustee for cancellation
have become due and payable, and






	 	(A)	 	the Issuer has irrevocably deposited or caused to be irrevocably
deposited with the Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to the date
such amounts are payable), in trust for such purpose, in an amount sufficient to
pay and discharge the entire indebtedness on the Bonds, in each case to the
extent not theretofore delivered to the Indenture Trustee for cancellation when
due on the Final Scheduled Payment Date or Redemption Date (if Bonds shall have
been called for redemption pursuant to Section 10.1), as the case may be;
	 
	 	(B)	 	the Issuer has paid or caused to be paid all Insurer Issuer Secured
Obligations and all Indenture Trustee Issuer Secured Obligations; and
	 
	 	(C)	 	the Issuer has delivered to the Indenture Trustee and the Insurer
an Officer’s Certificate, an Opinion of Counsel and, if required by the TIA, the
Indenture Trustee or the Insurer, an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements of Section
11.1(a) and each stating that all conditions precedent herein provided relating
to the satisfaction and discharge of this Indenture have been complied with.





     SECTION 4.2. Application of Trust Money.



     All monies deposited with the Indenture Trustee pursuant to Section 4.1 hereof shall be held
in trust and applied by it, in accordance with the provisions of the Bonds and this Indenture, to
the payment, either directly or through any Bond Paying Agent, as the Indenture Trustee may
determine, to the Holders of the particular Bonds for the payment or redemption of which such
monies have been deposited with the Indenture Trustee, of all sums due and to become due thereon
for principal and interest and to the Insurer for the payment of any amounts due to it under the
Basic Documents.



     SECTION 4.3. Repayment of Monies Held by Bond Paying Agent.



     In connection with the satisfaction and discharge of this Indenture with respect to the Bonds,
all monies then held by any Bond Paying Agent other than the Indenture Trustee under the provisions
of this Indenture with respect to such Bonds shall, upon demand of the Issuer, be paid to the
Indenture Trustee to be held and applied according to Section 3.3 and thereupon such Bond Paying
Agent shall be released from all further liability with respect to such monies.



ARTICLE V




Remedies




     SECTION 5.1. Remedies.



     If a Rapid Amortization Event as described in Article XII shall have occurred and be
continuing, the Bondholders shall be entitled on each Payment Date to an amount equal to the
Maximum Principal



16









 







Payment payable during such Rapid Amortization Period. The rights contained in
this Article V are in addition to any rights which the Bondholders possess pursuant to Article XII.



     SECTION 5.2. Limitation of Suits.



     No Holder of any Bond shall have any right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:




	 	(i)	 	such Holder has previously given written notice to the Indenture Trustee of a
continuing Rapid Amortization Event;
	 
	 	(ii)	 	the Holders of not less than 50% of the Outstanding Amount of the related Bonds
have made written request to the Indenture Trustee to institute such proceeding with
respect to the Bonds in respect of such Rapid Amortization Event in its own name as
Indenture Trustee hereunder;
	 
	 	(iii)	 	such Holder or Holders have offered to the Indenture Trustee indemnity
reasonably satisfactory to it against the costs, expenses and liabilities to be incurred
in complying with such request;
	 
	 	(iv)	 	the Indenture Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute such proceedings;
	 
	 	(v)	 	no direction inconsistent with such written request has been given to the
Indenture Trustee during such 60-day period by the Holders of a majority of the
Outstanding Amount of the Bonds; and
	 
	 	(vi)	 	an Insurer Default shall have occurred and be continuing;





it being understood and intended that no Holders of Bonds shall have any right in any manner
whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Bonds or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.




     In the event the Indenture Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of Bonds, each representing less than a majority of
the Outstanding Amount of the Bonds, the Indenture Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.



     SECTION 5.3. Unconditional Rights of Bondholders To Receive Principal and Interest.



     Notwithstanding any other provisions in this Indenture, the Holder of any Bond shall have the
right, which is absolute and unconditional, to receive payment of the principal of and interest, if
any, on such Bond on or after the respective due dates thereof expressed in such Bond or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired without the consent
of such Holder.



     SECTION 5.4. Restoration of Rights and Remedies.



     If the Indenture Trustee or any Bondholder has instituted any proceeding to enforce any right
or remedy under this Indenture and such proceeding has been discontinued or abandoned for any
reason, then and in every such case the Issuer, the Insurer, the Indenture Trustee and the
Bondholders shall,



17









 







subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Insurer and the Bondholders shall continue as though no such proceeding had
been instituted.



     SECTION 5.5. Rights and Remedies Cumulative.



     No right or remedy herein conferred upon or reserved to the Controlling Party or to the
related Bondholders is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.



     SECTION 5.6. Delay or Omission Not a Waiver.



     No delay or omission of the Indenture Trustee, the Insurer or any Holder of any Bond to
exercise any right or remedy accruing upon any Rapid Amortization Event shall impair any such right
or remedy or constitute a waiver of any such Rapid Amortization Event or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Indenture Trustee, the Insurer or
to the Bondholders may be exercised from time to time, and as often as may be deemed expedient, by
the Indenture Trustee, the Insurer or by the Bondholders, as the case may be.



     SECTION 5.7. Control by Insurer and Bondholders.



     The Insurer (or, if an Insurer Default shall have occurred and is continuing, Holders of a
majority of the Outstanding Amount of the related Bonds) shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the Indenture Trustee
pursuant to Section 12.1 hereof with respect to the Bonds or exercising any trust or power
conferred on the Indenture Trustee; provided that:




	 	(i)	 	such direction shall not be in conflict with any rule of law or with this
Indenture;
	 
	 	(ii)	 	the Indenture Trustee may take any other action deemed proper by the Indenture
Trustee that is not inconsistent with such direction;





provided, however, that, subject to Section 6.1, the Indenture Trustee need not take any action
that it determines might involve it in liability or might materially adversely affect the rights of
any Bondholders not consenting to such action.




     SECTION 5.8. Undertaking for Costs.



     All parties to this Indenture agree, and each Holder of any Bond by such Holder’s acceptance
thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit against the
Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable attorneys’ fees 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; but the provisions of this Section shall not
apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by the Insurer,
any Bondholder, or group of Bondholders with the prior written consent of the Insurer (so long as
no Insurer Default has occurred), in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Bonds or (c) any suit instituted by any Bondholder for the enforcement



18









 







of
the payment of principal of or interest on any Bond on or after the respective due dates expressed
in such Bond and in this Indenture (or, in the case of redemption, on or after the Redemption
Date).



     SECTION 5.9. Waiver of Stay or Extension Laws.



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



     SECTION 5.10. Action on Bonds.



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



     SECTION 5.11. Performance and Enforcement of Certain Obligations.



     (a) Promptly following a request from the Indenture Trustee (at the direction of the Insurer)
to do so and at the Servicer’s expense, the Issuer agrees to take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance by the Depositor
and the Servicer, as applicable, of each of their obligations to the Issuer under or in connection
with the Sale and Servicing Agreement in accordance with the terms thereof, and to exercise any and
all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the Depositor or the
Servicer thereunder and the institution of legal or administrative actions or proceedings to compel
or secure performance by the Depositor or the Servicer of each of their obligations under the Sale
and Servicing Agreement.



     (b) If a Rapid Amortization Event has occurred and is continuing, the Indenture Trustee, with
the consent of the Insurer, may, and, at the written direction of the Insurer (or, if (i) an
Insurer Default has occurred and is continuing or (ii) a Rapid Amortization Event described in
clause (g) of Section 12.1 has occurred and is continuing, the Holders of 66-2/3% of the
Outstanding Amount of the Bonds) shall, exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Depositor or the Servicer under or in connection with the Sale and
Servicing Agreement, including the right or power to take any action to compel or secure
performance or observance by the Depositor or the Servicer of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval, extension or
waiver under the Sale and Servicing Agreement, and any right of the Issuer to take such action
shall be suspended.



     SECTION 5.12. Subrogation.



     The Indenture Trustee shall receive as attorney-in-fact of each Bondholder any Insured Amounts
or Preference Amounts from the Insurer pursuant to the Policy. Any and all Insured Amounts and
Preference Amounts disbursed by the Indenture Trustee from claims made under the Policy shall not
be considered payment by the Issuer, and shall not discharge the obligations of the Issuer with
respect thereto. The Insurer shall, to the extent it makes any payment with respect to the Bonds,
become



19









 







subrogated to the rights of the recipient of such payments to the extent of such payments.
Subject to and conditioned upon any payment with respect to the Bonds by or on behalf of the
Insurer, the Indenture Trustee shall assign to the Insurer all rights to the payment of interest or
principal with respect to the Bonds which are then due for payment to the extent of all payments
made by the Insurer.



     SECTION 5.13. Preference Claims.



     (a) In the event that the Indenture Trustee has received a certified copy of an order of the
appropriate court that any Insured Amount on a Bond has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Indenture Trustee shall so notify the
Insurer, shall comply with the provisions of the Policy to obtain payment by the Insurer of such
avoided payment, and shall, at the time it provides notice to the Insurer, notify Holders of the
Bonds by mail that, in the event that any Bondholder’s payment is so recoverable, such Bondholder
will be entitled to payment pursuant to the terms of the Policy. The Indenture Trustee shall
furnish to the Insurer at its written request, the requested records it holds in its possession
evidencing the payments of principal of and interest on Bonds, if any, which have been made by the
Indenture Trustee and subsequently recovered from Bondholders and the dates on which such payments
were made. Pursuant to the terms of the Policy, the Insurer will make such payment on behalf of the
related Bondholder to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the final order of the court exercising jurisdiction on behalf of the Bondholders and not
to the Indenture Trustee, any Bondholder directly (unless such Bondholder has returned principal or
interest paid on the Bonds to such receiver or trustee in bankruptcy, in
which case the Insurer shall make such payment to the Indenture Trustee for payment to such
Bondholder in accordance with the terms of the Policy).



     (b) The Indenture Trustee shall promptly notify the Insurer of any proceeding or the
institution of any action (of which the Indenture Trustee has actual knowledge) seeking the
avoidance as a preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a “Preference Claim”) of any distribution made with respect to the
Bonds. Each Holder, by its purchase of Bonds, and the Indenture Trustee hereby agree that so long
as an Insurer Default shall not have occurred and be continuing, the Insurer may at any time during
the continuation of any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim, including, without limitation, (i) the direction of any appeal of any order
relating to any Preference Claim and (ii) the posting of any surety, supersedes or performance bond
pending any such appeal at the expense of the Insurer, but subject to reimbursement as provided in
the Insurance Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.12, the Insurer shall be subrogated to, and each Bondholder and the Indenture Trustee
hereby delegate and assign, to the fullest extent permitted by law, the rights of the Indenture
Trustee and each Bondholder in the conduct of any proceeding with respect to a Preference Claim,
including, without limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Preference Claim. All actions taken
under this Section 5.13(b) by the Indenture Trustee shall be taken in accordance with the terms of
the Policy.



     SECTION 5.14. Bondholder Rights.



     Each Bondholder by the acceptance of its Bond agrees that, so long as no Insurer Default has
occurred and is continuing, the Insurer shall be treated by the Issuer, the Seller, the Depositor,
the Servicer, the Owner Trustee and the Indenture Trustee as if the Insurer were the Holder of the
Bond for the purpose of the giving of any consent, the making of any direction or the exercise of
any voting or other control rights otherwise given to the Bondholder hereunder without any further
consent of the Bondholder. So long as no Insurer Default has occurred and is continuing, the
Bondholders may only exercise such rights with the consent of the Insurer.



20









 





     SECTION 5.15. Insurer’s Rights Regarding Actions, Proceedings or Investigations.



     Until all Bonds have been paid in full, all amounts owed to the Insurer have been paid in
full, the Insurance Agreement has terminated and the Policy has been returned to the Insurer for
cancellation, the following provisions shall apply:



     (a) Notwithstanding anything contained herein or in the other Basic Documents to the contrary,
the Insurer shall have the right to participate in, to direct the enforcement or defense of, and,
at the Insurer’s sole option, to institute or assume the defense of, any action, proceeding or
investigation that could adversely affect the Issuer, the Collateral, the Trust Property or the
rights or obligations of the Insurer hereunder or under the Policy or the Basic Documents,
including (without limitation) any insolvency or bankruptcy proceeding in respect of the Servicer,
the Seller, the Depositor, the Issuer or any affiliate thereof. Following notice to the Indenture
Trustee, the Insurer shall have exclusive right to determine, in its sole discretion, the actions
necessary to preserve and protect the Issuer, the Collateral, and the Trust Property. All costs and
expenses of the Insurer in connection with such action, proceeding or investigation, including
(without limitation) any judgment or settlement entered into affecting the Insurer or the Insurer’s
interests, shall be included in the Reimbursement Amount.



     (b) In connection with any action, proceeding or investigation that could adversely affect the
Issuer, the Collateral, the Trust Property or the rights or obligations of the Insurer hereunder or
under the Policy or the Basic Documents, including (without limitation) any insolvency or
bankruptcy proceeding in respect of the Servicer, the Seller, the Depositor, the Issuer or any
affiliate thereof, the Indenture Trustee hereby agrees to cooperate with, and to take such action
as directed by, the Insurer, including (without limitation) entering into such agreements and
settlements as the Insurer shall direct, in its sole discretion, without the consent of any
Bondholder.



     (c) The Indenture Trustee hereby agrees to provide to the Insurer prompt written notice of any
action, proceeding or investigation that names the Issuer or the Indenture Trustee as a party or
that could adversely affect the Issuer, the Collateral, the Trust Property or the rights or
obligations of the Insurer hereunder or under the Policy or the Basic Documents, including (without
limitation) any insolvency or bankruptcy proceeding in respect of the Servicer, the Seller, the
Depositor, the Trust or any affiliate thereof.



     (d) Notwithstanding anything contained herein or in any of the other Basic Documents to the
contrary, the Indenture Trustee shall not, without the Insurer’s prior written consent or unless
directed by the Insurer, undertake or join any litigation or agree to any settlement of any action,
proceeding or investigation affecting the Issuer, the Collateral, the Trust Property or the rights
or obligations of the Insurer hereunder or under the Policy or the Basic Documents.



     (e) Each Bondholder, by acceptance of its Bond, and the Indenture Trustee agree that the
Insurer shall have such rights as set forth in this Section, which are in addition to any rights of
the Insurer pursuant to the other provisions of the Basic Documents, that the rights set forth in
this Section may be exercised by the Insurer, in its sole discretion, without the need for the
consent or approval of any Bondholder or the Indenture Trustee, notwithstanding any other provision
contained herein or in any of the other Basic Documents, and that nothing contained in this Section
shall be deemed to be an obligation of the Insurer to exercise any of the rights provided for
herein.



21









 





ARTICLE VI




The Indenture Trustee




     SECTION 6.1. Duties of Indenture Trustee.



     (a) If a Rapid Amortization Event has occurred and is continuing, the Indenture Trustee shall
exercise the rights and powers vested in it by this Indenture and the Basic Documents and use the
same degree of care and skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs; provided, however, that if the Indenture
Trustee is acting as Servicer, it shall use the same degree of care and skill as is required of the
Servicer under the Sale and Servicing Agreement.



     (b) Except during the continuance of a Rapid Amortization Event:




	 	(i)	 	the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the Indenture
Trustee; and
	 
	 	(ii)	 	in the absence of bad faith on its part, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this Indenture; however,
the Indenture Trustee shall examine the certificates and opinions to determine
whether or not they conform on their face to the requirements of this Indenture.





     (c) The Indenture Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:




	 	(i)	 	this paragraph does not limit the effect of paragraph (b) of this
Section;
	 
	 	(ii)	 	the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts;
	 
	 	(iii)	 	the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12; and
	 
	 	(iv)	 	the Indenture Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer referred
to in clause (ii) of Section 6.01 of the Sale and Servicing Agreement unless a
Responsible Officer of the Indenture Trustee at the Corporate Trust Office
obtains actual knowledge of such failure or occurrence or the Indenture Trustee
receives written notice of such failure or occurrence from the Servicer, the
Insurer or the Holders of Bonds evidencing more than 50% of the Outstanding
Amount.





     (d) The Indenture Trustee shall not be liable for interest on any money received by it except
as the Indenture Trustee may agree in writing with the Issuer.



     (e) No provision of this Indenture shall require the Indenture Trustee to expend or risk its
own funds or otherwise incur financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe
that repayment of



22









 







such funds or indemnity reasonably satisfactory to it against such risk or
liability is not reasonably assured to it.



     (f) Every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the provisions of this Section
and to the provisions of the TIA.



     (g) The Indenture Trustee shall, upon three Business Days’ prior written notice to the
Indenture Trustee, permit any representative of the Insurer, during the Indenture Trustee’s normal
business hours, to examine all books of account, records, reports and other papers of the Indenture
Trustee relating to the Bonds, to make copies and extracts (at the expense of the party requesting
such copies or extracts) therefrom and to discuss the Indenture Trustee’s affairs and actions, as
such affairs and actions relate to the Indenture Trustee’s duties with respect to the Bonds, with
the Indenture Trustee’s officers and employees responsible for carrying out the Indenture Trustee’s
duties with respect to the Bonds.



     (h) The Indenture Trustee shall, and hereby agrees that it will, perform all of the
obligations and duties required of it under the Sale and Servicing Agreement.



     (i) The Indenture Trustee shall, and hereby agrees that it will, hold the Policy in trust, and
will hold any proceeds of any claim on the Policy in trust solely for the use and benefit of the
Bondholders.



     (j) In no event shall [Indenture Trustee], in any of its capacities hereunder, be deemed to
have assumed any duties of the Owner Trustee under the Delaware Business Trust Statute, common law,
or the Trust Agreement.



     SECTION 6.2. Rights of Indenture Trustee.



     (a) The Indenture Trustee may conclusively rely on any document reasonably believed by it to
be genuine and to have been signed or presented by the proper person. The Indenture Trustee need
not investigate any fact or matter stated in the document.



     (b) Before the Indenture Trustee acts or refrains from acting, it may require an Officer’s
Certificate or an Opinion of Counsel. The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on the Officer’s Certificate or Opinion of
Counsel.



     (c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or a custodian or nominee and
the Indenture Trustee shall not be liable for the negligence of such agents, attorneys, custodians
or nominees appointed (i) with due care and (ii) with the consent of the Insurer.



     (d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or powers; provided, however, that
the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.



     (e) The Indenture Trustee may consult with counsel of its selection, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the Bonds shall be full and
complete authorization and protection from liability in respect to any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or opinion of such
counsel.



     (f) The Indenture Trustee shall be under no obligation to institute, conduct or defend any
litigation under this Indenture or in relation to this Indenture, at the request, order or
direction of any of



23









 







the Holders of Bonds or the Controlling Party, pursuant to the provisions of
this Indenture, unless such Holders of Bonds or the Controlling Party shall have offered to the
Indenture Trustee security or indemnity reasonably satisfactory to it against the costs, expenses
and liabilities that may be incurred therein or thereby; provided, however, that the Indenture
Trustee shall, upon the occurrence of a Rapid Amortization Event or Event of Servicing Termination
as defined in the Sale and Servicing Agreement (that has not been cured or waived), exercise the
rights and powers vested in it by this Indenture or the Sale and Servicing Agreement with
reasonable care and skill.



     (g) The Indenture Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless requested in writing to
do so by the Insurer or by the Holders of Bonds evidencing not less than 25% of the Outstanding
Amount thereof; provided, however, that if the payment within a reasonable time to the Indenture
Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Indenture Trustee may require indemnity reasonably satisfactory to it against such
cost, expense or liability as a condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Person making such request, or, if paid by the Indenture Trustee
shall be reimbursed by the Person making such request upon demand.



     (h) The Indenture Trustee shall not be accountable, shall have no liability and makes no
representation as to any acts or omissions hereunder of the Servicer until such time as the
Indenture Trustee may be required to act as Servicer.



     SECTION 6.3. Individual Rights of Indenture Trustee.



     The Indenture Trustee in its individual or any other capacity may become the owner or pledgee
of Bonds and may otherwise deal with the Issuer or its Affiliates with the same rights it would
have if it were not Indenture Trustee. Any Bond Paying Agent, Bond Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Indenture Trustee must comply with
Sections 6.11 and 6.12.



     SECTION 6.4. Indenture Trustee’s Disclaimer.



     The Indenture Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, the Trust Property or the Bonds, it shall not be
accountable for the Issuer’s use of the proceeds from the Bonds, and it shall not be responsible
for any statement of the Issuer in the Indenture or in any document issued in connection with the
sale of the Bonds or in the Bonds other than the Indenture Trustee’s certificate of authentication.



     SECTION 6.5. Notice of Rapid Amortization Events and Events of Servicing Termination.



     If a Rapid Amortization Period or an Event of Servicing Termination occurs and is continuing
and if it is either known by, or written notice of the existence thereof has been delivered to, a
Responsible Officer of the Indenture Trustee, the Indenture Trustee shall (i) promptly mail to the
Insurer notice of such event, and (ii) within 90 days after such knowledge or notice occurs, mail
to each Bondholder notice of such event. Except in the case of a default in payment of principal of
or interest on any Bond, the Indenture Trustee may withhold the notice to the Bondholders if and so
long as one of its Responsible Officers in good faith determines that withholding the notice is in
the interests of Bondholders; provided that the Indenture Trustee shall not withhold any such
notice to the Insurer.



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     SECTION 6.6. Reports by Indenture Trustee to Holders.



     Upon written request, the Bond Paying Agent or the Servicer shall on behalf of the Issuer
deliver to each Bondholder such information as may be reasonably required to enable such Holder to
prepare its federal and state income tax returns required by law.



     SECTION 6.7. Compensation and Indemnity.



     (a) Pursuant to Section 8.7 and subject to Section 6.10 herein, the Issuer shall, or shall
cause the Servicer to, pay to the Indenture Trustee from time to time compensation as agreed to in
writing between the Servicer and the Indenture Trustee for its services. The Indenture Trustee’s
compensation shall not be limited by any law on compensation of a trustee of an express trust. The
Issuer shall or shall cause the Servicer to reimburse the Indenture Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and
experts. The Issuer shall or shall cause the Servicer to indemnify the Indenture Trustee and its
respective officers, directors, employees and agents against any and all loss, liability or expense
(including attorneys’ fees and expenses) incurred by each of them in connection with the acceptance
or the administration of this trust and the performance of its duties hereunder or under any other
Basic Document. The Indenture Trustee shall notify the Issuer and the Servicer promptly of any
claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and
the Servicer shall not relieve the Issuer of its obligations hereunder or the Servicer of its
obligations under Article VIII of the Sale and Servicing Agreement. The Issuer shall or shall cause
the Servicer to defend the claim, the Indenture Trustee may have separate counsel and the Issuer
shall or shall cause the Servicer to pay the fees and expenses of such counsel. Neither the Issuer
nor the Servicer need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct,
negligence or bad faith.



     (b) The Issuer’s payment obligations to the Indenture Trustee pursuant to this Section shall
survive the discharge of this Indenture. Notwithstanding anything else set forth in this Indenture
or the Basic Documents, the Indenture Trustee agrees that the obligations of the Issuer (but not
the Servicer) to the Indenture Trustee hereunder and under the Basic Documents shall be recourse to
the Trust Property only and specifically shall not be recourse to the assets of the Issuer or any
Bondholder. In addition, the Indenture Trustee agrees that its recourse to the Issuer, the Trust
Property and the Depositor shall be limited to the right to receive the distributions referred to
in Section 8.7 herein.



     SECTION 6.8. Replacement of Indenture Trustee.



     The Indenture Trustee may resign at any time by so notifying the Issuer and the Insurer by
written notice. Upon receiving such notice of resignation, the Issuer shall promptly appoint a
successor Indenture Trustee (approved in writing by the Insurer, so long as such approval is not
unreasonably withheld) by written instrument, in duplicate, one copy of such instrument shall be
delivered to the resigning Indenture Trustee (who shall deliver a copy to the Servicer and the
Insurer) and one copy to the successor Indenture Trustee; provided, however, that any such
successor Indenture Trustee shall be subject to the prior written approval of the Servicer. The
Issuer may, and at the request of the Insurer shall, remove the Indenture Trustee, if:




	 	(i)	 	the Indenture Trustee fails to comply with Section 6.11;
	 
	 	(ii)	 	a court having jurisdiction in the premises in respect of the Indenture Trustee
in an involuntary case or proceeding under federal or state banking or bankruptcy laws,
as now or hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order granting relief or
appointing a




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	 	 	 	receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any substantial part
of the Indenture Trustee’s property, or ordering the winding-up or liquidation of the
Indenture Trustee’s affairs;
	 	(iii)	 	an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future federal or state bankruptcy, insolvency or similar
law is commenced with respect to the Indenture Trustee and such case is not dismissed
within 60 days;
	 
	 	(iv)	 	the Indenture Trustee commences a voluntary case under any federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or consents to the
appointment of or taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or other similar official) for the Indenture Trustee
or for any substantial part of the Indenture Trustee’s property, or makes any assignment
for the benefit of creditors or fails generally to pay its debts as such debts become
due or takes any corporate action in furtherance of any of the foregoing;
	 
	 	(v)	 	the Indenture Trustee otherwise becomes incapable of acting; or
	 
	 	(vi)	 	the Indenture Trustee materially breaches any covenant or obligation under the
Basic Documents.





     Additionally, the Issuer shall remove the Indenture Trustee at the request of the Insurer.



     If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of
Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as
the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee
acceptable to the Insurer. If the Issuer fails to appoint such a successor Indenture Trustee, the
Insurer may appoint a successor Indenture Trustee.



     A successor Indenture Trustee shall deliver a written acceptance of its appointment to the
retiring Indenture Trustee, to the Insurer and to the Issuer. Thereupon the resignation or removal
of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall
have all the rights, powers and duties of the retiring Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to Bondholders. The retiring
Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.



     If a successor Indenture Trustee does not take office within 30 days after the retiring
Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer, the Insurer,
or the Holders of a majority in Outstanding Amount of the Bonds may, at the expense of the
Servicer, petition any court of competent jurisdiction for the appointment of a successor Indenture
Trustee acceptable to the Insurer.



     If the Indenture Trustee fails to comply with Section 6.11, any Bondholder may petition any
court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee acceptable to the Insurer.



     Any resignation or removal of the Indenture Trustee and appointment of a successor Indenture
Trustee pursuant to any of the provisions of this Section shall not become effective until
acceptance of appointment by the successor Indenture Trustee pursuant to Section 6.8 and payment of
all fees and expenses owed to the outgoing Indenture Trustee.



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     Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the
Issuer’s and the Servicer’s indemnity obligations under Section 6.7 shall continue for the benefit
of the retiring Indenture Trustee and the Servicer shall pay any amounts owing to the Indenture
Trustee.



     SECTION 6.9. Successor Indenture Trustee by Merger.



     If the Indenture Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee, provided that
such entity meets the requirements of Section 6.11 hereunder and is otherwise acceptable to the
Insurer (unless an Insurer Default has occurred and is continuing). The Indenture Trustee shall
provide Insurer and the Servicer with at least 30 days notice of any such transaction.



     In case at the time such successor or successors by merger, conversion or consolidation to the
Indenture Trustee shall succeed to the trusts created by this Indenture any of the Bonds shall have
been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such Bonds so authenticated;
and in case at that time any of the Bonds shall not have been authenticated, any successor to the
Indenture Trustee may authenticate such Bonds either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Bonds or in this Indenture.



     SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.



     (a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of
meeting any legal requirement of any jurisdiction in which any part of the Trust may at the time be
located, the Indenture Trustee, with the consent of the Insurer, shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the Trust, and to vest
in such Person or Persons, in such capacity and for the benefit of the Bondholders, such title to
the Trust, or any part hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or
desirable.



     (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed
and act subject to the following provisions and conditions:




	 	(i)	 	all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Indenture Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Indenture Trustee;
	 
	 	(ii)	 	no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder, including acts or omissions of
predecessor or successor trustees; and




27









 






	 	(iii)	 	the Indenture Trustee and the Servicer acting jointly may at any
time accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of an Event of Servicing Termination, the
Indenture Trustee acting alone may accept the resignation of or remove any
separate trustee or co-trustee.





     (c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to
have been given to each of the then separate trustees and co-trustees, as effectively as if given
to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this
Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Indenture Trustee or separately, as may be
provided therein, subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of,
affecting the liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.



     (d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its
agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do
any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, dissolve, become insolvent, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a
new or successor trustee.



     (e) The Servicer shall be responsible for the fees of any co-trustee or separate trustee
appointed hereunder.



     SECTION 6.11. Eligibility; Disqualification.



     The Indenture Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in
its most recent published annual report of condition. The Indenture Trustee shall provide copies of
such reports to the Insurer upon request. The Indenture Trustee shall comply with TIA Section
310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.



     SECTION 6.12. Preferential Collection of Claims Against Issuer.



     The Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned or been removed
shall be subject to TIA Section 311(a) to the extent indicated.



     SECTION 6.13. Appointment and Powers.



     Subject to the terms and conditions hereof, each of the Issuer Secured Parties hereby appoints
[Indenture Trustee] as the Indenture Trustee with respect to the Collateral, and [Indenture
Trustee] hereby accepts such appointment and agrees to act as Indenture Trustee with respect to the
Trust Property for the Issuer Secured Parties, to maintain custody and possession of such Trust
Property (except as otherwise provided hereunder) and to perform the other duties of the Indenture
Trustee in accordance with the provisions of this Indenture and the other Basic Documents. Each
Issuer Secured Party hereby authorizes the Indenture Trustee to take such action on its behalf, and
to exercise such rights, remedies, powers and privileges hereunder, as the Controlling Party may
direct and as are specifically authorized to be exercised



28









 







by the Indenture Trustee by the terms
hereof, together with such actions, rights, remedies, powers and privileges as are reasonably
incidental thereto. The Indenture Trustee shall act upon and in compliance with the written
instructions delivered to it pursuant to this Indenture promptly following receipt of such written
instructions; provided that the Indenture Trustee shall not act in accordance with any instructions
(i) which are not authorized by, or in violation of the provisions of, this Indenture or (ii) for
which the Indenture Trustee has not received reasonable indemnity. Receipt of such instructions
shall not be a condition to the exercise by the Indenture Trustee of its express duties hereunder,
except where this Indenture provides that the Indenture Trustee is permitted to act only following
and in accordance with such instructions.



     SECTION 6.14. Performance of Duties.



     The Indenture Trustee shall have no duties or responsibilities except those expressly set
forth in this Indenture and the other Basic Documents to which the Indenture Trustee is a party or
as directed by the Controlling Party in accordance with this Indenture. The Indenture Trustee shall
not be required to take any discretionary actions hereunder except at the
written direction and with the indemnification of the Controlling Party. The Indenture Trustee
shall, and hereby agrees that it will, perform all of the duties and obligations required of it
under the Sale and Servicing Agreement.



     SECTION 6.15. Limitation on Liability.



     Neither the Indenture Trustee nor any of its directors, officers, employees and agents shall
be liable for any action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Indenture Trustee shall be liable for its negligence, bad faith or
willful misconduct; nor shall the Indenture Trustee be responsible for the validity, effectiveness,
value, sufficiency or enforceability against the Issuer of this Indenture or any of the Trust
Property (or any part thereof).



     SECTION 6.16. Reliance Upon Documents.



     In the absence of negligence, bad faith or willful misconduct on its part, the Indenture
Trustee shall be entitled to conclusively rely on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been signed or sent by the
proper Person or Persons and shall have no liability in acting, or omitting to act, where such
action or omission to act is in reasonable reliance upon any statement or opinion contained in any
such document or instrument.



     SECTION 6.17. Representations and Warranties of the Indenture Trustee.



     The Indenture Trustee represents and warrants to the Issuer and to each Issuer Secured Party
as follows:



     (a) Due Organization. The Indenture Trustee is a                                          banking corporation, duly
organized, validly existing and in good standing under the laws of the State of                                          and is
duly authorized and licensed under applicable law to conduct its business as presently conducted.



     (b) Corporate Power. The Indenture Trustee has all requisite right, power and
authority to execute and deliver this Indenture and to perform all of its duties as the Indenture
Trustee hereunder.



     (c) Due Authorization. The execution and delivery by the Indenture Trustee of this
Indenture and the other Basic Documents to which it is a party, and the performance by the
Indenture Trustee of its duties hereunder and thereunder, have been duly authorized by all
necessary corporate proceedings, are required for the valid execution and delivery by the Indenture
Trustee, or the performance by the Indenture Trustee, of this Indenture and such other Basic
Documents.



29









 





     (d) Valid and Binding Indenture. The Indenture Trustee has duly executed and delivered
this Indenture and each other Basic Document to which it is a party, and each of this Indenture and
each such other Basic Document constitutes the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization and similar laws relating
to or affecting the enforcement of creditors’ rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general applicability.



     SECTION 6.18. Waiver of Setoffs.



     The Indenture Trustee hereby expressly waives any and all rights of setoff that the Indenture
Trustee may otherwise at any time have under applicable law with respect to any Account and agrees
that amounts in the Accounts shall at all times be held and applied solely in accordance with the
provisions hereof.



     SECTION 6.19. Control by the Controlling Party.



     The Indenture Trustee shall comply with notices and instructions given by the Issuer only if
accompanied by the written consent of the Controlling Party. The Indenture Trustee shall act upon
and comply with notices and instructions given by the Controlling Party alone.



     SECTION 6.20. Indenture Trustee May Enforce Claims Without Possession of Bonds.



     All rights of action and claims under this Indenture or the Bonds may be prosecuted and
enforced by the Indenture Trustee without the possession of any of the Bonds or the production
thereof in any proceeding relating thereto, and such proceeding instituted by the Indenture Trustee
shall be brought in its own name or in its capacity as Indenture Trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses, disbursement and
advances of the Indenture Trustee, its agents and counsel, be for the ratable benefit of the
Bondholders in respect of which such judgment has been recovered.



     SECTION 6.21. Suits for Enforcement.



     In case an Event of Servicing Termination or other default by the Servicer or the Depositor
hereunder shall occur and be continuing, the Controlling Party may proceed to protect and enforce
its rights and the rights of the Bondholders under this Indenture by a suit, action or proceeding
in equity or at law or otherwise, whether for the specific performance of any covenant or agreement
contained in this Indenture or in aid of the execution of any power granted in this Indenture or
for the enforcement of any other legal, equitable or other remedy, as the Indenture Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the rights of the
Indenture Trustee and the Bondholders.



     SECTION 6.22. Mortgagor Claims.



     In connection with any offset defenses, or affirmative claim for recovery, asserted in legal
actions brought by Mortgagors under one or more Mortgage Loans based upon provisions therein or
upon other rights or remedies arising from any requirements of law applicable to the Mortgage
Loans:



     (a) The Indenture Trustee is the holder of the Mortgage Loans only as trustee on behalf of the
holders of the Bonds and the Insurer, and not as a principal or in any individual or personal
capacity.



     (b) The Indenture Trustee shall not be personally liable for, or obligated to pay Mortgagors,
any affirmative claims asserted thereby, or responsible to holders of the Bonds for any offset
defense amounts applied against Mortgage Loan payments, pursuant to such legal actions.



30









 





     (c) The Indenture Trustee will pay, solely from the Trust Estate, affirmative claims for
recovery by Mortgagors only pursuant to final judicial orders or judgments, or judicially-approved
settlement agreements, resulting from such legal actions.



     (d) The Indenture Trustee will comply with judicial orders and judgments which require its
actions or cooperation in connection with Mortgagors’ legal actions to recover affirmative claims
against holders of the Bonds.



     (e) The Indenture Trustee will cooperate with and assist the Servicer, the Insurer, the
Issuer, the Depositor, or holders of the Bonds in their defense of legal actions by Mortgagors to
recover affirmative claims if such cooperation and assistance is not contrary to the interests of
the Indenture Trustee as a party to such legal actions and if the Indenture Trustee is
satisfactorily indemnified for all liability, costs and expenses (including attorneys’ fees and
expenses) arising therefrom.



     (f) The Issuer and Servicer hereby agree to indemnify, hold harmless and defend the Indenture
Trustee from and against any and all liability, loss, costs and expenses (including attorneys’ fees
and expenses) of the Indenture Trustee resulting from any affirmative claims for recovery asserted
or collected by Mortgagors under the Mortgage Loans.



ARTICLE VII




Bondholders’ Lists and Reports




     SECTION 7.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Bondholders.



     The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than
five days after the earlier of (i) each Record Date and (ii) three months after the last Record
Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders as of such Record Date, (b) at such other times as the Indenture Trustee
may request in writing, within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the Bond Registrar, no such
list shall be required to be furnished. The Indenture Trustee or, if the Indenture Trustee is not
the Bond Registrar, the Issuer shall furnish to the Insurer or the Issuer in writing upon their
written request and at such other times as the Insurer or the Issuer may request a copy of the
list.



     SECTION 7.2. Preservation of Information; Communications to Bondholders.



     (a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable,
the names and addresses of the Holders contained in the most recent list furnished to the Indenture
Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Indenture
Trustee in its capacity as Bond Registrar. The Indenture Trustee may destroy any list furnished to
it as provided in such Section 7.1 upon receipt of a new list so furnished.



     (b) Bondholders may communicate with other Bondholders with respect to their rights under this
Indenture or under the Bonds.



     (c) The Issuer, the Indenture Trustee and the Bond Registrar shall have the protection of TIA
ss. 312(c).



31









 





     SECTION 7.3. Reports by Issuer.



     (a) The Issuer shall:




	 	(i)	 	file with the Indenture Trustee (with a copy to the Insurer),
within 15 days after the Issuer is required to file the same with the Commission,
copies of the annual reports and copies of the information, documents and other
reports (or copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
	 
	 	(ii)	 	file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance by the
Issuer with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
	 
	 	(iii)	 	supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Bondholders described in TIA Section 313(c)) (with a copy
to the Insurer) such summaries of any information, documents and reports required
to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a)
as may be required by rules and regulations prescribed from time to time by the
Commission.





     (b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on
December 31 of each year.



     SECTION 7.4. Reports by Indenture Trustee.



     If required by TIA Section 313(a), within 60 days after each                     , beginning with                     ,
200_, the Indenture Trustee shall mail to each Bondholder (with a copy to the Insurer) as required
by TIA Section 313(c) a brief report dated as of such date that complies with TIA ss. 313(a). The
Indenture Trustee also shall comply with TIA Section 313(b).



     A copy of each report at the time of its mailing to Bondholders shall be filed by the
Indenture Trustee with the Commission and each stock exchange, if any, on which the Bonds are
listed. The Issuer shall notify the Indenture Trustee if and when the Bonds are listed on any stock
exchange or the delisting thereof.



ARTICLE VIII




Payments and Statements to Bondholders and Residual Bondholders;



Accounts, Disbursements and Releases




     SECTION 8.1. Collection of Money.



     Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or
delivery of, and shall receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture and the Sale and Servicing Agreement. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture and the Sale and
Servicing Agreement. Except as otherwise expressly provided in this Indenture or in the Sale and
Servicing Agreement, if any default occurs in the making of any payment or performance under any
agreement or instrument that is



32









 







part of the Trust Property, the Indenture Trustee may, with the
consent of the Insurer (so long as no Insurer Default has occurred and is continuing), or shall at
the direction of the Insurer (so long as no Insurer Default has occurred and is
continuing), take such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings.



     SECTION 8.2. Release of Trust Property.



     (a) Subject to Section 8.10 and the payment of its fees and expenses pursuant to Section 6.7,
the Indenture Trustee may, and when required by the Issuer and the provisions of this Indenture
shall, execute instruments to release property from the lien of this Indenture, in a manner and
under circumstances that are not inconsistent with the provisions of this Indenture or the Sale and
Servicing Agreement. In the event that the fair value of property to be released from the lien of
this Indenture on any date, together with the fair value of property previously released during the
then-current calendar year, equals or exceeds 10% of the Bond Principal Balance, in addition to all
other actions required to be taken pursuant to this Indenture, the Sale and Servicing Agreement or
otherwise in connection with such release, an Independent Certificate in accordance with TIA
Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1 shall also be
delivered to the Indenture Trustee. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s
authority, inquire into the satisfaction of any conditions precedent or see to the application of
any monies.



     (b) The Indenture Trustee shall, at such time as there are no Bonds outstanding and all sums
due the Indenture Trustee pursuant to Section 6.7, and to the Insurer pursuant to the Insurance
Agreement have been paid and the Policy has been cancelled and returned to the Insurer, release any
remaining portion of the Trust Property that secured the Bonds from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto any funds then on deposit in the
Accounts. The Indenture Trustee shall release property from the lien of this Indenture pursuant to
this Section 8.2(b) only upon receipt by the Indenture Trustee and the Insurer of an Issuer Request
accompanied by an Officer’s Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.1.



     SECTION 8.3. Establishment of Accounts.



     The Depositor shall cause to be established, and the Indenture Trustee shall maintain, at the
Corporate Trust Office of the Indenture Trustee, a Collection Account and a Policy Payment Account
(which account maybe a sub-account of the Collection Account) to be held by the Indenture Trustee
in the name of the Trust for the benefit of the Bondholders and the Insurer, as their interests may
appear. Each account shall be an Eligible Account. In addition, the Depositor shall be permitted to
withdraw amounts from the Collection Account from time to time as described in Section 3.03 of the
Sale and Servicing Agreement.



     SECTION 8.4. The Policy.



     (a) By the close of business on the Business Day preceding each Determination Date the
Indenture Trustee shall determine from the Servicing Certificate with respect to the immediately
following Payment Date, the Deficiency Amount, if any.



     (b) If the Indenture Trustee determines pursuant to paragraph (a) above that a Deficiency
Amount would exist, the Indenture Trustee shall complete a Notice in the form of Exhibit A to the
Policy and submit such notice to the Insurer no later than 12:00 noon New York City time on the
related Determination Date preceding such Payment Date as a claim for the payment of an Insured
Amount in an amount equal to the Deficiency Amount.



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     (c) The Indenture Trustee shall establish an Eligible Account (which may be a sub-account of
the Collection Account) for the benefit of the Bondholders and the Insurer referred to herein as
the “Policy Payment Account” over which the Indenture Trustee shall have exclusive control and sole
right of withdrawal. The Indenture Trustee shall deposit upon receipt any amount paid under the
Policy into the Policy Payment Account and distribute such amount only for purposes of payment to
the Bondholders of the Insured Amount for which a claim was made and such amount may not be
applied to satisfy any costs, expenses or liabilities of the Depositor, the Servicer, the
Indenture Trustee or the Trust. Amounts paid under the Policy, to the extent needed to pay the
Insured Amount, shall be disbursed by the Indenture Trustee to the Bondholders in accordance with
Section 8.7(b). It shall not be necessary for such payments to be made by check or wire transfers
separate from checks or wire transfers used to pay the Insured Amount with other funds available to
make such payment. However, the amount of any payment of principal or interest on the Bonds to be
paid from funds transferred from the Policy Payment Account shall be noted as provided in
subsection (d) of this Section 8.4 in the Bond Register and in the Indenture Trustee’s Statement to
Bondholders. Funds held in the Policy Payment Account shall not be invested. Any funds remaining in
the Policy Payment Account on the first Business Day following a Payment Date shall be returned to
the Insurer pursuant to the written instructions of the Insurer by the end of such Business Day.



     (d) The Indenture Trustee shall keep a complete and accurate record of the amount of interest
and principal paid in respect of any Bond from moneys received under the Policy. The Insurer shall
have the right to inspect such records at reasonable times during normal business hours upon one
(1) Business Day’s prior written notice to the Indenture Trustee.



     (e) The Indenture Trustee shall, upon retirement of the Bonds, furnish to the Insurer a notice
of such retirement, and, upon retirement of the Bonds, and, upon retirement of the Bonds and the
expiration of the term of the Policy surrender the Policy to the Insurer for cancellation.



     SECTION 8.5. Indenture Trustee’s Annual Statement of Compliance.



     The Indenture Trustee shall deliver (and the Indenture Trustee shall cause any Servicing
Function Participant engaged by it to deliver) to the Manager on or before March 10 (with a 5
calendar day cure period) of each year, commencing in March 200_, an Officer’s Certificate stating,
as to the signer thereof, that (A) a review of such party’s activities during the preceding
calendar year or portion thereof and of such party’s performance under this Agreement, or such
other applicable agreement in the case of a Servicing Function Participant, has been made under
such officer’s supervision and (B) to the best of such officer’s knowledge, based on such review,
such party has fulfilled all its obligations under this Agreement and the Sale and Servicing
Agreement, or such other applicable agreement in the case of a Servicing Function Participant, in
all material respects throughout such year or portion thereof, or, if there has been a failure to
fulfill any such obligation in any material respect, specifying each such failure known to such
officer and the nature and status thereof. Promptly after receipt of each such Officer’s
Certificate, the Manager shall review such Officer’s Certificate and, if applicable, consult with
each such party, as applicable, as to the nature of any failures by such party, in the fulfillment
of any of such party’s obligations hereunder or, in the case of a Servicing Function Participant,
under such other applicable agreement.



     8.6 Indenture Trustee’s Assessment of Compliance and Attestation Report.



     (a) By March 10 (with a 5 calendar day cure period) of each year, commencing in March 200_,
the Indenture Trustee, at its own expense, shall furnish, and shall cause any Servicing Function
Participant engaged by it to furnish, each at its own expense, to the Manager, a report on an
assessment of compliance with the Relevant Servicing Criteria that contains (A) a statement by such
party of its responsibility for assessing compliance with the Relevant Servicing Criteria, (B) a
statement that such party used the Servicing Criteria to assess compliance with the Relevant
Servicing Criteria, (C) such



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party’s assessment of compliance with the Relevant Servicing Criteria
as of and for the fiscal year covered by the Form 10-K required to be filed pursuant to Section
3.14(b) of the Sale and Servicing Agreement including, if there has been any material instance of
noncompliance with the Relevant Servicing Criteria, a discussion of each such failure and the
nature and status thereof, and (D) a statement that a registered public accounting firm has issued
an attestation report on such party’s assessment of compliance with the Relevant Servicing Criteria
as of and for such period.



     (b) By March 10 (with a 5 calendar day cure period) of each year, commencing in March 200_,
the Indenture Trustee, at its own expense, shall cause, and shall cause any Servicing Function
Participant engaged by it to cause, each at its own expense, a registered public accounting firm
(which may also render other services to the Indenture Trustee or such other Servicing Function
Participants, as the case may be) and that is a member of the American Institute of Certified
Public Accountants to furnish a report to the Manager, to the effect that (i) it has obtained a
representation regarding certain matters from the management of such party, which includes an
assertion that such party has complied with the Relevant Servicing Criteria, and (ii) on the basis
of an examination conducted by such firm in accordance with standards for attestation engagements
issued or adopted by the PCAOB, it is expressing an opinion as to whether such party’s compliance
with the Relevant Servicing Criteria was fairly stated in all material respects, or it cannot
express an overall opinion regarding such party’s assessment of compliance with the Relevant
Servicing Criteria. In the event that an overall opinion cannot be expressed, such registered
public accounting firm shall state in such report why it was unable to express such an opinion.
Such report must be available for general use and not contain restricted use language.



     (c) Promptly after receipt of such report on assessment of compliance and accountants’ report,
(i) the Manager shall review such reports and, if applicable, consult with the Indenture Trustee
and any Servicing Function Participant engaged by the Indenture Trustee as to the nature of any
material instance of noncompliance with the Relevant Servicing Criteria by the Indenture Trustee,
and (ii) the Indenture Trustee shall confirm that the assessments, taken as a whole, address all of
the Servicing Criteria and taken individually address the Relevant Servicing Criteria for each
party as set forth on Exhibit [ ], and that each assessment is coupled with an attestation meeting
the requirements of this Section and notify the Manager of any exceptions. The Indenture Trustee
shall not be required to deliver any such assessments or accountants’ reports until April 15 in any
given year so long as it has received written confirmation from the Manager that a Form 10-K is not
required to be filed in respect of the Trust for the preceding calendar year.



     SECTION 8.6. [Reserved]



     SECTION 8.7. Priority of Distributions.



     (a) The Indenture Trustee shall deposit to the Collection Account, without duplication, upon
receipt, (i) any payments related to the Class A Bonds made pursuant to the Policy, (ii) the
proceeds of any liquidation of the assets of the Trust and (iii) Interest Collections and Principal
Collections remitted by the Servicer, together with any Substitution Amounts, and any Loan Purchase
Price amounts received by the Indenture Trustee.



     (b) With respect to the Collection Account, on each Payment Date, the Indenture Trustee shall
make the following allocations, disbursements and transfers in the following order of priority, and
each such allocation, transfer and disbursement shall be treated as having occurred only after all
preceding allocations, transfers and disbursements have occurred:




	 	(i)	 	to the Indenture Trustee, the Trustee Fee then due;
	 
	 	(ii)	 	from amounts on deposit therein, the Premium Amount with respect to
the Class A Bonds to the Insurer for such Payment Date;




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	 	(iii)	 	from amounts then on deposit therein, to the Class A Bondholders,
the Interest Payment Amount for such Payment;
	 
	 	(iv)	 	on each Payment Date during the Managed Amortization Period, from
amounts then on deposit therein, to the Depositor, the portion of Additional
Balance Contributed Amount for such Payment Date related to HELOC Mortgage Loans;
	 
	 	(v)	 	from amounts then on deposit therein, to the Class A Bondholders as
a distribution of principal, the Principal Payment Amount for such Payment Date;
	 
	 	(vi)	 	from amounts then on deposit therein, to the Class A Bondholders,
as a distribution of principal, the Overcollateralization Deficit for such
Payment Date;
	 
	 	(vii)	 	from amounts then on deposit therein, to the Insurer, the
Reimbursement Amount, if any, then due to it;
	 
	 	(viii)	 	from amounts then on deposit therein, the Excess Cashflow with respect to the
Class A Bonds shall be applied to the extent necessary to fund the full amount of
the Accelerated Principal Payment;
	 
	 	(ix)	 	from amounts then on deposit, pari passu (a) to the Servicer,
reimbursement for amounts reimbursable to the Servicer pursuant to Section 3.03
and Section 5.03 of the Sale and Servicing Agreement to the extent not previously
reimbursed and (b) to the Indenture Trustee, up to a maximum of $5,000 on any
Payment Date to pay certain amounts that may be required to be paid to the
Indenture Trustee with respect to its or the Custodian’s preparation and
recording of assignments of mortgages (which amounts were not previously paid
pursuant to clause (i) or reimbursed pursuant to the Sale and Servicing
Agreement);
	 
	 	(x)	 	from amounts then on deposit therein, the current Deferred Interest
with respect to the Class A Bonds and any unpaid Deferred Interest from prior
Payment Dates with interest thereon at the Formula Bond Rate;
	 
	 	(xi)	 	to the Indenture Trustee, all remaining amounts due and owing to
the Indenture Trustee pursuant to the Basic Documents and not otherwise paid
pursuant to clause (i) or (ix);
	 
	 	(xii)	 	to the Manager of the Trust, the Management Fee then due and any
amount due and owing to the Manager pursuant to Section 5(b) of the Management
Agreement; and
	 
	 	(xiii)	 	to the Residual Certificateholders, any amounts remaining on deposit in the
Collection Account.





     SECTION 8.8. Statements to Bondholders.



     The Indenture Trustee (based upon information received from the Servicer) will make available
via its internet website on each Payment Date concurrently with each distribution to the
Bondholders, to the Servicer, the Bondholders and the Insurer a statement setting forth among other
items with respect to the Bonds (a “Payment Date Statement”):




	 	(i)	 	the amount being distributed to the Bonds;




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	 	(ii)	 	the amount of interest included in such distribution and the Bond Rate;
	 
	 	(iii)	 	the amount, if any, of overdue accrued interest included in such distribution
(and the amount of interest thereon);
	 
	 	(iv)	 	the amount, if any, of the remaining overdue accrued interest after giving effect
to such distribution;
	 
	 	(v)	 	the amount, if any, of principal included in such distribution;
	 
	 	(vi)	 	the Servicing Fee for such Payment Date;
	 
	 	(vii)	 	the related principal balance, after giving effect to such distribution;
	 
	 	(viii)	 	the related initial Pool Balance and the related Pool Balance as of the end of the
preceding Collection Period;
	 
	 	(ix)	 	the number and aggregate Principal Balance of Mortgage Loans that were (A)
delinquent (exclusive of Mortgage Loans in bankruptcy or foreclosure or properties
acquired by the Trust by deed in lieu of foreclosure) (1) 30 to 59 days, (2) 60 to 89
days, (3) 90 to 119 days, (4) 120 to 149 days, (5) 150 to 179 days, (6) 180 to 269 days
and (7) 270 or more days, (B) in foreclosure, (C) in bankruptcy and (D) properties
acquired by the Trust by deed in lieu of foreclosure;
	 
	 	(x)	 	(A) cumulative losses as a percentage of original Pool Balance, (B) cumulative
losses as a percentage of current Pool Balance and (C) the twelve-month rolling average
of cumulative losses as a percentage of original Pool Balance;
	 
	 	(xi)	 	the three-month rolling average of Mortgage Loans that are 60 days or more
delinquent;
	 
	 	(xii)	 	the book value of any real estate which is acquired by the Trust through
foreclosure or grant of deed in lieu of foreclosure;
	 
	 	(xiii)	 	the amount of any draws on the Policy;;
	 
	 	(xiv)	 	whether the related Payment Date will fall during the Managed Amortization
Period or the Rapid Amortization Period;
	 
	 	(xv)	 	whether a Rapid Amortization Event has occurred during the related Collection
Period;
	 
	 	(xvi)	 	the amount, if any, of any Relief Act Shortfalls incurred during the related
Collection Period;
	 
	 	(xvii)	 	the outstanding principal balance of the three Mortgage Loans in with the largest
outstanding principal balance;
	 
	 	(xviii)	 	whether an Event of Servicing Termination or an Insurer Default has occurred;
	 
	 	(xix)	 	the amount, if any, of Additional Balances created during the related Collection Period;
	 
	 	(xx)	 	whether the Managed Amortization Period has ended and the Rapid Amortization Period has begun;




37









 






	 	(xxi)	 	the Specified Overcollateralization Amount;
	 
	 	(xxii)	 	the Overcollateralization Amount, after giving effect to payments on such Payment Date;
	 
	 	(xxiii)	 	the amount of any servicing advances made by the Servicer during the related Collection Period; and
	 
	 	(xxiv)	 	the amount, if any, of interest shortfalls relating to prepayments during the related Collection Period.





     In the case of information furnished pursuant to clauses (ii), (iii), (iv) and (v) above, the
amounts shall be expressed as a dollar amount per Class A Bond with a $1,000 denomination.



     The Indenture Trustee will make the reports referred to above (and, at its option, any
additional files containing the same information in an alternative format) available each month to
Bondholders, the Insurer, the Depositor and the Servicer via the Indenture Trustee’s internet
website, which is presently located at www.mbsreporting.com. Any such persons that are unable to
use this website are entitled to have a paper copy of such information sent to them via facsimile
by faxing a request to the Indenture Trustee at (212) 815-3986. If the Insurer requests a paper
copy of such information, a
paper copy shall be sent to the Insurer each month without the need for any additional
request. The Indenture Trustee shall have the right to change the manner in which the reports
referred to in this section are distributed in order to make such distribution more convenient
and/or more accessible to the Bondholders, the Insurer, the Depositor and the Servicer. The
Indenture Trustee will provide timely and adequate notification to all such parties regarding any
such change to the method of distribution of the reports.



     Each report provided to the Insurer (either via the Indenture Trustee’s website or a paper
copy) pursuant to this Section 8.8 shall additionally report: (a) the total amount of funds
received as Insured Amounts or Preference Amounts for such Payment Date, separately stating the
portions used to pay principal and interest components of the Deficiency Amount; (b) the cumulative
amount of Insured Amounts or Preference Amounts paid by the Insurer through such Payment Date; and
(c) other information as the Insurer may reasonably request from time to time.



     Within 60 days after the end of each calendar year, the Servicer shall prepare or cause to be
prepared and shall forward to the Indenture Trustee the information set forth in clauses (i) and
(ii) above aggregated for such calendar year. Such obligation of the Servicer shall be deemed to
have been satisfied to the extent that substantially comparable information shall be provided by
the Servicer or a Bond Paying Agent pursuant to any requirements of the Code.



     SECTION 8.9. Indenture Trustee Annual Certification.



     On or before January 31 of each year, the Manager, on behalf of the Trust, shall provide the
Indenture Trustee with a written notice listing all Payment Date reports to Bondholders with
respect to Payment Dates occurring in the prior calendar year that were included in a Form 10-D
filing pursuant to Section 3.14(a) of the Sale and Servicing Agreement; provided that if no Form
10-K is required to be filed for such prior calendar year, no written notice shall be required. No
later than March 15 of each year in which such written notice is provided by the Manager to the
Indenture Trustee, the Indenture Trustee shall sign a certification (in the form attached hereto as
Exhibit C) for the benefit of the Person(s) signing the Form 10-K Certification, regarding certain
aspects of the Form 10-K Certification.



     SECTION 8.10. Rights of Bondholders and Residual Certificateholders.



     The Bonds shall represent obligations of the Trust, each representing interests in or secured
by the Trust Property, including the Collection Account and the right to receive Interest
Collections, Principal



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Collections, if any, and other amounts at the times and in the amounts
specified in this Indenture and the Residual Certificates shall represent a beneficial interest in
the Trust (other than the Policy).



     SECTION 8.11. Opinion of Counsel.



     The Indenture Trustee and the Insurer shall receive at least seven days’ notice when requested
by the Issuer to take any action pursuant to Section 8.2(a), accompanied by copies of any
instruments involved, and the Indenture Trustee shall also require as a condition to such action,
an Opinion of Counsel (addressed to the Indenture Trustee and to the Insurer), stating the legal
effect of any such action, outlining the steps required to complete the same, and concluding that
all conditions precedent to the taking of such action have been complied with and such action will
not materially and adversely impair the security for the Bonds or the rights of the Bondholders or
the Insurer in contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust
Property. Counsel rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in
connection with any such action.



ARTICLE IX




Supplemental Indentures




     SECTION 9.1. Supplemental Indentures Without Consent of Bondholders.



     (a) Without the consent of the Holders of any Bonds but with the consent of the Insurer, as
evidenced to the Indenture Trustee, the parties hereto, when authorized by an Issuer Order, at any
time and from time to time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the TIA as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee and the Insurer, for any of the following purposes:




	 	(i)	 	to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this Indenture
additional property;
	 
	 	(ii)	 	to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by any
such successor of the covenants of the Issuer herein and in the Bonds contained;
	 
	 	(iii)	 	to add to the covenants of the Issuer, for the benefit of the
Holders of the Bonds, or to surrender any right or power herein conferred upon
the Issuer;
	 
	 	(iv)	 	to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee;
	 
	 	(v)	 	to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any other
provision herein or in any supplemental indenture or to make any other provisions
with respect to matters or questions arising under this Indenture or in any
supplemental indenture; provided that such action shall not adversely affect the
interests of the Holders of the Bonds; or
	 
	 	(vi)	 	to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Bonds and to add to or
change any of the




39









 






	 	 	 	provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one trustee,
pursuant to the requirements of Article VI.
	 	(vii)	 	to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of the Indenture
under the TIA or under any similar federal statue hereafter enacted and to add to
this Indenture such other provisions as may be expressly required by the TIA.





     The Indenture Trustee is hereby authorized to join in the execution of any such supplemental
indenture and to make any further appropriate agreements and stipulations that may be therein
contained.



     (b) The parties hereto, when authorized by an Issuer Order, may, also without the consent of
any of the Holders of the Bonds but with the prior written consent of the Insurer and with prior
notice to the Rating Agencies by the Issuer, as evidenced to the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in
any manner the rights of the Holders of the Bonds under this Indenture; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Bondholder.



     SECTION 9.2. Supplemental Indentures with Consent of Bondholders.



     The parties hereto, when authorized by an Issuer Order, also may, with prior notice to the
Rating Agencies, with the consent of the Insurer and with the consent of the Holders of not less
than a majority of the Outstanding Amount of the
Bonds, by Act of such Holders delivered to the parties hereto, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or changing in any
manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Bonds under this Indenture; provided, however, that, subject to the
express rights of the Insurer under the Basic Documents, no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Bonds affected thereby:




	 	(i)	 	change the date of payment of any installment of principal of or interest on any
Bond, or reduce the principal amount thereof, the interest rate thereon or the
Redemption Price with respect thereto, change the provision of this Indenture relating
to the application of collections on, or the proceeds of the sale of, the Trust Property
to payment of principal of or interest on the Bonds, or change any place of payment
where, or the coin or currency in which, any Bond or the interest thereon is payable;
	 
	 	(ii)	 	impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in Article
V, to the payment of any such amount due on the Bonds on or after the respective due
dates thereof (or, in the case of redemption, on or after the Redemption Date);
	 
	 	(iii)	 	educe the percentage of the Outstanding Amount of the Bonds, the consent of the
Holders of which is required for any such supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences provided for in this
Indenture;
	 
	 	(iv)	 	modify or alter the provisions of the proviso to the definition of the term
“Outstanding”;
	 
	 	(v)	 	educe the percentage of the Outstanding Amount of the Bonds required to direct
the Indenture Trustee to direct the Issuer to sell or liquidate the Trust Property
pursuant to Section 5.4;




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	 	(vi)	 	modify any provision of this Section except to increase any percentage specified
herein or to provide that certain additional provisions of this Indenture or the Basic
Documents cannot be modified or waived without the consent of the Holder of each
Outstanding Bond affected thereby;
	 
	 	(vii)	 	modify any of the provisions of this Indenture in such manner as to affect the
calculation of the amount of any payment of interest or principal due on any Bond on any
Payment Date (including the calculation of any of the individual components of such
calculation); or
	 
	 	(viii)	 	permit the creation of any lien ranking prior to or on a parity with the lien of this
Indenture with respect to any part of the Trust Property or, except as otherwise
permitted or contemplated herein or in any of the Basic Documents, terminate the lien of
this Indenture on any property at any time subject hereto or deprive the Holder of any
Bond of the security provided by the lien of this Indenture.





     The Indenture Trustee may conclusively rely as to whether or not any Bonds would be adversely
affected by any supplemental indenture upon receipt of an Opinion of Counsel addressed and
delivered to the Indenture Trustee and the Insurer to that effect and any such determination shall
be conclusive upon the Holders of all Bonds, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for relying on such Opinion of
Counsel in good faith.



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



     Promptly after the execution by the parties hereto of any supplemental indenture pursuant to
this Section, the Indenture Trustee shall mail to the Holders of the Bonds to which such amendment
or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental indenture. Any
failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.



     SECTION 9.3. Execution of Supplemental Indentures.



     In executing, or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created by this Indenture,
the Indenture Trustee and the Insurer shall be entitled to receive, and subject to Sections 6.1 and
6.2, shall be fully protected in relying upon, an Opinion of Counsel (and, if requested, an
Officer’s Bond) stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Indenture Trustee’s own rights, duties,
liabilities or immunities under this Indenture or otherwise.



     SECTION 9.4. Effect of Supplemental Indenture.



     Upon the execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to
the Bonds affected thereby, and the respective rights, limitations of rights, obligations, duties,
liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the
Holders of the Bonds shall thereafter be determined, exercised and enforced hereunder subject in
all respects to such modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.



41









 





     SECTION 9.5. Reference in Bonds to Conformity With Trust Indenture Act.



     Every amendment of this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the TIA as then in effect so long as this Indenture
shall then be qualified under the TIA.



     SECTION 9.6. Reference in Bonds to Supplemental Indentures.



     Bonds authenticated and delivered after the execution of any supplemental indenture pursuant
to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form
approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If
the Issuer or the Indenture Trustee shall so determine, new Bonds so modified as to conform, in the
opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared
and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Bonds.



ARTICLE X




Redemption of Bonds




     SECTION 10.1. Redemption.



     The Bonds are subject to redemption in whole, but not in part, at the direction of the
Depositor pursuant to Section 7.01(b) of the Sale and Servicing Agreement, on any Payment Date on
which the Depositor exercises its option to transfer the Trust Property pursuant to said Section
7.01(b), for a purchase price equal to the Redemption Price. The Servicer or the Issuer shall
furnish the Insurer notice of such redemption not later than 35 days prior to the Redemption Date.
If the Bonds are to be redeemed pursuant to this Section 10.1, the Servicer or the Issuer shall
furnish notice of such election to the Indenture Trustee not later than 35 days prior to the
Redemption Date and the Issuer shall deposit or undertake to deposit on or prior to the Redemption
Date with the Indenture Trustee in the Collection Account the Redemption Price of such Bonds
whereupon all such Bonds shall be due and payable on the Redemption Date upon the furnishing of a
notice complying with Section 10.2 (unless the Issuer shall default in the deposit of the
Redemption Price).



     SECTION 10.2. Surrender of Bonds.



     (a) Notice of any termination, specifying the Payment Date (which shall be a date that would
otherwise be a Payment Date) upon which the Bondholders may surrender their Bonds to the Indenture
Trustee for payment of the final distribution and cancellation, shall be given promptly by the
Indenture Trustee (upon receipt of written directions from the Depositor, if the Depositor is
exercising its right to transfer of the Mortgage Loans, given not later than the first day of the
month preceding the month of such final distribution) to the Insurer and to the Servicer and by
letter to Bondholders mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of such final distribution specifying (i) the Payment Date upon
which final distribution of the Bonds will be made upon presentation and surrender of Bonds at the
office or agency of the Indenture Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, distributions being made only upon presentation and surrender of the Bonds at the
office or agency of the Indenture Trustee therein specified. In the event written directions are
delivered by the Depositor to the Indenture Trustee as described in the preceding sentence, the
Depositor shall deposit in the Collection Account on or before the Payment Date for such final
distribution in immediately available funds an amount which, when added to the funds on deposit in
the Collection Account that are payable to the Bondholders, will be equal to the retransfer amount
for the Mortgage Loans computed as above provided, together with all amounts due and owing to the
Insurer for unpaid premiums and unreimbursed draws on the Policy and all other amounts due and
owing to the Insurer



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pursuant to the Insurance Agreement, together with interest thereon as
provided under the Insurance Agreement.



     (b) Upon presentation and surrender of the Bonds, the Indenture Trustee shall cause to be
distributed to the Holders of Bonds on the Payment Date for such final distribution, in proportion
to the Percentage Interests of their respective Bonds and to the extent that funds are available
for such purpose, the amount required to be distributed to Bondholders pursuant to Section 10.1 of
this Indenture for such Payment Date. The distribution on such final Payment Date pursuant to a
retransfer pursuant to Section 7.01(a)(B)(i) of the Sale and Servicing Agreement shall be in lieu
of the distribution otherwise required to be made on such Payment Date in respect of the Bonds. On
the final Payment Date prior to having made the distributions called for above, the Indenture
Trustee shall, based upon the information set forth in the Servicing Certificate for such Payment
Date, withdraw from the Collection Account and remit to the Insurer the lesser of (x) the amount
available for distribution on such final Payment Date, net of any portion thereof necessary to pay
the amounts described in clauses (i) and (ii) above and (y) the unpaid amounts due and owing to the
Insurer for unpaid premiums and unreimbursed draws on the Policy and all other amounts due and
owing to the Insurer pursuant to the Insurance Agreement, together with interest thereon as
provided under the Insurance Agreement.



     (c) In the event that all of the Bondholders shall not surrender their Bonds for final payment
and cancellation on or before such final Payment Date, the Indenture Trustee shall on such date
cause all funds in the Collection Account not distributed in final distribution to Bondholders to
be withdrawn therefrom and credited to the remaining Bondholders by depositing such funds in a
separate escrow account for the benefit of such Bondholders and the Depositor (if the Depositor has
exercised its right to transfer the Mortgage Loans) or the Indenture Trustee (in any other case)
and shall give a second written notice to the remaining Bondholders to surrender their Bonds for
cancellation and receive the final distribution with respect thereto. If within one year after the
second notice all the Bonds shall not have been surrendered for cancellation, the Indenture Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the
remaining Bondholders concerning surrender of their Bonds, and the cost thereof shall be paid out
of the funds on deposit in such escrow account.



     SECTION 10.3. Form of Redemption Notice.



     Notice of redemption supplied to the Indenture Trustee by the Depositor under Section 10.1
shall be given by the Indenture Trustee by facsimile or by first-class mail, postage prepaid,
transmitted or mailed prior to the applicable Redemption Date to each Holder of Bonds of record, as
of the close of business on the date which is not less than 5 days prior to the applicable
Redemption Date, at such Holder’s address appearing in the Bond Register.



     All notices of redemption shall state:




	 	(i)	 	the Redemption Date;
	 
	 	(ii)	 	the Redemption Price;
	 
	 	(iii)	 	that the Record Date otherwise applicable to such Redemption Date is not
applicable and that payments shall be made only upon presentation and surrender of such
Bonds at the place where such Bonds are to be surrendered for payment of the Redemption
Price (which shall be the office or agency of the Issuer to be maintained as provided in
Section 3.2); and
	 
	 	(iv)	 	that interest on the Bonds shall cease to accrue on the Redemption Date.




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     Notice of redemption of the Bonds shall be given by the Indenture Trustee in the name and at
the expense of the Issuer. Failure to give notice of redemption, or any defect therein, to any
Holder of any Bond shall not impair or affect the validity of the redemption of any other Bond.



     SECTION 10.4. Bonds Payable on Redemption Date.



     The Bonds to be redeemed shall, following notice of redemption as required by Section 10.2, on
the Redemption Date become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the Redemption Price
for any period after the date to which accrued interest is calculated for purposes of calculating
the Redemption Price.



ARTICLE XI




Miscellaneous




     SECTION 11.1. 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 and to the
Insurer if the application or request is made to the Indenture Trustee (i) an Officer’s Certificate
stating that all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with and (iii) (if required
by the TIA or any provision of this Agreement) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is specifically
required by any provision of this Indenture, no additional certificate or opinion need be
furnished.



     Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture shall include:




	 	(i)	 	a statement that each signatory of such certificate or opinion has read or has
caused to be read such covenant or condition and the definitions herein relating
thereto;
	 
	 	(ii)	 	a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are
based;
	 
	 	(iii)	 	a statement that, in the opinion of each such signatory, such signatory has made
such examination or investigation as is necessary to enable such signatory to express an
informed opinion as to whether or not such covenant or condition has been complied with;
and
	 
	 	(iv)	 	a statement as to whether, in the opinion of each such signatory such condition
or covenant has been complied with.





     SECTION 11.2. 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.



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     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 or her 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 Servicer, the Depositor or the Issuer, stating
that the information with respect to such factual matters is in
the possession of the Servicer, the Depositor or the Issuer, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.



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



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



     SECTION 11.3. Acts of Bondholders.



     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Bondholders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Bondholders in person or by
agents duly appointed in writing; and except as herein otherwise expressly provided such action
shall become effective when such instrument or instruments are delivered to the Indenture Trustee,
and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the
Bondholders signing such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this Indenture and
(subject to Section 6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section.



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



     (c) The ownership of Bonds shall be proved by the Bond Register.



     (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by
the Holder of any Bonds shall bind the Holder of every Bond issued upon the registration thereof or
in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be
done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Bond.



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     SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer, Insurer and Rating Agencies.



     Any request, demand, authorization, direction, notice, consent, waiver or Act of Bondholders
or other documents provided or permitted by this Indenture to be made upon, given or furnished to
or filed with:



     (a) The Indenture Trustee by any Bondholder or by the Issuer shall be sufficient for every
purpose hereunder if personally delivered, delivered by overnight courier or mailed first-class and
shall be deemed to have been duly given upon receipt to the Indenture Trustee at its Corporate
Trust Office and any notice delivered by facsimile shall be addressed to the Corporate Trust
Office, telecopy number (                    )                     -                    , or



     (b) The Issuer by the Indenture Trustee or by any Bondholder shall be sufficient for every
purpose hereunder if personally delivered, delivered by facsimile or overnight courier or mailed
first class, and shall deemed to have been duly given upon receipt to the Issuer addressed to:
Sequoia Mortgage Trust 200-_, in care of [Owner Trustee], [Owner Trustee’s Address], or at any
other address previously furnished in writing to the Indenture Trustee by Issuer. The Issuer shall
promptly transmit any notice received by it from the Bondholders to the Indenture Trustee.



     (c) The Insurer by the Issuer or the Indenture Trustee shall be sufficient for any purpose
hereunder if in writing and mailed by first-class mail personally delivered or telecopied to the
recipient as follows:



	 	 	 	 	 
	 

	 	To the Insurer:
	 	[Insurer]
	 

	 	 	 	[Insurer’s Address]
	 

	 	 	 	Telecopy: (                    )                     -                    






     Notices required to be given to the Rating Agencies by the Issuer, the Indenture Trustee or
the Owner Trustee shall be in writing, personally delivered, delivered by overnight courier or
first class or via facsimile to (i) in the case of [First Rating Agency], at the following address:
[First Rating Agency’s Address], Fax No: (                    )                     -                     and (ii) in the case of [Second Rating
Agency], at the following address: [Second Rating Agency’s Address], Fax No: (                    )                     -                    ; or as
to each of the foregoing, at such other address as shall be designated by written notice to the
other parties.



     SECTION 11.5. Notices to Bondholders; Waiver.



     Where this Indenture provides for notice to Bondholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Bondholder affected by such event (and in all cases, the
Insurer shall receive notice), at his address as it appears on the Bond Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.
In any case where notice to Bondholders is given by mail, neither the failure to mail such notice
nor any defect in any notice so mailed to any particular Bondholder shall affect the sufficiency of
such notice with respect to other Bondholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.



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



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



     Where this Indenture provides for notice to the Rating Agencies, failure to give such notice
shall not affect any other rights or obligations created hereunder.



     SECTION 11.6. Alternate Payment and Notice Provisions.



     Notwithstanding any provision of this Indenture or any of the Bonds to the contrary, the
Issuer may enter into any agreement with any Holder of a Bond providing for a method of payment, or
notice by the Indenture Trustee or any Bond Paying Agent to such Holder, that is different from the
methods provided for in this Indenture for such payments or notices, provided that such methods are
reasonable and consented to by the Indenture Trustee (which consent shall not be unreasonably
withheld). The Issuer will furnish to the Indenture Trustee a copy of each such agreement and the
Indenture Trustee will cause payments to be made and notices to be given in accordance with such
agreements.



     SECTION 11.7. Conflict with Trust Indenture Act.



     If any provision hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the TIA, such required
provision shall control.



     The provisions of TIA Sections 310 through 317 that impose duties on any person (including the
provisions automatically deemed included herein unless expressly excluded by this Indenture) are a
part of and govern this Indenture, whether or not physically contained herein.



     SECTION 11.8. 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.



     Notwithstanding anything to the contrary contained in this Indenture or any document delivered
herewith, all persons may disclose to any and all persons, without limitation of any kind, the
federal income tax treatment of the Bonds, any fact relevant to understanding the federal tax
treatment of the Bonds, and all materials of any kind (including opinions or other tax analyses)
relating to such federal tax treatment.



     SECTION 11.9. Successors and Assigns.



     All covenants and agreements in this Indenture and the Bonds by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors.



     SECTION 11.10. Separability.



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



47









 





     SECTION 11.11. Benefits of Indenture.



     The Insurer and its successors and assigns shall be third-party beneficiaries to the
provisions of this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture. Nothing in this Indenture or in the Bonds, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder, the Insurer, and
the Bondholders, and any other party secured hereunder, and any other person with an ownership
interest in any part of the Trust Property, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Insurer may disclaim any of its rights and powers under this
Indenture (in which case the Indenture Trustee may exercise such rights or powers hereunder), but
not its duties and obligations under the Policy upon delivery of a written notice to the Indenture
Trustee.



     SECTION 11.12. Legal Holidays.



     In any case where the date on which any payment is due shall not be a Business Day, then
(notwithstanding any other provision of the Bonds or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same force and effect as if
made on the date on which nominally due, and no interest shall accrue for the period from and after
any such nominal date.



     SECTION 11.13. GOVERNING LAW.



     THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS .



     SECTION 11.14. Counterparts.



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



     SECTION 11.15. Recording of Indenture.



     If this Indenture is subject to recording in any appropriate public recording offices, such
recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trust or any other counsel reasonably acceptable to the Indenture
Trustee and the Insurer) to the effect that such recording is necessary either for the protection
of the Bondholders or any other person secured hereunder or for the enforcement of any right or
remedy granted to the Indenture Trustee under this Indenture.



     SECTION 11.16. Trust Obligation.



     No recourse may be taken, directly or indirectly, with respect to the obligations of the
Issuer, the Depositor, the Servicer, the Owner Trustee or the Indenture Trustee on the Bonds or
under this Indenture or any Bond or other writing delivered in connection herewith or therewith,
against (i) the Depositor, the Servicer, the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the Depositor, the Servicer, the
Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Depositor, the Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Depositor, the Servicer, the Indenture Trustee



48









 







or the Owner
Trustee in its individual capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for
stock, unpaid capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or obligations of the
Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of Articles VI, VII and VIII of the Trust Agreement.



     SECTION 11.17. No Petition.



     The Indenture Trustee, by entering into this Indenture, and each Bondholder, by accepting a
Bond, hereby covenant and agree that they will not at any time institute against the Depositor, or
the Issuer, or join in any institution against the Depositor, or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law in connection with any obligations
relating to the Bonds, this Indenture or any of the Basic Documents.



     SECTION 11.18. Inspection.



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



     SECTION 11.19. Limitation of Liability.



     It is expressly understood and agreed by the parties hereto that (a) this Indenture is executed and
delivered by [Owner Trustee], not individually or personally but solely as Owner Trustee of the
Issuer under the Trust Agreement, in the exercise of the powers and authority conferred and vested
in it, (b) each of the representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and agreements by [Owner
Trustee] but is made and intended for the purpose for binding only the Issuer, (c) nothing herein
contained shall be construed as creating any liability on [Owner Trustee] individually or
personally, to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to this Indenture and by any person
claiming by, through or under them and (d) under no circumstances shall [Owner Trustee] be
personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for
the breach or failure of any obligation, representation, warranty or covenant made or undertaking
by the Issuer under this Indenture or any related documents.




49










 






ARTICLE XII




Rapid Amortization Events




     SECTION 12.1. Rapid Amortization Events.



     The following shall constitute Rapid Amortization Events with respect to the Bonds:




	 	(a)	 	failure on the part of the Issuer, the Depositor or the Servicer, as the case
may be, (i) to make any payment or deposit required by the terms of this Indenture, the
Sale and Servicing Agreement or the Insurance Agreement, within two Business Days after
notification that such payment or deposit is required to be made, or (ii) to observe or
perform in any material respect the covenants or agreements of the Issuer, the
Depositor or the Servicer, as the case may be, set forth in the Sale and Servicing
Agreement or the Insurance Agreement or this Indenture, as the case may be, and which,
in the case of clause (ii), continues unremedied for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied, shall have
been given to the Issuer, the Depositor or the Servicer, as the case may be, by the
Indenture Trustee, or to the Issuer, the Depositor or the Servicer, as the case may be,
and the Indenture Trustee by the Insurer or Holders of Bonds evidencing more than 50%
of the Outstanding Amount;
	 
	 	(b)	 	any representation or warranty made by the Issuer, the Depositor or the
Servicer, as the case may be, in this Indenture, the Sale and Servicing Agreement or
the Insurance Agreement shall prove to have been incorrect in any material respect when
made, as a result of which the interests of the Bondholders or the Insurer are
materially and adversely affected and which continues to be incorrect in any material
respect and continues to affect materially and adversely the interests of the
Bondholders or the Insurer for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given to the
Issuer, the Depositor or the Servicer, as the case may be, by the Indenture Trustee, or
to the Issuer, the Depositor or the Servicer, as the case may be, and the Indenture
Trustee by either the Insurer or the Holders of Bonds evidencing more than 50% of the
Outstanding Amount; provided, however, that with respect to any such representation or
warranty made with respect to the related Mortgage Loans, a Rapid Amortization Event
pursuant to this subparagraph (b) shall not be deemed to have occurred hereunder if the
Servicer or the Depositor has accepted retransfer of such related Mortgage Loan or
related Mortgage Loans during such period (or such longer period not to exceed an
additional 60 days as the Indenture Trustee may specify with the consent of the
Insurer) in accordance with the provisions hereof;
	 
	 	(c)	 	the Servicer, the Depositor or the Issuer or any of their Subsidiaries o r
Affiliates shall voluntarily go into liquidation, consent to the appointment of a
conservator or receiver or liquidator or similar person in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings of or relating to
the Servicer, the Depositor or the Trust or of or relating to all or substantially all
of such Person’s property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer, the Depositor
of the Trust and such decree or order shall have remained in force undischarged or
unstayed for a period of 30 days; or the Servicer, the Depositor or the Trust shall
admit in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization statute, make




50









 






	 	 	 	an assignment for the benefit of its creditors or voluntarily suspend payment of its
obligations;
	 	(d)	 	the Issuer becomes subject to regulation by the Securities and Exchange
Commission as an investment company within the meaning of the Investment Company Act of
1940, as amended;
	 
	 	(e)	 	any draw is made under the Policy with respect to any Class;
	 
	 	(f)	 	an Event of Servicing Termination has occurred;
	 
	 	(g)	 	a default in the payment of any Deferred Interest on the Class A Bonds on the
Final Maturity Date; and
	 
	 	(h)	 	default in the payment of any interest, principal or any installment of
principal on the Bonds when the same becomes due and payable, and such default
continues for a period of five Business Days.





     In the case of any event described in clauses (a) through (h) above, a Rapid Amortization
Event will be deemed to have occurred only if, after the applicable grace period, if any, described
in the Indenture or Sale and Servicing Agreement, any of the Indenture Trustee or Holders holding
Class A Bonds evidencing more than 50% of the outstanding principal balance of the Class A Bonds,
in each case with the prior written consent of the Insurer (so long as no Insurer Default has
occurred and is continuing or unless a Rapid Amortization Event described in clause (g) above has
occurred) or the Insurer (so long as no Insurer Default has occurred and is continuing), by written
notice to the Trust, the Insurer, the Depositor, and the Servicer (and to the Indenture Trustee, if
given by the Bondholders or the Insurer) declare that a Rapid Amortization Event has occurred as of
the date of such notice.



     If so directed by the Insurer, so long as no Insurer Default has occurred and is continuing,
the Indenture Trustee will and the Insurer (so long as no Insurer Default has occurred and is
continuing) or Holders holding Class A Bonds evidencing more than 50% of the outstanding principal
balance of the Class A Bonds (if a Rapid Amortization Event described in clause (g) above has
occurred) shall have the right to direct the Indenture Trustee to sell, dispose of or otherwise
liquidate the Trust Property with respect to the Mortgage Loans in a commercially reasonable manner
and on commercially reasonable terms. So long as no Event of Servicing Termination has occurred
and is continuing, any such sale, disposal or liquidation will be “servicing retained” by the
Servicer. With respect to the Bonds, the net proceeds of such sale will be paid (i) first, to the
Holders of the Bonds insofar as may be necessary to reduce the principal balance of such Class,
together with all accrued and unpaid interest due thereon, to zero, (ii) second, to reimburse the
Insurer to the extent of unreimbursed draws under the Policy and other amounts owing to the
Insurer, and (iii) third, to the Residual Certificateholder.



     In addition to the consequences of a Rapid Amortization Event discussed above, if the
Depositor voluntarily files a bankruptcy petition or goes into liquidation or any person is
appointed a receiver or bankruptcy trustee of the Depositor, on the day of any such filing or
appointment no further Additional Balances will be transferred to the Trust and the Depositor will
promptly give notice to the Indenture Trustee and the Insurer of any such filing or appointment.
Within 15 days, the Indenture Trustee notify the Holders of the Bonds of the occurrence of such
event.



51









 





     IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly
executed by their respective officers, hereunto duly authorized, all as of the day and year first
above written.



	 	 	 
	 

	 	SEQUOIA MORTGAGE TRUST 200_-_
	 
	 	 
	 

	 	By: [OWNER TRUSTEE],
	 
	 	 
	 

	 	not in its individual capacity but

solely as Owner Trustee
	 
	 	 
	 

	 	By:                                                                                 
	 

	 	Name:
	 

	 	Title:
	 
	 	 
	 

	 	[INDENTURE TRUSTEE],
	 
	 	 
	 

	 	not in its individual capacity but

solely as Indenture Trustee
	 
	 	 
	 

	 	By:                                                                                 
	 

	 	Name:
	 

	 	Title:










52









 








EXHIBIT A




SEQUOIA MORTGAGE TRUST 200-_ CLASS A BOND




			
	REGISTERED
	 	$                                        
	No. A-1
	 	CUSIP NO.                                         






     Unless this Class A Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation (“DTC”), to the Issuer or its agent for registration of transfer,
exchange or payment, and any Class A Bond issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any payment is made to Cede
& Co. or to such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.



     THE PRINCIPAL OF THIS CLASS A BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A BOND AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.



SEQUOIA MORTGAGE TRUST 200_-_




COLLATERALIZED MORTGAGE BONDS




     Sequoia Mortgage Trust 200-_, a statutory trust organized and existing under the laws of the
State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of                                                              MILLION DOLLARS
($                                        ), such amount payable on each Payment Date in an amount equal to the result obtained
by multiplying (i) a fraction the numerator of which is $                                         and the denominator of which
is $                                         by (ii) the aggregate amount, if any, payable from the Collection Account in
respect of principal on the Class A Bonds pursuant to Section 8.7 of the Indenture; provided,
however, that the entire unpaid principal amount of this Class A Bond shall be due and payable on
the Payment Date in                                          20                     (the “Final Scheduled Payment Date”). The Issuer will pay interest
on this Bond at the rate per annum provided in the Indenture on each Payment Date on the principal
amount of this Class A Bond outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date). Interest on this Class A Bond will
accrue for each Payment Date from the most recent Payment Date on which interest has been paid to
but excluding such Payment Date or, if no interest has yet been paid, from                     , 200. Interest
will be computed on the basis of the actual number of days elapsed in a 360-day year. Such
principal of and interest on this Class A Bond shall be paid in the manner specified on the reverse
hereof.



     The principal of and interest on this Class A Bond are payable in such coin or currency of the
United States of America as at the time of payment is legal tender for payment of public and
private debts. All payments made by the Issuer with respect to this Class A Bond shall be applied
first to interest due and payable on this Class A Bond as provided above and then to the unpaid
principal of this Class A Bond.



     The Bonds are entitled to the benefits of a financial guaranty insurance policy (the “Policy”)
issued by [Insurer] (the “Insurer”), pursuant to which the Insurer has unconditionally guaranteed
payments of the Insured Amounts with respect to the Class A Bonds on each Payment Date and
Preference Amounts, all as more fully set forth in the Policy.



Ex-A-1









 





     For purposes of federal income, state and local income and franchise and any other income
taxes, the Issuer will treat the Bonds as indebtedness of the Depositor and hereby instructs the
Indenture Trustee to treat the Bonds as indebtedness of the Depositor for federal and state tax
reporting purposes. Each Bondholder by acceptance of a Bond (and each owner of a beneficial
interest in a Bond by acceptance of such beneficial interest) agrees to treat the Bonds for federal
income, state and local income and franchise and any other income taxes as indebtedness of the
Depositor.



     Each Bondholder or Bond Owner, by acceptance of this Class A Bond or, in the case of a Bond
Owner, a beneficial interest in a Bond, covenants and agrees that no recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Class A Bonds or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Depositor, the Servicer, the Indenture Trustee,
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any owner, beneficiary, agent, officer, director or employee of the Depositor, the
Servicer, the Indenture Trustee, or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Depositor, the Servicer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Depositor, the Servicer, the Indenture Trustee, or the
Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.



     Reference is made to the further provisions of this Class A Bond set forth on the reverse
hereof, which shall have the same effect as though fully set forth on the face of this Class A
Bond.



     Unless the certificate of authentication hereon has been executed by the Indenture Trustee
whose name appears below by manual signature, this Class A Bond shall not be entitled to any
benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any
purpose.



     This Class A Bond is one of a duly authorized issue of Bonds of the Issuer, designated as its
Collateralized Mortgage Bonds (herein called the “Class A Bonds”), all issued under an Indenture
dated as of                                         , 200                     (such agreement, as supplemented or amended, is herein called the
“Indenture”), between the Issuer and [Indenture Trustee], as Indenture Trustee (the “Indenture
Trustee”), which term includes any successor Indenture Trustee under the Indenture.



     All terms used in this Class A Bond that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended. If any such terms are not defined in the Indenture, as supplemented or
amended, then such terms shall have the meanings assigned to them in or pursuant to the Trust
Agreement dated as of                                         , 200                     (such trust agreement, as supplemented or amended is herein
called the “Trust Agreement”), between Sequoia Mortgage Funding Corporation, as Depositor, and
[Owner Trustee], as Owner Trustee (the “Owner Trustee,” which term includes any successor Owner
Trustee under the Trust Agreement), as so supplemented or amended.



     The Class A Bonds are and will be secured by the collateral pledged as security therefor as
provided in the Indenture.



     Principal of the Class A Bonds will be payable on each Payment Date in an amount described in
the Indenture. “Payment Date” means the fifteenth day of each month, or, if any such date is not a
Business Day, the next succeeding Business Day, commencing                     , 200. The term “Payment Date,”
shall be deemed to include the Final Scheduled Payment Date.



Ex-A-2









 





     As described above, the entire unpaid principal amount of this Class A Bond shall be due and
payable on the earlier of the Final Scheduled Payment Date and the Redemption Date, if any,
pursuant to Section 10.1 of the Indenture. Notwithstanding the foregoing, on the date on which a
Rapid Amortization Period as described in Section 5.1(a) shall have occurred and be continuing and,
in the limited instances specified in the Indenture, the Holders representing more than 50% of the
Outstanding Amount of the Class A Bonds, with the prior written consent of the Insurer (so long as
there is no continuing Insurer Default) shall have the right among others to direct the Indenture
Trustee to sell or liquidate the Mortgage Loans as provided in Section 12.1 of the Indenture and
pay such amounts to the Holders of the Class A Bonds. All principal payments on the Class A Bonds
shall be made pro rata to the Holders of the Class A Bonds entitled thereto.



     Payments of interest on this Class A Bond due and payable on each Payment Date, together with
the installment of principal, if any, to the extent not in full payment of this Class A Bond, shall
be made by check mailed to the Person whose name appears as the Holder of this Class A Bond (or one
or more Predecessor Bonds) on the Bond Register as of the close of business on each Record Date,
except that with respect to Class A Bond registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such nominee. Such checks
shall be mailed to the Person entitled thereto at the address of such Person as it appears on the
Bond Register as of the applicable Record Date without requiring that this Bond be submitted for
notation of payment. Any reduction in the principal amount of this Bond (or any one or more
Predecessor Bonds) effected by any payments made on any Payment Date shall be binding upon all
future Holders of this Class A Bond and of any Class A Bond issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of the then remaining
unpaid principal amount of this Class A Bond on a Payment Date, then the Indenture Trustee, in the
name of and on behalf of the Issuer, will notify the Person who was the Holder hereof as of the
Record Date preceding such Payment Date by notice mailed prior to such Payment Date and the amount
then due and payable shall be payable only upon presentation and surrender of this Class A Bond at
the office designated by the Indenture Trustee for such purposes located in The City of                                         .



     The Issuer shall pay interest on overdue installments of interest at the Class A-1 Interest
Rate to the extent lawful.



     As provided in the Indenture, the Class A Bonds may be redeemed pursuant to Section 10.1 of
the Indenture, in whole, but not in part, at the option of the Depositor (with the consent of the
Insurer under certain circumstances), on any Payment Date after the Payment Date on which the Bond
Principal Balance is less than or equal to 10% of the Pool Balance, after taking into account all
distributions made on such Payment Date.



     As provided in the Indenture and subject to certain limitations set forth therein, the
transfer of this Class A Bond may be registered on the Bond Register upon surrender of this Class A
Bond for registration of transfer at the office or agency designated by the Issuer pursuant to the
Indenture, (i) duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an “eligible guarantor institution”
meeting the requirements of the Bond Registrar which requirements include membership or
participation in Bonds Transfer Agents Medallion Program (“Stamp”) or such other “signature
guarantee program” as may be determined by the Registrar in addition to, or in substitution for,
Stamp, all in accordance with the Exchange Act, and (ii) accompanied by such other documents as the
Indenture Trustee may require, and thereupon one or more new Bonds of authorized denominations and
in the same aggregate principal amount will be issued to the designated transferee or transferees.
No service charge will be charged for any registration of transfer or exchange of this Class A
Bond, but the transferor may be required to pay a sum sufficient to cover any tax or other



Ex-A-3









 







governmental charge that may be imposed in connection with any such registration of transfer
or exchange.



     Each Bondholder or Bond Owner, by acceptance of a Bond or, in the case of a Bond Owner, a
beneficial interest in a Bond covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture
Trustee on the Bonds or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Depositor, the Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii)
any owner, beneficiary, agent, officer, director or employee of the Depositor, the Servicer, the
Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Depositor, the Servicer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Depositor, the Servicer, the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.



     Each Bondholder or Bond Owner, by acceptance of a Bond or, in the case of a Bond Owner, a
beneficial interest in a Bond covenants and agrees that by accepting the benefits of the Indenture
and the Trust Agreement that such Bondholder will not at any time institute against the Depositor,
or the Issuer or join in any institution against the Depositor, or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings, under any
United States Federal or state bankruptcy or similar law in connection with any obligations
relating to the Bonds, the Trust Agreement, the Indenture or the Basic Documents.



     Prior to the due presentment for registration of transfer of this Bond, the Issuer, the
Indenture Trustee and the Insurer and any agent of the Issuer, the Indenture Trustee or the Insurer
may treat the Person in whose name this Bond (as of the day of determination or as of such other
date as may be specified in the Indenture) is registered as the owner hereof for all purposes,
whether or not this Bond be overdue, and neither the Issuer, the Indenture Trustee nor any such
agent shall be affected by notice to the contrary.



     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Issuer and the rights of the Holders of the
Bond under the Indenture at any time by the Issuer with the consent of the Insurer and of the
Holders of Bonds representing a majority of the Outstanding Amount of all Bonds at the time
Outstanding. Any such consent or waiver by the Holder of this Bond (or any one of more Predecessor
Bonds) shall be conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent or waiver is made upon this Bond. The Indenture also
permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Bonds issued thereunder but with the consent of the
Insurer.



     The term “Issuer” as used in this Bond includes any successor to the Issuer under the
Indenture or the Trust Agreement.



     The Class A Bonds are issuable only in registered form in denominations as provided in the
Indenture, subject to certain limitations therein set forth.



     This Bond, the Trust Agreement and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.



Ex-A-4









 





     No reference herein to the Trust Agreement or the Indenture and no provision of this Bond, the
Trust Agreement or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Bond at the times, place,
and rate, and in the coin or currency herein prescribed.



     Anything herein to the contrary notwithstanding, except as expressly provided in the Trust
Agreement, the Indenture or the Basic Documents, neither [Owner Trustee] in its individual
capacity, any owner of a beneficial interest in the Issuer, nor any of their respective
beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of principal of or interest
on, or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Bond or the Indenture, it being expressly understood that said
covenants, obligations and indemnifications have been made by the Issuer for the sole purposes of
binding the interests of the Issuer in the assets of the Issuer. The Holder of this Bond by the
acceptance hereof agrees that except as expressly provided in the Indenture or the Basic Documents
in the case of a Rapid Amortization Event with respect to the Class A Bonds under the Indenture,
the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to,
and enforcement against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Bond.



     IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in
facsimile, by its Authorized Officer.



Date: _______, 200_




	 	 	 
	 

	 	SEQUOIA MORTGAGE TRUST 200_-_
	 
	 	 
	 

	 	By: [Owner Trustee], not in its
	 
	 	 
	 

	 	individual capacity but solely as

Owner Trustee
	 
	 	 
	 

	 	By:                                                                                
	 

	 	Name:
	 

	 	Title:






INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION




     This is one of the Bonds designated above and referred to in the within-mentioned Indenture.



Date: ________, 200_




	 	 	 
	 

	 	                                                                                

[Indenture Trustee], not in its
	 

	 	individual capacity but solely as Indenture
	 

	 	Trustee
	 

	 	By:                                                                                 
	 

	 	                    Authorized Signatory






Ex-A-5









 






EXHIBIT B




FORM OF OPINION OF COUNSEL




Ex-B-1









 








EXHIBIT C




FORM OF CERTIFICATION TO BE PROVIDED TO




SEQUOIA MORTGAGE TRUST 200_-_ BY THE INDENTURE TRUSTEE




Sequoia Mortgage Trust 200_-_ (the “Trust”)




Collateralized Mortgage Bonds




     I,                                                                                 , a                                                                                  of [Indenture Trustee], as Indenture
Trustee for the Trust, hereby certify to Sequoia Mortgage Funding Corporation (the “Depositor”),
and its offices, directions and affiliates, and with the knowledge and intent that they will rely
upon this certification that:



     1. The Depositor has caused it to be provided to the Indenture Trustee a written notice
listing all of the monthly distribution reports that were prepared by the Indenture Trustee and
that will be included in the Depositor’s Form 10-K for the Trust’s fiscal year ending on
                                        . I have reviewed each of such distribution reports.



     2. Based on my knowledge, the information in these distribution reports prepared by the
Indenture Trustee, taken as a whole, does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading as of the last day of the period covered by
that annual report.



     3. Based on my knowledge, the distribution information required to be provided by the
Indenture Trustee under the Indenture, dated as of                                         , 200                    , the Trust and the Indenture
Trustee is included in these reports.



[SIGNATURE PAGE IMMEDIATELY FOLLOWS]




Ex-C-1









 








	 	 	 
	 

	 	[INDENTURE TRUSTEE]
	 
	 	 
	 

	 	as Indenture Trustee
	 
	 	 
	 

	 	By:                                                                                
	 

	 	Name:
	 

	 	Title:
	 
	 	 
	 

	 	Dated:                                        







Ex-C-2









 








ANNEX A — DEFINED TERMS




     Accelerated Principal Payment: With respect to any Payment Date a payment received as a
payment of principal by the Bondholders, for the purpose of increasing the related
Overcollateralization Amount, and to be paid from the Excess Cashflow, and equal to for any Payment
Date the lesser of (x) the amount of the Excess Cashflow and (y) the Overcollateralization
Deficiency Amount.



     Act: As defined in Section 11.3(a) of the Indenture.



     Additional Balance: As to the HELOC Mortgage Loans and any date of determination, the
aggregate amount of all Draws conveyed to the Issuer with respect to such Pool pursuant to Section
2.01 of the Sale and Servicing Agreement.



     Additional Balance Contributed Amount: As to any Payment Date, the difference, if any, between
(a) the aggregate excess, if any, for all prior Payment Dates of (i) the aggregate principal amount
of all Additional Balances created during the Collection Period relating to each such Payment Date
over (ii) Principal Collections relating to such Payment Date, and (b) the aggregate Additional
Balance Contributed Amounts paid to the Depositor on all prior Payment Dates pursuant to Section
8.7(d)(iv) of the Indenture.



     Additional Servicer: Each affiliate of the Servicer that Services any of the Mortgage Loans
and each Person who is not an affiliate of the Servicer, who Services 10% or more of the Mortgage
Loans.



     Additional Form 10-D Disclosure: As defined in Section 3.14(a)(i) of the Sale and Servicing
Agreement.



     Additional Form 10-K Disclosure: As defined in Section 3.14 (b)(i) of the Sale and Servicing
Agreement.



     Affiliate: With respect to any specified Person, any other Person controlling, controlled by
or under common control with such Person. For the purposes of this definition, “control” means the
power to direct the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.



     Appraised Value: As to any Mortgaged Property, the value established by either a full
appraisal or a drive by inspection of such Mortgaged Property made to establish compliance with the
underwriting criteria then in effect in connection with the application for the Mortgage Loan
secured by such Mortgaged Property.



     Assignment of Mortgage: With respect to any Mortgage, an assignment, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the jurisdiction in which
the related Mortgaged Property is located to reflect the sale of the Mortgage to the Indenture
Trustee, which assignment, notice of transfer or equivalent instrument may be in the form of one or
more blanket assignments covering the Mortgage Loans secured by Mortgaged Properties located in the
same jurisdiction, to the extent permitted by applicable law.



     Authorized Newspaper: A newspaper of general circulation in the Borough of Manhattan, The City
of New York, printed in the English language and customarily published on each Business Day,
whether or not published on Saturdays, Sundays and holidays.



     Authorized Officer: With respect to the Issuer and the Servicer, any officer or agent acting
pursuant to a power of attorney of the Owner Trustee or the Servicer, respectively, who is
authorized to



Annex-1









 







act for the Owner Trustee or the Servicer, respectively, in matters relating to the Issuer and the Servicer, respectively, and who is identified on the list of Authorized Officers delivered by
each of the Owner Trustee and the Servicer, respectively, to the Indenture Trustee on the Closing
Date (as such lists may be modified or supplemented from time to time thereafter).



     Available Funds: With respect to any Payment Date, the amount then on deposit in the
Collection Account, after taking into account the deposits thereto made pursuant to Section 8.7(a)
of the Indenture, if any (exclusive of the amount of any related Insured Amount or Preference
Amount then on deposit in the Policy Payment Account).



     Back-Up Certification: the certification as defined in Section 3.14(e) of the Sale and
Servicing agreement.



     Basic Documents: The Indenture, the Bonds, the Residual Certificate, the Certificate of Trust,
the Trust Agreement, the Sale and Servicing Agreement, the Purchase Agreement, the Indemnification
Agreement, the Management Agreement, the Insurance Agreement, and the Policy.



     BBA: The British Bankers’ Association.



     BIF: The Bank Insurance Fund, as from time to time constituted, created under the Financial
Institutions Reform, Recovery and Enhancement Act of 1989, or if at any time after the execution of
this instrument the Bank Insurance Fund is not existing and performing duties now assigned to it,
the body performing such duties on such date.



     Billing Cycle: With respect to any Mortgage Loan and Collection Period, the billing period
specified in the related Loan Agreement and with respect to which amounts billed are received
during such Collection Period.



     Bond: A Class A Bond, but not any Residual Certificate.



     Bondholder or Holder: Any Holder of a Class A Bond whose name is registered on the Bond
Register.



     Bondholders: Any Holder of a Class A Bond.



     Bond Owner: With respect to a Book-Entry Bond, the Person who is the owner of such Book-Entry
Bond, with respect to a Definitive Bond, the registered owner of such Definitive Bond.



     Bond Paying Agent: The Indenture Trustee or any other Person that meets the eligibility
standards for the Indenture Trustee specified in Section 6.11 of the Indenture and is authorized by
the Issuer to make payments to and distributions from the Collection Account, including payment of
principal of or interest on the Bonds on behalf of the Issuer.



     Bond Principal Balance: With respect to the Class A Bonds and as of any time of determination,
the Original Bond Principal Balance, less any amounts actually distributed as principal to the
Class A Bonds on all prior Payment Dates.



     Bond Register: As defined in Section 2.3 of the Indenture.



     Bond Registrar: As defined in Section 2.3 of the Indenture.



     Book-Entry Bonds: A beneficial interest in the Bonds, ownership and transfers of which shall
be made through book entries by a Clearing Agency as described in Section 2.9 of the Indenture.



Annex-2









 





     Business Day: Any day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in the state of New York, the state of California or the state in which the Corporate
Trust Office is located are required or authorized by law or executive order to be closed or (iii)
a day on which the Insurer is closed.



     Certificate of Trust: The certificate of trust of the Issuer substantially in the form of
Exhibit C to the Trust Agreement.



     Class A Bond: Any Bond designated as a “Class A Collateralized Mortgage Bond” on the face
thereof in substantially the form of Exhibit A-1 to the Indenture.



     Class A Bond Rate: (A) For the first Interest Accrual Period, ___% and (B) for any Interest
Accrual Period thereafter, the lesser of the Class A Formula Bond Rate and the Maximum Rate.



     Clearing Agency: An organization registered as a “clearing agency” pursuant to Section 17A of
the Exchange Act.



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



     Closed-End Mortgage Loans: Mortgage Loans consisting solely of fixed-rate closed-end second
lien residential mortgage loans under the Mortgage Notes.



     Closed-End Principal Balance: As to any Closed-End Mortgage Loan, other than a Liquidated
Mortgage Loan, and as of any date, the Cut-Off Date Principal Balance minus all collections
credited as principal against the Closed-End Principal Balance of such Closed-End Mortgage Loan in
accordance with the related Mortgage Note prior to such day.



     Closing Date: ___, 200_.



     Code: The Internal Revenue Code of 1986, as amended from time to time.



     Collateral: As defined in the Granting Clause of the Indenture.



     Collection Account: That account designated as the “Collection Account” and established
pursuant to Section 8.3 of the Indenture.



     Collection Period: With respect to any Payment Date and any Mortgage Loans, the calendar month
preceding such Payment Date.



     Combined Loan-to-Value Ratio: (i) With respect to any HELOC Mortgage Loan as of any date, the
percentage equivalent of a fraction, the numerator of which is the sum of (A) the Credit Limit and
(B) the outstanding principal balance as of the date of application for the related credit line (or
as of any subsequent date, if any, as of which such outstanding principal balance may be determined
in connection with an increase in the Credit Limit for such HELOC Mortgage Loan) of any mortgage
loan or mortgage loans that are senior in priority to the HELOC Mortgage Loan and which are secured
by the same Mortgaged Property and the denominator of which is (C) the Appraised Value of the
related Mortgaged Property as set forth in the Mortgage File as of the date of the appraisal or on
such subsequent date, if any, or (D) in the case of a Mortgaged Property purchased within one year
of the date of execution of the related Credit Line Agreement, the lesser of (x) the Appraised
Value of the related Mortgaged Property as set forth in the loan files as of the date of the
appraisal and (y) the purchase price of such Mortgaged Property and (ii) with respect to any
Closed-End Mortgage Loan as of any date, the percentage equivalent



Annex-3









 







of a fraction, the numerator of which is the sum of (A) the original principal balance of the
Closed-End Mortgage Loan and (B) any outstanding principal balances of mortgage loans senior to
such Closed-End Mortgage Loan (calculated at the date of application for the Closed-End Mortgage
Loan) and the denominator of which is (C) the Appraised Value of the related Mortgaged Property as
set forth in the Mortgage File as of the date of the appraisal or (D) in the case of a Mortgaged
Property purchased within one year of the origination of the related Closed-End Mortgage Loan, the
lesser of (x) the Appraised Value of the related Mortgaged Property as set forth in the Mortgage
Files as of the date of the appraisal and (y) the purchase price of such Mortgaged Property.



     Company: [                                                                                ] or any successor thereto.



     Controlling Party: The Insurer, so long as no Insurer Default shall have occurred and be
continuing, and the Indenture Trustee, for so long as an Insurer Default shall have occurred and is
continuing.



     Corporate Trust Office: With respect to (i) the Indenture Trustee, the principal corporate
trust office of the Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at date of the execution of the Indenture is located at c/o
[Indenture Trustee’s Address] and (ii) the Owner Trustee, the principal corporate trust office of
the Owner Trustee located at [Owner Trustee’s Address], or at such other address as the Owner
Trustee may designate by notice to the Bondholders and the Depositor, or the principal corporate
trust office of any successor Owner Trustee (the address of which the successor owner trustee will
notify the Bondholders and the Depositor).



     Credit Limit: As to any HELOC Mortgage Loan, the maximum principal balance permitted under the
terms of the related Credit Line Agreement.



     Credit Limit Utilization Rate: As to any HELOC Mortgage Loan, the percentage equivalent of a
fraction the numerator of which is the related HELOC Principal Balance and the denominator of which
is the related Credit Limit.



     Credit Line Agreement: With respect to any HELOC Mortgage Loan, the related home equity line
of credit agreement and promissory note executed by the related Mortgagor and any amendment or
modification thereof.



     Credit Scores: With respect to the Mortgage Loans, statistical credit scores obtained by
mortgage lenders in connection with the loan application to help assess a borrower’s
creditworthiness.



     Custodian: [Custodian], or any replacement Custodian named by the Indenture Trustee and
approved by the Insurer on prior written notice to the Servicer, the Depositor, the Issuer and the
Insurer.



     Cut-Off Date: ___, 200_.



     Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the unpaid principal
balance thereof as of the Cut-Off Date.



     Default: Any occurrence that is, or with notice or the lapse of time or both would become, a
Rapid Amortization Event.



     Defective Mortgage Loan: A Mortgage Loan subject to retransfer pursuant to Section 2.03 or
2.05 of the Sale and Servicing Agreement.



     Deferred Interest: With respect to the Class A Bonds and any Payment Date, the excess, if any,
of interest due at the Class A Formula Bond Rate over interest due at the Class A Bond Rate.



Annex-4









 





     Deficiency Amount: With respect to the Class A Bonds and (1) any Payment Date, the excess, if
any, of (a) the sum of (i) the Interest Payment Amount (excluding any Relief Act Shortfalls, any
interest shortfalls resulting from prepayments on the Mortgage Loans, and any Deferred Interest)
and (ii) the Overcollateralization Deficit (which prior to the twenty-fourth Payment Date shall be
deemed to be zero for purposes of the Policy) over (b) the Total Available Funds and (2) on the
Final Scheduled Payment Date, the outstanding principal balance of the Class A Bonds then
outstanding, after taking into account all payments to be made to such Class A Bonds on that date.



     Definitive Bonds: As defined in Section 2.11 of the Indenture.



     Delinquent: A Mortgage Loan is “delinquent” if any payment due thereon is not made by the
close of business on the day such payment is scheduled to be due. A Mortgage Loan is “30 days
delinquent” if such payment has not been received by the close of business on the corresponding day
of the month immediately succeeding the month in which such payment was due, or, if there is no
such corresponding day (e.g., as when a 30-day month follows a 31-day month in which a payment was
due on the 31st day of such month) then on the last day of such immediately succeeding month.
Similarly for “60 days delinquent,” “90 days delinquent” and so on.



     Depositor: Sequoia Mortgage Funding Corporation, a Delaware corporation, or its
successors-in-interest.



     Depository: The initial Depository shall be The Depository Trust Company, the nominee of which
is Cede & Co., as the registered Holder of Class A Bonds evidencing $___in initial
aggregate principal amount of the Class A Bonds. The Depository shall at all times be a “clearing
corporation” as defined in Section 8-102(5) of the UCC of the State of New York.



     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 Telerate Page: The Dow Jones Telerate Service page 3750, or such other page as may
replace page 3750 on that service or such other service as may be nominated by the BBA as the
information vendor for the purpose of displaying the BBA’s “Interest Settlement Rates” for deposits
in U.S. dollars.



     Determination Date: With respect to any Payment Date, the fourth Business Day prior to such
Payment Date or such earlier day as shall be designated by the Insurer and the Indenture Trustee.



     Draw: With respect to any HELOC Mortgage Loan, an additional borrowing by the Mortgagor
subsequent to the Cut-Off Date in accordance with the related Credit Line Agreement.



     Draw Period: With respect to any HELOC Mortgage Loan, the period of time specified in the
related Credit Line Agreement whereby a Mortgagor may make a Draw under the related Credit Line
Agreement, not to exceed five or fifteen years (as applicable) unless extended pursuant to such
Credit Line Agreement and the Sale and Servicing Agreement, such extension to be limited by the
provisions set forth in Section 2.04 of the Sale and Servicing Agreement.



     Eligible Account: A segregated account that is (i) maintained with a depository institution
whose short-term debt obligations at the time of any deposit therein have the highest short-term
debt rating by the Rating Agencies, (ii) one or more accounts maintained with a depository
institution whose long-term unsecured debt rating by the Rating Agencies is at least AA- and whose
accounts are fully insured by either the Savings Association Insurance Fund or the Bank Insurance
Fund of the Federal Deposit Insurance Corporation established by such fund, (iii) a segregated
trust account maintained with the



Annex-5









 







Indenture Trustee in its fiduciary capacity, or (iv) otherwise acceptable to each Rating
Agency and the Insurer as evidenced by a letter from each Rating Agency and the Insurer to the
Indenture Trustee, without reduction or withdrawal of their then current ratings of the Class A
Bonds without regard to the Policy.



     Eligible Investments: One or more of the following (excluding any callable investments
purchased at a premium):




	 	(i)	 	direct obligations of, or obligations fully guaranteed as to timely payment of
principal and interest by, the United States or any agency or instrumentality thereof,
provided that such obligations are backed by the full faith and credit of the United
States;
	 
	 	(ii)	 	repurchase agreements on obligations specified in clause (i) maturing not more
than 30 days from the date of acquisition thereof, provided that (a) the short-term
unsecured debt obligations of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest short-term rating category (which
is A-1+ for Standard and Poor’s and P-1 for Moody’s), (b) the obligations must be
valued daily at current market price plus accrued interest, (c) the obligations,
pursuant to such evaluation, must be equal, at all times, to ___% of the cash
transferred to the Indenture Trustee in exchange for the obligations and (d) the
obligations must be delivered to the Indenture Trustee or, if the Indenture Trustee is
supplying the obligations, to an agent for the Indenture Trustee, in such a manner as
to accomplish perfection of a security interest in the obligations by possession of
certificated securities;
	 
	 	(iii)	 	certificates of deposit, time deposits and bankers’ acceptances (which, if
Moody’s is a Rating Agency, shall each have an original maturity of not more than 90
days and, in the case of bankers’ acceptances, shall in no event have an original
maturity of more than 365 days) of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof and subject to
supervision and examination by federal and/or state banking authorities, provided that
the unsecured short-term debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated by each of Standard & Poor’s
and Moody’s in its highest unsecured short-term debt rating category;
	 
	 	(iv)	 	commercial paper (having original maturities of not more than 270 days) of any
corporation incorporated under the laws of the United States or any state thereof which
on the date of acquisition has been rated by Standard & Poor’s and Moody’s in their
highest short-term debt rating categories;
	 
	 	(v)	 	short-term investment funds (“STIFS”) sponsored by any trust company or
national banking association incorporated under the laws of the United States or any
state thereof which on the date of acquisition has been rated by Standard & Poor’s and
Moody’s in their respective highest applicable rating category;
	 
	 	(vi)	 	interests in any money market fund which at the date of acquisition of the
interests in such fund and throughout the time such interests are held in such fund has
a rating of Aaa by Moody’s and either AAAm AAAm-G by Standard & Poor’s or such lower
rating as will not result in the qualification, downgrading or withdrawal of the
then-current rating assigned to the Bonds by each Rating Agency without regard to the
Policy; and
	 
	 	(vii)	 	other obligations or securities that are acceptable to each Rating Agency and
the Insurer as an Eligible Investment hereunder and will not result in a reduction in
the then current rating of the Bonds without regard to the Policy, as evidenced by a
letter to such effect




Annex-6









 






	 	 	 	from such Rating Agency and the Insurer and with respect to which the Servicer has
received confirmation that, for tax purposes, the investment complies with the last
clause of this definition;




provided that no instrument described hereunder shall evidence either the right to receive (a) only
interest with respect to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument and the interest and
principal payments with respect to such instrument provided a yield to maturity at par greater than
___% of the yield to maturity at par of the underlying obligations; and provided, further, that
(x) no instrument described hereunder may be purchased at a price greater than par if such
instrument may be prepaid or called at a price less than its purchase price prior to its stated
maturity and (y) all Eligible Investments shall mature no later than the next Payment Date.




     Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the Depositor, with the
consent of the Insurer, for a Defective Mortgage Loan which must, on the date of such substitution,
(i) have an outstanding Principal Balance (or, in the case of a substitution of more than one
Mortgage Loan for a Defective Mortgage Loan, an aggregate Principal Balance), equal to or less than
the Principal Balance of the Defective Mortgage Loan as of the applicable Cut-Off Date; (ii) except
for HELOC Mortgage Loans still in their teaser period, have a Loan Rate not less than the Loan Rate
of the Defective Mortgage Loan and not more than ___% in excess of the Loan Rate of such Defective
HELOC Mortgage Loan; (iii) for HELOC Mortgage Loans, have a Loan Rate based on the same Index as
the Defective Mortgage Loan with adjustments to such Loan Rate made on the same date on which the
Defective HELOC Mortgage Loan’s interest rate adjusts; (iv) for HELOC Mortgage Loans, have a Margin
that is not less than the Margin of the Defective HELOC Mortgage Loan and not more than 100 basis
points higher than the Margin for the Defective HELOC Mortgage Loan; (v) have a mortgage of the
same or higher level of priority as the Defective Mortgage Loan at the time such Mortgage Loan was
transferred to the Trust; (vi) have a remaining term to maturity not more than ___months earlier
and not more than ___months later than the remaining term to maturity of the Defective Mortgage
Loan; (vii) comply with each representation and warranty as to the Mortgage Loans set forth in the
Sale and Servicing Agreement (deemed to be made as of the date of substitution); (viii) have an
original Combined Loan-to-Value Ratio not greater than that of the Defective Mortgage Loan; and
(ix) have a Credit Score greater than or equal to the Credit Score of the Defective Mortgage Loan
at the time such Mortgage Loan was transferred to the Trust; (x) the related Mortgaged Property is
not an investment property (unless the Mortgaged Property related to the Defective Mortgage Loan
was an investment property); (xi) the related Mortgaged Property is not a second home (unless the
Mortgaged Property related to the Defective Mortgage Loan was a second home); (xii) the Combined
Loan-to-Value Ratio is not greater than 100%; and (xiii) in the case of HELOC Mortgage Loans, are
no longer in its teaser period.



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



     Event of Servicing Termination: As defined in Section 6.01 of the Sale and Servicing
Agreement.



     Event of Termination: As defined in Article IX of the Purchase Agreement.



     Excess Cashflow: With respect to any Payment Date, the Available Funds for such Payment Date
which remain on deposit in the Collection Account after taking into account the distributions
listed in clauses (i) through (vii) of Section 8.7(b) of the Indenture on such Payment Date.



     Excess Spread Amount: With respect to any Payment Date, the fraction, expressed as a
percentage, equal to (x) (i) 12 multiplied by (ii) the sum of the Available Funds for the related
Payment Date which remain on deposit in the Collection Account after taking into account the
distributions listed in clauses (i) through (vii) of Section 8.7(d) of the Indenture with respect
to such Payment Date divided by (y) the Pool Balance as of such Payment Date.



Annex-7









 





     Exchange Act: The Securities Exchange Act of 1934, as amended.



     FDIC: The Federal Deposit Insurance Corporation or any successor thereto.



     Final Scheduled Payment Date: For the Class A Bonds, the Payment Date in ___20___, in each
case whereby the related Bondholders shall be entitled to receive a payment of principal in an
amount equal to the respective outstanding Bond Principal Balance and any accrued and unpaid
interest thereon.



     Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the amount, if any, by which
(i) the aggregate of its Net Liquidation Proceeds exceeds (ii) the related Principal Balance (plus
accrued and unpaid interest thereon at the applicable Loan Rate from the date interest was last
paid through the last day in the related Collection Period) of such Liquidated Mortgage Loan
immediately prior to the final recovery of its Liquidation Proceeds.



     Form 8-K Disclosure Information: As defined in Section 3.14 (c)(i) of the Sale and Servicing
Agreement.



     Formula Bond Rate: For any Interest Accrual Period, (x) with respect to any Payment Date which
occurs on or prior to the Optional Redemption Date, LIBOR plus ___% per annum and (y) for any
Payment Date thereafter, LIBOR plus ___% per annum.



     GAAP: Generally accepted accounting principles, consistently applied.



     Grant: Mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign,
transfer, create, grant a lien upon and a security interest in and right of set-off against,
deposit, set over and confirm pursuant to the Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none of the obligations)
of the Granting party thereunder, including the immediate and continuing right to claim for,
collect, receive and give receipt for principal and interest payments in respect of the Collateral
and all other monies payable thereunder, to give and receive notices and other communications, to
make waivers or other agreements, to exercise all rights and options, to bring proceedings in the
name of the Granting party or otherwise and generally to do and receive anything that the Granting
party is or may be entitled to do or receive thereunder or with respect thereto.



     Gross Margin: As to any HELOC Mortgage Loans, the percentage set forth as the “Gross Margin”
for such HELOC Mortgage Loans on Exhibit A to the Sale and Servicing Agreement.



     HELOC Mortgage Loans: Mortgage Loans consisting solely of adjustable-rate home equity
revolving credit line loans under the Credit Line Agreements.



     HELOC Principal Balance: As to any HELOC Mortgage Loan, other than a Liquidated Mortgage Loan,
and as of any date, the related Cut-Off Date Principal Balance, plus (i) any Additional Balance in
respect of such HELOC Mortgage Loan, minus (ii) all collections credited as principal against the
HELOC Principal Balance of any such HELOC Mortgage Loan in accordance with the related Credit Line
Agreement prior to such day.



     Holder or Bondholder: The Person in whose name a Bond is registered on the Bond Register.



     Indebtedness: With respect to any Person at any time, (a) indebtedness or liability of such
Person for borrowed money whether or not evidenced by bonds, debentures, notes or other
instruments, or for the deferred purchase price of property or services (including trade
obligations); (b) obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted



Annex-8









 







accounting principles, recorded as capital leases; (c) current liabilities of such Person in
respect of funding vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or liabilities of such
Person arising under acceptance facilities; (f) obligations of such Person under any guarantees,
endorsements (other than for collection or deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any
Person or otherwise to assure a creditor against loss; (g) obligations of such Person secured by
any lien on property or assets of such Person, whether or not the obligations have been assumed by
such Person; or (h) obligations of such Person under any interest rate or currency exchange
agreement.



     Indemnification Agreement: The Indemnification Agreement, dated as of ___, 200_, by and
among the Insurer and [Underwriter] as underwriter.



     Indenture: The Indenture, dated as of ___, 200_, by and between the Issuer and the
Indenture Trustee, as the same may be amended and supplemented from time to time.



     Indenture Trustee: [Indenture Trustee], not in its individual capacity but as indenture
trustee under the Indenture, or any successor indenture trustee under the Indenture.



     Indenture Trustee Issuer Secured Obligations: All amounts and obligations which the Issuer may
at any time owe to the Indenture Trustee for the benefit of the Bondholders under the Indenture or
the Bonds.



     Independent: When used with respect to any specified Person, that the Person (a) is in fact
independent of the Issuer, any other obligor upon the Bonds, the Depositor and any Affiliate of any
of the foregoing Persons, (b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Depositor or any Affiliate of any of
the foregoing Persons and (c) is not connected with the Issuer, any such other obligor, the
Depositor or any Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions.



     Independent Certificate: A certificate, verification report or opinion to be delivered to the
Indenture Trustee and the Insurer under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1 of the Indenture, prepared by an Independent
appraiser or other expert appointed pursuant to an Issuer Order and approved by the Indenture
Trustee and the Insurer in the exercise of reasonable care, and such opinion or certificate shall
state that the signer has read the definition of “Independent” in the Indenture and that the signer
is Independent within the meaning thereof.



     Index: With respect to each Interest Rate Adjustment Date for a HELOC Mortgage Loan, the
highest “prime rate” as published in the “Money Rates” table of The Wall Street Journal as of the
last business day of the previous Billing Cycle.



     Initial Pool Balance: $___.



     Insurance Agreement: The Insurance Agreement, dated as of ___, 200_, by and among the
Insurer, the Seller, the Servicer, the Depositor and the Indenture Trustee.



     Insurance Policy: Any hazard, title or primary mortgage insurance policy relating to a
Mortgage Loan, but shall not include the Policy.



     Insurance Proceeds: Proceeds paid by any insurer (other than the Insurer) pursuant to any
Insurance Policy covering a Mortgage Loan, or amounts required to be paid by the Servicer pursuant
to



Annex-9









 







the last sentence of Section 3.04 of the Sale and Servicing Agreement, net of any component
thereof (i) covering any expenses incurred by or on behalf of the Servicer in connection with
obtaining such proceeds, (ii) that is applied to the restoration or repair of the related Mortgaged
Property, (iii) released to the Mortgagor in accordance with the Servicer’s normal servicing
procedures or (iv) required to be paid to any holder of a mortgage senior to such Mortgage Loan.



     Insured Amount: As defined in the Policy with respect to the Class A Bonds and as of any
Payment Date



     Insured Payment: As defined in the Policy with respect to the Class A Bonds.



     Insurer: [Insurer], and any successor thereto.



     Insurer Default: Any of (i) the failure by the Insurer to make a payment required under the
Policy in accordance with the terms thereof, (ii) the voluntary or involuntary filing of a petition
or other invocation of the process of any court or government authority for the purpose of
commencing or sustaining a case under any federal or state bankruptcy, insolvency or similar law
against the Insurer or (iii) the appointing of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Insurer or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the Insurer.



     Insurer Issuer Secured Obligations: All amounts and obligations which the Issuer may at any
time owe to or on behalf of the Insurer under the Indenture, the Insurance Agreement or any other
Basic Document.



     Interest Accrual Period: With respect to any Payment Date, the period from and including the
prior Payment Date (or, in the case of the ___200___Payment Date, from and including the
Closing Date) to, but excluding, the current Payment Date, with interest being computed on the
basis of the actual number of days in such Interest Accrual Period and a 360-day year.



     Interest Collections: With respect to any Payment Date, the sum of all payments by or on
behalf of Mortgagors and any other amounts constituting interest, including the portion of Net
Liquidation Proceeds and Insurance Proceeds allocated to interest pursuant to the terms of the
related Loan Agreement (net of the applicable servicing fees and excluding the fees or late charges
or similar administrative fees paid by Mortgagors), less the related Servicing Fee for the related
Collection Period. The terms of the related Loan Agreement shall determine the portion of each
payment in respect of such Mortgage Loan that constitutes principal or interest.



     Interest Determination Date: (i) With respect to any Interest Accrual Period (other than the
initial Interest Accrual Period), the second LIBOR Business Day preceding the first day of such
Interest Accrual Period and (ii) with respect to the initial Interest Accrual Period, the second
LIBOR Business Day preceding the Closing Date.



     Interest Payment Amount: With respect to the Class A Bonds and any Payment Date, (x) the Class
A Bond Rate applicable to such Payment Date multiplied by (y) the Bond Principal Balance
immediately prior to such Payment Date multiplied by (z) a fraction, the numerator of which is the
actual number of days in the related Interest Accrual Period and the denominator of which is 360.



     Interest Rate Adjustment Date: With respect to each HELOC Mortgage Loan, any date on which the
Loan Rate is adjusted in accordance with the related Credit Line Agreement.



     Interest Settlement Rates: Those rates which are displayed on the Designated Telerate Page.



Annex-10









 





     Issuer or Trust: Sequoia Mortgage Trust 200-_, a Delaware statutory trust, until a successor
replaces it and, thereafter, such successor.



     Issuer Order and Issuer Request: A written order or request signed in the name of the Issuer
by any one of its Authorized Officers and delivered to the Indenture Trustee.



     Issuer Secured Obligations: The Insurer Issuer Secured Obligations and the Indenture Trustee
Issuer Secured Obligations.



     Issuer Secured Parties: Each of the Indenture Trustee in respect of the Indenture Trustee
Issuer Secured Obligations and the Insurer in respect of the Insurer Issuer Secured Obligations.



     Late Payment Rate: For any Payment Date, the lesser of (a) the greater of (i) the per annum
rate of interest publicly announced from time to time by Citibank, N.A. as its prime lending rate
(any change in such rate of interest to be effective on the date such change is announced by
Citibank, N.A.), plus ___% per annum and (ii) the then applicable highest rate of interest on the
Class A Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days
elapsed over a year of 360 days.



     LIBOR: With respect to any Interest Accrual Period, the rate determined by the Indenture
Trustee on the related Interest Determination Date appearing on the Designated Telerate Page on
that Interest Determination Date based on the Interest Settlement Rate for U.S. dollar deposits of
one-month maturity set by the BBA as of the Interest Determination Date. If the BBA’s Interest
Settlement Rate does not appear on the Designated Telerate Page as of 11:00 a.m. (London time) on
such date, or if the Designated Telerate Page is not available on such date, the Indenture Trustee
will obtain such rate from the Reuters Monitor Money Rates Service page “LIBOR01” or the Bloomberg
L.P. page “BBAM.” If such rate is not published for such Interest Determination Date, LIBOR for
such date will be the most recently published Interest Settlement Rate. In the event that the BBA
no longer sets an Interest Settlement Rate, the Indenture Trustee, with the prior written consent
of the Insurer (but only if an Insurer Default shall not have occurred and be continuing), will
designate an alternative index that has performed in a manner substantially similar to the BBA’s
Interest Settlement Rate.



     LIBOR Business Day: Any day on which banks in London and New York are open for conducting
transactions in foreign currency and exchange.



     Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation, assignment,
participation, deposit arrangement, encumbrance, lien (statutory or other), preference, priority
right or interest or other security agreement or preferential arrangement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the UCC (other than any such financing statement filed for
informational purposes only) or comparable law of any jurisdiction to evidence any of the
foregoing; provided, however, that any assignment pursuant to Section 5.02 of the Sale and
Servicing Agreement shall not be deemed to constitute a Lien.



     Lifetime Rate Cap: With respect to each HELOC Mortgage Loan with respect to which the related
Mortgage Note provides for a lifetime rate cap, the maximum Loan Rate permitted over the life of
such HELOC Mortgage Loan under the terms of the related Credit Line Agreement previously delivered
to the Indenture Trustee.



     Liquidated Mortgage Loan: As to any Payment Date, any Mortgage Loan in respect of which the
Servicer has determined, in accordance with the servicing procedures specified in the Sale and
Servicing Agreement, as of the end of the related Collection Period, that all Liquidation Proceeds
which it expects to recover with respect to the disposition of such Mortgage Loan or the related
REO have been recovered.



Annex-11









 





     Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) which are incurred by the
Servicer in connection with the liquidation of any Mortgage Loan and not recovered under any
Insurance Policy, including, without limitation, legal fees and expenses, any unreimbursed amount
expended pursuant to Section 3.06 of the Sale and Servicing Agreement (including, without
limitation, amounts advanced to correct defaults on any mortgage loan which is senior to such
Mortgage Loan and amounts advanced to keep current or pay off a mortgage loan that is senior to
such Mortgage Loan) respecting the related Mortgage Loan and any related and unreimbursed
expenditures with respect to real estate property taxes, water or sewer taxes, condominium
association dues, property restoration or preservation or insurance against casualty, loss or
damage.



     Liquidation Loss Amounts: With respect to any Payment Date and Mortgage Loan that became a
Liquidated Mortgage Loan during the related Collection Period, the unrecovered portion of the
related Principal Balance thereof at the end of such Collection Period, after giving effect to the
Net Liquidation Proceeds applied in reduction of such Principal Balance.



     Liquidation Proceeds: Proceeds (including Insurance Proceeds) received in connection with the
liquidation of any Mortgage Loan or related REO, whether through trustee’s sale, condemnation,
foreclosure sale or otherwise.



     Loan Agreement: Any Credit Line Agreement or Mortgage Note.



     Loan Purchase Price: With respect to any Mortgage Loan purchased from the Trust pursuant to
Section 2.03 or 2.05 of the Sale and Servicing Agreement, an amount equal to the Principal Balance
of such Mortgage Loan as of the date of purchase, plus one month’s interest on the outstanding
Principal Balance thereof as of the beginning of the preceding Collection Period computed at the
Loan Rate less the Servicing Fee plus any costs and damages incurred by the Trust in connection
with any violation by such Mortgage Loan of any predatory or abusive lending law, together with,
without duplication, the aggregate amount of (i) all delinquent interest, all advances made by the
Servicer and not subsequently recovered from the related Mortgage Loan and (ii) any Reimbursement
Amount related to such Mortgage Loan.



     Loan Rate: With respect to any HELOC Mortgage Loan and as of any day, the per annum rate of
interest applicable under the related Credit Line Agreement to the calculation of interest for such
day on the Principal Balance of such HELOC Mortgage Loan. With respect to any Closed-End Mortgage
Loan and as of any day, the per annum rate of interest applicable under the related Mortgage Note
to the calculation of interest for such day on the Principal Balance of such Closed-End Mortgage
Loan.



     Loan Rate Cap: With respect to each Mortgage Loan, the lesser of (i) the Lifetime Rate Cap, if
any, or (ii) the applicable state usury ceiling, if any.



     Losses: Any and all out-of-pocket losses, claims, damages, liabilities or expenses (including
reasonable attorneys’ fees and disbursements) directly incurred by any Person specified in the
Purchase Agreement, resulting from transactions entered into under the Purchase Agreement (other
than liability for taxes). Losses must be accounted for and presented for reimbursement documented
in reasonable detail and within a reasonable time.



     Managed Amortization Period: With respect to the Class A Bonds, the period commencing on the
Closing Date and ending on the earlier to occur of (x) the ___200___Payment Date and (y) the
Payment Date which immediately precedes the occurrence of a Rapid Amortization Event with respect
to the Class A Bonds.



     Management Agreement: The Management Agreement, dated as of ___, 200_, by and between the
Company and the Issuer.



Annex-12









 





     Management Fee: $  per month.



     Manager: The Person acting in such capacity pursuant to the Management Agreement or its
successors or assigns, which shall initially be the Company.



     Margin: With respect to each HELOC Mortgage Loan, the fixed percentage amount set forth in the
related Loan Agreement which amount is added to the Prime Rate in accordance with the terms of the
related Loan Agreement to determine the Loan Rate for such HELOC Mortgage Loan, subject to any
maximum.



     Material Adverse Change: A material adverse change in (i) the business, results of operations
or properties of the Servicer or (ii) the ability of the Servicer to perform its obligations under
the Sale and Servicing Agreement.



     Maximum Principal Payment: With respect to the Class A Bonds and (i) any Payment Date during
the Managed Amortization Period, the Net Principal Collections and (ii) any Payment Date during the
Rapid Amortization Period, 100% of the Principal Collections relating to such Payment Date.



     Maximum Rate: With respect to the Class A Bonds and as to any Interest Accrual Period, the
Weighted Average Net Loan Rate of the Mortgage Loans for the Collection Period during which such
Interest Accrual Period begins (adjusted to an effective rate reflecting accrued interest
calculated on the basis of the actual number of days in the Interest Accrual Period and a year
assumed to consist of 360 days).



     MERS: Mortgage Electronic Registration Systems, Inc., a corporation organized and existing
under the laws of the State of Delaware, or any successor thereto.



     MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS System.



     MERS System: The system of recording transfers of mortgages electronically maintained by MERS.



     Minimum Monthly Payment: With respect to any Mortgage Loan and any month, the minimum amount
required to be paid by the related Mortgagor in that month.



     Moody’s: Moody’s Investors Service, Inc., or its successor in interest.



     Mortgage: The mortgage, deed of trust or other instrument creating a first or junior lien on
an estate in fee simple interest in real property securing a Mortgage Note or Credit Line
Agreement.



     Mortgage File: The mortgage documents listed in Section 2.01(c) to the Sale and Servicing
Agreement pertaining to a particular Mortgage Loan and any additional documents required to be
added to the Mortgage File pursuant to the Sale and Servicing Agreement.



     Mortgage Loan Schedule: With respect to any date, the schedule of Mortgage Loans included in
the Trust on such date. The schedule of Mortgage Loans as of the Cut-Off Date is the schedule set
forth in Exhibit A to the Sale and Servicing Agreement, which schedule sets forth as to each such
Mortgage Loan, to the extent applicable, (i) the Cut-Off Date Principal Balance, (ii) the Credit
Limit, (iii) the Gross Margin, (iv) the Lifetime Rate Cap, (v) the account number, (vi) the current
Loan Rate, (vii) the Combined Loan-to-Value Ratio, (viii) a code specifying the property type, (ix)
a code specifying documentation type and (x) a code specifying lien position. The Mortgage Loan
Schedule will be deemed to be amended from time to time to reflect Additional Balances and Eligible
Substitute Mortgage Loans.



Annex-13









 





     Mortgage Loans: Any HELOC Mortgage Loans, including any Additional Balances with respect
thereto, as well as any Closed-End Mortgage Loans, that are transferred to the Trust and assigned
to the Indenture Trustee pursuant to Sections 2.01 of the Sale and Servicing Agreement, together
with the Related Documents, exclusive of mortgage loans that are retransferred to the Depositor or
the Servicer from time to time pursuant to Sections 2.03, 2.05 or 2.07 of the Sale and Servicing
Agreement as from time to time are held as a part of the Trust. The Mortgage Loans originally so
held are identified in the Mortgage Loan Schedule delivered on the Closing Date. The Mortgage Loans
shall also include any Eligible Substitute Mortgage Loans substituted by the Depositor for a
Defective Mortgage Loan pursuant to Sections 2.03 and 2.05 of the Sale and Servicing Agreement. The
term “Mortgage Loan” includes the terms “HELOC Mortgage Loans” and “Closed-End Mortgage Loans.”



     Mortgage Note: The note or other evidence of indebtedness evidencing the indebtedness of a
Mortgagor under a Closed-End Mortgage Loan.



     Mortgaged Property: The underlying property, including any real property and improvements
thereon, securing a Mortgage Loan.



     Mortgagor: The obligor on a Mortgage Note or Credit Line Agreement.



     Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan, Liquidation Proceeds
net of Liquidation Expenses; provided, that Net Liquidation Proceeds shall not be an amount less
than zero.



     Net Loan Rate: With respect to any Mortgage Loan and as to any day, the Loan Rate (assuming
each HELOC Mortgage Loan is fully indexed) less the Servicing Fee Rate, the Premium Percentage and
the Trustee Fee Rate.



     Net Principal Collections: The excess of (x) Principal Collections over (y) the sum of (A) the
aggregate amount of all Additional Balances arising during the related Collection Period plus (B)
the Additional Balance Contributed Amounts outstanding as of the opening of business on the related
Payment Date; provided, however, that in no event will Net Principal Collections be less than zero
with respect to any Payment Date.



     Officer’s Certificate: A certificate signed by any Authorized Officer of a Person that
complies with the applicable requirements of Section 11.1 of the Indenture.



     Opinion of Counsel: One or more opinions of counsel who may, except as otherwise expressly
provided in the Indenture, be employees of or counsel to the Issuer and, if addressed to the
Insurer, satisfactory to such party, and which shall comply with any applicable requirements of
Section 11.1 of the Indenture, and if addressed to the Insurer, shall be satisfactory to such
party; provided, that any opinion relating to matters of federal, state or local taxation must be
provided by independent, outside counsel.



     Optional Redemption Date: The date on which the Depositor is first able to exercise its right
of optional redemption of the Class A Bonds pursuant to Section 10.1 of the Indenture or Section
7.01(b)(i) of the Sale and Servicing Agreement.



     Original Bond Principal Balance: $___.



     Original Pool Balance: $___.



     Outstanding: As of the date of determination, all Bonds theretofore authenticated and
delivered under the Indenture except:



Annex-14









 






	 	(i)	 	Bonds theretofore canceled by the Bond Registrar or delivered to the Bond
Registrar for cancellation;
	 
	 	(ii)	 	Bonds or portions thereof the payment for which money in the necessary amount
has been theretofore deposited with the Indenture Trustee or any Bond Paying Agent in
trust for the Holders of such Bonds (provided, however, that if such Bonds are to be
redeemed, notice of such redemption has been duly given pursuant to the Indenture or
provision therefor, satisfactory to the Indenture Trustee); and
	 
	 	(iii)	 	Bonds in exchange for or in lieu of other Bonds which have been authenticated
and delivered pursuant to the Indenture unless proof satisfactory to the Indenture
Trustee is presented that any such Bonds are held by a bona fide purchaser; provided,
however, that Bonds which have been paid with proceeds of the Policy shall continue to
remain Outstanding for purposes of the Indenture until the Insurer has been paid as
subrogee under the Insurance Agreement or the Insurer has been reimbursed pursuant to
the Insurance Agreement, as evidenced by a written notice from the Insurer delivered to
the Indenture Trustee, and the Insurer shall be deemed to be the Holder thereof to the
extent of any payments thereon made by the Insurer; provided, further, that in
determining whether the Holders of the requisite Outstanding Amount of the Bonds have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder or under any Basic Document, Bonds owned by the Issuer, any other obligor
upon the Bonds, the Depositor or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Bonds that a Responsible
Officer of the Indenture Trustee either actually knows to be so owned or has received
written notice thereof shall be so disregarded. Bonds so owned that have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to
such Bonds and that the pledgee is not the Issuer, any other obligor upon the Bonds,
the Depositor or any Affiliate of any of the foregoing Persons.





     Outstanding Amount: With respect to any date of determination, the aggregate Bond Principal
Balance of all the Bonds Outstanding as of such date of determination.



     Overcollateralization Amount: With respect to the Class A Bonds and as of any Payment Date,
the excess, if any, of (x) the Pool Balance as of such Payment Date over (y) the Bond Principal
Balance as of such Payment Date (after taking into account any reductions to such Bond Principal
Balance resulting from payments made pursuant to clauses (v) and (vi) of Section 8.7(b) of the
Indenture on such Payment Date).



     Overcollateralization Deficiency Amount: With respect to the Class A Bonds and any Payment
Date, the excess, if any, of (i) the Specified Overcollateralization Amount applicable to such
Payment Date over (ii) the Overcollateralization Amount applicable to such Payment Date.



     Overcollateralization Deficit: With respect to the Class A Bonds and any Payment Date, the
amount, if any, by which (i) the aggregate Bond Principal Balance, after taking into account the
payment to the Bondholders of all principal from sources other than the Policy on such Payment
Date, exceeds (ii) the Pool Balance as of such Payment Date.



     Overcollateralization Reduction Amount: With respect to the Class A Bonds and any Payment
Date, the excess, if any, of (x) the Overcollateralization Amount over (y) the Specified



Annex-15









 







Overcollateralization Amount assuming that the Maximum Principal Payment had been distributed
to the Bondholders on such Payment Date.



     Owner Trustee: [Owner Trustee], not in its individual capacity, but solely as owner trustee
under the Trust Agreement, and any successor Owner Trustee thereunder.



     Owner Trustee Fee: A fee which is separately agreed to between the Servicer and the Owner
Trustee and is payable to the Owner Trustee .



     Owner Trustee Fee Rate: The per annum rate at which the Owner Trustee Fee is calculated.



     Payment Date: The fifteenth day of each month, or if such day is not a Business Day, then the
next Business Day, beginning in the month immediately following the Closing Date.



     Payment Date Statement: as of each Payment Date, the statement to Bondholders as defined in
Section 8.8.



     Percentage Interest: As to any Bond, the percentage obtained by dividing the principal
denomination of such Bond by the aggregate of the principal denominations of all Bonds. As to any
Residual Certificate, the percentage set forth on the face of such Residual Certificate.



     Person: Any individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or political subdivision
thereof.



     Policy: The financial guaranty insurance policy No. ___and any endorsement thereto,
with respect to the Class A Bonds, dated ___, 200_, issued by the Insurer to the Indenture
Trustee for the benefit of the Bondholders.



     Policy Payment Account: As defined in Section 8.4(c) of the Indenture.



     Pool: The pool of Mortgage Loans held by the Issuer including any Eligible Substitute Mortgage
Loan delivered in the replacement thereof.



     Pool Balance: With respect to any date, the aggregate of the Principal Balances of all of the
Mortgage Loans as of such date.



     Pool Delinquency Rate: With respect to any Collection Period, the fraction, expressed as a
percentage, equal to (x) the aggregate Principal Balances of all Mortgage Loans that are 90 or more
days delinquent (including all foreclosures and REO properties) as of the close of business on the
last day of such Collection Period over (y) the Pool Balance as of the close of business on the
last day of such Collection Period.



     Pool Factor: A seven-digit decimal which the Servicer shall compute monthly expressing the
related Bond Principal Balance as of each Payment Date (after giving effect to any distribution of
principal on such Payment Date) as a proportion of the Original Bond Principal Balance. On the
Closing Date, the Pool Factor will be 1.0000000. Thereafter, the Pool Factor shall decline to
reflect reductions in the Bond Principal Balance resulting from distributions of principal to the
Bonds.



     Predecessor Bond: With respect to any particular Bond, every previous Bond evidencing all or a
portion of the same interest as that evidenced by such particular Bond; and, for the purpose of
this definition, any Bond authenticated and delivered under Section 2.4 of the Indenture in lieu of
a mutilated, lost, destroyed or stolen Bond shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Bond.



Annex-16









 





     Preference Amount: As defined in the Policy.



     Preference Claim: As defined in Section 5.13(b) of the Indenture.



     Premium Amount: With respect to the Bonds and as to any Payment Date, the product of (x) the
Premium Percentage, (y) the Bond Principal Balance immediately prior to such Payment Date and (z)
the fraction, expressed as a percentage, the numerator of which is the number of days elapsed from
the last Payment Date to the related Payment Date and the denominator of which is 360.



     Premium Percentage: As defined in the Insurance Agreement.



     Prime Rate: The interest rate entitled “Prime Rate” in the published Money Rates table of The
Wall Street Journal.



     Principal Balance: As of any date and with respect to any Mortgage Loan, the HELOC Principal
Balance or the Closed-End Principal Balance, as applicable. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have a Principal Balance equal to the Principal Balance
of the related Mortgage Loan immediately prior to the final recovery of related Liquidation
Proceeds and a Principal Balance of zero thereafter.



     Principal Collections: With respect to any Payment Date, the sum of all payments by or on
behalf of Mortgagors and any other amounts constituting principal (including, but not limited to,
Substitution Amounts and any portion of Insurance Proceeds, Net Liquidation Proceeds or amounts to
be deposited to the Collection Account pursuant to Section 7.01 of the Sale and Servicing Agreement
that are applicable to principal, in each case as allocable to principal of the applicable Mortgage
Loan, but excluding Foreclosure Profits) collected by the Servicer under the related Mortgage Loans
during the related Collection Period. The terms of the related Loan Agreements shall determine the
portion of each payment in respect of a Mortgage Loan that constitutes principal or interest.



     Principal Payment Amount: With respect to the Class A Bonds on any Payment Date, the excess,
if any, of (x) the Maximum Principal Payment over (y) the Overcollateralization Reduction Amount.



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



     Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as of ___, 200_, by and
between the Company and the Depositor with respect to the Mortgage Loans.



     Purchased Assets: As defined in Section 2.01 of the Purchase Agreement.



     Purchase Price: With respect to the Mortgage Loans as of the Cut-Off Date (and any Eligible
Substitute Mortgage Loan as of the date delivered), at least 100% of the Principal Balance; with
respect to all Additional Balances, at least 100% of the Principal Balance (as such term is used in
Section 2.01 of the Purchase Agreement).



     Purchaser Bond: As defined in Section 10.02 of the Purchase Agreement.



     Rapid Amortization Event: Any of those “Rapid Amortization Events” described in Section 12.1
of the Indenture.



     Rapid Amortization Period: With respect to the Class A Bonds, the period which immediately
follows the end of the Managed Amortization Period.



Annex-17









 





     Rating Agency: [Each of Moody’s and Standard & Poor’s]. If such agency or a successor is no
longer in existence, “Rating Agency” shall be such statistical credit rating agency, or other
comparable Person, designated by the Depositor and the Insurer, notice of which designation shall
be given to the Indenture Trustee. References in any Basic Document to the highest short term
unsecured rating category of a Rating Agency shall means “A-1+” or better in the case of Standard &
Poor’s and “P-1” or better in the case of Moody’s, and in the case of any other Rating Agency shall
mean the ratings such other Rating Agency deems equivalent to the foregoing ratings. References in
any Basic Document to the highest long-term rating category of a Rating Agency shall mean “AAA” in
the case of Standard & Poor’s and “Aaa” in the case of Moody’s, and in the case of any other Rating
Agency, the rating such other Rating Agency deems equivalent to the foregoing ratings.



     Realized Losses: For any Payment Date will equal the positive difference between (i) the
Principal Balances of all Mortgage Loans that were liquidated during the related Collection Period
and (ii) the principal portion of Net Liquidation Proceeds of such Mortgage Loans.



     Recordation Event: Any of (i) the resignation of [___], as Servicer, (ii) the
occurrence of an Event of Servicing Termination, (iii) the occurrence of a bankruptcy, insolvency
or foreclosure relating to the Issuer; provided, that any Recordation Event may be waived by the
Insurer by its providing written notice of such waiver to the Servicer and the Indenture Trustee;
and (iv) at the written request of the Insurer to the Indenture Trustee to record Assignments of
Mortgages because the Insurer has determined, in the exercise of its reasonable judgment, that such
recordation is necessary to protect the Insurer’s interest with respect to such Mortgage Loans
because (a) a Material Adverse Change with respect to the Servicer has occurred, (b) the Insurer
has been so advised by counsel as a result of a change that occurred after the Closing Date in
applicable law or the interpretation thereof or (c) with respect to a particular Mortgage Loan, the
insolvency of the related Mortgagor.



     Record Date: The Business Day immediately preceding the related Payment Date; provided,
however, that following the date on which Definitive Bonds are available, the Record Date for the
Bonds shall be the last Business Day of the calendar month preceding the month in which the related
Payment Date occurs.



     Redemption Date: In the case of a redemption of any Bonds pursuant to Section 10.1 of the
Indenture, the Payment Date specified by the Depositor pursuant to Section 7.01(b) of the Sale and
Servicing Agreement.



     Redemption Price: In the case of a redemption of any Bonds pursuant to Section 10.1 of the
Indenture, an amount equal to the unpaid principal amount of the then outstanding principal amount
of the Bonds being redeemed, plus accrued and unpaid interest thereon to but excluding the
Redemption Date, plus any outstanding, Reimbursement Amount.



     Regulation AB: Subpart 229.1100 — Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject to such clarifications
and interpretations as have been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff from time to time.



     Reimbursement Amount: As of any Payment Date with respect to the Class A Bonds, the sum of
(x)(i) all Insured Payments made pursuant to the Policy by the Insurer and in each case not
previously repaid to the Insurer pursuant to Section 8.7(d)(vii) of the Indenture, plus (ii)
interest accrued on each such payment made pursuant to the Policy not previously repaid calculated
at the Late Payment Rate from the date the Indenture Trustee received the related Insured Payments
and (y)(i) any other amounts then due and owing to the Insurer under the Insurance Agreement, plus
(ii) interest on such amounts at the Late Payment Rate.



Annex-18









 





     Related Documents: As defined in Section 2.01(c) of the Sale and Servicing Agreement.



     Relevant Servicing Criteria: The Servicing Criteria applicable to each party, as set forth on
Exhibit G to the Sale and Servicing Agreement. Multiple parties can have responsibility for the
same Relevant Servicing Criteria. With respect to a Servicing Function Participant engaged by the
Master Servicer, the Trustee or each Servicer, the term “Relevant Servicing Criteria” may refer to
a portion of the Relevant Servicing Criteria applicable to such parties.



     Relief Act Shortfall: Shortfalls in interest collections resulting from the application of the
Servicemembers Civil Relief Act, as amended or similar state laws.



     Removal Date: As defined in Section 2.07 of the Sale and Servicing Agreement.



     Removal Notice Date: As defined in Section 2.07 of the Sale and Servicing Agreement.



     REO: A Mortgaged Property acquired by the Servicer or any sub-servicer on behalf of the Trust
through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.



     Repurchase Price: The sum of (a) the outstanding principal balance of the related Mortgage
Loan as of such date of repurchase plus (b) any accrued interest as of such date.



     Residual Certificate: As defined in Section 1.1 of the Trust Agreement.



     Residual Certificateholder: Holder of the Residual Certificate.



     Responsible Officer: With respect to the Indenture Trustee or any officer of the Indenture
Trustee with direct responsibility for the administration of the Indenture and, also, with respect
to a particular matter, any other officer to whom such matter is referred because of such officer’s
knowledge of and familiarity with the particular subject.



     SAIF: The Savings Association Insurance Fund, as from time to time constituted, created under
the Financial Institutions Reform, Recovery and Enhancement Act of 1989, or if at any time after
the execution of the Indenture, the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such date.



     Sale and Servicing Agreement: The Sale and Servicing Agreement, dated as of ___, 200_,
by and among the Issuer, the Depositor, the Servicer and the Indenture Trustee, as the same may be
amended or supplemented from time to time.



     Sarbanes Oxley Act: The Sarbanes-Oxley Act of 2002 and the rules and regulations of the
Commission promulgated thereunder (including any interpretations thereof by the Commission’s
staff).



     Sarbanes-Oxley Certification: A written certification covering the activities of all Servicing
Function Participants and signed by an officer of the Depositor and that complies with (i) the
Sarbanes-Oxley Act of 2002, as amended from time to time, and (ii) the February 21, 2003 Statement
by the Staff of the Division of Corporation Finance of the Securities and Exchange Commission
Regarding Compliance by Asset-Backed Issuers with Exchange Act Rules 13a-14 and 15d-14, as in
effect from time to time; provided that if, after the Closing Date (a) the Sarbanes-Oxley Act of
2002 is amended, (b) the Statement referred to in clause (ii) is modified or superseded by any
subsequent statement, rule or regulation of the Securities and Exchange Commission or any statement
of a division thereof, or (c) any future releases, rules and regulations are published by the
Securities and Exchange Commission from time to time pursuant to the Sarbanes-Oxley Act of 2002,
which in any such case affects the form or substance of the required certification and results in
the required certification being, in the reasonable



Annex-19









 







judgment of the Master Servicer, materially more onerous than the form of the required
certification as of the Closing Date, the Sarbanes-Oxley Certification shall be as agreed to by the
Servicer, the Manager and the Seller following a negotiation in good faith to determine how to
comply with any such new requirements.



     SEC: The Securities and Exchange Commission and any successor thereto.



     Seller: RWT Holdings, Inc., a Delaware corporation, in its capacity as Seller pursuant to the
Purchase Agreement.



     Servicer: [___], a [___], any successor thereto and, after its termination or
resignation as Servicer, any successor.



     Servicing Certificate: A certificate completed and executed by a Servicing Officer in
accordance with Section 4.01 of the Sale and Servicing Agreement.



     Servicing Criteria: The criteria set forth in paragraph (d) of Item 1122 of Regulation AB, as
such may be amended from time to time.



     Servicing Fee: With respect to any Payment Date, the product of (i) one-twelfth of the
Servicing Fee Rate and (ii) the aggregate Principal Balance of the Mortgage Loans on the first day
of the Collection Period preceding such Payment Date (or at the Cut-Off Date with respect to the
first Payment Date).



     Servicing Fee Rate: ___% per annum.



     Servicing Function Participant: Any Subservicer or Subcontractor, other than each Servicer,
the Master Servicer and the Trustee, that is participating in the servicing function within the
meaning of Regulation AB, unless such Person’s activities relate only to 5% or less of the Mortgage
Loans.



     Servicing Officer: Any officer of the Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loan whose name and specimen signature appear on a
list of servicing officers furnished to the Indenture Trustee (with a copy to the Insurer) by the
Servicer on the Closing Date, as such list may be amended from time to time.



     Specified Overcollateralization Amount: With respect to any Payment Date, the amount equal to
the greater of: (I) the sum of (a) the related Spread Squeeze Amount plus (b) ___% of the Principal
Balance of Mortgage Loans which are 180 or more days Delinquent as of the close of business of the
last day of the related Collection Period plus (c)(i) prior to the 31st Payment Date, the greater
of (x) ___% of the Original Bond Principal Balance and (y) the Step-Up Overcollateralization
Amount and (ii) on or after the 31st Payment Date the greater of (x) the lesser of (A) ___% of the
Original Bond Principal Balance and (B) ___% of the Pool Balance as of the current Payment Date
and (y) the Step-Up Overcollateralization Amount; and (II) the sum of the related Spread Squeeze
Amount and ___% of the Original Bond Principal Balance; provided, however, that no reduction in
clause (c)(ii) shall occur unless (i) aggregate cumulative Liquidation Loss Amounts with respect to
the Pool as a percentage of the Initial Pool Balance are less than ___% and (ii) the Three Month
Rolling Delinquency Rate for is less than ___%.



     Spread Squeeze Amount: As of any Payment Date (A) on or prior to the twelfth Payment Date, $0
and (B) after the twelfth Payment Date, a number equal to the product of (I) two times the positive
difference, if any of (x) ___% and (y) the related Spread Squeeze Percentage and (II) the Pool
Balance as of such Payment Date.



Annex-20









 





     Spread Squeeze Percentage: As of any Payment Date after the twelfth Payment Date, a fraction
(expressed as a percentage), the numerator of which is the product of ___and the related Available
Funds for such Payment Date which remain on deposit in the Collection Account after taking into
account the distributions listed in clauses (i) through (vii) of Section 8.7(b) of the Indenture
with respect to such Payment Date and the denominator of which is the related Pool Balance as of
such Payment Date.



     Standard & Poor’s: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.



     Stepdown Date: With respect to the Class A Bonds, the later to occur of (a) the 31st Payment
Date and (b) the first Payment Date on which the Pool Balance has been reduced to 50% or less of
the Pool Balance as of the Cut-Off Date.



     Step-Up Overcollateralization Amount: If aggregate cumulative Liquidation Loss Amounts as a
percentage of the Original Bond Principal Balance exceed the following percentages on the specified
Payment Dates,



	 	 	 	 	 	 	 
	Payment Dates	 	Percentage
	1st

	 	—
	 	___th
	 	___%
	___th

	 	—
	 	___th
	 	___%
	___th

	 	—
	 	___th
	 	___%
	___th

	 	—
	 	___th
	 	___%
	___th

	 	 	 	 	 	___%





the Step-Up Overcollateralization Amount will equal (a) ___% of the Original Bond Principal
Balance, prior to the 31st Payment Date and (b) on or after the 31st Payment Date, the lesser of
(x) ___% of the Original Bond Principal Balance and (y) ___% of the Pool Balance as of current
Payment Date. Otherwise, the Step-Up Overcollateralization Amount is zero.




     Subcontractor: Any vendor, subcontractor or other Person that is not responsible for the
overall servicing of Mortgage Loans but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to Mortgage Loans under the direction or authority of any
Servicer (or a Subservicer of any Servicer), the Master Servicer or the Trustee.



     Subservicer: Any Person that (i) services Mortgage Loans on behalf of any Servicer, and (ii)
is responsible for the performance (whether directly or through sub-servicers or Subcontractors) of
Servicing functions required to be performed under this Agreement, any related Servicing Agreement
or any sub-servicing agreement that are identified in Item 1122(d) of Regulation AB.



     Substitute Cut-Off Date: With respect to any Eligible Substitute Mortgage Loan, the opening of
business on the first day of the calendar month in which such Eligible Substitute Mortgage Loan is
conveyed to the Trust.



     Substitution Amounts: In connection with the delivery of any Eligible Substitute Mortgage
Loan, if the outstanding principal amount of such Eligible Substitute Mortgage Loan as of the
applicable Substitute Cut-Off Date is less than the related Principal Balance of the Mortgage Loan
being replaced as of such Substitute Cut-Off Date, an amount equal to such difference together with
accrued and unpaid



Annex-21









 







interest on such amount calculated at the Loan Rate net of the Servicing Fee, if any, of the
Mortgage Loan being replaced.



     Termination Date: The latest of (i) the termination of the Policy and the return of the Policy
to the Insurer for cancellation, (ii) the date on which the Insurer shall have received all amounts
due and owing to the Insurer under the Insurance Agreement and (iii) the date on which the
Indenture Trustee shall have received payment and performance of all Indenture Trustee Issuer
Secured Obligations.



     Three Month Rolling Delinquency Rate: As of any Payment Date beginning with the third Payment
Date, a number equal to the average of the related Pool Delinquency Rates for each of the three
immediately preceding Collection Periods.



     Total Available Funds: With respect to any Payment Date, Available Funds (after taking into
account the distributions pursuant to clauses (i) and (ii) of Section 8.7(d) of the Indenture for
such Payment Date).



     Transfer Date: With respect to each Eligible Substitute Mortgage Loan, the date on which such
Eligible Substitute Mortgage Loan shall have been transferred to the Trust.



     Trust: Sequoia Mortgage Trust 200-_, a trust established by the Trust Agreement.



     Trust Agreement: The Trust Agreement, dated as of ___, 200_, by and between the Depositor
and the Owner Trustee, as the same may be amended and supplemented from time to time.



     Trust Property: All property and proceeds conveyed pursuant to Section 2.01 of the Sale and
Servicing Agreement, and certain other rights under that Agreement.



     Trustee Fee: A fee which is separately agreed to between the Servicer and the Indenture
Trustee.



     Trustee Fee Rate: The per annum rate at which the Trustee Fee is calculated.



     UCC: Unless the context otherwise requires, the Uniform Commercial Code, as in effect in the
relevant jurisdiction, as amended from time to time.



     Weighted Average Net Loan Rate: As to any Collection Period, the average of the daily Net Loan
Rate for each Mortgage Loan i for each day during the related Billing Cycle, weighted on the basis
of the daily average of the related Principal Balances for each day in such Billing Cycle for each
Mortgage Loan as determined by the Servicer in accordance with the Servicer’s normal servicing
procedures.




Annex-22