- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported): May 27, 1999
BEAR STEARNS ASSET BACKED SECURITIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-9532 13-3836437
- ----------------------------- ------------------------ -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) (Commission File Number) Identification No.)
245 Park Avenue 10167
New York, New York ----------
- --------------------- (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code (212) 272-4095
----- --------
- ------------------------------------------------------------------------------
<PAGE>
Item 5. Other Events.
- ---- ------------
On May 27, 1999, a single series of notes, entitled Irwin Home Equity Loan
Trust 1999-2, Home Equity Loan-Backed Notes, Series 1999-2 (the "Notes"), was
issued pursuant to an indenture (the "Indenture") attached hereto as Exhibit 4.1
and dated as of April 30, 1999, between Irwin Home Equity Loan Trust 1999-2, as
issuer (the "Trust"), and Norwest Bank Minnesota, National Association, as
indenture trustee (the "Indenture Trustee"). The Notes consist of four classes
(each, a "Class") of Notes designated as the "Class A-1 Notes", the "Class A-2
Notes", the "Class A-3 Notes" and the "Class A-4 Notes". The Notes have the
benefit of an irrevocable and unconditional financial guaranty insurance policy
(the "Policy") attached hereto as Exhibit 99.1 issued by Ambac Assurance
Corporation (the "Enhancer") for the benefit of the holders of the Notes
pursuant to an insurance and indemnity agreement (the "Insurance and Indemnity
Agreement"), dated as of May 27, 1999, among the Enhancer, Irwin Funding Corp.,
as transferor (the "Transferor"), Bear Stearns Asset Backed Securities, Inc.
(the "Depositor"), Irwin Union Bank and Trust Company, as master servicer (the
"Master Servicer"), Irwin Home Equity Corporation, as originator, the Trust, as
issuer, and the Indenture Trustee. The Notes represent obligations of the Trust
established pursuant to a trust agreement (the "Trust Agreement"), dated as of
April 30, 1999, between the Depositor and Wilmington Trust Company, as owner
trustee (the "Owner Trustee"). The assets of the Trust include, without
limitation, two groups of closed-end, fixed rate home equity loans (the
"Mortgage Loans") secured by primarily second mortgages or deeds of trust on
residential properties. The Mortgage Loans were acquired by the Trust from the
Depositor pursuant to a sale and servicing agreement (the "Sale and Servicing
Agreement") attached hereto as exhibit 99.2 and dated as of April 30, 1999,
among the Depositor, the Transferor, the Master Servicer, the Trust, as issuer,
and the Indenture Trustee.
The Notes and the Mortgage Loans are more particularly described in the
Prospectus, dated December 4, 1998, and the Prospectus Supplement, dated May 6,
1999, as previously filed with the Securities and Exchange Commission pursuant
to Rule 424(b)(5).
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements - Not Applicable.
(b) Pro Forma Financial Information - Not Applicable.
(c) Exhibits
4.1 Indenture, dated as of April 30, 1999,
between Irwin Home Equity Loan Trust 1999-2,
as issuer, and Norwest Bank Minnesota,
National Association, as indenture trustee.
99.1 Financial Guaranty Insurance Policy issued
by Ambac Assurance Corporation pursuant to
the Insurance and Indemnity Agreement, dated
as of May 27, 1999, among Ambac Assurance
Corporation, as enhancer, Irwin Funding
Corp., as transferor, Bear Stearns Asset
Backed Securities, Inc., as depositor, Irwin
Union Bank and Trust Company, as master
servicer, Irwin Home Equity Corporation, as
originator, Irwin Home Equity Loan Trust
1999-2, as issuer, and Norwest Bank
Minnesota, National Association, as
indenture trustee.
99.2 Sale and Servicing Agreement, dated as of
April 30, 1999, among Bear Stearns Asset
Backed Securities, Inc., as depositor, Irwin
Funding Corp., as transferor, Irwin Union
Bank and Trust Company, as master servicer,
Irwin Home Equity Loan Trust 1999-2, as
issuer, and Norwest Bank Minnesota, National
Association, as indenture trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BEAR STEARNS ASSET BACKED
SECURITIES, INC.
By: /s/ Jonathan Lieberman
-------------------------------
Name: Jonathan Lieberman
Title: Managing Director
Dated: June 11, 1999
<PAGE>
Exhibit Index
-------------
Exhibit Page
- ------- ----
4.1 Indenture, dated as of April 30, 1999, between Irwin
Home Equity Loan Trust 1999-2, as issuer, and Norwest
Bank Minnesota, National Association, as indenture
trustee.
99.1 Financial Guaranty Insurance Policy issued by
Ambac Assurance Corporation pursuant to the
Insurance and Indemnity Agreement, dated as of
May 27, 1999, among Ambac Assurance Corporation,
as enhancer, Irwin Funding Corp., as transferor,
Bear Stearns Asset Backed Securities, Inc., as depositor,
Irwin Union Bank and Trust Company, as master servicer,
Irwin Home Equity Corporation, as originator,
Irwin Home Equity Loan Trust 1999-2, as issuer,
and Norwest Bank Minnesota, National Association,
as indenture trustee.
99.2 Sale and Servicing Agreement, dated as of April 30, 1999,
among Bear Stearns Asset Backed Securities, Inc.,
as depositor, Irwin Funding Corp., as transferor,
Irwin Union Bank and Trust Company, as master servicer,
Irwin Home Equity Loan Trust 1999-2, as issuer,
and Norwest Bank Minnesota, National Association,
as indenture trustee.
EXHIBIT 4.1
-----------
IRWIN HOME EQUITY LOAN TRUST 1999-2,
as Issuer,
and
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
-----------------------------
INDENTURE
Dated as of April 30, 1999
-----------------------------
HOME EQUITY LOAN-BACKED NOTES
CLASS A-1, CLASS A-2, CLASS A-3 AND CLASS A-4
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................2
Section 1.01 Definitions.....................................................2
Section 1.02 Incorporation by Reference of Trust Indenture Act...............2
ARTICLE II ORIGINAL ISSUANCE OF NOTES........................................3
Section 2.01 Form............................................................3
Section 2.02 Execution, Authentication and Delivery..........................3
ARTICLE III COVENANTS........................................................4
Section 3.01 Collection of Payments with Respect to the Mortgage Loans.......4
Section 3.02 Maintenance of Office or Agency.................................4
Section 3.03 Money for Payments To Be Held in Trust; Paying Agent............4
Section 3.04 Existence.......................................................5
Section 3.05 Payment of Principal and Interest; Defaulted Interest...........6
Section 3.06 Protection of Trust Estate......................................8
Section 3.07 Opinions as to Trust Estate.....................................9
Section 3.08 Performance of Obligations; Sale and Servicing Agreement.......10
Section 3.09 Negative Covenants.............................................10
Section 3.10 Annual Statement as to Compliance..............................11
Section 3.11 Recordation of Assignments.....................................11
Section 3.12 Representations and Warranties Concerning the Mortgage Loans...11
Section 3.13 Assignee of Record of the Mortgage Loans.......................12
Section 3.14 Servicer as Agent and Bailee of the Indenture Trustee..........12
Section 3.15 Investment Company Act.........................................12
Section 3.16 Issuer May Not Consolidate, etc................................12
Section 3.17 Successor or Transferee........................................14
Section 3.18 No Other Business..............................................14
Section 3.19 No Borrowing...................................................15
Section 3.20 Guarantees.....................................................15
Section 3.21 Capital Expenditures...........................................15
Section 3.22 Indenture Trustee Not Liable for Notes or Related Documents....15
Section 3.23 Notice of Events of Default....................................15
Section 3.24 Further Instruments and Acts...................................15
Section 3.25 Statements to Noteholders......................................15
Section 3.26 Payments under the Policy......................................15
Section 3.27 Replacement Enhancemen.........................................16
ARTICLE IV THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE ..............17
Section 4.01 The Notes......................................................17
Section 4.02 Registration of and Limitations on Transfer and
Exchange of Notes; Appointment of Certificate Registrar........17
Section 4.03 Mutilated, Destroyed, Lost or Stolen Notes.....................18
Section 4.04 Persons Deemed Owners..........................................19
Section 4.05 Cancellation...................................................19
Section 4.06 Book-Entry Notes...............................................20
Section 4.07 Notices to Depositor...........................................20
Section 4.08 Definitive Notes...............................................21
Section 4.09 Tax Treatment..................................................21
Section 4.10 Satisfaction and Discharge of Indenture........................21
Section 4.11 Application of Trust Money.....................................22
Section 4.12 Subrogation and Cooperation....................................22
Section 4.13 Repayment of Monies Held by Paying Agent.......................23
Section 4.14 Temporary Notes................................................23
Article V DEFAULT AND REMEDIES...............................................25
Section 5.01 Events of Default..............................................25
Section 5.02 Acceleration of Maturity; Rescission and Annulment.............25
Section 5.03 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee...............................26
Section 5.04 Remedies; Priorities...........................................28
Section 5.05 Optional Preservation of the Trust Estate......................30
Section 5.06 Limitation of Suits............................................30
Section 5.07 Unconditional Right of Noteholders To
Receive Principal and Interest.................................30
Section 5.08 Restoration of Rights and Remedies.............................31
Section 5.09 Rights and Remedies Cumulative.................................31
Section 5.10 Delay or Omission Not a Waiver.................................31
Section 5.11 Control by Noteholders.........................................31
Section 5.12 Waiver of Past Defaults........................................32
Section 5.13 Undertaking for Costs..........................................32
Section 5.14 Waiver of Stay or Extension Laws...............................32
Section 5.15 Sale of Trust Estate...........................................33
Section 5.16 Action on Notes................................................34
Section 5.17 Performance and Enforcement of Certain Obligations.............35
ARTICLE VI THE INDENTURE TRUSTEE............................................36
Section 6.01 Duties of Indenture Trustee....................................36
Section 6.02 Rights of Indenture Trustee....................................37
Section 6.03 Individual Rights of Indenture Trustee.........................37
Section 6.04 Indenture Trustee's Disclaimer.................................38
Section 6.05 Notice of Event of Default.....................................38
Section 6.06 Reports by Indenture Trustee to Noteholders....................38
Section 6.07 Compensation...................................................38
Section 6.08 Replacement of Indenture Trustee...............................38
Section 6.09 Successor Indenture Trustee by Merger..........................39
Section 6.10 Appointment of Co-Indenture Trustee or
Separate Indenture Trustee.....................................40
Section 6.11 Eligibility; Disqualification..................................41
Section 6.12 Preferential Collection of Claims Against Issuer...............41
Section 6.13 Representations and Warranties.................................41
Section 6.14 Directions to Indenture Trustee................................42
Section 6.15 Indenture Trustee May Own Securities...........................42
ARTICLE VII NOTEHOLDERS'LISTS AND REPORTS...................................43
Section 7.01 Issuer To Furnish Indenture Trustee
Names and Addresses of Noteholders.............................43
Section 7.02 Preservation of Information; Communications to Noteholders.....43
Section 7.03 Reports by Issuer..............................................43
Section 7.04 Reports by Indenture Trustee...................................44
ACCOUNTS, DISBURSEMENTS AND RELEASES.........................................45
Section 8.01 Collection of Money............................................45
Section 8.02 Trust Accounts.................................................45
Section 8.03 Officer's Certificate..........................................45
Section 8.04 Termination Upon Distribution to Noteholders...................45
Section 8.05 Release of Trust Estate........................................46
Section 8.06 Surrender of Notes Upon Final Payment..........................46
SUPPLEMENTAL INDENTURES......................................................47
Section 9.01 Supplemental Indentures Without Consent of Noteholders.........47
Section 9.02 Supplemental Indentures With Consent of Noteholders............48
Section 9.03 Execution of Supplemental Indentures...........................49
Section 9.04 Effect of Supplemental Indenture...............................49
Section 9.05 Conformity with Trust Indenture Act............................50
Section 9.06 Reference in Notes to Supplemental Indentures..................50
MISCELLANEOUS................................................................51
Section 10.01 Compliance Certificates and Opinions, etc.....................51
Section 10.02 Form of Documents Delivered to Indenture Trustee..............52
Section 10.03 Acts of Noteholders...........................................53
Section 10.04 Notices.......................................................54
Section 10.05 Notices to Noteholders; Waiver................................54
Section 10.06 Conflict with Trust Indenture Act............................55
Section 10.07 Effect of Headings............................................55
Section 10.08 Successors and Assigns........................................55
Section 10.09 Severability of Provisions....................................55
Section 10.10 Benefits of Indenture.........................................55
Section 10.11 Legal Holidays................................................55
Section 10.12 Governing Law.................................................55
Section 10.13 Counterparts..................................................55
Section 10.14 Recording of Indenture........................................56
Section 10.15 Issuer Obligation.............................................56
Section 10.16 No Petition...................................................56
Section 10.17 Inspection.....................................................56
This Indenture, dated as of April 30, 1999, is between Irwin Home Equity
Loan Trust 1999-2, a Delaware business trust, as issuer (the "Issuer"), and
Norwest Bank Minnesota, National Association, as trustee (the "Indenture
Trustee").
WITNESSETH:
Each party hereto agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Issuer's Home
Equity Loan-Backed Notes, Series 1999-2 (the "Notes").
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
trustee for the benefit of the Noteholders and the Enhancer, all of the
Issuer's right, title and interest, whether now existing or hereafter created,
in and to (i) the Mortgage Loans, (ii) all funds on deposit from time to time
in the Note Payment Account, the Certificate Distribution Account, the
Pre-Funding Account, the Collection Account, the Trustee Collection Account
and the Capitalized Interest Account (in each case as defined in Appendix A
hereto) and all proceeds thereof, (iii) the Policy and (iv) all present and
future claims, demands, causes and chooses in action in respect of any or all
of the foregoing and all payments on or under, and all proceeds of every kind
and nature whatsoever in respect of, any or all of the foregoing and all
payments on or under, and all proceeds of every kind and nature whatsoever in
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables, instruments and other
property that at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Trust Estate" or the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided herein.
The foregoing Grant shall inure to the benefit of the Enhancer in respect
of draws made on the Policy and amounts owing from time to time under the
Insurance Agreement, and such Grant shall continue in full force and effect
for the benefit of the Enhancer until all such amounts owing to it have been
repaid in full.
The Indenture Trustee, as trustee on behalf of the Noteholders,
acknowledges such Grant, accepts the trust under this Indenture in accordance
with the provisions hereof and agrees to perform its duties as Indenture
Trustee as required herein.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A attached hereto, which is incorporated
by reference herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act of 1940, as
amended (the "TIA"), such provision is incorporated by reference in and made a
part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meanings assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
requires, (i) a term has the meaning assigned to it; (ii) an accounting term
not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles as in effect from time to time; (iii)
"or" includes "and/or"; (iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural include
the singular; (vi) the term "proceeds" has the meaning ascribed thereto in the
UCC; (vii) any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
and (viii) references to a Person are also to such Person's permitted
successors and assigns.
ARTICLE II
ORIGINAL ISSUANCE OF NOTES
Section 2.01. Form. The Notes together with the Indenture Trustee's
certificate of authentication, shall be in substantially the forms set forth
in Exhibit A with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution thereof.
Any portion of the text of a Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face thereof.
The Notes shall be typewritten, printed, lithographed or engraved, or
produced by any combination of such methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing the same, as
evidenced by their execution thereof.
The terms of the Notes set forth in Exhibits A are part of the terms of
this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them shall have ceased to hold
such offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
Notes for original issuance in an aggregate initial principal amount of
$53,500,000 in the case of Class A-1 Notes, $85,100,000 in the case of Class
A-2 Notes, $17,400,000 in the case of Class A-3 Notes and $22,200,000 in the
case of Class A-4 Notes.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in minimum initial Note Balances of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by
the Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
ARTICLE III
COVENANTS
Section 3.01. Collection of Payments with Respect to the Mortgage Loans.
The Indenture Trustee shall establish and maintain the Note Payment Account,
into which the Indenture Trustee shall deposit, on each Payment Date, the
amounts required to be deposited therein pursuant to Section 3.05. The
Indenture Trustee shall make all payments of principal of and interest on the
Notes (subject to Section 3.03) as provided in Section 3.05 from monies on
deposit in the Note Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer shall maintain
an office or agency where, subject to the satisfaction of conditions set forth
herein, Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served. The Issuer hereby initially appoints the
Indenture Trustee to serve as its agent for the foregoing purposes. If at any
time the Issuer shall fail to maintain any such office or agency or shall fail
to furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Indenture Trustee, and the Issuer hereby appoints the Indenture Trustee as its
agent to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments To Be Held in Trust; Paying Agent. As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Note Payment
Account pursuant to Section 3.05 shall be made on behalf of the Issuer by the
Indenture Trustee or the Paying Agent, and no amounts so withdrawn from the
Note Payment Account for payments in respect of the Notes shall be paid to the
Issuer except as provided in this Section. The Indenture Trustee shall
initially be the Paying Agent.
The Issuer shall cause each Paying Agent (other than the Indenture
Trustee) to execute and deliver to the Indenture Trustee an instrument in
which such Paying Agent shall agree with the Indenture Trustee (and as Paying
Agent, the Indenture Trustee hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of amounts due with respect
to the Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(b) give the Indenture Trustee written notice of any default by the
Issuer of which it has actual knowledge in the making of any payment required
to be made with respect to the Notes;
(c) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(d) immediately resign as Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for payments in respect of the Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment;
(e) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith; and
(f) deliver to the Indenture Trustee a copy of the statement to
Noteholders prepared with respect to each Payment Date pursuant to Section
4.01 of the Sale and Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Request
direct any Paying Agent to pay to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which such sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer on Issuer Request; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer
for payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Indenture Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Indenture Trustee or such Paying Agent, before being required to make any such
repayment, shall at the expense and direction of the Issuer cause to be
published once, in an Authorized Newspaper, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Issuer. The Indenture Trustee may
also adopt and employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such repayment (including mailing notice
of such repayment to Holders the Notes of which have been called but have not
been surrendered for redemption or the right of which to or interest in monies
due and payable but not claimed is determinable from the records of the
Indenture Trustee or any Paying Agent, at the last address of record for each
such Holder).
Section 3.04. Existence. The Issuer shall keep in full force and effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other State or of the United States
of America, in which case the Issuer shall keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and shall
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.
Section 3.05. Payment of Principal and Interest; Defaulted Interest.
(a) On each Payment Date, from amounts on deposit in the Trustee
Collection Account (including any draw on the Policy deposited therein for
such Payment Date), the Indenture Trustee shall apply the following amounts in
the following order of priority, in accordance with the Servicing Certificate:
(i) any prepayment penalties collected during the immediately prior
Due Period to the Certificate Distribution Account for distribution to
the Certificateholders by the Certificate Paying Agent;
(ii) to the Enhancer, the amount of the Premium for the Policy, with
interest thereon as provided in the Insurance Agreement and to the
Indenture Trustee, the Indenture Trustee Fee payable thereto in respect
of such Collection Period (to the extent sufficient funds remain
available from Interest Collections and Principal Collections from
Mortgage Loans assigned to Group I and Group II individually such payment
shall be allocated among Group I and Group II in proportion to the sum of
the Class A-1 Note Balance and the Class A-2 Note Balance and the sum of
the Class A-3 Note Balance and the Class A-4 Note Balance, respectively);
(iii) interest for the related Interest Period at the related Note
Rate on the related Note Balances of the Notes immediately prior to such
Payment Date, after giving effect to any Policy Draw Amount deposited
into the Note Payment Account pursuant to Section 3.26(a), excluding any
Interest Carry-Forward Amounts to the Note Payment Account, for payment,
pro rata, to the Holders of the Notes by the Paying Agent on such Payment
Date;
(iv) the Base Principal Distribution Amount for Group I after giving
effect to any Policy Draw Amount deposited into the Note Payment Account
pursuant to Section 3.26(a) to the Note Payment Account, for payment by
the Paying Agent on such Payment Date, pro rata, first to the Holders of
the Class A-1 Notes until the principal balance thereof has been reduced
to zero and then to the Holders of the Class A-2 Notes until the
principal balance thereof has been reduced to zero; and the Base
Principal Distribution Amount for Group II after giving effect to any
Policy Draw Amount deposited into the Note Payment Account pursuant to
Section 3.26(a) to the Note Payment Account, for payment by the Paying
Agent on such Payment Date, pro rata, first to the Holders of the Class
A-3 Notes until the principal balance thereof has been reduced to zero
and then to the Holders of the Class A-4 Notes until the principal
balance thereof has been reduced to zero;
(v) to the Enhancer, to reimburse it for prior draws made on the
Policy, with interest thereon as provided in the Insurance Agreement
(such payment shall be allocated first to Interest Collections and
Principal Collections from Mortgage Loans assigned to Group I if the draw
in question was made for the benefit of the Class A-1 Notes or the Class
A-2 Notes or first to Interest Collections and Principal Collections from
Mortgage Loans assigned to Group II if the draw in question was made for
the benefit of the Class A-3 Notes or the Class A-4 Notes);
(vi) to the extent of Group I Excess Spread any
Overcollateralization Deficiency Amount for Group I to the Note Payment
Account, for payment by the Paying Agent on such Payment Date, pro rata,
first to the Holders of the Class A-1 Notes until the Principal Balance
thereof has been reduced to zero and then to the Holders of the Class A-2
Notes until the Principal Balance thereof has been reduced to zero; and
to the extent of Group II Excess Spread any Overcollateralization
Deficiency Amount for Group II to the Note Payment Account, for payment
by the Paying Agent on such Payment Date, pro rata, first to the Holders
of the Class A-3 Notes until the Principal Balance thereof has been
reduced to zero and then to the Holders of the Class A-4 Notes until the
Principal Balance thereof has been reduced to zero;
(vii) to the extent of any remaining Group I Excess Spread, the
Additional Principal Distribution Amount for Group II to the Note Payment
Account, for payment by the Paying Agent on such Payment Date, pro rata,
first to the Holders of the Class A-3 Notes until the Principal Balance
thereof has been reduced to zero and then to the Holders of the Class A-4
Notes until the Principal Balance thereof has been reduced to zero; and
to the extent of any remaining Group II Excess Spread, any remaining
Additional Principal Distribution Amount for Group I to the Note Payment
Account, for payment by the Paying Agent on such Payment Date, pro rata,
first to the Holders of the Class A-1 Notes until the Principal Balance
thereof has been reduced to zero and then to the Holders of the Class A-2
Notes until the Principal Balance thereof has been reduced to zero;
(viii) to the Enhancer, any other amounts owed to the Enhancer
pursuant to the Insurance Agreement;
(ix) to the Indenture Trustee, any amounts owing to the Indenture
Trustee pursuant to Section 6.07 to the extent remaining unpaid;
(x) to the Note Payment Account, for payment, pro rata, to the Class
A-1 Noteholders and the Class A-3 Noteholders by the Paying Agent on such
Payment Date, any Interest Carry-Forward Amounts not previously paid,
together with interest thereon at the related Note Rate (as adjusted from
time to time), based on the amount remaining unpaid with respect thereto;
and
(xi) any remaining amount, to the Certificate Distribution Account,
for distribution to the Certificateholders by the Certificate Paying
Agent;
Notwithstanding the foregoing (x) on the Final Insured Payment Date, the
aggregate of amounts to be paid pursuant to clauses (iv), (vi) and (vii) above
shall be equal to the aggregate of the Note Balances immediately prior to such
Payment Date and (y) any payments under the Policy shall be applied only to
the payment of amounts to be paid pursuant to clauses (iii), (iv), (vi) and
(vii) above.
For purposes of the foregoing, payments of principal of the Notes on each
Payment Date will be reduced by the pro rata portion allocable to the related
Notes of all Subordination Deficits for such Payment Date, to the extent such
Subordination Deficits are not otherwise covered by Excess Spread or a draw on
the Policy.
Amounts paid to Noteholders shall be paid in accordance with the
applicable percentage as set forth in paragraph (b) below. Any installment of
interest or principal payable on any Note that is punctually paid or duly
provided for by the Issuer on the applicable Payment Date shall be paid to the
Holder of record thereof on the immediately preceding Record Date by wire
transfer to an account specified in writing by such Holder reasonably
satisfactory to the Indenture Trustee, the amount required to be distributed
to such Holder on such Payment Date pursuant to such Holder's Notes; provided,
that the Indenture Trustee shall not pay to any such Holder any amounts
required to be withheld from a payment to such Holder by the Code.
(b) Principal of each Note shall be due and payable in full on the Final
Insured Payment Date as provided in the applicable form of Note set forth in
Exhibit A. All principal payments on the Notes shall be made pro rata to the
Noteholders entitled thereto in accordance with the related Percentage
Interests represented thereby. Upon written notice to the Indenture Trustee by
the Issuer, the Indenture Trustee shall notify the Person in the name of which
a Note is registered at the close of business on the Record Date preceding the
Final Insured Payment Date or other Final Insured Payment Date, as applicable.
Such notice shall be mailed no later than five Business Days prior to the
Final Insured Payment Date or such other Final Insured Payment Date and shall
specify that payment of the principal amount and any interest due with respect
to such Note at the Final Insured Payment Date or such other Final Insured
Payment Date will be payable only upon presentation and surrender of such
Note, and shall specify the place where such Note may be presented and
surrendered for such final payment.
Section 3.06. Protection of Trust Estate.
(a) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and shall take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) cause the Trust to enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee and the Noteholders therein against the claims of
all Persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture Trustee
shall not remove any portion of the Trust Estate that consists of money or
that is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which
it was held as described in the Opinion of Counsel delivered at the Closing
Date pursuant to Section 3.07(a), if no Opinion of Counsel shall have yet been
delivered pursuant to Section 3.07(b)), unless the Indenture Trustee shall
have first received an Opinion of Counsel to the effect that the Lien and
security interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section.
Section 3.07. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee, the Owner Trustee and the Enhancer an Opinion of Counsel, at the
expense of the Issuer, stating that (i) in the opinion of such counsel, such
action has been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to perfect and make
effective the Lien and security interest in the Mortgage Loans and reciting
the details of such action, or (ii) in the opinion of such counsel, no such
action is necessary to make such Lien and security interest effective.
(b) On or before December 31st of each calendar year, commencing in 2000,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel at the
expense of the Issuer stating that (i) in the opinion of such counsel, such
action has been taken with respect to the recording, filing, re-recording and
re-filing of this Indenture, any indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements and continuation statements as is necessary to maintain
the Lien and security interest in the Mortgage Loans and reciting the details
of such action or (ii) in the opinion of such counsel, no such action is
necessary to maintain such Lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and re-filing of this
Indenture, any indentures supplemental hereto and any other requisite
documents, and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the Lien and security interest in the Mortgage Loans until
December 31 of the following calendar year.
Section 3.08. Performance of Obligations; Sale and Servicing Agreement.
(a) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Basic
Documents and the instruments and agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a
Person identified to the Indenture Trustee in an Officer's Certificate of the
Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer shall not take any action or permit any action to be taken
by others that would release any Person from any of such Person's covenants or
obligations under any document relating to the Mortgage Loans (including the
Mortgage Documents and the Related Documents) or under any instrument included
in the Trust Estate, or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such document or any such instrument, except such
actions as the Master Servicer is expressly permitted to take in the Sale and
Servicing Agreement.
(d) The Issuer may enter into contracts with other Persons for the
performance of the Issuer's obligations hereunder, and performance of such
obligations by such Persons shall be deemed to be performance of such
obligations by the Issuer.
Section 3.09. Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(a) except as expressly permitted by this Indenture, sell, transfer,
exchange or otherwise dispose of the Trust Estate, unless directed to do so by
the Indenture Trustee;
(b) claim any credit on or make any deduction from the principal or
interest payable in respect of the Notes (other than amounts properly withheld
from such payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Trust Estate;
(c) permit the validity or effectiveness of this Indenture to be
impaired, or permit the Lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture, except as may be expressly permitted hereby, permit any Lien (other
than the Lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Trust Estate, any part thereof, any interest therein
or any proceeds thereof or permit the Lien of this Indenture not to constitute
a valid first priority security interest in the Trust Estate; or
(d) impair or cause to be impaired the Issuer's interest in the Mortgage
Loans, the Mortgage Loan Sale Agreement or in any other Basic Document, if any
such action would materially and adversely affect the interests of the
Noteholders.
Section 3.10. Annual Statement as to Compliance. The Issuer shall deliver
to the Indenture Trustee, within 120 days after the end of each fiscal year of
the Issuer (commencing with 2000), an Officer's Certificate stating, as to the
Authorized Officer signing such Officer's Certificate, that:
(a) a review of the activities of the Issuer during such year and of its
performance under this Indenture and the Trust Agreement has been made under
such Authorized Officer's supervision; and
(b) 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 and the Trust Agreement throughout such year or, if there has been a
default in its compliance with any such condition or covenant, specifying each
such default known to such Authorized Officer and the nature and status
thereof.
In the event such firm requires the Indenture Trustee to agree to the
procedures performed by such firm, the Master Servicer shall direct the
Indenture Trustee in writing to so agree; it being understood and agreed that
the Indenture Trustee shall deliver such letter of agreement in conclusive
reliance upon the direction of the Master Servicer, and the Indenture Trustee
need not make any independent inquiry or investigation as to, and shall have
no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
Section 3.11. Recordation of Assignments. The Issuer shall enforce the
obligation of the Transferor under Section 3.15 of the Sale and Servicing
Agreement to submit or cause to be submitted for recording Assignments of
Mortgages in accordance with such Section.
Section 3.12. Representations and Warranties Concerning the Mortgage
Loans. The Indenture Trustee, as pledgee of the Mortgage Loans, and the
Enhancer shall have the benefit of the representations, warranties and limited
guaranty of the Transferor in Sections 3.1 and 3.2 of the Purchase Agreement
and as incorporated by reference in Section 2.08 of the Sale and Servicing
Agreement concerning the Mortgage Loans and the right to enforce the remedies
against the Transferor provided in such Sections to the same extent as though
such representations, warranties and guaranty were made directly to the
Indenture Trustee.
Section 3.13. Assignee of Record of the Mortgage Loans. As pledgee of the
Mortgage Loans, the Indenture Trustee shall hold record title to the Mortgage
Loans by being named as payee in the endorsements of the Mortgage Notes and
assignee in the Assignments of Mortgage recorded to the extent required by
Section 3.13 of the Sale and Servicing Agreement. Except as expressly provided
in the Mortgage Loan Sale Agreement, Purchase and Sale Agreement or the Sale
and Servicing Agreement with respect to any Mortgage Loan, the Indenture
Trustee shall not execute any endorsement or assignment or otherwise release
or transfer record title to such Mortgage Loan until such time as the
remaining Trust Estate, or any portion thereof, may be released pursuant to
Section 8.05.
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee.
Solely for purposes of perfection under Section 9-305 of the UCC or other
similar applicable law, rule or regulation of the State in which such property
is held by the Master Servicer, the Indenture Trustee hereby acknowledges that
the Master Servicer is acting as agent and bailee of the Indenture Trustee in
holding amounts on deposit in the Collection Account pursuant to Section 3.03
of the Sale and Servicing Agreement that are allocable to the Mortgage Loans,
as well as the agent and bailee of the Indenture Trustee in holding any
Related Documents released to the Master Servicer pursuant to Section 3.09(c)
of the Sale and Servicing Agreement, and any other items constituting a part
of the Trust Estate that from time to time come into the possession of the
Master Servicer. It is intended that, by the Master Servicer's acceptance of
such agency pursuant to Section 3.01 of the Sale and Servicing Agreement, the
Indenture Trustee, as pledgee of the Mortgage Loans, will be deemed to have
possession of such Related Documents, such monies and such other items for
purposes of Section 9-305 of the UCC of the State in which such property is
held by the Master Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder (taking into account not only the general
definition of the term "investment company" but also any available exceptions
to such general definition); provided, that the Issuer shall be in compliance
with this Section if it shall have obtained an order exempting it from
regulation as an "investment company" so long as it is in compliance with the
conditions imposed in such order.
Section 3.16. Issuer May Not Consolidate, etc.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State, and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form reasonably satisfactory to
the Indenture Trustee, the due and punctual payment of the principal of
and interest on the Notes, and to the Certificate Paying Agent, on behalf
of the Certificateholders, and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Event
of Default shall have occurred and be continuing;
(iii) no Rating Agency, after prior written notice thereto, shall
have notified the Issuer that such transaction will result in a Rating
Event, determined without regard to the Policy;
(iv) the Issuer and the Enhancer shall have received an Opinion of
Counsel (and shall have delivered a copy thereof to the Indenture
Trustee) to the effect that such transaction will not have any material
adverse tax consequence to the Issuer, the Enhancer, any Noteholder or
any Certificateholder;
(v) any action that is necessary to maintain the Lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing required
by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any State, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory to
the Indenture Trustee, the due and punctual payment of the principal of
and interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and interest
so conveyed or transferred shall be subject and subordinate to the rights
of the Noteholders and the Enhancer, (D) unless otherwise provided in
such supplemental indenture, expressly agree to indemnify, defend and
hold harmless the Issuer from and against any loss, liability or expense
arising under or relating to this Indenture or the Notes and (E)
expressly agree by means of such supplemental indenture that such Person
(or if a group of Persons, then one specified Person) shall make all
filings with the Commission (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) no Rating Agency, after prior written notice thereto, shall
have notified the Issuer that such transaction will cause a Rating Event,
determined without regard to the Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect
that such transaction will not have any material adverse tax consequence
to the Issuer or any Noteholder;
(v) any action that is necessary to maintain the Lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing required
by the Exchange Act).
Section 3.17. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.16(a), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture
with the same effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.16(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the
part of the Issuer with respect to the Notes immediately upon the delivery of
written notice to the Indenture Trustee of such conveyance or transfer.
Section 3.18. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning and selling and managing the
Mortgage Loans, the issuance of the Notes and the Certificates in the manner
contemplated by this Indenture and the other Basic Documents and all
activities incidental thereto.
Section 3.19. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness, except for the Notes.
Section 3.20. Guarantees. Except as contemplated by this Indenture or the
other Basic Documents, the Issuer shall not make any loan or advance or credit
to, or guarantee (directly or indirectly or by an instrument having the effect
of assuring another's payment or performance on any obligation or capability
of so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire (or agree contingently
to do so) any stock, obligations, assets or securities of, or any other
interest in, or make any capital contribution to, any Person.
Section 3.21. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22. Indenture Trustee Not Liable for Notes or Related
Documents. The recitals contained herein shall be taken as the statements of
the Depositor, and the Indenture Trustee assumes no responsibility for the
correctness thereof. The Indenture Trustee makes no representations as to the
validity or sufficiency of this Indenture, of any other Basic Document or of
the Notes (other than the signatures of the Indenture Trustee on the
authentication of the Notes) or of any other documents relating thereto. The
Indenture Trustee shall at no time have any responsibility or liability with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to the Noteholders under this Indenture, including
the compliance by the Depositor or the Transferor with any representation or
warranty made under any Basic Document or in any related document or the
accuracy of any such representation or warranty, or any action of the Paying
Agent or the Note Registrar or the Indenture Trustee taken in the name of the
Owner Trustee.
Section 3.23. Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Enhancer and each Rating Agency prompt written notice
of each Event of Default hereunder.
Section 3.24. Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer shall 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 3.25. Statements to Noteholders. On each Payment Date, the
Indenture Trustee shall forward by mail to each Noteholder, the Depositor and
the Enhancer the statement delivered to it pursuant to Section 4.01 of the
Sale and Servicing Agreement.
Section 3.26. Payments under the Policy.
(a) On any Payment Date, the Indenture Trustee shall make a draw on the
Policy in an amount, if any, equal to the Policy Draw Amount. The Indenture
Trustee shall deposit or cause to be deposited such Policy Draw Amount into
the Note Payment Account on such Payment Date.
(b) The Indenture Trustee shall submit, if a Policy Draw Amount is
specified in any statement to Securityholders prepared pursuant to Section
4.01 of the Sale and Servicing Agreement, the Notice of Nonpayment and Demand
for Payment of Insured Amounts (in the form attached as Exhibit A to the
Policy) to the Enhancer no later than 3:00 p.m., New York City time, on the
second Business Day prior to the applicable Payment Date (the "Notice and
Demand Date").
Section 3.27. Replacement Enhancement. The Issuer (or the Master Servicer
on its behalf) may, at its expense, in accordance with and upon satisfaction
of the conditions set forth herein, but shall not be required to, obtain a
surety bond, letter of credit, guaranty or reserve account as a Permitted
Investment for amounts on deposit in the Capitalized Interest Account, as the
case may be, or may arrange for any other form of additional credit
enhancement; provided, that after prior notice thereto, no Rating Agency shall
have informed the Issuer that a Rating Event would occur as a result thereof,
and provided that the timing and mechanism for drawing on such additional
enhancement shall be reasonably acceptable to the Indenture Trustee and the
Enhancer. It shall be a condition to procurement of any such additional credit
enhancement that there be delivered to the Indenture Trustee and the Enhancer
(a) an Opinion of Counsel, acceptable in form to the Indenture Trustee and the
Enhancer, from counsel to the provider of such additional credit enhancement
with respect to the enforceability thereof and such other matters as the
Indenture Trustee or the Enhancer may require and (b) an Opinion of Counsel to
the effect that the procurement of such additional enhancement would not (i)
adversely affect in any material respect the tax status of the Notes or the
Certificates or (ii) cause the Issuer to be taxable as an association (or a
publicly traded partnership) for federal income tax purposes or to be
classified as a taxable mortgage pool. within the meaning of Section 7701(i)
of the Code.
ARTICLE IV
THE NOTES; SATISFACTION AND DISCHARGE OF INDENTURE
Section 4.01. The Notes.
The Notes shall be registered in the name of a nominee designated by the
Depository. Beneficial Owners shall hold interests in the Notes through the
book-entry facilities of the Depository in minimum initial Note Balances of
$1,000 and integral multiples of $1,000 in excess thereof.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Noteholders hereunder. Except as provided
in the next succeeding paragraph, the rights of Beneficial Owners with respect
to the Notes shall be limited to those established by law and agreements
between such Beneficial Owners and the Depository and Depository Participants.
Except as provided in Section 4.08, Beneficial Owners shall not be entitled to
definitive certificates for the Notes as to which they are the Beneficial
Owners. Requests and directions from, and votes of, the Depository as Holder
of the Notes shall not be deemed inconsistent if they are made with respect to
different Beneficial Owners. The Indenture Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
Noteholders and give notice to the Depository of such Record Date. Without the
consent of the Issuer and the Indenture Trustee, the Depository may not
transfer any Note except to a successor Depository that agrees to hold such
Note for the account of the Beneficial Owners.
In the event that The Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee, with the approval of the Issuer, may
appoint a successor Depository. If no successor Depository has been appointed
within 30 days after the effective date of the predecessor Depository's
resignation or removal, each Beneficial Owner shall be entitled to
certificates representing the Notes it beneficially owns in the manner
prescribed in Section 4.08.
The Owner Trustee (not in its individual capacity but solely as Owner
Trustee), shall, on original issue, execute the Notes on behalf of the Issuer,
and the Indenture Trustee shall authenticate and deliver the Notes to or upon
the order of the Issuer.
Section 4.02. Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar. The Issuer shall cause to be kept
at the Corporate Trust Office of the Indenture Trustee a Note Register in
which, subject to such reasonable regulations as it may prescribe, the Note
Registrar shall provide for the registration of Notes and of transfers and
exchanges of Notes as herein provided.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office of the Indenture Trustee, the Issuer shall execute, and the Note
Registrar shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes in authorized initial Note
Balances evidencing the same aggregate Percentage Interests.
At the option of the related Noteholders, Notes may be exchanged for
other Notes of like tenor and Class, in authorized initial Note Balances
evidencing the same aggregate Percentage Interests upon surrender of the Notes
to be exchanged at the Corporate Trust Office of the Indenture Trustee, as
Note Registrar. Whenever any Notes are so surrendered for exchange, the
Indenture Trustee shall execute, and the Note Registrar shall authenticate and
deliver, the Notes that the Noteholder making such exchange is entitled to
receive. Each Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Note Registrar) be duly endorsed by, or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Note Registrar duly executed by the Holder thereof or his
attorney duly authorized in writing, with such signature guaranteed by a
commercial bank or trust company. Notes delivered upon any such transfer or
exchange shall evidence the same obligations, and shall be entitled to the
same rights and privileges, as the Notes surrendered.
No service charge shall be made for any registration of transfer or
exchange of any Notes, but the Note Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any such registration of transfer or exchange. All Notes
surrendered for registration of transfer and exchange shall be cancelled by
the Note Registrar and delivered to the Indenture Trustee for subsequent
destruction without liability on the part of either.
The Issuer hereby appoints the Indenture Trustee as Certificate Registrar
to keep at its Corporate Trust Office a Certificate Register pursuant to
Section 3.08 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for
the registration of Certificates and of transfers and exchanges thereof
pursuant to Section 3.04 of the Trust Agreement. The Indenture Trustee hereby
accepts such appointment.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Indenture Trustee such
security or indemnity as may be required by it to hold the Issuer and the
Indenture Trustee harmless; then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of
the UCC are met, the 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 Note, a replacement Note; provided, that
if any such destroyed, lost or stolen Note, but not a mutilated Note, shall
be, or within seven days shall be, due and payable, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when
so due or payable without surrender thereof. If, after the delivery of a
replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment
such original Note, the Issuer and the Indenture Trustee shall be entitled to
recover such replacement Note or such payment from the Person to which it was
delivered or any Person taking such replacement Note from the Person to whom
such replacement Note was delivered or any assignee of such Person, except a
bona fide purchaser, and shall be entitled to recover the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the related Noteholder of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith and any other reasonable related expenses (including the fees and
expenses of the Indenture Trustee).
Each replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not such
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone each such replacement Note shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude, to the
extent lawful, all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in the
name of which such Note is registered as of the date of determination as the
owner of such Note for the purpose of receiving payments of principal and
interest, if any, on such Note and for all other purposes whatsoever, whether
or not such Note shall be overdue; and neither the Issuer, the Indenture
Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected
by notice to the contrary.
Section 4.05. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture
Trustee, and shall be promptly cancelled by the Indenture Trustee. The Issuer
may at any time deliver to the Indenture Trustee for cancellation any Notes
previously authenticated and delivered hereunder that the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Indenture Trustee. No Notes shall be authenticated
in lieu of or in exchange for any Notes cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Notes may be
held or disposed of by the Indenture Trustee in accordance with its standard
retention or disposal policy as in effect at the time of cancellation thereof,
unless the Issuer directs by Issuer Request that the same be destroyed or
returned to it; provided, that such Issuer Request shall be timely and such
Notes have not been previously disposed of by the Indenture Trustee.
Section 4.06. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten notes representing Book-Entry Notes, to
be delivered to The Depository Trust Company, the initial Depository, by or on
behalf of the Issuer. The Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Depository, and
no Beneficial Owner shall receive a Definitive Note representing such
Beneficial Owner's interest in the related Note, except as provided in Section
4.08. Unless and until definitive, fully-registered Notes (the "Definitive
Notes") have been issued to Beneficial Owners pursuant to Section 4.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to Beneficial Owners;
(c) to the extent that the provisions of this Section conflict with any
other provisions of this Indenture, the provisions of this Section shall
control;
(d) the rights of Beneficial Owners shall be exercised only through the
Depository, and shall be limited to those established by law and agreements
between the related Beneficial Owners and the Depository or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to Section
4.08, the initial Depository shall make book-entry transfers among the
Depository Participants and receive and transmit payments of principal of and
interest on the Notes to such Depository Participants; and
(e) whenever this Indenture requires or permits actions to be taken based
upon instructions or directions of Holders of Notes representing a specified
percentage of the aggregate Note Balance, the Depository shall be deemed to
represent such percentage only to the extent that it has received instructions
to such effect from Beneficial Owners or Depository Participants owning or
representing, respectively, such required percentage, and has delivered such
instructions to the Indenture Trustee.
Section 4.07. Notices to Depositor. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Beneficial Owners pursuant to
Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Noteholders to the Depository,
and shall have no obligation to any Beneficial Owner.
Section 4.08. Definitive Notes. If (i) the Indenture Trustee determines
that the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Notes and the Indenture Trustee is unable
to locate a qualified successor, (ii) the Indenture Trustee elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, Beneficial Owners representing at least a
majority of the aggregate Note Balance advise the Depository in writing that
the continuation of a book-entry system through the Depository is no longer in
the best interests of the Beneficial Owners, then the Depository shall notify
all Beneficial Owners and the Indenture Trustee of the occurrence of such
event and of the availability of Definitive Notes to Beneficial Owners
requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Depository,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note 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 Notes, the Indenture
Trustee shall recognize the holders of such Definitive Notes as Noteholders.
Section 4.09. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes shall be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will
qualify as indebtedness of the Issuer.
The Issuer, by entering into this Indenture, and each Noteholder, by its
acceptance of a Note (and each Beneficial Owner by its acceptance of an
interest in the applicable Book-Entry Note), agree to treat the Notes for
federal, state and local income, single business and franchise tax purposes as
indebtedness of the Issuer.
Section 4.10. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (a)
rights of registration of transfer and exchange, (b) substitution of
mutilated, destroyed, lost or stolen Notes, (c) rights of Noteholders to
receive payments of principal thereof and interest thereon, (d) Sections 3.03,
3.04, 3.06, 3.09, 3.16, 3.18 and 3.19, (e) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.11) and (f) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them. The Indenture Trustee, upon the demand and at
the expense of the Issuer, shall execute proper instruments acknowledging the
satisfaction and discharge of this Indenture with respect to the Notes, when:
(i) either
(A) all Notes theretofore authenticated and delivered (other
than (1) Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 4.03 and (2) Notes
for the payment of which money has theretofore been deposited in
trust or segregated and held in trust by the Issuer and thereafter
repaid to the Issuer or discharged from such trust, as provided in
Section 3.03) have been delivered to the Indenture Trustee for
cancellation; or
(B) all Notes not theretofore delivered to the Indenture
Trustee for cancellation (I) have become due and payable; (II) will
become due and payable at the Final Insured Payment Date within one
year (III) or have been declared immediately due and payable
pursuant to Section 5.02;
and the Issuer, in the case of (I) or (II) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the
United States of America that 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 Notes then outstanding and
not theretofore delivered to the Indenture Trustee for cancellation when
due on the Final Insured Payment Date;
(ii) the Issuer has paid or caused to be paid all other sums payable
hereunder and under the Insurance Agreement by the Issuer;
(iii) the Policy has been returned to the Enhancer; and
(iv) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel, each meeting the applicable
requirements of Section 10.01 and stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with. If such Opinion of Counsel relates to
a deposit made in connection with clause (i)(A)(2) above, such opinion
shall further be to the effect that such deposit will not have any
material adverse tax consequences to the Issuer, the Noteholders or the
Certificateholders.
Section 4.11. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 shall be held in trust and applied
by the Indenture Trustee in accordance with the provisions of the Notes and
this Indenture to the payment, either directly or through the Paying Agent or
the Certificate Paying Agent, as the Indenture Trustee may determine, to the
Securityholders of all sums due and to become due thereon for principal and
interest; provided, that such monies need not be segregated from other funds
except to the extent required herein or required by law.
Section 4.12. Subrogation and Cooperation. The Issuer and the Indenture
Trustee acknowledge that (a) to the extent the Enhancer makes payments under
the Policy, the rights of the Enhancer will be fully subrogated to the rights
of the Noteholders to receive principal and interest from the Mortgage Loans,
and (b) the Enhancer will be paid only from the sources and in the manner
provided herein and in the Insurance Agreement.
Subject to the provisions of Article VI, the Indenture Trustee shall
cooperate in all respects with any reasonable request by the Enhancer for any
action to preserve or enforce the Enhancer's rights or interests under this
Indenture or the Insurance Agreement, consistent with this Indenture and
without limiting the rights of the Noteholders as otherwise set forth in this
Indenture, including, upon the occurrence and continuance of a default under
the Insurance Agreement, a request to take any one or more of the following
actions:
(a) institute Proceedings for the collection of all amounts then payable
on the Notes or under this Indenture in respect of the Notes, and all amounts
payable under the Insurance Agreement, and to enforce any judgment obtained
and collect from the Issuer monies adjudged due;
(b) sell the Trust Estate or any portion thereof or rights or interest
therein, at one or more public or private Sales called and conducted in any
manner permitted by law;
(c) file or record all assignments that have not previously been
recorded;
(d) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture; and
(e) exercise any remedies of a secured party under the UCC and take any
other appropriate action to protect and enforce the rights and remedies of the
Enhancer hereunder.
Following the payment in full of the Notes, the Enhancer shall continue
to have all rights and privileges provided to it under this Section and in all
other provisions of this Indenture, until all amounts owing to the Enhancer
have been paid in full and the Policy has been returned to the Enhancer.
Section 4.13. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the
Notes, all monies then held by any Person other than the Indenture Trustee
under the provisions of this Indenture with respect to the Notes shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.05, and thereupon the Paying Agent shall be released
from all further liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Notes that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Notes in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer shall cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of the
Definitive Notes, the temporary Notes shall be exchangeable for Definitive
Notes upon surrender of such temporary Notes at the office or agency of the
Indenture Trustee, without charge to the related Noteholder. Upon surrender
for cancellation of any one or more temporary Notes, the Issuer shall execute
and the Indenture Trustee shall authenticate and make available for delivery,
in exchange therefor, Definitive Notes of authorized denominations and of like
tenor and aggregate principal amount. Until so exchanged, such temporary Notes
shall in all respects be entitled to the same benefits under this Indenture as
Definitive Notes.
ARTICLE V
DEFAULT AND REMEDIES
Section 5.01. Events of Default. The Issuer shall deliver to the
Indenture Trustee and the Enhancer, within five days after learning of the
occurrence any event that with the giving of notice and the lapse of time
would become an Event of Default under paragraph (c) of the definition of
"Event of Default", written notice in the form of an Officer's Certificate of
the status thereof and what action the Issuer is taking or proposes to take
with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default shall occur and be continuing or if the Transferor shall
purchase all of the Group I Mortgage Loans pursuant to Section 8.08 of the
Sale and Servicing Agreement, then in every such case the Indenture Trustee or
the Holders of Notes representing not less than a majority of the aggregate
Note Balance of the Class A-1 Notes and Class A-2 Notes (in each case with the
consent of the Enhancer), may declare such Notes to be immediately due and
payable, by a notice in writing to the Issuer (and to the Indenture Trustee if
given by the Noteholders); and upon any such declaration, the unpaid Note
Balance of such Notes, together with accrued and unpaid interest thereon
through the date of acceleration, shall become immediately due and payable.
If an Event of Default shall occur and be continuing or if the Transferor
shall purchase all of the Group II Mortgage Loans pursuant to Section 8.08 of
the Sale and Servicing Agreement, then in every such case the Indenture
Trustee or the Holders of Notes representing not less than a majority of the
aggregate Note Balance of the Class A-3 Notes and Class A-4 Notes (in each
case with the consent of the Enhancer), may declare such Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by the Noteholders); and upon any such declaration,
the unpaid Note Balance of such Notes, together with accrued and unpaid
interest thereon through the date of acceleration, shall become immediately
due and payable.
At any time after a declaration of acceleration of maturity with respect
to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter provided in this Article, the Holders of Notes representing not
less than a majority of the aggregate Note Balance of the related Classes, by
written notice to the Issuer and the Indenture Trustee, may with the consent
of the Enhancer, in writing waive such Event of Default and rescind and annul
such declaration and its consequences if the Issuer has paid or deposited with
the Indenture Trustee a sum sufficient to pay:
(a) all payments of principal of and interest on such Notes and all other
amounts that would then be due hereunder or upon such Notes if the Event of
Default giving rise to such acceleration had not occurred;
(b) all sums paid or advanced by the Indenture Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel; and
(c) all Events of Default, other than the nonpayment of principal of such
Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if a default occurs in the payment of (i)
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) principal of any Note when the
same becomes due and payable; then, in each case the Issuer shall, upon demand
of the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the entire amount then due and payable on the Notes for principal
and interest, with interest on the overdue principal at the applicable Note
Rate. In addition thereto, the foregoing shall include such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, subject to the provisions of Section 10.16, may, and at the direction
of the Enhancer, shall, institute Proceedings for the collection of the sums
so due and unpaid, and may prosecute such Proceedings to judgment or final
decree, and may enforce the same against the Issuer or other obligor on the
Notes and collect in the manner provided by law out of the property of the
Issuer or such other obligor on the Notes, wherever situated, the monies
adjudged or decreed to be payable.
(c) If an Event of Default shall occur and be continuing, the Indenture
Trustee, subject to the provisions of Section 10.16, may, as more particularly
provided in Section 5.04, in its discretion proceed to protect and enforce its
rights and the rights of the Noteholders by such appropriate Proceedings as
the Indenture Trustee shall deem most effective to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relating to the Issuer, any other
obligor on the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or similar law; or in
case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or
Person, or in case of any other comparable Proceedings relating to the Issuer
or such other obligor, or to the creditors or property of the Issuer or such
other obligor, the Indenture Trustee, irrespective of whether the principal of
any Notes shall then be due and payable as expressed in such Notes or by
declaration or otherwise, and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to this Section, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim for the entire amount of principal and
interest owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee
and their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each such predecessor Indenture Trustee, except as
a result of negligence, willful misconduct or bad faith) and the
Noteholders allowed in the related Proceeding;
(ii) unless prohibited by applicable law or regulation, to vote on
behalf of the Noteholders in any election of a trustee, standby trustee
or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable or
deliverable in respect of the claims of the Noteholders and the Indenture
Trustee and to distribute all amounts received with respect to any such
claims on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Noteholders allowed in any judicial Proceeding
relating to the Issuer, its creditors or its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by the Noteholders to make payments
to the Indenture Trustee and, in the event the Indenture Trustee shall consent
to the making of payments directly to the Noteholders, to pay to the Indenture
Trustee such amounts as shall be sufficient to cover reasonable compensation
of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
such predecessor Indenture Trustee, except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing contained herein shall be deemed to permit the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder, or to
authorize the Indenture Trustee to vote in respect of any claim of a
Noteholder in any such Proceeding, except to vote for the election of a
trustee in bankruptcy or similar Person as provided above.
(f) All rights of action and of asserting claims under this Indenture or
in respect of the Notes may be enforced by the Indenture Trustee without the
possession of any Notes or the production thereof in any Proceeding relating
thereto. Any such Proceeding instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents and attorneys, shall be for the ratable benefit of the
Noteholders.
(g) In any Proceeding brought by the Indenture Trustee (including any
Proceeding involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceeding.
Section 5.04. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee, subject to the provisions of Section 10.16 and Section
5.05, may do one or more of the following:
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, and all amounts payable under the Insurance Agreement, enforce
any judgment thereby obtained and collect from the Issuer or any other
obligor on the Notes any monies thereby adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or any right or
interest therein at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Holders of Notes representing
100% of the aggregate Note Balance, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to discharge in
full all amounts then due and unpaid on the Notes for principal and interest
and to pay any amounts due the Enhancer under the Insurance Agreement, without
a draw on the Policy, or (C) the Indenture Trustee determines that the
Mortgage Loans will not continue to provide sufficient funds for the payment
of principal of and interest on the Notes as the same would have become due if
the Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of the Holders of Notes representing not less than 66 2/3%
of the aggregate Note Balance. In determining such sufficiency or
insufficiency with respect to clauses (B) and (C) above, the Indenture Trustee
may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose. Notwithstanding the foregoing, for so long as a
Servicing Default shall not have occurred, any Sale of the Trust Estate shall
be made subject to the continued servicing of the Mortgage Loans by the Master
Servicer as provided in the Sale and Servicing Agreement.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article, it shall pay out such money or property in the following order:
(i) to the Indenture Trustee, for amounts due under Section 6.07;
(ii) to the Noteholders, for amounts due and unpaid on the related
Notes in respect of interest, ratably, without preference or priority of
any kind, according to the amounts then due and payable;
(iii) to the Noteholders, for amounts due and unpaid on the related
Notes in respect of principal, ratably, without preference or priority of
any kind, according to the amounts then due and payable, until the
respective Note Balances of the Notes have been reduced to zero;
(iv) to the payment of all amounts then due and owing to the
Enhancer under the Insurance Agreement;
(v) to the Certificate Paying Agent for amounts then due under
Article VII of the Trust Agreement; and
(vi) to the Issuer or any other Person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date, the Indenture Trustee shall mail to each Noteholder a notice that states
such record date, and payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Trust Estate. If the Notes
have been declared due and payable under Section 5.02 following an Event of
Default, and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to take and maintain
possession of the Trust Estate. In determining whether to take and maintain
possession of the Trust Estate, the Indenture Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
Section 5.06. Limitation of Suits. No Noteholder shall have any right to
institute any Proceeding with respect to this Indenture, for the appointment
of a receiver or trustee or for any other remedy hereunder, unless (subject to
the provisions of Section 10.16):
(a) such Noteholder shall have previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Holders of Notes representing not less than 25% of the aggregate
Note Balance shall have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own name
as Indenture Trustee hereunder;
(c) such Noteholders shall have offered the Indenture Trustee reasonable
indemnity against the costs, expenses and liabilities that may be incurred by
it in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute such
Proceedings; and
(e) no direction inconsistent with such written request shall have been
given to the Indenture Trustee during such 60-day period by the Enhancer or
the Holders of Notes representing not less than a majority of the aggregate
Note Balance.
No Noteholder shall have any right in any manner whatsoever by virtue of
or by availing itself of any provision of this Indenture to affect, disturb or
prejudice the rights of any other Noteholder, to obtain or to seek to obtain
priority or preference over any other Noteholder or to enforce any right under
this Indenture, in each case except in the manner herein provided.
In the event that the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders,
each representing less than a majority of the aggregate Note Balance, the
Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provision of this Indenture.
Section 5.07. Unconditional Right of Noteholders To Receive Principal and
Interest. Notwithstanding any other provision of this Indenture, each
Noteholder shall have the right, which is absolute and unconditional, to
receive payment of the interest and principal, if any, due on such
Noteholder's Notes on or after the due date expressed in such Notes or in this
Indenture and to institute suit for the enforcement of any such payment. Such
right shall not be impaired without the consent of the related Noteholder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Indenture
Trustee or to such Noteholder, then in every such case the Issuer, the
Indenture Trustee, the Noteholders and the Enhancer shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of
the Indenture Trustee, the Noteholders and the Enhancer shall continue as
though no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Enhancer or the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder or otherwise shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Enhancer or any Noteholder to exercise any right or
remedy accruing upon an Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the
Indenture Trustee, the Enhancer or the Noteholders may be exercised from time
to time, and as often as may be deemed expedient, by the Indenture Trustee,
the Enhancer or the Noteholders, as the case may be.
Section 5.11. Control by Noteholders. The Holders of Notes representing
not less than a majority of the aggregate Note Balance shall have the right to
direct the time, method and place of conducting any Proceeding for any remedy
available to the Indenture Trustee with respect to the Notes or exercising any
trust or power conferred on the Indenture Trustee; provided that:
(a) such direction shall not conflict with any rule of law or with this
Indenture;
(b) subject to Section 5.04, any direction to the Indenture Trustee to
sell or liquidate the Trust Estate shall be given by Holders of Notes
representing 100% of the aggregate Note Balance;
(c) if the conditions set forth in Section 5.05 have been satisfied and
the Indenture Trustee elects to retain the Trust Estate pursuant to such
Section, then any direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the aggregate Note Balance to sell or liquidate
the Trust Estate shall be of no force or effect; and
(d) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders as set forth in this Section,
and subject to Section 6.01, the Indenture Trustee need not take any action
that it determines might subject it to liability or might materially and
adversely affect the rights of any Noteholders not consenting thereto.
Section 5.12. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Enhancer or the Holders of Notes representing not less than a majority of the
aggregate Note Balance with the consent of the Enhancer may waive any past
Event of Default and its consequences, except an Event of Default (a) with
respect to payment of principal of or interest on the Notes or (b) in respect
of a covenant or provision hereof that cannot be modified or amended without
the consent of all Noteholders or each Noteholder affected thereby. In the
case of any such waiver, the Issuer, the Indenture Trustee, the Enhancer and
the Noteholders shall be restored to their respective former positions and
rights hereunder; provided, that no such waiver shall extend to any subsequent
or other Event of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred for every purpose of this
Indenture; provided, that no such waiver shall extend to any subsequent or
other Event of Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. The parties hereto agree, and each
Noteholder, by such Noteholder's acceptance of a Note, shall be deemed to have
agreed, that any court may in its discretion require, in any Proceeding for
the enforcement of any right or remedy under this Indenture, or in any
Proceeding against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
Proceeding of an undertaking to pay the costs of such Proceeding, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such Proceeding, having due
regard to the merits and good faith of the claims or defenses made by such
party litigant; provided, that the provisions of this Section shall not apply
to any Proceeding instituted by (i) the Indenture Trustee, (ii) any Noteholder
or group of Noteholders, in each case holding Notes representing in the
aggregate more than 10% of the aggregate Note Balance or (iii) any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the due date expressed in such Note and in this Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, 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 each such power
as though no such law had been enacted.
Section 5.15. Sale of Trust Estate.
(a) The power to effect any sale or other disposition (each, a "Sale") of
any portion of the Trust Estate pursuant to Section 5.04 is expressly subject
to the provisions of Section 5.05 and this Section. The power to effect any
such Sale shall not be exhausted by any one or more Sales as to any portion of
the Trust Estate remaining unsold. The power to effect any such Sale shall
continue unimpaired until the entire Trust Estate has been sold or all amounts
payable on the Notes, under this Indenture and under the Insurance Agreement
have been paid. The Indenture Trustee may from time to time postpone any
public Sale by public announcement made at the time and place of such Sale.
The Indenture Trustee hereby expressly waives its right to any amount fixed by
law as compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless:
(i) all Noteholders and the Enhancer consent to or direct the
Indenture Trustee to make such Sale;
(ii) the proceeds of such Sale would be not less than the entire
amount that would be payable to the Securityholders and the Enhancer in
respect of amounts drawn under the Policy and any other amounts due the
Enhancer under the Insurance Agreement, in full payment thereof in
accordance with Section 5.02, on the Payment Date next succeeding the
date of such Sale; or
(iii) the Indenture Trustee determines, in its sole discretion, that
the conditions for retention of the Trust Estate set forth in Section
5.05 cannot be satisfied (and in making any such determination, the
Indenture Trustee may rely upon an opinion of an Independent investment
banking firm obtained and delivered as provided in Section 5.05), and
Holders of Notes representing not less than 66 2/3% of the aggregate Note
Balance consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust
Estate at a private Sale shall not be deemed a Sale or other disposition
thereof for purposes of this paragraph.
(c) Unless the Noteholders and the Enhancer have otherwise consented or
directed the Indenture Trustee, at any public Sale of all or any portion of
the Trust Estate at which a minimum bid equal to or greater than the amount
described in clause (ii) of paragraph (b) of this Section has not been
established by the Indenture Trustee, and no Person bids an amount equal to or
greater than such amount, the Indenture Trustee shall bid an amount at least
$1.00 greater than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust Estate:
(i) any Noteholder may bid for and purchase the property offered for
sale and, upon compliance with the terms of sale, may hold, retain,
possess and dispose of such property without further accountability; and
may, in paying the purchase price therefor, deliver any Notes or claims
for interest thereon in lieu of cash up to the amount, upon distribution
of the net proceeds of such Sale, payable thereon. Such Notes, in case
the amounts so payable thereon shall be less than the amount due thereon,
shall be returned to the Holders thereof after being appropriately
stamped to show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale, may, subject to any requirements of and to the extent
permitted by applicable law in connection therewith, purchase all or any
portion of the Trust Estate in a private Sale, and may, in lieu of paying
cash therefor, make settlement for the purchase price by crediting the
gross sale price against the sum of (A) the amount that would be
distributable to the Securityholders and amounts owing to the Enhancer as
a result of such Sale in accordance with Section 5.04(b) on the Payment
Date next succeeding the date of such Sale and (B) the expenses of such
Sale and of any Proceeding in connection therewith that are reimbursable
to it, without being required to produce the Notes in order to complete
any such Sale or in order for the net sale price to be credited against
such Notes; and any property so acquired by the Indenture Trustee shall
be held and dealt with by it in accordance with the provisions of this
Indenture;
(iii) the Indenture Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Trust Estate in connection with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the agent
and attorney in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to
take all action necessary to effect such Sale; and
(v) no purchaser or transferee at any such Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the Lien of this Indenture nor any rights
or remedies of the Indenture Trustee, the Enhancer or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Trust Estate or any other assets of the Issuer. Any money or property
collected by the Indenture Trustee shall be applied in accordance with Section
5.04(b).
Section 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a written request from the Indenture Trustee to do
so, the Issuer, in its capacity as owner of the Mortgage Loans, shall take all
such lawful action as the Indenture Trustee may request to cause the Issuer to
compel or secure the performance and observance by the Transferor and the
Master Servicer, as applicable, of each of their obligations to the Issuer
under or in connection with the Mortgage Loan Sale Agreement and the Sale and
Servicing Agreement, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Mortgage Loan Sale Agreement and the Sale and Servicing Agreement, to the
extent and in the manner directed by the Indenture Trustee, as pledgee of the
Mortgage Loans, including the transmission of notices of default on the part
of the Transferor or the Master Servicer thereunder and the institution of
Proceedings to compel or secure performance by the Transferor or the Master
Servicer of each of their obligations under the Mortgage Loan Sale Agreement
and the Sale and Servicing Agreement.
(b) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee, as pledgee of the Mortgage Loans, may, and at the direction
(which direction shall be in writing or by telephone confirmed in writing
promptly thereafter) of the Holders of Notes representing not less than 66
2/3% of the aggregate Note Balance, shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Transferor or the
Master Servicer under or in connection with the Mortgage Loan Sale Agreement
or the Sale and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by the Transferor the
Master Servicer, as the case may be, of each of their respective obligations
to the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Mortgage Loan Sale Agreement or the
Sale and Servicing Agreement, as the case may be, and any right of the Issuer
to take such action shall not be suspended. In connection therewith, as
determined by the Indenture Trustee, the Issuer shall execute all documents
provided to it by the Indenture Trustee necessary to effect the transfer of
the Mortgage Loans to the Indenture Trustee.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise under the circumstances in the conduct of such
Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee that conform to the
requirements of this Indenture; provided, that the Indenture Trustee
shall examine such certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it (A) pursuant to Section 5.11 or (B) from the
Enhancer, pursuant to any of the Basic Documents.
(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
Section 6.02. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Indenture Trustee need not investigate any fact or matter stated in such
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 any such Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers or
perform any duties hereunder either directly or by or through agents,
attorneys, a custodian or a nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within its
rights or powers, provided that the Indenture Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Issuer and its
Affiliates with the same rights that it would have if it were not Indenture
Trustee. Any Note Registrar, co-registrar or co-paying agent may do the same
with like rights. Notwithstanding the foregoing, the Indenture Trustee must
comply with Sections 6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be (a) responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, (b) accountable for the Issuer's use
of the proceeds from the sale of the Notes or (c) responsible for any
statement of the Issuer in the Indenture, in any document issued in connection
with the sale of the Notes or in the Notes, other than the Indenture Trustee's
certificate of authentication.
Section 6.05. Notice of Event of Default. The Indenture Trustee shall
mail to each Noteholder notice of any Event of Default within 90 days and to
the Enhancer immediately after such Event of Default occurs. Except in the
case of an Event of Default relating to the payment of principal of or
interest on any Note, the Indenture Trustee may withhold such notice to the
Noteholders only if and for so long as a committee of its Responsible Officers
in good faith determines that withholding such notice is in the interests of
the Noteholders.
Section 6.06. Reports by Indenture Trustee to Noteholders. The Indenture
Trustee shall deliver to each Noteholder such information in the possession of
the Indenture Trustee as may be required to enable such Noteholder to prepare
its federal and state income tax returns. In addition, upon Issuer Request,
the Indenture Trustee shall promptly furnish information in the possession of
the Indenture Trustee reasonably requested by the Issuer that is reasonably
available to the Indenture Trustee to enable the Issuer to perform its federal
and state income tax reporting obligations.
Section 6.07. Compensation. The Issuer shall pay to the Indenture Trustee
on each Payment Date reasonable compensation for its services. The Indenture
Trustee shall be compensated and indemnified by the Master Servicer in
accordance with Section 6.06 of the Sale and Servicing Agreement, and all
amounts owing to the Indenture Trustee hereunder and not paid pursuant to
Section 6.06 of the Sale and Servicing Agreement shall be paid solely as
provided in Section 3.05 (subject to the priorities set forth therein). The
Indenture Trustee's compensation shall not be limited by any law relating to
compensation of a trustee of an express trust. The Issuer shall reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made
by the Indenture Trustee in addition to the compensation for its services.
Such expenses shall include costs of collection and reasonable compensation
and expenses, disbursements and advances of the Indenture Trustee's agents,
counsel, accountants and experts.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of an Event of Default specified
in paragraph (d) or (e) of the definition thereof with respect to the Issuer,
such expenses are intended to constitute expenses of administration under
Title 11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section. The Indenture Trustee may resign
at any time by so notifying the Issuer. The Holders of Notes representing not
less than a majority of the aggregate Note Balance may remove the Indenture
Trustee by so notifying the Indenture Trustee, and may appoint a successor
Indenture Trustee. The Issuer shall remove the Indenture Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee. In addition, the
Indenture Trustee shall resign to avoid being directly or indirectly
controlled by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and the Issuer. Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to the Noteholders.
The retiring Indenture Trustee shall promptly transfer all property held by it
as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of Notes representing not less
than a majority of the aggregate Note Balance may petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition a court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Section 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into or transfers all or
substantially all its corporate trust business or assets to another
corporation or banking association, the resulting, surviving or transferee
without any further act shall be the successor Indenture Trustee hereunder;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall provide
each Rating Agency and the Enhancer with written notice of any such
transaction after the Closing Date.
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 Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor Indenture Trustee, and
deliver such Notes so authenticated. In case at such time any of the Notes
shall not have been authenticated, any successor Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor Indenture Trustee; and in all such cases, such
certificates shall have the full force that it is anywhere in the Notes or in
this Indenture provided that the certificate of the Indenture Trustee shall
have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at such time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees or separate
trustee or separate trustees, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust
Estate or any part thereof 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. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11, and no notice to Noteholders of the appointment of
any co-trustee or separate trustee shall be required under Section 6.08.
(b) Each 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 Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then-separate trustees and
co-trustees, as effectively as if given to each of them. Each instrument
appointing a separate trustee or co-trustee shall refer to this Indenture and
to the conditions of this Article. 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
provisions of this Indenture, including each provision relating to the conduct
of, affecting the liability of or affording protection to the Indenture
Trustee. Each 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, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA ss.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 and it or its parent
shall have a long-term debt rating of A or better by Moody's. The Indenture
Trustee shall comply with TIA ss.310(b), including the optional provision
permitted by the second sentence of TIA ss.310(b)(9); provided, that there
shall be excluded from the operation of TIA ss.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 ss.310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss.311 (a), excluding any creditor
relationship listed in TIA ss.311 (b). Any Indenture Trustee that has resigned
or been removed shall be subject to TIA ss.311 (a) to the extent indicated
therein.
Section 6.13. Representations and Warranties. The Indenture Trustee
hereby represents and warrants that:
(a) the Indenture Trustee is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States, with full power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted;
(b) the Indenture Trustee has the power and authority to execute and
deliver this Indenture and to carry out its terms; and the execution, delivery
and performance of this Indenture have been duly authorized by the Indenture
Trustee by all necessary action;
(c) the consummation of the transactions contemplated by this Indenture
and the fulfillment of the terms hereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the charter or bylaws of the
Indenture Trustee or any agreement or other instrument to which the Indenture
Trustee is a party or by which it may be bound;
(d) to the Indenture Trustee's knowledge, there are no Proceedings or
investigations pending or threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Indenture Trustee or any of its properties: (i)
asserting the invalidity of this Indenture, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Indenture or
(iii) seeking any determination or ruling that might materially and adversely
affect the performance by the Indenture Trustee of its obligations under, or
the validity or enforceability of, this Indenture; and
(e) the Indenture Trustee does not have notice of any adverse claim (as
such terms are used in UCC Section 8-302) with respect to the Mortgage Loans.
Section 6.14. Directions to Indenture Trustee. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Mortgage Loans and hold the Trust Estate
in trust for the benefit of the Noteholders;
(b) to authenticate and deliver the Notes substantially in the form of
Exhibit A hereto in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer shall furnish or cause to be furnished to the
Indenture Trustee (i) not more than five days after each Record Date, a list,
in such form as the Indenture Trustee may reasonably require, of the names and
addresses of the Noteholders as of such Record Date, and (ii) 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 in similar form and of
similar content as of a date not more than 10 days prior to the time such list
is furnished; provided, that for so long as the Indenture Trustee is the Note
Registrar, no such list need be furnished.
Section 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01, and the names and addresses of the Noteholders received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section upon receipt of a
new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss.312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss.312(c).
Section 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and 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) that 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 the 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 Noteholders described in TIA ss.313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this paragraph
and 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 7.04. Reports by Indenture Trustee. If required by TIA ss.313(a),
within 60 days after each January 1, commencing with January 1, 2000, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss.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 ss. 313(b).
A copy of each report at the time of its mailing to the Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this
Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided
in Article V.
Section 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Indenture
Trustee to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders, the Note Payment Account as provided in
Section 3.01.
(b) All monies deposited from time to time into the Note Payment Account
are for the benefit of the Noteholders, and all investments made with such
monies, including all net income or other gain from such investments, shall be
deposited therein or credited thereto.
(c) On each Payment Date, the Paying Agent shall distribute all amounts
on deposit in the Note Payment Account to the Noteholders in the order of
priority set forth in Section 3.05 (except as otherwise provided in Section
5.04(b)).
Section 8.03. Officer's Certificate. The Indenture Trustee and the
Enhancer shall receive at least seven days prior written notice when requested
by the Issuer to take any action pursuant to Section 8.05(a), accompanied by
copies of any instruments to be executed; and the Indenture Trustee shall
require, as a condition to such action, an Officer's Certificate in form and
substance satisfactory to the Indenture Trustee 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 satisfied.
Section 8.04. Termination Upon Distribution to Noteholders. This
Indenture and the respective obligations and responsibilities of the Issuer
and the Indenture Trustee created hereby shall terminate upon the distribution
to Noteholders, the Enhancer and the Indenture Trustee of all amounts required
to be distributed pursuant to Article III or Article V.
Section 8.05. Release of Trust Estate.
(a) Subject to the payment of its fees and expenses, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the Lien of this Indenture, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in 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 (i) there are no Notes
Outstanding, (ii) all sums due the Indenture Trustee pursuant to this
Indenture have been paid and (iii) all sums due the Enhancer have been paid,
release any remaining portion of the Trust Estate that secured the Notes from
the Lien of this Indenture.
(c) The Indenture Trustee shall release property from the Lien of this
Indenture pursuant to this Section only upon receipt of an Issuer Request.
(d) The Indenture Trustee shall surrender the Policy to the Enhancer for
cancellation upon final payment of principal of and interest on the Notes.
Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of any
Note, the Holder thereof agrees to surrender such Note to the Indenture
Trustee promptly, prior to such Noteholder's receipt of the final payment
thereon.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
Without the consent of the Holders of any Notes, but with prior written notice
to each Rating Agency and the Enhancer, the Issuer and the Indenture Trustee,
when authorized by an Issuer Request, at any time and from time to time, may
enter into one or more indentures supplemental hereto (which shall conform to
the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(a) 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;
(b) 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 Notes
contained;
(c) to add to the covenants of the Issuer for the benefit of the
Noteholders, or to surrender any right or power herein conferred upon the
Issuer;
(d) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee;
(e) to cure any ambiguity, to correct or supplement any provision herein
or in any supplemental indenture that may be inconsistent with any other
provision herein or in any supplemental indenture;
(f) to make any other provisions with respect to matters or questions
arising under this Indenture or in any supplemental indenture; provided, that
such action shall not materially and adversely affect the interests of the
Noteholders and the Enhancer;
(g) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(h) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter enacted
and to add to this Indenture such other provisions as may be expressly
required by the TIA;
provided, however, that no such supplemental indentures shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel to the
effect that entering into such supplemental indenture will not have any
material adverse tax consequence to the Noteholders.
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.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, may,
with prior written notice to each Rating Agency and with the consent of the
Enhancer and the Holders of Notes representing not less than a majority of the
aggregate Note Balance, by Act of such Noteholders delivered to the Issuer and
the Indenture Trustee, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provision 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 Noteholders under this Indenture; provided, that no
such supplemental indenture may, without the consent of the Holder of each
Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, reduce the principal amount thereof or the interest rate
thereon, change the provisions of this Indenture relating to the application
of collections on or the proceeds of the sale of the Trust Estate to payment
of principal of or interest on the Notes, change any place of payment where,
or the coin or currency in which, any Note or the interest thereon is payable,
or 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 Notes on
or after the respective due dates thereof;
(b) reduce the percentage of the Note Balances of the Notes, the consent
of the Holders of which is required for any such supplemental indenture or for
any waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding" or modify or alter the exception in the definition of
the term "Holder";
(d) reduce the percentage of the aggregate Note Balance with respect to
which the consent of the Holders of Notes representing such Note Balance is
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
(e) 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 other Basic Documents cannot be modified or waived
without the consent of the Holder of each Note affected thereby;
(f) modify any provision of this Indenture in such a manner as to affect
the calculation of the amount of any payment of interest or principal due on
any Note on any Payment Date (including the calculation of any of the
individual components of such calculation); or
(g) permit the creation of any Lien ranking prior to or on a parity with
the Lien of this Indenture with respect to any part of the Trust Estate or,
except as otherwise permitted or contemplated herein, terminate the Lien of
this Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the Lien of this Indenture; and
provided further, that such action shall not, as evidenced by an Opinion of
Counsel, cause the Issuer to be subject to an entity level tax.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture, and any such
determination shall be conclusive upon the all Noteholders, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders 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 Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Noteholders to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of
such supplemental indenture. Notwithstanding the foregoing, any failure of the
Indenture Trustee to mail such notice or any defect therein shall not in any
way impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing or
permitting the additional trusts created by any supplemental indenture
permitted by this Article or the modification thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Indenture Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
that affects the Indenture Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes 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 Noteholders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all terms and conditions of
any such supplemental indenture shall be and be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Each amendment of this
Indenture and every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect
for so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 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 Notes 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 Notes.
ARTICLE X
MISCELLANEOUS
Section 10.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating
that all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with and (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that, in the case of any such application
or request as to which the furnishing of such documents is specifically
required by any provision of this Indenture, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(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;
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(v) if the signer of such certificate or opinion is required to be
Independent, the statement required by the definition of the term
"Independent".
(b) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the Lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or
elsewhere in this Indenture, famish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
(c) Whenever the Issuer is required to furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in paragraph (b) above, the Issuer shall
also deliver to the Indenture Trustee an Independent Certificate as to the
same matters, if the fair value to the Issuer of the securities to be so
deposited and of all other such securities made the basis of any such
withdrawal or release since the commencement of the then-current fiscal year
of the Issuer, as set forth in the certificates delivered pursuant to
paragraph (b) above and this paragraph, is 10% or more of the aggregate Note
Balance, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set forth
in the related Officer's Certificate is less than $25,000 or less than one
percent of the aggregate Note Balance.
(d) Whenever any property or securities are to be released from the Lien
of this Indenture, the Issuer shall also furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such release) of the
property or securities proposed to be released and stating that in the opinion
of such person the proposed release will not impair the security under this
Indenture in contravention of the provisions hereof.
(e) Whenever the Issuer is required to furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in paragraph (d) above, the Issuer shall
also furnish to the Indenture Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities and of all other
property, other than property as contemplated by paragraph (f) below or
securities released from the Lien of this Indenture since the commencement of
the then-current calendar year, as set forth in the certificates required by
paragraph (d) above and this paragraph equals 10% or more of the aggregate
Note Balance, but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set forth in
the related Officer's Certificate is less than $25,000 or less than one
percent of the aggregate Note Balance.
(f) Notwithstanding any provision of this Indenture, the Issuer may,
without compliance with the requirements of the other provisions of this
Section, (i) collect, sell or otherwise dispose of the Mortgage Loans as and
to the extent permitted or required by the Basic Documents or (ii) make cash
payments out of the Note Payment Account as and to the extent permitted or
required by the Basic Documents, so long as the Issuer shall deliver to the
Indenture Trustee every six months, commencing December 31, 1999, an Officer's
Certificate of the Issuer stating that all the dispositions of Collateral
described in clauses (i) or (ii) above that occurred during the preceding six
calendar months were in the ordinary course of the Issuer's business and that
the proceeds thereof were applied in accordance with the Basic Documents.
Section 10.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Transferor, the Depositor or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Transferor, 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
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Article VI.
Section 10.03. Acts of Noteholders.
(a) Any request, demand, authorization,, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by the
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee; and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and, subject to Section 6.01,
shall be 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 manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Noteholder shall bind the Holder of every Note
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 Note.
Section 10.04. Notices. Notices required to be given hereunder shall be
given in the manner set forth in Section 8.03 of the Sale and Servicing
Agreement.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders 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 Noteholder's address as it
appears on the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. In any case
where notice to Noteholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any Noteholder shall affect
the sufficiency of such notice with respect to other Noteholders, and any
notice that is mailed in the manner herein provided shall conclusively be
presumed to have been duly given regardless of whether such notice is in fact
actually received.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to each Rating Agency, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of
Default.
Section 10.06. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with any other provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA ss.ss.310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded hereby) are a part of and govern this Indenture, whether or
not physically contained herein.
Section 10.07. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 10.08. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes of the Issuer shall bind its successors and
assigns, whether or not so expressed. All agreements of the Indenture Trustee
in this Indenture shall bind its successors, co-trustees and agents.
Section 10.09. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Indenture shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture, and shall in no way affect the validity
or enforceability of the other provisions of this Indenture or of the Notes or
the rights of the Noteholders.
Section 10.10. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, the Enhancer and
any other party secured hereunder, and any other Person with an ownership
interest in any part of the Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 10.11. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
Section 10.12. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 10.13. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 10.14. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders, the Enhancer or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
Section 10.15. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee
or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or
the Owner Trustee in its individual capacity, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their respective individual
capacities) and except that any such partner, 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 V, VI and VII of the Trust Agreement.
Section 10.16. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by its acceptance of a Note, 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 federal or state bankruptcy or
similar law in connection with any obligation relating to the Notes, this
Indenture or any of the other Basic Documents.
Section 10.17. Inspection. The Issuer agrees that, on reasonable prior
written notice, it will permit any representative of the Indenture Trustee,
during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, 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 applicable law (and all reasonable applications for
confidential treatment are unavailing), and except to the extent the Indenture
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
IRWIN HOME EQUITY LOAN TRUST 1999-2,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Jill K. Morrison
----------------------------------------
Name: Jill K. Morrison
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
By: /s/ Amy Wahl
----------------------------------------
Name: Amy Wahl
Title: Assistant Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION hereby
accepts the appointment as Paying Agent
pursuant to Section 3.03 hereof and as Note
Registrar pursuant to Section 4.02 hereof.
By: /s/ Amy Wahl
----------------------------------------
Name: Amy Wahl
Title: Assistant Vice President
STATE OF )
) SS.:
COUNTY OF )
On this day of May, 1999, before me personally appeared Amy Wahl, to
me known, who being by me duly sworn, did depose and say, that she resides at
Pasadena, Maryland, that she is the A.V.P. of Norwest Bank Minnesota,
National Association, as Indenture Trustee, one of the parties described in and
that executed the above instrument; that she knows the seal of said party; that
the seal affixed to said instrument is the seal of such party; that it was so
affixed by order of said party; and that she signed his name thereto by like
order.
Sworn to and subscribed before me this 27th day of May, 1999, by
_________________.
/s/ Edward M. Owens
--------------------------------------
Notary Public
Name: Edward M. Owens
---------------------------------
[Notarial Seal] My Commission Expires: 10/19/2000
----------------
EXHIBIT A-1
FORM OF CLASS A-[_] NOTE
UNLESS THIS CLASS A-[_] NOTE 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-[_] NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS CLASS A-[_] NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS
A-[_] NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS CLASS A-[_] NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE TRANSFEROR, THE DEPOSITOR, THE MASTER SERVICER, THE INDENTURE TRUSTEE, THE
OWNER TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY
PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.
IRWIN HOME EQUITY LOAN TRUST 1999-2
HOME EQUITY LOAN-BACKED NOTE, SERIES 1999-2
Registered
No. A-[_]-1
Percentage Interest: 100%
Note Balance: $[____________]
Note Rate: As set forth herein. CUSIP NO. _________
First Payment Date: June 15, 1999
Final Insured Payment Date: August 15, 2030
Irwin Home Equity Loan Trust 1999-2, a business trust duly organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co. or its registered assigns, the
principal sum of [__________________________ ($__________)], payable on each
Payment Date in an amount equal to the Percentage Interest specified above of
the aggregate amount, if any, payable from the Note Payment Account in respect
of principal of the Class A-[_] Notes pursuant to Section 3.05 of the
Indenture dated as of April 30, 1999 (the "Indenture"), between the Issuer and
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee"); provided, however, that the entire unpaid principal
amount of this Class A-[_] Note shall be due and payable on the August 15,
2030 Payment Date to the extent not previously paid on a prior Payment Date.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the Indenture.
Interest on the Class A-[_] Notes will be paid monthly on each Payment
Date at the Note Rate for the related Interest Period, subject to limitations
that may result in Interest Carry-Forward Amounts (as further described in the
Indenture). Interest on this Class A-[_] Note will accrue at the Note Rate for
each Payment Date from the most recent Payment Date on which interest has been
paid (in the case of the first Payment Date, from the Closing Date) to but
excluding such Payment Date. The "Note Rate" for each Interest Period will be
[a floating rate equal to the least of (i) LIBOR plus 0.10% per annum, (ii)
the weighted average net Mortgage Interest Rate of the Mortgage Loans in Group
[_] and (iii) 14.50% per annum.] [[_____% per annum] (or, on any Payment Date
on which the aggregate Note Balance is less than 10% of the Initial Note
Balance, [_____%]per annum).] Interest will be computed on the basis of the
actual number of days in each Interest Period and a 360-day year. Principal of
and interest on this Class A-[_] Note shall be paid in the manner specified on
the reverse hereof. "Payment Date" means the 15th day of each month or, if any
such day is not a Business Day, the immediately succeeding Business Day.
If an Event of Default shall have occurred and be continuing, then the
Indenture Trustee or the Holders of Notes representing not less than a
majority of the aggregate Note Balance may declare the Notes to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture.
Principal of and interest on this Class A-[_] Note will be 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-[_] Note will generally be
applied first to interest due and payable on this Class A-[_] Note as provided
above and then to the unpaid principal of this Class A-[_] Note.
Reference is made to the further provisions of this Class A-[_] Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Class A-[_] Note.
Unless the Indenture Trustee has executed the certificate of
authentication hereon by manual signature, this Class A-[_] Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
[REVERSE OF CLASS A-[_] NOTE]
This Class A-[_] Note is one of a duly authorized issue of Class A-[_]
Notes of the Issuer, designated as its Home Equity Loan-Backed Notes, Series
1999-2 (the "Class A-[_] Notes"), all issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights and obligations thereunder of the Issuer,
the Indenture Trustee and the Noteholders. The Class A-[_] Notes are subject
to all of the terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes (collectively, the "Notes") are and will be equally and
ratably secured by the collateral pledged as security therefor as provided in
the Indenture.
This Class A-[_] Note is entitled to the benefits of an irrevocable and
unconditional financial guaranty insurance policy issued by Ambac Assurance
Corporation.
This Class A-[_] Note may be transferred by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Holder
hereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended, and thereupon one or
more new Class A-[_] Notes in 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-[_] Note, but the Note Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any registration of transfer or
exchange of this Class A-[_] Note.
Each Holder or Beneficial Owner of a Class A-[_] Note, by its acceptance of a
Class A-[_] Note (or, in the case of a Beneficial Owner of a Class A-[_] Note,
a beneficial interest in such Class A-[_] Note) covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee, the Transferor, the Master Servicer, the
Depositor or the Indenture Trustee on the Class A-[_] Notes or under the
Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in their
respective individual capacities, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director
or employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee
or the Indenture Trustee or any successor or assign of the Indenture Trustee
or the Owner Trustee in their respective individual capacities, except as any
such Person may have expressly agreed, and provided that any such partner,
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 Beneficial Owner or Class A-[_] Noteholder, by its acceptance of a Class
A-[_] Note (or, in the case of a Beneficial Owner of a Class A-[_] Note, a
beneficial interest in such Class A-[_] Note) covenants and agrees by
accepting the benefits of the Indenture that such Class A-[_] Noteholder or
Beneficial Owner will not at any time institute against the Depositor, the
Transferor, the Master Servicer or the Issuer, or join in any institution
against the Depositor, the Transferor, the Master Servicer or the Issuer of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any federal or state bankruptcy or similar law in connection
with any obligation relating to the Class A-[_] Notes, the Indenture or the
other Basic Documents.
The Issuer has entered into the Indenture, and this Class A-[_] Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Class A-[_] Notes will qualify as indebtedness
of the Issuer. Each Class A-[_] Noteholder, by its acceptance of a Class A-[_]
Note (and each Beneficial Owner of a Class A-[_] Note by its acceptance of a
beneficial interest in such Class A-[_] Note), agrees to treat the Class A-[_]
Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Class A-[_]
Note, the Issuer, the Indenture Trustee and any agent thereof may treat the
Person in the name of which this Class A-[_] Note is registered (as of the
date of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Class
A-[_] Note shall be overdue; and none of the Issuer, the Indenture Trustee or
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 Indenture Trustee and the rights of the Class A-[_] Noteholders
under the Indenture at any time by the Issuer and the Indenture Trustee with
prior written notice to each Rating Agency and with the consent of the
Enhancer and the Holders of Notes representing not less than a majority of the
aggregate Note Balance. The Indenture also contains provisions permitting the
Holders of Notes representing a specified percentage of the aggregate Note
Balance, on behalf of all Noteholders, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Class A-[_] Note (or any one or more Predecessor Notes) shall be
conclusive and binding upon such Holder and upon all future Holders of this
Class A-[_] Note and of any Class A-[_] Note 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 hereon. The Indenture also permits
the Issuer and the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of the Noteholders,
but with prior written notice to each Rating Agency and the Enhancer.
The term "Issuer" as used in this Class A-[_] Note includes any successor
to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Class A-[_] Note and the Indenture shall be construed in accordance
with the laws of the State of New York, and the obligations, rights and
remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the Indenture and no provision of this Class A-[_]
Note 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 Class A-[_] Note 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 Basic Documents, none of Wilmington Trust Company or Norwest
Bank Minnesota, National Association in their respective individual
capacities, any owner of a beneficial interest in the Issuer, or any of their
respective partners, 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 this Class
A-[_] Note or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The Holder of this
Class A-[_] Note, by its acceptance hereof, agrees that, except as expressly
provided in the Basic Documents, in the case of an Event of Default under the
Indenture, such 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 Class A-[_] Note.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in its
individual capacity, has caused this Class A-[_] Note to be duly executed.
IRWIN HOME EQUITY LOAN TRUST 1999-2
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee
By:__________________________________________
Authorized Signatory
Dated: May 27, 1999
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-[_] Notes referred to in the within-mentioned
Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By:__________________________________________
Authorized Signatory
Dated: May 27, 1999
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
____________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer
unto __________________________________________________________________________
_______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints _________________________, attorney, to transfer said
Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:_______________________ ______________________*/
______________________*/
________________________
* NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.
APPENDIX A
DEFINITIONS
"Additional Principal Distribution Amount" means for any Payment Date and
(i) Group I, the lesser of (a) the Group II Excess Spread remaining after
payment of amounts referenced in clause (vi) of Section 3.05 and (b) any
Overcollateralization Deficiency Amount for such Group remaining after payment
of amounts referenced in clauses (v) and (vi) of Section 3.05 for such Payment
Date and (ii) Group II, the lesser of (a) the Group I Excess Spread remaining
after payment of amounts referenced in clauses (vi) of Section 3.05 and (b)
any Overcollateralization Deficiency Amount for such Group remaining after
payment of amounts referenced in clauses (v) and (vi) of Section 3.05 for such
Payment Date.
"Administration Agreement" means the administration agreement dated as of
April 30, 1999, by and among the Issuer, the Indenture Trustee and the Master
Servicer.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise and "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Appraised Value" means, with respect to any Mortgaged Property, the
value thereof as generally set forth in an appraisal or other property
valuation method of such Mortgaged Property used to establish compliance with
the underwriting criteria applicable to the origination of the related
Mortgage Loan.
"Assignment of Mortgage" means, with respect to any Mortgage Loan, 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 conveyance of the Mortgage Loan, 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.
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language
and customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Base Principal Distribution Amount" means for any Payment Date and
Group, the greater of (i) Principal Collections plus any Liquidation Loss
Amounts for Mortgage Loans assigned to such Group less any
Overcollateralization Release Amount for such Group and Payment Date and (ii)
the Subordination Deficit for such Group and the immediately preceding Payment
Date.
"Basic Documents" means the Trust Agreement, the Indenture, the Mortgage
Loan Sale Agreement, the Insurance Agreement, the Policy, the Sale and
Servicing Agreement, the Indemnification Agreement, the Administration
Agreement and any documents or certificates required by the terms of any of
the foregoing to be delivered in connection therewith.
"Beneficial Owner" means, with respect to any Note, the Person that is
the beneficial owner of such Note as reflected on the books of the Depository
or on the books of a Person maintaining an account with such Depository
(directly as a Depository Participant or indirectly through a Depository
Participant, in accordance with the rules of such Depository).
"Book-Entry Notes" means beneficial interests in the Notes, ownership and
transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.
"Business Day" means any day other than (a) a Saturday or a Sunday or (b)
a day on which banking institutions in the States of New York, Delaware,
California, Minnesota, Maryland or Indiana are required or authorized by law
to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss. 3801 et seq., as amended.
"Capitalized Interest Account" has the meaning set forth in Section 5.01
of the Sale and Servicing Agreement.
"Capitalized Interest Requirement" means, with respect to each Payment
Date during the Pre-Funding Period, the excess, if any of (a) the amount of
interest accrued on the amount on deposit in the Pre-Funding Account as of the
preceding Payment Date (or as of the Closing Date, in the case of the first
Payment Date) at the weighted average of the Note Rates plus the sum of the
rates at which the Trustee's Fee accrues and the Premium Percentage over (b)
the amount of reinvestment earnings on funds on deposit in the Pre-Funding
Account.
"Certificate" means any of the Home Equity Loan-Backed Certificates,
Series 1999-2, in substantially the form set forth in Exhibit A to the Trust
Agreement.
"Certificate Balance" means, with respect to any Payment Date and any
Certificate, the product of (i) the Percentage Interest of such Certificate
and (ii) the sum of the Overcollateralization Amounts for Group I and Group
II.
"Certificate Distribution Account" means the account or accounts created
and maintained by the Certificate Paying Agent pursuant to Section 3.09(c) of
the Trust Agreement.
"Certificate of Trust" means the certificate of trust filed for the Trust
pursuant to Section 3810(a) of the Business Trust Statute.
"Certificate Paying Agent" means any paying agent or co-paying agent
appointed pursuant to the Trust Agreement, which initially shall be the
Indenture Trustee.
"Certificate Register" means the register maintained by the Certificate
Registrar in which the Certificate Registrar shall provide for the
registration and transfers and exchanges of Certificates.
"Certificate Registrar" means, initially, the Indenture Trustee, in its
capacity as Certificate Registrar.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register, except that any Certificate registered
in the name of the Issuer, the Owner Trustee or the Indenture Trustee or any
Affiliate thereof shall be deemed not to be outstanding, and the registered
holder will not be considered a Certificateholder or a Holder for purposes of
giving any request, demand, authorization, direction, notice, consent or
waiver under the Indenture or the Trust Agreement; provided that, in
determining whether the Indenture Trustee or the Owner Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that the Indenture Trustee or the
Owner Trustee knows to be so owned shall be so disregarded. Owners of
Certificates that have been pledged in good faith may be regarded as Holders
if the pledgee thereof establishes to the satisfaction of the Indenture
Trustee or the Owner Trustee, as the case may be, the pledgee's right so to
act with respect to such Certificates and that the pledgee is not the Issuer,
any other obligor upon the Certificates or any Affiliate of any of the
foregoing.
"Civil Relief Act" shall mean the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended.
"Class" means with respect to any Note, all Notes that bear the same
class designation, (i.e., the Class A-1 Notes as a group, the Class A-2 Notes
as a group, the Class A-3 Notes as a group or the Class A-4 Notes as a group).
"Class A-1 Note Balance" means with respect to any Payment Date and the
Class A-1 Notes, the Initial Class A-1 Note Balance reduced by all payments of
principal on the Class A-1 Notes prior to such Payment Date.
"Class A-2 Note Balance" means with respect to any Payment Date and the
Class A-2 Notes, the Initial Class A-2 Note Balance reduced by all payments of
principal on the Class A-2 Notes prior to such Payment Date.
"Class A-3 Note Balance" means with respect to any Payment Date and the
Class A-3 Notes, the Initial Class A-3 Note Balance reduced by all payments of
principal on the Class A-3 Notes prior to such Payment Date.
"Class A-4 Note Balance" means with respect to any Payment Date and the
Class A-4 Notes, the Initial Class A-4 Note Balance reduced by all payments of
principal on the Class A-4 Notes prior to such Payment Date.
"Class A-1 Notes" means the Class A-1 Home Equity Loan-Backed Notes,
Series 1999-2, in substantially the form set forth in Exhibit A to the
Indenture.
"Class A-2 Notes" means the Class A-2 Home Equity Loan-Backed Notes,
Series 1999-2, in substantially the form set forth in Exhibit A to the
Indenture.
"Class A-3 Notes" means the Class A-3 Home Equity Loan-Backed Notes,
Series 1999-2, in substantially the form set forth in Exhibit A to the
Indenture.
"Class A-4 Notes" means the Class A-4 Home Equity Loan-Backed Notes,
Series 1999-2, in substantially the form set forth in Exhibit A to the
Indenture.
"Closing Date" means May 27, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Collateral" has the meaning set forth in the Granting Clause of the
Indenture.
"Collection Account" has the meaning set forth in Section 5.01 of the
Sale and Servicing Agreement.
"Collection Period" means, with respect to any Mortgage Loan and Payment
Date, the calendar month preceding any such Payment Date.
"Collections" means, with respect to any Collection Period and Group, all
Interest Collections and Principal Collections for such Group during such
Collection Period.
"Combined Loan-to-Value Ratio" or "CLTV" means, with respect to any
Mortgage Loan and any date, the ratio, expressed as a percentage, of the sum
of (a) with respect to any Mortgage Loan, the Cut-Off Date Principal Balance
thereof and (b) the outstanding principal balance at origination of such
Mortgage Loan of all other mortgage loans, if any, secured by senior liens on
the related Mortgaged Property, to the Appraised Value.
"Corporate Trust Office" means, with respect to 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 the date of the execution of this instrument is located at Norwest
Center, Sixth and Marquette, Minneapolis, Minnesota 55479-0070, Attention:
Corporate Trust. The principal corporate trust office of the Owner Trustee is
the office at which at any particular time its corporate trust business shall
be administered, and is, at the date of the execution of the Trust Agreement,
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration.
"Custodian" initially means the Indenture Trustee.
"Cut-Off Date" means the Initial Cut-Off Date or a Subsequent Cut-Off
Date, as the context may require.
"Cut-Off Date Principal Balance" means, with respect to any Mortgage
Loan, the outstanding Principal Balance thereof as of the related Cut-Off
Date.
"Debt Service Reduction" shall mean, with respect to any Mortgage Loan, a
reduction by a court of competent jurisdiction of the Monthly Payment due on
such Mortgage Loan in a proceeding under the Bankruptcy Code, except such a
reduction that constitutes a Deficient Valuation or a permanent forgiveness of
principal.
"Default" means any occurrence that is or with notice or the lapse of
time or both would constitute an Event of Default.
"Deficiency Amount" means, with respect to any Payment Date, an amount
equal to the Policy Draw Amount for such Payment Date.
"Deficient Valuation" shall mean, with respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of
the Mortgage Loan and a corresponding reduction in the amount payable pursuant
to the related Mortgage Note, which valuation and reduction result from a
proceeding initiated under the United States Bankruptcy Code.
"Definitive Notes" has the meaning set forth in Section 4.06 of the
Indenture.
"Deleted Loan" means a Mortgage Loan replaced or to be replaced with an
Eligible Substitute Mortgage Loan.
"Depositor" means Bear Steams Asset Backed Securities, Inc., a Delaware
corporation, and its successors.
"Depository" or "Depository Agency" means The Depository Trust Company or
a successor appointed by the Indenture Trustee with the approval of the
Depositor. Any successor to the Depository shall be an organization registered
as a "clearing agency" pursuant to Section 17A of the Exchange Act and the
regulations of the Securities and Exchange Commission thereunder.
"Depository Participant" means a Person for whom, from time to time, the
Depository effects book-entry transfers and pledges of securities deposited
with the Depository.
"Determination Date" means, with respect to any Payment Date, the 10th
day of the month in which such Payment Date occurs or if such day is not a
Business Day, the next succeeding Business Day.
"Due Date" means (a) in the case of Mortgage Loans secured by first
Mortgages and certain other Mortgage Loans that are Subsequent Mortgage Loans
or Eligible Substitute Mortgage Loans (as identified on the Mortgage Loan
Schedule), the first day of each calendar month and (b) in the case of all
other Mortgage Loans, the fifteenth day of each calendar month.
"Eligible Account" means (a) with respect to the Collection Account,
unless the Enhancer shall have given the Master Servicer notice to the
contrary, The Bank of the West, or (b) an account that is any of the
following: (i) maintained with a depository institution the debt obligations
of which have been rated by each Rating Agency in its highest rating
available, or (ii) an account or accounts in a depository institution in which
such accounts are fully insured to the limits established by the FDIC,
provided that any deposits not so insured shall, to the extent acceptable to
each Rating Agency, as evidenced in writing, be maintained such that (as
evidenced by an Opinion of Counsel delivered to the Indenture Trustee and the
Enhancer) the Indenture Trustee have a claim with respect to the funds in such
account or a perfected first security interest against any collateral (which
shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution with which such account is maintained, or (iii) in the case of the
Trustee Collection Account, either (A) a trust account or accounts maintained
at the corporate trust department of the Indenture Trustee or (B) an account
or accounts maintained at the corporate trust department of the Indenture
Trustee, as long as its short term debt obligations are rated P-1 by Moody's
and A-1 by Standard & Poor's (or the equivalent) or better by each Rating
Agency and its long term debt obligations are rated A2 by Moody's and A by
Standard & Poor's (or the equivalent) or better, by each Rating Agency, or
(iv) in the case of the Note Payment Account and the Certificate Distribution
Account, a trust account or accounts maintained in the corporate trust
division of the Indenture Trustee, or (v) an account or accounts of a
depository institution acceptable to the Enhancer, and that will not result in
a Rating Event (determined without regard to the Policy).
"Eligible Substitute Mortgage Loan" means a Mortgage Loan that, on the
date of substitution, as confirmed in an Officers' Certificate delivered to
the Indenture Trustee, (a) has an outstanding Principal Balance, after
deduction of the principal portion of the Monthly Payment due in the month of
substitution (or in the case of a substitution of more than one Mortgage Loan
for a Deleted Mortgage Loan, an aggregate outstanding Principal Balance, after
such deduction), not in excess of the outstanding Principal Balance of the
related Deleted Loan (the amount of any shortfall to be deposited by the
Transferor into the Collection Account in the month of substitution); (b)
complies with each representation and warranty set forth in Section 3.2 of the
Mortgage Loan Sale Agreement (excluding subsections (n), (v), (w) and (x)
thereof) as of the date of substitution; (c) has a Mortgage Interest Rate
substantially the same as that of the Mortgage Interest Rate of the related
Deleted Loan as of the date of substitution; (d) has a Combined Loan-to-Value
Ratio at the time of substitution substantially the same as that of the
related Deleted Loan at the time of substitution; (e) has a remaining term to
stated maturity extending not later than the Final Insured Payment Date and
(f) is not more than 30 days delinquent.
"Enhancer" means Ambac Assurance Corporation, any successor thereto or
any replacement Enhancer substituted pursuant to Section 3.27 of the
Indenture.
"Enhancer Default" means the existence and continuance of any of the
following: (a) a failure by the Insurer to make a payment required under the
Policy in accordance with its terms; (b) the entry of a decree or order of a
court or agency having jurisdiction in respect of the Enhancer in an
involuntary case under any present or future federal or state bankruptcy,
insolvency or similar law appointing a conservator or receiver or liquidator
or other similar official of the Enhancer or of any substantial part of its
property, or the entering of an order for the winding up or liquidation of the
affairs of the Enhancer and the continuance of any such decree or order
undischarged or unstayed and in force for a period of 90 consecutive days; (c)
the Enhancer shall consent to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings or of relating to
the Enhancer or of or relating to all or substantially all of its property; or
(d) the Enhancer shall admit in writing its liability to pay its debts
generally as they become due, file a petition to take advantage of or
otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Policy" has the meaning set forth in Section
3.06(a) of the Sale and Servicing Agreement.
"Event of Default" means, with respect to the Indenture, any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) a default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of five
days;
(b) a default in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable, and such
default shall continue for a period of five days;
(c) there occurs a default in the observance or performance of any
covenant or agreement of the Issuer made in the Indenture, or any
representation or warranty of the Issuer made in the Indenture or in any
certificate or other writing delivered pursuant hereto or in connection
herewith proving to have been incorrect in any material respect as of the time
when the same shall have been made which has a material adverse effect on the
Securityholders, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such representation or warranty
was incorrect shall not have been eliminated or otherwise cured, for a period
of 30 days after there shall have been given, by registered or certified mail,
to the Issuer by the Indenture Trustee or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the outstanding Note Balance of the
Notes, a written notice specifying such default or incorrect representation or
warranty and requiring it to be remedied and stating that such notice is a
notice of default hereunder;
(d) there occurs the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days;
(e) there occurs the commencement by the Issuer of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer
or for any substantial part of the assets of the Trust Estate, or the making
by the Issuer of any general assignment for the benefit of creditors, or the
failure by the Issuer generally to pay its debts as such debts become due, or
the taking of any action by the Issuer in furtherance of any of the foregoing;
or
(f) there occurs an event of default under the Insurance Agreement.
"Excess Spread" means, with respect to Group I, the Group I Excess Spread
and, with respect to Group II, the Group II Excess Spread.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Expenses" has the meaning set forth in Section 7.02 of the Trust
Agreement.
"FDIC" means The Federal Deposit Insurance Corporation, or any successor
thereto.
"Fidelity Bond" has the meaning set forth in Section 3.06(a) of the Sale
and Servicing Agreement.
"Final Insured Payment Date" means the Payment Date occurring on August
15, 2030.
"Grant" means pledge, bargain, sell, warrant, alienate, remise, release,
convey, assign, transfer, create, and 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 such collateral or other agreement or
instrument and all other moneys payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring proceedings in the name of the
granting party or otherwise, and generally to do and receive anything that the
granting party is or may be entitled to do or receive thereunder or with
respect thereto.
"Group" means each of Group I and Group II.
"Group I" means those Mortgage Loans identified on the Mortgage Loan
Schedule as being assigned to Group I, each of which Mortgage Loans shall
conform to certain requirements established by FHLMC.
"Group II" means those Mortgage Loans identified on the Mortgage Loan
Schedule as being assigned to Group II.
"Group I Excess Spread" means with respect to any Payment Date and
without taking into account any draw on the Policy for such Payment Date, the
excess, if any, of Interest Collections for Mortgage Loans assigned to Group I
and Principal Collections for Mortgage Loans assigned to Group I over the sum
of (i) prepayment penalties collected on Mortgage Loans assigned to Group I,
(ii) the portion of the Premium for the Policy and the Indenture Trustee Fee
allocable to Loan Group I, (iii) interest accrued on the outstanding Class A-1
Note Balance and Class A-2 Note Balance at the applicable Note Rate for the
related Interest Period, (iv) the Base Principal Distribution Amount for Group
I and (v) the portion of any reimbursement amount, together with any interest
thereon, payable to the Enhancer that is allocable to Group I.
"Group II Excess Spread" means with respect to any Payment Date and
without taking into account any draw on the Policy for such Payment Date, the
excess, if any, of Interest Collections for Mortgage Loans assigned to Group
II and Principal Collections for Mortgage Loans assigned to Group II over the
sum of (i) prepayment penalties collected on Mortgage Loans assigned to Group
II, (ii) the portion of the Premium for the Policy and the Indenture Trustee
Fee allocable to Loan Group II, (iii) interest accrued on the outstanding
Class A-3 Note Balance and Class A-4 Note Balance at the applicable Note Rate
for the related Interest Period, (iv) the Base Principal Distribution Amount
for Group II and (v) the portion of any reimbursement amount, together with
any interest thereon, payable to the Enhancer that is allocable to Group II.
"High LTV Mortgage Loans" means those Mortgage Loans identified on the
Mortgage Loan Schedule as High LTV Mortgage Loans, which Mortgage Loans shall
consist of each and every Mortgage Loan assigned to the Issuer that was
originated by the Seller (or one of its Affiliates) as a 125% LTV mortgage
loan.
"Holder" means a Noteholder or a Certificateholder, as the context may
require.
"Home Equity Mortgage Loans" means those Mortgage Loans identified on the
Mortgage Loan Schedule as being Home Equity Mortgage Loans, which Mortgage
Loans shall consist of each and every Mortgage Loan assigned to the Issuer
that was originated by the Seller (or one of its Affiliates) as a closed end,
fixed rate home equity loan and had a CLTV at origination less than or equal
to 100%.
"Indemnification Agreement" means that certain indemnification agreement,
dated as of April 30, 1999, among the Master Servicer, the Transferor, the
Depositor and the Underwriter.
"Indemnified Parties" has the meaning set forth in Section 7.02 of the
Trust Agreement.
"Indenture" means the indenture dated as of April 30, 1999, between the
Issuer and the Indenture Trustee.
"Indenture Trustee" means Norwest Bank Minnesota, National Association,
and its successors and assigns, or any successor indenture trustee appointed
pursuant to the terms of the Indenture.
"Indenture Trustee Fee" means, as to any Payment Date, one-twelfth of the
product of 0.005% and the aggregate of the Pool Balance for Group I and the
Pool Balance for Group II as of the beginning of the related Collection
Period.
"Independent" means, when used with respect to any specified Person, that
such Person (a) is in fact independent of the Issuer, any other obligor on the
Notes, the Transferor, the Depositor, the Originator, the Master Servicer or
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 Transferor, the Depositor, the Originator, the
Master Servicer or any Affiliate of any of the foregoing Persons and (c) is
not connected with the Issuer, any such other obligor, the Transferor, the
Depositor, the Originator, the Master Servicer 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" means a certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer
Request and approved by the Indenture Trustee in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read the
definition of "Independent" herein and that the signer is Independent within
the meaning thereof.
"Initial Certificate Balance" means zero.
"Initial Class A-1 Note Balance" means $53,500,000.00.
"Initial Class A-2 Note Balance" means $85,000,000.00.
"Initial Class A-3 Note Balance" means $17,400,000.00
"Initial Class A-4 Note Balance" means $22,200,000.00
"Initial Cut-Off Date" means April 30, 1999 or, with respect to any
Mortgage Loan originated after such date, the date of origination of such
Mortgage Loan.
"Initial Cut-Off Date Principal Balance" means, with respect to any
Initial Mortgage Loan, the Principal Balance thereof as of the Initial Cut-Off
Date.
"Initial Mortgage Loans" means the Mortgage Loans initially transferred
by the Depositor to the Trust on the Closing Date, which Mortgage Loans are
listed on the Mortgage Loan Schedule on such date.
"Initial Note Balance" means $178,200,000.
"Initial Security Balance" means the Initial Note Balance or the Initial
Certificate Balance, as the context may require.
"Insurance Agreement" means the insurance and indemnity agreement dated
as of May 27, 1999, among the Enhancer, the Transferor, the Depositor, the
Originator, the Master Servicer and the Issuer, including any amendments and
supplements thereto.
"Insurance Proceeds" means proceeds paid by any insurer (other than the
Enhancer) pursuant to any insurance policy covering a Mortgage Loan that are
required to be remitted to the Master Servicer, or amounts required to be paid
by the Master Servicer pursuant to the next to last sentence of Section 3.04
of the Sale and Servicing Agreement, net of any component thereof (a) covering
any expenses incurred by or on behalf of the Master Servicer in connection
with obtaining such proceeds, (b) that is applied to the restoration or repair
of the related Mortgaged Property, (c) released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures or (d) required to be
paid to any holder of a mortgage senior to such Mortgage Loan.
"Interest Carry-Forward Amount" means, with respect to the Class A-1
Notes and the Class A-3 Notes and for any Payment Date for which the related
Note Rate has been determined pursuant to clause (i)(a) or (iii)(a), as
applicable, of the definition of "Note Rate", the excess of (a) the amount of
interest that would have accrued on the Notes during the related Interest
Period had such amount been determined pursuant to such clause (i)(a) or
(iii)(a), as applicable, of the definition of "Note Rate" over (b) the
interest actually accrued on such Notes during such Interest Period.
"Interest Collections" means, with respect to any Payment Date and Group,
the sum of all payments by or on behalf of Mortgagors and any other amounts
constituting interest (including such portion of Insurance Proceeds,
Liquidation Proceeds and Repurchase Prices as is allocable to interest on the
applicable Mortgage Loan) as are paid by the Transferor or the Master Servicer
in respect of Mortgage Loans in the applicable Group or is collected by the
Master Servicer under the Mortgage Loans in such Group, reduced by the
Servicing Fee for the related Collection Period and by any fees (including
annual fees), prepayment penalties or late charges or similar administrative
fees paid by Mortgagors with respect to Mortgage Loans in such Group during
such Collection Period. The terms of the related Mortgage Documents shall
determine the portion of each payment in respect of such Mortgage Loan that
constitutes principal and interest, respectively.
"Interest Period" means, with respect to the Class A-1 Notes, the Class
A-3 Notes and the Certificates and any Payment Date other than the first
Payment Date, the period commencing on the preceding Payment Date and ending
on the day preceding such Payment Date, in the case of the first Payment Date
and the Class A-1 Notes, the Class A-3 Notes and the Certificates, the period
commencing on the Closing Date and ending on the day preceding the first
Payment Date and with respect to any Class of Securities other than the Class
A-1 Notes, the Class A-3 Notes and the Certificates and any Payment Date, the
calendar month immediately preceding such Payment Date.
"Irwin Underwriting Standards" means the underwriting standards of the
Originator developed at the direction of Irwin Union Bank and Trust Company,
as in effect from time to time.
"Issuer" or "Trust" means Irwin Home Equity Loan Trust 1999-2, a Delaware
business trust, and its successors.
"Issuer Request" means 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.
"Letter of Credit" means an unconditional and irrevocable letter of
credit (a) issued by a bank holding company, commercial bank or trust company
acceptable to the Enhancer, the short-term and long-term debt obligations of
which at the date of delivery of such letter of credit are rated "A-1" or
better and "AA-" or better, respectively, by Standard & Poor's and "P1" or
better and A1 or better, respectively, by Moody's, (b) in form and substance
reasonably acceptable to the Enhancer and the Indenture Trustee, (c) with a
maximum term of three years, (d) for the benefit of the Indenture Trustee and
(e) providing for the amount thereof to be available to the Indenture Trustee
in multiple drawings conditioned only upon presentation of the applicable
certificate in the form attached to such letter of credit.
"LIBOR" means, for any Interest Period other than the first Interest
Period, the rate for United States dollar deposits for one month which appears
on the Telerate Screen Page 3750 as of 11:00 A.M., London, England time, on
the second LIBOR Business Day prior to the first day of such Interest Period.
With respect to the first Interest Period, the rate for United States dollar
deposits for one month which appears on the Telerate Screen Page 3750 as of
11:00 A.M., London, England time, two LIBOR Business Days prior to the Closing
Date. If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be
reasonably selected by the Indenture Trustee after consultation with the
Master Servicer), the rate will be the Reference Bank Rate. If no such
quotations can be obtained and no Reference Bank Rate is available, LIBOR will
be LIBOR applicable to the preceding Payment Date.
"LIBOR Business Day" means any day other than (a) a Saturday or a Sunday
or (b) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
"Lien" means any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance,
lien (statutory or other), claim, charge, preference, priority, right,
interest or other security agreement or preferential arrangement of any kind
or nature whatsoever, including 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, that any assignment pursuant to Section 6.02 of the Sale and
Servicing Agreement shall not constitute a Lien.
"Liquidated Mortgage Loan" means, with respect to any Payment Date, any
Mortgage Loan in respect of which the Master 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 substantially
all Liquidation Proceeds which it reasonably expects to recover, if any, with
respect to the disposition of the related REO Property have been recovered.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of
overhead) which are incurred by or on behalf of the Master Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under
any insurance policy, such expenses including, without limitation, legal fees
and expenses, any unreimbursed amount expended (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 for real estate property
taxes or for property restoration, preservation or insurance against casualty
loss or damage.
"Liquidation Loss Amount" means, with respect to any Liquidated Mortgage
Loans, the unrecovered Principal Balance thereof at the end of the related
Collection Period in which such Mortgage Loan became liquidated, after giving
effect to the Liquidation Proceeds in connection therewith.
"Liquidation Proceeds" means the proceeds, including Insurance Proceeds,
but not including amounts drawn under the Policy, if any, received in
connection with the liquidation of any Mortgage Loan or any related Mortgaged
Property or REO Property, whether through trustee's sale, foreclosure sale or
otherwise, net of related Liquidation Expenses (but not including the portion,
if any, of such amount that exceeds the Principal Balance of the related
Mortgage Loan at the end of the Collection Period immediately preceding the
Collection Period in which such Mortgage Loan became a Liquidated Mortgage
Loan).
"Loan Affidavit" means, with respect to any Mortgage Loan as to which any
related original Mortgage Document has been permanently lost or destroyed and
has not been replaced, an affidavit from the Transferor certifying that the
original of such Mortgage Document has been lost, misplaced or destroyed
(together with a copy of such Mortgage Document).
"Master Servicer" means Irwin Union Bank and Trust Company, and its
successors.
"Master Servicer Remittance Date" means with respect to any Payment Date,
the latest day that is a Business Day that is at least three days prior to
such Payment Date.
"Monthly Payment" means the monthly payment made by a Mortgagor in
respect of a Mortgage Loan.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Mortgage" means the mortgage, deed of trust or other instrument creating
a first or second lien on an estate in fee simple interest in the real
property securing a Mortgage Loan.
"Mortgage Documents" means with respect to any Mortgage Loan, the related
Mortgage and Mortgage Note.
"Mortgage File" means the file containing the Mortgage Documents and
Related Documents pertaining to a particular Mortgage Loan, and any additional
documents required to be added thereto pursuant to the Mortgage Loan Sale
Agreement or the Sale and Servicing Agreement.
"Mortgage Interest Rate" means, with respect to any Mortgage Loan and any
day, the per annum rate of interest applicable under the related Mortgage
Documents.
"Mortgage Loan" means (i) each closed-end, fixed rate 125% LTV mortgage
loan included in the Trust Estate; (ii) each closed-end, fixed rate home
equity loan included in the Trust Estate and (iii) each closed-end, fixed rate
first lien mortgage loan included in the Trust Estate, or in the case of (i),
(ii) or (iii) all of such mortgage loans, as the context may require. The
inclusion of any mortgage loan in the Trust Estate shall be, in the absence of
manifest error, conclusively established by its inclusion on the Mortgage Loan
Schedule.
"Mortgage Loan Sale Agreement" means the Mortgage Loan Sale Agreement
dated as of April 30, 1999, among Irwin Union Bank and Trust Company, the
Transferor and the Depositor.
"Mortgage Loan Schedule" means the schedule of Mortgage Loans set forth
in Exhibit A of the Sale and Servicing Agreement, which schedule sets forth as
to each Mortgage Loan (a) the Initial Cut-Off Date Principal Balance, (b) the
name of the related Mortgagor, (c) the loan number (d) the Mortgage Interest
Rate, (e) the Lien position of the related Mortgage, (f) whether such Mortgage
Loan is assigned to Group I or Group II, (g) whether such Mortgage Loan is a
High LTV Mortgage Loan, a Home Equity Mortgage Loan or a Thirty-year Maturity
Mortgage Loan and (h) whether such Mortgage Loan is assigned to Pool A, Pool B
or Pool C.
"Mortgage Note" means, with respect to a Mortgage Loan, the mortgage note
pursuant to which the related Mortgagor agrees to pay the indebtedness
evidenced thereby and secured by a Mortgage on the related Mortgaged Property,
as modified or amended.
"Mortgaged Property" means the underlying property, including real
property and improvements thereon, securing a Mortgage Loan.
"Mortgagor" means the obligor or obligors under the related Mortgage
Documents.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or a
Class A-4 Note, or all of them as the context may require.
"Note Balance" means, with respect to any Payment Date and any Note, the
Initial Note Balance thereof reduced by all payments of principal on such Note
prior to such Payment Date.
"Note Payment Account" has the meaning set forth in Section 5.01 of the
Sale and Servicing Agreement.
"Note Rate" means, (i) with respect to the applicable Interest Period and
the Class A-1 Notes, the least of (a) LIBOR plus 0.10% per annum, (b) the
weighted average net Mortgage Interest Rate of the Mortgage Loans in Group I,
and (c) 14.50% per annum; (ii) with respect to any Interest Period and the
Class A-2 Notes, 6.830% per annum (or, on any Payment Date on which the
aggregate of the Principal Balances of the Mortgage Loans in Group I is less
than 10% of the sum of the Principal Balances of the Mortgage Loans in Group I
as of the initial Cut-Off Date plus the portion of the Pre-Funding Account
allocated to Group I, 7.580% per annum), (iii) with respect to the applicable
Interest Period and the Class A-3 Notes, the least of (a) LIBOR plus 0.18% per
annum, (b) the weighted average net Mortgage Interest Rate of the Mortgage
Loans in Group II, and (c) 14.50% per annum; and (iv) with respect to any
Interest Period and the Class A-4 Notes, 6.890% per annum (or, on any Payment
Date on which the aggregate of the Principal Balances of the Mortgage Loans in
Group II is less than 10% of the sum of the Principal Balances of the Mortgage
Loans in Group II as of the initial Cut-Off Date plus the portion of the
Pre-Funding Account allocated to Group II, 7.640% per annum).
"Note Register" means the register maintained by the Note Registrar, in
which the Note Registrar shall provide for the registration of Notes and of
transfers and exchanges of Notes.
"Note Registrar" the Indenture Trustee, in its capacity as Note
Registrar.
"Noteholder" means the Person in whose name a Note is registered in the
Note Register, except that, any Note registered in the name of the Depositor,
the Issuer or the Indenture Trustee or any Affiliate of any of them shall be
deemed not to be outstanding and the registered holder will not be considered
a Noteholder or Holder for purposes of giving any request, demand,
authorization, direction, notice, consent or waiver under the Indenture or the
Trust Agreement provided that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Indenture Trustee or
the Owner Trustee knows to be so owned shall be so disregarded. Owners of
Notes that have been pledged in good faith may be regarded as Holders if the
pledgee establishes to the satisfaction of the Indenture Trustee or the Owner
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes or any Affiliate
of any of the foregoing Persons.
"Notice and Demand Date" has the meaning set forth in Section 3.26(b) of
the Indenture.
"Officer's Certificate" means, with respect to the Master Servicer, a
certificate signed by the President, Managing Director, a Director, a Vice
President or an Assistant Vice President, of the Master Servicer and delivered
to the Indenture Trustee; provided, that such certificate may be delivered by
an Affiliate of the Master Servicer on behalf of the Master Servicer. With
respect to the Issuer, a certificate signed by any Authorized Officer of the
Issuer, under the circumstances described in, and otherwise complying with,
the applicable requirements of Section 10.01 of the Indenture, and delivered
to the Indenture Trustee. Unless otherwise specified, any reference in the
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means a written opinion of counsel. Any Opinion of
Counsel may be provided by in-house counsel if reasonably acceptable to the
Indenture Trustee and the Enhancer, or counsel for the Depositor, as the case
may be.
"Originator" means Irwin Home Equity Corporation, and its successors.
"Outstanding" means, with respect to any Notes, as of the date of
determination, all Notes theretofore executed, authenticated and delivered
under the Indenture except:
(a) Notes theretofore cancelled by the Note Registrar or delivered to the
Indenture Trustee for cancellation; and
(b) Notes in exchange for or in lieu of which Other Notes have been
executed, authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a holder in due course;
provided, however, that for purposes of effectuating the Enhancer's right of
subrogation as set forth in Section 4.12 of the Indenture only, all Notes that
have been paid with funds provided under the Policy shall be deemed to be
Outstanding until the Enhancer has been reimbursed with respect thereto.
"Overcollateralization Amount" shall mean, with respect to any Payment
Date and Group, the excess, if any, of (i) the aggregate Principal Balance of
all Mortgage Loans assigned to such Group as of the close of business on the
last day of the related Collection Period over (ii) the aggregate of the Note
Balances of the Class A-1 Notes and the Class A-2 Notes, in the case of Group
I or the Class A-3 Notes and the Class A-4 Notes, in the case of Group II, in
each case after taking into account the payment of the Base Principal
Distribution Amount for such Payment Date.
"Overcollateralization Deficiency Amount" shall mean, with respect to any
date of determination and Group, the excess, if any, of the
Overcollateralization Target Amount for such Group over the
Overcollateralization Amount for such Group.
"Overcollateralization Target Amount" with respect to each Group, shall
have the meaning assigned thereto in the Insurance Agreement.
Notwithstanding the above, the Enhancer may, in its sole discretion,
modify the definition of Overcollateralization Target Amount. The Indenture
Trustee and the Rating Agencies shall be notified in writing of such
modification prior to the related Payment Date and any such modification shall
not result in a downgrading of the then-current ratings of any Note without
regard to the Policy.
"Overcollateralization Release Amount" shall mean, with respect to any
date of determination and Group, the excess, if any, of the
Overcollateralization Amount for such Group over the Overcollateralization
Target Amount for such Group.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as trustee of the Trust, and its successors and assigns or
any successor thereto appointed pursuant to the terms of the Trust Agreement.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture, which initially shall be the
Indenture Trustee.
"Payment Date" means the 15th day of each month, or if such day is not a
Business Day, then the next succeeding Business Day, commencing with June 15,
1999.
"Percentage Interest" means, with respect to any Note, the percentage
obtained by dividing the Note Balance thereof by the aggregate of the Note
Balances of all Notes of the same Class prior to such Payment Date. With
respect to any Certificate, the percentage set forth on the face thereof.
"Periodic Advance" shall mean, with respect to any Payment Date, the
related Collection Period and a Thirty-year Maturity Mortgage Loan or a Home
Equity Mortgage Loan or at the sole election of the Master Servicer a High LTV
Mortgage Loan, an amount equal to the excess of (i) interest on the Principal
Balance of such Mortgage Loan at the related Mortgage Interest Rate, net of
the Servicing Fee, for the most recently ended Collection Period over (ii) any
amounts actually collected as interest by the Master Servicer with respect to
such Mortgage Loan during such Collection Period.
"Permitted Investments" means one or more of the following:
(a) mortgage loans; provided, that such mortgage loans shall have the
characteristics, and shall be subject to the terms and conditions, specified
in an agreement to be entered into between the Master Servicer and the
Enhancer on or after the Closing Date.
(b) obligations of or guaranteed as to principal and interest by the
United States or any agency or instrumentality thereof when such obligations
are backed by the full faith and credit of the United States;
(c) repurchase agreements on obligations specified in clause (a) maturing
not more than one month from the date of acquisition thereof; provided, that
the unsecured obligations of the party agreeing to repurchase such obligations
are at the time rated by each Rating Agency in its highest available
short-term rating;
(d) federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which 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 or a remaining maturity
of more than 30 days) denominated in United States dollars of any U.S.
depository institution or trust company incorporated under the laws of the
United States or any state thereof or of any domestic branch of a foreign
depository institution or trust company; provided, that the debt obligations
of such depository institution or trust company (or, if the only Rating Agency
is Standard & Poor's, in the case of the principal depository institution in a
depository institution holding company, debt obligations of the depository
institution holding company) at the date of acquisition thereof have been
rated by each Rating Agency in its highest short-term rating available; and
provided further, that if the only Rating Agency is Standard & Poor's and if
the depository or trust company is a principal subsidiary of a bank holding
company and the debt obligations of such subsidiary are not separately rated,
the applicable rating shall be that of the bank holding company; and provided
further, that if the original maturity of such short-term obligations of a
domestic branch of a foreign depository institution or trust company shall
exceed 30 days, the short-term rating of such institution shall be A-1 + in
the case of Standard & Poor's, if Standard & Poor's is the Rating Agency;
(e) commercial paper (having original maturities of not more than 365
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 each
Rating Agency in its highest short-term rating available; provided, that only
with respect to amounts held in the Pre-Funding Account, such amounts may be
invested in commercial paper shall have a remaining maturity of not more than
90 days; with respect to all other commercial paper, such commercial paper
shall have a remaining maturity of not more than 30 days;
(f) a money market fund or a qualified investment fund rated by each
Rating Agency in one of its two highest available long-term rating; and
(g) other obligations or securities that are acceptable to the Enhancer
as a Permitted Investment hereunder and as will not result in a Rating Event;
provided, that if the Master Servicer or any other Person controlled by the
Master Servicer is the issuer or the obligor of any obligation or security
described in this clause, such obligation or security must have an interest
rate or yield that is fixed or is variable based on an objective index that is
not affected by the rate or amount of losses on the Mortgage Loans;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (i) the right to receive only interest payments with
respect to the underlying debt instrument or (ii) the right to receive both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity greater than 120% of the yield to
maturity at par of such underlying obligations. References herein to the
highest rating available on unsecured long-term debt shall mean AAA in the
case of Standard & Poor's and Aaa in the case of Moody's, and references
herein to the highest rating available on unsecured commercial paper and
short-term debt obligations shall mean A-1 in the case of Standard & Poor's
and P-1 in the case of Moody's.
"Permitted Liens" shall mean liens for (i) real estate taxes and special
assessments not yet delinquent (provided, that property taxes may be
delinquent up to one year); (ii) as to the junior Mortgage Loans, any senior
mortgage loan secured by such Mortgaged Property; (iii) covenants, conditions
and restrictions, rights of way, easements and other matters of public record
as of the date of recording that are acceptable to mortgage lending
institutions generally; (iv) with respect to junior Mortgage Loans with
principal balances less than or equal to $35,000 and that were originated on
or after April 13, 1998 with combined loan-to-values of 100% or less, (a)
liens prior to the related first mortgage, if verified as paid, and (b) liens
and judgments of $5,000 or less, including sewer or maintenance liens,
mechanics' liens or UCC filings; and (v) other matters to which like
properties are commonly subject that do not materially interfere with the
benefits of the security intended to be provided by the related Mortgage
Documents.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
business trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Plan Assets" has the meaning set forth in Section 3.04 of the Trust
Agreement.
"Pledge Agreement" has the meaning set forth in the Insurance Agreement.
"Policy" means the Guarantee Insurance Policy ABO26OBE, dated as of the
Closing Date, issued by the Enhancer.
"Policy Draw Amount" means, (x) with respect to any Loan Group and as of
any Payment Date other than the Final Insured Payment Date, the excess, if
any, of (i) the sum of (a) the amount of interest accrued on the Note Balances
of the related Class or Classes of Notes, at the applicable Note Rates during
the related Interest Period (excluding any Interest Carry-Forward Amounts and
Relief Act Shortfalls) and (b) the related Subordination Deficit minus an
amount equal to the Overcollaterization Amount for the other Group (to the
extent not in excess of such Subordination Deficit) over (ii) the amount on
deposit in the Note Payment Account on such Payment Date and (y) on the Final
Insured Payment Date, the outstanding Note Balance of all Classes of Notes
then outstanding to the extent not otherwise paid on such date, together with
interest accrued on the Note Balances of the related Class or Classes of
Notes, at the applicable Note Rates during the related Interest Period
(excluding any Interest Carry-Forward Amounts and Relief Act Shortfalls).
"Pool A" means the segregated pool of Mortgage Loans assigned to Pool A
as indicated on the Mortgage Loan Schedule (as amended from time to time).
"Pool B" means the segregated pool of Mortgage Loans assigned to Pool B
as indicated on the Mortgage Loan Schedule (as amended from time to time).
"Pool C" means the segregated pool of Mortgage Loans assigned to Pool C
as indicated on the Mortgage Loan Schedule (as amended from time to time).
"Pool Balance" means, with respect to any date and Group, the aggregate
of the Principal Balances of all Mortgage Loans assigned to such Group as of
such date.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 4.03 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Pre-Funded Amount" means $30,227,739.41.
"Pre-Funding Account" has the meaning set forth in Section 5.01 of the
Sale and Servicing Agreement.
"Pre-Funding Period" means the period commencing on the Closing Date and
ending on the earliest to occur of (a) the date on which the amount on deposit
in the Pre-Funding Account is less than $100,000, (b) October 31, 1999 or (c)
the occurrence of an event of default under the Sale and Servicing Agreement.
"Premium" and "Premium Percentage" shall have the meanings assigned
thereto in the Insurance Agreement.
"Prepayment Interest Shortfall" shall mean, with respect to any Payment
Date, for each Mortgage Loan that was the subject during the related
Collection Period of a principal prepayment, an amount equal to the excess, if
any, of (i) 30 days' interest on the Principal Balance of such Mortgage Loan
at a per annum rate equal to the Mortgage Interest Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the
Civil Relief Act, any Deficient Valuation and/or any Debt Service Reduction)
minus the rate at which the Servicing Fee is calculated, over (ii) the amount
of interest actually remitted by the Mortgagor in connection with such
principal prepayment.
"Principal Balance" means, with respect to any Mortgage Loan, other than
a Liquidated Mortgage Loan, and as of any day, the related Cut-Off Date
Principal Balance, minus, all collections credited as principal in respect of
any such Mortgage Loan in accordance with the related Mortgage Documents and
applied in reduction of the Principal Balance thereof. 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 substantially all related
Liquidation Proceeds, and a Principal Balance of zero thereafter.
"Principal Collections" means, with respect to any Payment Date and any
Mortgage Loan, the aggregate of the following amounts:
(a) the total amount of payments made by or on behalf of the related
Mortgagor, received and applied as payments of principal on such Mortgage Loan
during the related Collection Period, as reported by the Master Servicer or
the related Subservicer;
(b) any Liquidation Proceeds allocable as a recovery of principal
received in connection with such Mortgage Loan during the related Collection
Period;
(c) if such Mortgage Loan was purchased by the Transferor pursuant to the
Mortgage Loan Sale Agreement during the related Collection Period, 100% of the
Principal Balance thereof as of the date of such purchase; and
(d) other amounts received as payments on or proceeds of such Mortgage
Loan during the Collection Period, to the extent applied in reduction of the
Principal Balance thereof;
provided, that Principal Collections shall be reduced by any amounts withdrawn
from the Collection Account pursuant to clause (d) of Section 3.04 of the Sale
and Servicing Agreement.
"Principal Distribution Amount" means with respect to any Payment Date
and Group the sum of the Base Principal Distribution Amount for such Payment
Date and Group and the Additional Principal Distribution Amount for such
Payment Date and Group.
"Principal Prepayment" means, with respect to any Mortgage Loan, a
payment of principal by the related Mortgagor in advance of the scheduled Due
Date of such amount.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency" means any nationally recognized statistical rating
organization, or its successor, that rated the Notes at the request of the
Depositor at the time of the initial issuance of the Securities. If such
organization or a successor is no longer in existence, "Rating Agency" shall
be such nationally recognized statistical rating organization, or other
comparable Person, designated by the Depositor, notice of which designation
shall be given to the Indenture Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean A-1 or
better in the case of Standard & Poor's, and P-1 or better in the case of
Moody's; and in the case of any other Rating Agency, shall mean such
equivalent ratings. References herein to the highest long-term rating category
of a Rating Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa"
in the case of Moody's; and in the case of any other Rating Agency, such
equivalent rating.
"Rating Event" means the qualification, reduction or withdrawal by a
Rating Agency of its then-current rating of the Notes.
"Record Date" means, with respect to the Class A-1 Notes, the Class A-3
Notes or the Certificates and any Payment Date, the Business Day next
preceding such Payment Date, and with respect to the Securities other than the
Class A-1 Notes, the Class A-3 Notes or the Certificates, the last Business
Day of the month preceding the month of such Payment Date.
"Reference Bank Rate" means, with respect to any Interest Period, as
follows: the arithmetic mean (rounded upwards, if necessary, to the nearest
one sixteenth of a percent) of the offered rates for United States dollar
deposits for one month which are offered by the Reference Banks as of 11:00
A.M., London, England time, on the second LIBOR Business Day prior to the
first day of such Interest Period to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the sum of
the outstanding Note Balances of the Class A-1 Notes and the Class A-3 Notes;
provided, that at least two such Reference Banks provide such rate. If fewer
than two offered rates appear, the Reference Bank Rate will be the arithmetic
mean of the rates quoted by one or more major banks in New York City, selected
by the Indenture Trustee after consultation with the Master Servicer, as of
11:00 a.m., New York time, on such date for loans in U.S. Dollars to leading
European Banks for a period of one month in amounts approximately equal to the
sum of the outstanding Note Balances of the Class A-1 Notes and the Class A-3
Notes. If no such quotations can be obtained, the Reference Bank Rate shall be
the Reference Bank Rate applicable to the preceding Interest Period.
"Reference Banks" means three major banks that are engaged in
transactions in the London interbank market, selected by the Indenture Trustee
after consultation with the Master Servicer.
"Registered Holder" means the Person in whose name a Note is registered
in the Note Register on the applicable Record Date.
"Related Documents" means, with respect to each Mortgage Loan, the
documents specified in Section 2.5 of the Mortgage Loan Sale Agreement, and
any documents required to be added to such documents pursuant to the Mortgage
Loan Sale Agreement, the Trust Agreement or the Sale and Servicing Agreement.
"REO Property" means a Mortgaged Property that is acquired by the Trust
in foreclosure or by deed in lieu of foreclosure.
"Repurchase Event" means, with respect to any Mortgage Loan, either (a) a
discovery that, as of the Closing Date, the related Mortgage Documents did not
constitute a valid Lien on the related Mortgaged Property subject only to
Permitted Liens or (b) with respect to any Mortgage Loan as to which the
Transferor delivers a Loan Affidavit, a subsequent default on such Mortgage
Loan if the enforcement thereof or of the related Mortgage Documents are
materially and adversely affected by the absence of such original Mortgage
Document.
"Repurchase Price" with respect to any Mortgage Loan, an amount equal to
the Principal Balance of such Mortgage Loan as of the date of repurchase, plus
the greater of (1) all accrued and unpaid interest on such Principal Balance
and (2) 30 days' interest on such Principal Balance, computed at the Mortgage
Interest Rate.
"Request for Release" means the request for release, in the form of
Exhibit C to the Sale and Servicing Agreement.
"Responsible Officer" means, with respect to the Indenture Trustee, 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.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale" has the meaning set forth in Section 5.15 of the Indenture.
"Sale and Servicing Agreement" means the sale and servicing agreement
dated as of April 30, 1999, among the Depositor, the Transferor, the Issuer,
the Master Servicer and the Indenture Trustee.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Security" means a Certificate or a Note, as the context may require.
"Security Balance" means the Note Balance or the Certificate Balance, as
the context may require.
"Securityholder" means any Noteholder or Certificateholder.
"Seller" means Irwin Union Bank and Trust Company as seller under the
Mortgage Loan Sale Agreement.
"Servicing Certificate" means a certificate completed and executed by a
Servicing Officer on behalf of the Master Servicer in accordance with Section
4.01 of the Sale and Servicing Agreement.
"Servicing Default" has the meaning set forth in Section 7.01 of the Sale
and Servicing Agreement.
"Servicing Fee" means, with respect to any Collection Period and Mortgage
Loan, the product of (a) the Servicing Fee Rate multiplied by a fraction, the
numerator of which is the actual number of days in such Collection Period and
the denominator of which is 360 and (b) the Principal Balance of such Mortgage
Loan as of the first day of such Collection Period; provided however, that the
Servicing Fee shall be reduced (but not below zero) by an amount equal to
Prepayment Interest Shortfalls for such Collection Period.
"Servicing Fee Rate" means with respect to Mortgage Loan that is a
Thirty-year Maturity Mortgage Loan, .50% and with respect to each other
Mortgage Loan, .75%.
"Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee by the Master Servicer, as such list may be
amended from time to time.
"Standard & Poor's" means Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., and its successors.
"State" means any state of the United States of America, or the District
of Columbia.
"Subordination Deficit" shall mean, with respect to any Payment Date and
Group, the excess, if any, of (i) the aggregate of the Class A-1 Note Balance
and the Class A-2 Note Balance, in the case of Group I or the aggregate of the
Class A-3 Note Balance and the Class A-4 Note Balance, in the case of Group II
on such Payment Date, after taking into account payment of the Base Principal
Distribution Amount and Additional Principal Distribution Amount on such
Payment Date (without taking into account any amount payable under the Policy
on such Payment Date) over (ii) the Pool Balance for such Group as of the
close of business on the last day of the related Collection Period.
"Subsequent Cut-Off Date" shall have the meaning ascribed thereto in each
Subsequent Transfer Agreement.
"Subsequent Mortgage Loans" means the Mortgage Loans transferred by the
Transferor to the Trust pursuant to a Subsequent Transfer Agreement on the
related Subsequent Transfer Date, which Mortgage Loans are listed on Schedule
A to such Subsequent Transfer Agreement.
"Subsequent Transfer Agreement" means each subsequent transfer agreement,
dated as of the related Subsequent Cut-Off Date, between the Transferor and
the Issuer, pursuant to which Subsequent Mortgage Loans are conveyed to the
Trust.
"Subsequent Transfer Date" means the Business Day specified by the
Transferor relating to a Subsequent Cut-Off Date.
"Subservicer" means each Person that enters into a Subservicing Agreement
as a subservicer of Mortgage Loans.
"Subservicing Agreement" means the written contract between the Master
Servicer and a Subservicer that relates to the servicing and administration of
Mortgage Loans as provided in Section 3.02(a) of the Sale and Servicing
Agreement.
"Substitution Adjustment Amount" means, with respect to any Eligible
Substitute Mortgage Loan and Deleted Loan, the amount determined by the Master
Servicer, if any, by which the aggregate Principal Balance of all such
Eligible Substitute Mortgage Loans as of the date of substitution is less than
the aggregate Principal Balance of all such Deleted Loans (after application
of the principal portion of the Monthly Payments due in the month of
substitution that are to be distributed in the month of substitution).
"Tax Matters Partner" has the meaning set forth in Section 5.03 of the
Trust Agreement.
"Telerate Screen Page 3750" means the display designated as page 3750 on
the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks). If such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be selected
by the Issuer after consultation with the Indenture Trustee), the rate will be
the Reference Bank Rate.
"Thirty-year Maturity Mortgage Loans" means those Mortgage Loans
identified on the Mortgage Loan Schedule as being Thirty-year Maturity
Mortgage Loans, which Mortgage Loans shall consist of each and every Mortgage
Loan assigned to the Issuer that was originated by the Seller (or one of its
Affiliates) as a first lien mortgage loan with an original term to maturity of
360 months.
"Transferor" means Irwin Funding Corp., and its successors.
"Treasury Regulations" means regulations, including proposed or temporary
Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust Agreement" means the trust agreement dated as of April 30, 1999,
between the Owner Trustee and the Depositor.
"Trust Estate" has the meaning set forth in the Granting Clause of the
Indenture.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in effect on any relevant date.
"Trustee Collection Account" has the meaning set forth in Section 5.01
(f) of the Sale and Servicing Agreement.
"UCC" means the Uniform Commercial Code, as amended, as in effect in any
specified jurisdiction.
"Underwriter" means Bear, Steams & Co. Inc.
"Underwriting Agreement" means the Underwriting Agreement dated May 6,
1999, between the Underwriter and the Depositor.
EXHIBIT 99.1
------------
<TABLE>
<CAPTION>
<S> <C>
Ambac Ambac Assurance Corporation
Certificate Guaranty Insurance Policy c/o CT Corporation Systems
44 East Mifflin Street, Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, New York 10004
Telephone: (212) 668-0340
</TABLE>
Insured Obligations: Policy Number:
$178,200,000 Irwin Home Equity AB0260BE
Loan Trust 1999-2, Home Equity
Loan-Backed Notes, Series 1999-2
Premium:
Calculated as set forth in the
Certificate Guaranty Insurance Policy
Endorsement attached hereto
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee
for the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by
reason of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later
of (a) one (1) Business Day following notification to Ambac of Nonpayment or
(b) the Business Day on which the Insured Amounts are Due for Payment. Such
payments of principal or interest shall be made only upon presentation of an
instrument of assignment in form and substance satisfactory to Ambac,
transferring to Ambac all rights under such Insured Obligations to receive the
principal of and interest on the Insured Obligation. Ambac shall be subrogated
to all the Holders' rights to payment on the Insured Obligations to the extent
of the insurance disbursements so made. Once payments of the Insured Amounts
have been made to the Trustee, Ambac shall have no further obligation
hereunder in respect of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any
payment of principal or interest on an Insured Obligation which has become Due
for Payment and which is made to a Holder by or on behalf of the Trustee has
been deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is
not refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment, including failure of the Trustee to
make any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such
rights and defenses may be available to Ambac, to avoid payment of its
obligations under this Policy in accordance with the express provisions
hereof.
Any capitalized terms not defined herein shall have the meaning given such
terms in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile
to become effective as their original signatures and binding upon Ambac by
virtue of the countersignature of its duly authorized representative.
/s/ Phillip Lassiter /s/ Stephen Cooke
President [SEAL] Secretary
/s/ Warren K. Tong
Effective Date: May 27, 1999 Authorized Representative
<PAGE>
CERTIFICATE GUARANTY INSURANCE ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy #AB0260BE May 27,1999
issued to:
Norwest Bank Minnesota, National Association,
as Indenture Trustee for the Holders of
Home Equity Loan-Backed Notes, Series 1999-2
For all purposes of this Policy, the following terms shall have the
following meanings:
"Agreement" shall mean the Sale and Servicing Agreement dated as of April
30, 1999 among Bear Stearns Asset Backed Securities Inc., as Depositor, Irwin
Funding Corp., as Transferor, Irwin Union Bank and Trust Company, as Master
Servicer, the Irwin Home Equity Loan Trust 1999-2, as Issuer, and Norwest Bank
Minnesota, National Association, as Indenture Trustee, as such Agreement may
be amended, modified or supplemented from time to time as set forth in the
Agreement.
"Certificate Insurance Policy" or "Policy" shall mean this Certificate
Guaranty Insurance Policy together with each and every endorsement hereto.
"Collection Account" shall have the meaning set forth in Section 5.01 of
the Agreement.
"Deficiency Amount" means, for each Payment Date, the excess, if any, of
Required Payments over the Total Available Funds for such Payment Date.
"Due for Payment" shall mean, with respect to any Insured Amount, such
amount is due and payable pursuant to the terms of the Indenture.
"Enhancer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Certificate Insurance Policy.
"First Payment Date" shall mean June 15, 1999.
"Holder" shall mean the registered owner or beneficial owner of any Note.
"Indenture" shall mean the Indenture between the Irwin Home Equity Loan
Trust 1999-2, as Issuer and Norwest Bank Minnesota, National Association, as
Indenture Trustee, dated as of April 30 1999.
"Indenture Trustee" shall mean Norwest Bank Minnesota, National
Association or its successor-in-interest, in its capacity as Indenture Trustee
under the Indenture, or if any successor Indenture Trustee or any co-trustee
shall be appointed as provided therein, then "Indenture Trustee" shall also
mean such successor trustee or such co-trustee, as the case may be, subject to
the provisions thereof.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement,
dated as of May 27, 1999, among Ambac Assurance Corporation, as Enhancer,
Irwin Funding Corp., as Transferor, Bear Stearns Asset Backed Securities Inc.,
as Depositor, Irwin Union Bank and Trust Company, as Master Servicer, Irwin
Home Equity Corporation, as Originator, the Irwin Home Equity Loan Trust
1999-2, as Issuer and Norwest Bank Minnesota, National Association, as
Indenture Trustee, as such Insurance Agreement may be amended, modified or
supplemented from time to time.
"Insured Amounts" shall mean, with respect to any Payment Date, the
Deficiency Amount for such Payment Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount actually paid by the Enhancer to the Indenture Trustee in
respect of Insured Amounts for such Payment Date.
"Late Payment Rate" shall mean for any Payment Date, the greater of (i)
the rate of interest, as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 2% and (ii) the then applicable highest rate of interest
----
on the Investor Certificates. The Late Payment Rate shall be computed on the
basis of a year of 360 days and the actual number of days elapsed. In no event
shall the Late Payment Rate exceed the maximum rate permissible under any
applicable law limiting interest rates.
"Nonpayment" shall mean, with respect to any Payment Date, an Insured
Amount is Due for Payment but has not been paid pursuant to the Indenture.
"Notes" means, collectively, the Home Equity Loan-Backed Notes, Series
1999-2, substantially in the form set forth in Exhibit A to the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Indenture Trustee specifying the Insured Amount which
shall be due and owing on the applicable Payment Date.
"Payment Date" shall mean the 15th day of any month (or if such 15th day
is not a Business Day, the first Business Day immediately following) beginning
with the First Payment Date.
"Premium" shall mean the amount payable to the Enhancer on each Payment
Date calculated at the Premium Percentage.
"Premium Percentage" shall have the meaning set forth in the Insurance
Agreement.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum of (x)
(i) all Insured Payments paid by the Enhancer, but for which the Enhancer has
not been reimbursed prior to such Payment Date pursuant to Section 3.05(a)(v)
of the Indenture, plus (ii) interest accrued thereon, calculated at the Late
Payment Rate from the date the Indenture Trustee received the related Insured
Payments, and (y) without duplication (i) any amounts then due and owing to
the Enhancer under the Insurance Agreement plus (ii) interest on such amounts
at the Late Payment Rate.
"Required Payments" shall mean, (x) with respect to any Loan Group and
for any Payment Date (other than the Final Insured Payment Date), the excess,
if any, of (i) the sum of (a) the amount of interest accrued on the Note
Balances of the related Class or Classes of Notes, at the applicable Note
Rates during the related Interest Period (excluding any Interest Carry-Forward
Amounts and Relief Act Shortfalls), and (b) the related Subordination Deficit
minus an amount equal to the Overcollateralization Amount, if any, for the
- -----
other Loan Group (to the extent not in excess of such Subordination Deficit)
over (ii) the related Total Available Funds for such Loan Group for such
Payment Date, and (y) on the Final Insured Payment Date, the outstanding Note
Balance of all Classes of Notes then outstanding, together with the amount of
interest accrued on the Note Balances of such Notes, at the applicable Note
Rates during the related Interest Period (excluding any Interest Carry-Forward
Amounts and Relief Act Shortfalls), in each case to the extent not otherwise
paid on such date.
"Total Available Funds" shall mean, as to each Loan Group and for any
Payment Date, the sum of (i) the Interest Collections and Principal
Collections (excluding prepayment penalties, the the Premium, the Indenture
Trustee Fee, the Owner Trustee Fee and the Servicer Fee) for the related
Classes of Notes and (ii) any Excess Spread available from the other Loan
Group.
"Trust Agreement" shall mean the Trust Agreement between Bear Stearns
Asset Backed Securities Inc., as Depositor and Wilmington Trust Company, as
Owner Trustee, dated as of April 30,1999.
Capitalized used herein and not otherwise defined shall have the meaning
assigned to them in the Agreement, the Indenture or the Trust Agreement.
As provided by the Policy, the Enhancer will pay any amount payable
hereunder no later than 12:00 noon, New York City time, on the later of the
Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Enhancer of a
Notice; provided that, if such Notice is received after 12:00 noon, New York
City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have been received for purposes of this paragraph, and
the Enhancer shall promptly so advise the Indenture Trustee and the Indenture
Trustee may submit an amended Notice.
The Enhancer hereby agrees that if it shall be subrogated to the rights
of Holders by virtue of any previous payment under this Policy, no recovery of
such payment will occur unless the full amount of the Holders' allocable
distributions for such Payment Date can be made. In so doing, the Enhancer
does not waive its rights to seek full payment of all Reimbursement Amounts
owed to it under the Agreement.
The terms and provisions of the Agreement constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as provided
in Section 3.05(a)(ii) of the Indenture, beginning with the first Payment
Date, in an amount equal to the Premium.
Claims arising under the Policy would be excluded from coverage by the
California Insurance Guaranty Association established pursuant to the laws of
California.
THE INSURANCE PROVIDED BY THE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
The Policy to which this Endorsement is attached and of which it forms a
part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Enhancer.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the
above mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York.
IN WITNESS WHEREOF, the Enhancer has caused this endorsement to the
Policy to be signed by its duly authorized officers.
/s/ Ruth Cove /s/ Warren Tong
- -------------------- --------------------
Assistant Secretary First Vice President
<PAGE>
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
--------------------------------------------
Policy No. AB0260BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference is made to Certificate Guaranty Insurance Policy No.
AB0260BE (the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture, as the case may be, unless the context
otherwise requires.
The Indenture Trustee hereby certifies as follows:
1. The Indenture Trustee is the Indenture Trustee under the
Indenture for the Holders.
2. The relevant Payment Date is [date].
3. Payment on the Notes in respect of the Payment Date is due to
be received on under the Indenture, in an amount
------------
equal to $ .
---------
4. There is a Deficiency Amount of $ in respect of the
----------
notes, which amount is an Insured Amount and Due for Payment
pursuant to the terms of the Indenture.
5. The Indenture Trustee has not heretofore made a demand for the
Insured Amount in respect of the Payment Date.
6. The Indenture Trustee hereby requests the payment of the
Insured Amount that is Due For Payment be made by Ambac under
the Policy and directs that payment under the Policy be made to
the following account by bank wire transfer of federal or other
immediately available funds in accordance with the terms of the
Policy to: (Indenture Trustee's account)
--------------------
number.
7. The Indenture Trustee hereby agrees that, following receipt of
the Insured Payment from Ambac, it shall (a) hold such amounts
in trust and apply the same directly to the distribution of
payment on the Notes when due; (b) not apply such funds for any
other purpose; (c) deposit such funds to the Note Account and
not commingle such funds with other funds held by Trustee; and
(d) maintain an accurate record of such payments with respect
to each certificate and the corresponding claim on the Policy
and proceeds thereof.
ANY PERSON WHO KNOWINGLY AND WITH INTENT TO DEFRAUD ANY INSURANCE COMPANY
OR OTHER PERSON FILES AN APPLICATION FOR INSURANCE OR STATEMENT OF CLAIM
CONTAINING ANY MATERIALLY FALSE INFORMATION, OR CONCEALS FOR THE PURPOSE OF
MISLEADING, INFORMATION CONCERNING ANY FACT MATERIAL THERETO, COMMITS A
FRAUDULENT INSURANCE ACT, WHICH IS A CRIME AND SHALL ALSO BE SUBJECT TO A
CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS AND THE STATED VALUE OF THE
CLAIM FOR EACH SUCH VIOLATION.
By:
-----------------------------
Indenture Trustee
Title:
---------------------------
(Officer)
EXHIBIT 99.2
------------
==============================================================================
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
as Depositor,
IRWIN FUNDING CORP.,
as Transferor,
IRWIN UNION BANK AND TRUST COMPANY,
as Master Servicer,
THE IRWIN HOME EQUITY LOAN TRUST 1999-2,
as Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
SALE AND SERVICING AGREEMENT
Dated as of April 30, 1999
==============================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................3
Section 1.01. Definitions................................................3
Section 1.02. Interpretive Provisions....................................3
Section 1.03. Interest Calculations......................................3
ARTICLE II CONVEYANCE OF MORTGAGE LOANS...............................5
Section 2.01. Conveyance of Initial Mortgage Loans.......................5
Section 2.02. Conveyance of Subsequent Mortgage Loans....................5
Section 2.03. Treatment of Transfer......................................7
Section 2.04. Mortgage File..............................................8
Section 2.05. Representations and Warranties
of the Master Servicer.....................................9
Section 2.06. Representations and Warranties of the Issuer..............10
Section 2.07. Representations and Warranties of the Depositor...........10
Section 2.08. Representations and Warranties of the Transferor
Regarding the Mortgage Loans; Retransfer of
Certain Mortgage Loans....................................11
Section 2.09. Enforcement of Representations and Warranties.............12
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS............14
Section 3.01. Appointment of the Master Servicer........................14
Section 3.02. Subservicing Agreements Between
the Master Servicer and Subservicers......................15
Section 3.03. Collection of Mortgage Loan Payments......................16
Section 3.04. Permitted Withdrawals from the Collection Account.........17
Section 3.05. Maintenance of Insurance..................................18
Section 3.06. Fidelity Bond; Errors and Omissions Policy................19
Section 3.07. Enforcement of Due-on-Sale Clauses;
Assumption Agreements.....................................20
Section 3.08. Realization upon Defaulted Mortgage Loans.................21
Section 3.09. Indenture Trustee to Cooperate; Release of
Mortgage Files; Trust Estates; Related Documents..........22
Section 3.10. Servicing Fee; Payment of Certain Expenses
by Master Servicer........................................23
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans..............................24
Section 3.12. Optional Repurchase of Defaulted Loans....................24
Section 3.13. Recordation of Assignments................................24
Section 3.14. Annual Statement as to Compliance.........................24
Section 3.15. Annual Independent Public Accountants'
Servicing Report..........................................25
Section 3.16. Interest Carry-Forward Amounts............................25
Section 3.17. Indemnification; Third-Party Claims.......................25
Section 3.18. Maintenance of Existence and Licenses; Merger or
Consolidation of the Master Servicer......................26
Section 3.19. Letters of Credit.........................................26
Section 3.20. Periodic Advances.........................................25
ARTICLE IV SERVICING CERTIFICATE.....................................29
Section 4.01. Servicing Certificate.....................................29
ARTICLE V THE ACCOUNTS..............................................32
Section 5.01. Accounts..................................................32
Section 5.02. Collection Account........................................32
Section 5.03. Trustee Collection Account................................32
Section 5.04. Pre-Funding Account.......................................34
Section 5.05. Capitalized Interest Account..............................35
ARTICLE VI THE MASTER SERVICER.......................................36
Section 6.01. Liability of the Master Servicer..........................36
Section 6.02. Merger or Consolidation or Assumption of the Obligations
of the Master Servicer....................................36
Section 6.03. Limitation on Liability of the Master Servicer
and Others................................................36
Section 6.04. Master Servicer Not to Resign.............................37
Section 6.05. Delegation of Duties......................................37
Section 6.06. Indenture Trustee Fees and Expenses;
Indemnification...........................................37
ARTICLE VII DEFAULT...................................................40
Section 7.01. Default...................................................40
Section 7.02. Indenture Trustee to Act; Appointment of Successor........41
Section 7.03. Notification to Securityholders...........................42
ARTICLE VIII MISCELLANEOUS PROVISIONS..................................43
Section 8.01. Amendment.................................................43
Section 8.02. Governing Law.............................................43
Section 8.03. Notices...................................................43
Section 8.04. Severability of Provisions................................43
Section 8.05. Third-Party Beneficiaries.................................44
Section 8.06. Counterparts..............................................44
Section 8.07. Effect of Headings and Table of Contents..................44
Section 8.08. Termination; Clean-Up Call................................44
Section 8.09. Certain Matters Affecting the Indenture Trustee...........45
Section 8.10. Owner Trustee Not Liable for Mortgage
Documents or Related Documents............................45
Section 8.11. Policy....................................................45
<PAGE>
This Sale and Servicing Agreement (the "Agreement"), dated as of April
30, 1999, is among Bear Steams Asset Backed Securities, Inc., as depositor
(the "Depositor"), Irwin Funding Corp., as Transferor (the "Transferor"),
Irwin Union Bank and Trust Company, as master servicer (the "Master
Servicer"), Irwin Home Equity Loan Trust 1999-2, as issuer (the "Issuer"), and
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee").
WITNESSETH:
WHEREAS, pursuant to the terms of the Mortgage Loan Sale Agreement, Irwin
Union Bank and Trust Company will sell to Irwin Funding Corp. and pursuant to
the terms of the Purchase and Sale Agreement, Irwin Funding Corp. will sell to
Bear Stearns Asset Backed Securities, Inc. the Initial Mortgage Loans,
together with the applicable Mortgage Documents and Related Documents on the
Closing Date;
WHEREAS, the Depositor will sell the Initial Mortgage Loans and all of
its rights under the Purchase and Sale Agreement to the Issuer, together with
the applicable Mortgage Documents and Related Documents on the Closing Date;
WHEREAS, pursuant to the terms of one or more Subsequent Transfer
Agreements, the Transferor will sell to the Issuer Subsequent Mortgage Loans,
together with the applicable Mortgage Documents and Related Documents on one
or more Subsequent Transfer Dates;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer will
issue the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will issue
the Notes; and
WHEREAS, pursuant to the terms of this Agreement, the Master Servicer
will service the Mortgage Loans directly or through one or more Subservicers.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Agreement, except as
-----------
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the indenture dated as of April 30,
1999 (the "Indenture"), between the Issuer and the Indenture Trustee, which is
incorporated by reference herein. All other capitalized terms used herein
shall have the meanings specified herein.
Section 1.02. Interpretive Provisions. All terms defined in this
-----------------------
Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(a) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document, to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(b) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; the term "including" shall mean
"including without limitation"; and "or" includes "and/or".
(c) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes in the case of agreements or instruments references
to all attachments thereto and instruments incorporated therein; references to
a Person are also to its permitted successors and assigns.
Section 1.03. Interest Calculations. All calculations of interest
---------------------
hereunder that are made in respect of a Mortgage Loan shall be made on a daily
basis using a 365-day year; provided, that all calculations on certain
Mortgage Loans identified on the Mortgage Loan Schedule shall be made on the
basis of a 360-day year assumed to consist of twelve 30-day months. All
calculations of interest on the Class A-1 and Class A-3 Notes shall be made on
the basis of the actual number of days in the related Interest Period and a
year assumed to consist of 360 days. All calculations of interest on the Class
A-2 and Class A-4 Notes shall be made on the basis of a 360-day year assumed
to consist of twelve 30-day months. The calculation of the Servicing Fee shall
be made on the basis of the actual number of days in the related Interest
Period and a 360-day year.
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Conveyance of Initial Mortgage Loans. In consideration of
------------------------------------
the Issuer's delivery to or upon the order of the Depositor of executed and
authenticated Notes and Certificates, in authorized denominations and in
aggregate amounts equal to the aggregate Initial Security Balance, the
Depositor does hereby sell, transfer, assign and otherwise convey to the
Issuer, in trust for the benefit of the Securityholders and the Enhancer,
without recourse, subject to the Depositor's obligations herein:
(a) all right, title and interest of the Depositor in and to the Initial
Mortgage Loans listed in Schedule A hereto and all interest accrued after the
Initial Cut-Off Date and principal received relating to the Initial Cut-Off
Date Principal Balances of the Initial Mortgage Loans;
(b) all right, title and interest of the Depositor in the Lien on the
Mortgaged Properties created by the related Mortgage Documents;
(c) all right, title and interest of the Depositor in any Liquidation
Proceeds and Insurance Proceeds covering the Initial Mortgage Loans or the
related Mortgaged Properties or Mortgagors;
(d) all right, title and interest (but none of the obligations) of the
Depositor under the Purchase and Sale Agreement; and
(e) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders or the Enhancer.
Section 2.02. Conveyance of Subsequent Mortgage Loans.
---------------------------------------
(a) Subject to the conditions set forth in Section 2.02(b), in
consideration of the Issuer's delivery to or upon the order of the Transferor
of the purchase price for the Subsequent Mortgage Loans, in each case as
described below and set forth in the related Subsequent Transfer Agreement,
the Transferor shall, on each Subsequent Transfer Date, sell, transfer, assign
and otherwise convey to the Issuer, in trust for the benefit of the
Securityholders and the Enhancer, without recourse, subject to the
Transferor's obligations herein and in the Purchase and Sale Agreement:
(i) all right, title and interest of the Transferor in and to the
Subsequent Mortgage Loans listed on the Mortgage Loan Schedule to the
related Subsequent Transfer Agreement, and all interest accrued after the
related Subsequent Cut-Off Date and principal received relating to the
Principal Balances of the Subsequent Mortgage Loans as of the related
Subsequent Cut-Off Date, and any Additional Balances relating thereto;
(ii) all right, title and interest of the Transferor in the Lien on
the related Mortgaged Properties created by the related Mortgage
Documents;
(iii) all right, title and interest of the Transferor in any
Liquidation Proceeds and Insurance Proceeds relating to the Subsequent
Mortgage Loans or the related Mortgagors; and
(iv) any proceeds of the foregoing and all other assets included or
to be included in the Trust for the benefit of the Securityholders or the
Enhancer.
The purchase price to be paid by the Trust on each Subsequent Transfer
Date for the Subsequent Mortgage Loans so sold and the allocation of such
purchase price between monies reserved for Group I and Group II shall be set
forth in the related Subsequent Transfer Agreement, and shall be paid from
monies released from the Pre-Funding Account pursuant to Section 5.04. Such
purchase price shall equal the aggregate Principal Balance of such Subsequent
Mortgage Loans as of the related Subsequent Cut-Off Date.
(b) The Transferor shall transfer to the Issuer, and the Issuer shall
accept transfer of, Subsequent Mortgage Loans and the other property and
rights relating thereto described in paragraph (a) above on the related
Subsequent Transfer Date only upon the satisfaction of each of the following
conditions:
(i) the Transferor shall have, on the Business Day following the
Determination Date preceding the Subsequent Transfer Date, delivered to
the Issuer an executed Subsequent Transfer Agreement substantially in the
form of Exhibit D hereto, which shall include a list of the Subsequent
Mortgage Loans to be so transferred;
(ii) the Transferor shall have, on the Business Day following the
Determination Date preceding the Subsequent Transfer Date, delivered to
the Enhancer a data file in a format reasonably acceptable to the
Enhancer with respect to the Subsequent Mortgage Loans, which shows that
the composition of the Mortgage Loans in the aggregate following such
proposed Subsequent Transfer Date is substantially similar to the
composition of the Mortgage Loans in the aggregate as of the Closing
Date;
(iii) the Enhancer shall not have objected in writing to the
transfer of such Subsequent Mortgage Loans by the Business Day preceding
the proposed Subsequent Transfer Date;
(iv) the Transferor shall have caused the Master Servicer to deposit
into the Collection Account all collections on or in respect of such
Subsequent Mortgage Loans accrued after the related Subsequent Cut-Off
Date but received prior to the related Subsequent Transfer Date;
(v) as of the related Subsequent Transfer Date, neither the Master
Servicer nor the Transferor shall be insolvent nor shall either of them
be made insolvent by such transfer nor is either of them aware of any
pending insolvency;
(vi) such addition shall not result in a material adverse federal
tax consequence to the Trust or the Securityholders;
(vii) the Pre-Funding Period shall not have ended;
(viii) the Transferor shall have delivered to the Issuer, the
Indenture Trustee and the Enhancer an Officer's Certificate confirming
the satisfaction of each condition precedent specified in this paragraph
and in Section 7 of the related Subsequent Transfer Agreement;
(ix) the Transferor shall have delivered to the Issuer, the
Indenture Trustee and the Enhancer an Opinion of Counsel relating to all
Subsequent Mortgage Loans transferred to the Trust;
(x) the Transferor shall have taken all actions required to maintain
the ownership interest of the Trust in the Trust Estate, including such
Subsequent Mortgage Loans;
(xi) the Transferor or the Issuer shall not have been advised in
writing by any Rating Agency (after prior notice thereto) on or before
the Business Day immediately preceding the related Subsequent Transfer
Date that the conveyance of such Subsequent Mortgage Loans would result
in a Rating Event;
(xii) the Transferor shall have provided the Issuer with a
supplement to the Mortgage Loan Schedule setting forth the Subsequent
Mortgage Loans to be transferred on such Subsequent Transfer Date; and
(xiii) as of any Subsequent Transfer Date, taking into account the
Subsequent Mortgage Loans being transferred, no more than 45% (by
aggregate Principal Balance) of the Mortgage Loans in each of Loan Group
I and Loan Group II constitute "real estate mortgages" for the purposes
of Treasury Regulation ss.301.7701(i)-1(d) under the Code, and the
Transferor shall have provided the Issuer with an executed copy of a
certificate to that effect substantially in the form of Exhibit E hereto.
Neither the Issuer nor the Indenture Trustee shall be required to
investigate or otherwise verify compliance with the conditions specified
above, except in respect of its own receipt of documents specified above, and
shall be entitled to rely upon the Officer's Certificates and Opinions of
Counsel to be delivered pursuant to clauses (vii) and (viii) above for such
purposes.
Section 2.03. Treatment of Transfer. It is the intention of the Depositor
---------------------
that the transfer and assignment contemplated by this Agreement shall
constitute, as of its execution, a sale of all of its right, title and
interest in and to the Initial Mortgage Loans and other property of the Trust
Estate from the Depositor to the Issuer and the beneficial interest in and
title to the Initial Mortgage Loans and the other property shall not be part
of the Depositor's estate in the event of the filing of a bankruptcy petition
by or against the Depositor under any bankruptcy law. In the event that,
notwithstanding the intent of the Depositor, the transfer and assignment
contemplated hereby is held not to be a sale, this Agreement shall be deemed
to have constituted a grant of a security interest in the property referred to
in this Section for the benefit of the Securityholders.
Notwithstanding the characterization of the Notes as debt for federal,
state and local income and franchise tax purposes, the parties hereto intend
to treat the transfer of the Initial Mortgage Loans to the Trust as provided
herein as a sale, for certain non-tax purposes, of all the Depositor's right,
title and interest in and to the Initial Mortgage Loans, whether now existing
or hereafter created, and the other property described above and all proceeds
thereof. In the event such transfer is deemed not to be a sale for such
purposes, the Depositor shall be deemed to have granted to the Trust a
security interest in all of the Depositor's right, title and interest in, to
and under the Initial Mortgage Loans, whether now existing or hereafter
created, and the other property described above and all proceeds thereof; and
this Agreement shall constitute a security agreement under applicable law.
It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans by the Transferor to the Depositor as contemplated by the
Purchase Agreement is, and is to be treated for all purposes as, a sale by the
Transferor to the Depositor of the Mortgage Loans and that as stated above,
the Depositor intends to, and does, sell all its right, title and interest in
what it received from the Transferor to the Issuer. However, in the event
that, notwithstanding the intent of the parties, the Mortgage Loans, or any
portion thereof, are held to continue to be property of the Transferor then
(a) this Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer
of the Mortgage Loans provided for herein shall be deemed to be a grant by the
Transferor to the Depositor and the Issuer of, and the Transferor hereby does
grant, a security interest in all of the Transferor's right, title and
interest in and to the Mortgage Loans and all amounts payable on the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities
or other property to secure a loan from the Issuer in the amount equal to the
Principal Balance of such Mortgage Loans; (c) the possession by the Indenture
Trustee on behalf of the Issuer of the Mortgage Notes and such other items of
property as constitute instruments, money, negotiable documents or chattel
paper shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the Uniform
Commercial Code; and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Depositor and the Issuer for the purpose of perfecting such
security interest under applicable law. Any assignment of the interest of the
Depositor in the Mortgage Loans pursuant to any provision hereof shall also be
deemed to be an assignment of any security interest created hereby or by the
Purchase Agreement. The Transferor, the Depositor and the Issuer shall, to the
extent consistent with this Agreement, take such actions as may be necessary
to ensure that, if this Agreement were deemed to create a security interest in
the Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
Issuer hereby appoints the Indenture Trustee as its custodian for
purposes of taking possession of the Trust Estate in order to perfect any
security interest arising as a result of the operation of this Section 2.03.
------------
Section 2.04. Mortgage File. In connection with such transfer and
-------------
assignment, the Master Servicer shall deliver to the Indenture Trustee the
Mortgage File with respect to each Initial Mortgage Loan on the Closing Date,
and shall deliver the Mortgage File with respect to each Subsequent Mortgage
Loan on the related Subsequent Transfer Date. In connection with the transfer
of the Initial Mortgage Loans on the Closing Date, the Indenture Trustee will
deliver an initial certification, certifying that it has received a Mortgage
File containing a Mortgage Note for each such Mortgage Loan listed on the
Mortgage Loan Schedule to the Depositor and the Enhancer. Within 90 days
following each such delivery of Mortgage Files, the Indenture Trustee shall
review each such Mortgage File to ascertain that the Mortgage Documents (or,
in the case of the Initial Mortgage Loans the Mortgage Note) are contained
therein and that such Mortgage Documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule. Furthermore, the Indenture Trustee
shall review the following data elements contained in the Mortgage Loan
Schedule (a) the Originator's loan number, (b) the Mortgagor's name, (c) the
address (including state and ZIP code) of the related Mortgaged Property, (d)
the original principal balance, (e) the initial interest rate and (f) the
maturity of the related Mortgage Note. In so doing, the Indenture Trustee may
rely on the purported due execution and genuineness of any signature thereon.
If, within such 90 day period, the Indenture Trustee finds any Mortgage
Document constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loan identified in the Mortgage
Loan Schedule, the Indenture Trustee shall, promptly upon the conclusion of
its review, notify the Transferor in the form of the certificate attached as
Exhibit F hereto, and the Transferor shall have a period of 120 days after
such notice within which to correct or cure any such defect or to cause such
defect to be corrected or cured.
The Indenture Trustee shall have no responsibility for reviewing any
Mortgage File except as expressly provided in this Section. In reviewing any
Mortgage File pursuant to this Section, the Indenture Trustee shall have,
without limitation, no responsibility for determining whether any document is
valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form (except, if applicable, to determine if the
Indenture Trustee is the assignee or endorsee thereof), whether any document
has been recorded in accordance with the requirements of any applicable
jurisdiction, whether a blanket assignment is permitted in any applicable
jurisdiction, whether any Person executing any document is authorized to do so
or whether any signature thereon is genuine, but shall only be required to
determine whether a document has been executed and that it appears to be what
it purports to be.
Section 2.05. Representations and Warranties of the Master Servicer. The
-----------------------------------------------------
Master Servicer represents and warrants to the Issuer and for the benefit of
the Enhancer and the Indenture Trustee, as pledgee of the Mortgage Loans, as
of the Closing Date and as of each Subsequent Transfer Date:
(a) the Master Servicer is a bank duly organized, validly existing and in
good standing under the laws of the State of Indiana, and has full power and
authority to own its assets and to transact the business in which it is
currently engaged. The Master Servicer is duly qualified to do business and is
in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Master Servicer;
(b) the Master Servicer has full power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
hereunder, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement;
(c) the Master Servicer is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consent, license, approval
or authorization or registration or declaration as shall have been obtained or
filed, as the case may be;
(d) the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby by the Master Servicer will not violate
any material provision of any existing law or regulation or any order or
decree of any court applicable to the Master Servicer or any provision of the
articles or bylaws of the Master Servicer, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Master
Servicer is a party or by which it may be bound;
(e) no Proceeding of or before any court, tribunal or governmental body
is currently pending or, to the knowledge of the Master Servicer, threatened
against the Master Servicer or any of its properties or with respect to this
Agreement or the Securities that in the opinion of the Master Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement; and
(f) the Master Servicer is presently engaged in various procedures with
the goal of attaining year 2000 compliance for its computer systems and
software.
The foregoing representations and warranties shall survive the transfer
of the Mortgage Loans to the Trust and any termination of the Master Servicer
hereunder. Upon discovery of a breach of any representation or warranty that
materially and adversely affects the interests of the Securityholders or the
Enhancer, the party discovering such breach shall give prompt written notice
to the other parties hereto and to the Enhancer. Within 90 days of its
discovery or its receipt of notice of such breach or, with the prior written
consent of a Responsible Officer of the Indenture Trustee, such longer period
specified in such consent, the Master Servicer shall cure such breach in all
material respects.
Section 2.06. Representations and Warranties of the Issuer. The Issuer
--------------------------------------------
hereby represents and warrants to the Master Servicer and for the benefit of
the Enhancer and the Indenture Trustee, as pledgee of the Mortgage Loans, as
of the Initial Cut-Off Date and each Subsequent Cut-Off Date, that:
(a) the Issuer is a business trust duly formed and in good standing under
the laws of the State of Delaware and has full power, authority and legal
right to execute and deliver this Agreement and to perform its obligations
under this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement; and
(b) the execution and delivery by the Issuer of this Agreement and the
performance by the Issuer of its obligations under this Agreement will not
violate any provision of any law or regulation governing the Issuer or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Issuer or any of its assets. Such
execution, delivery, authentication and performance will not require the
authorization, consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency regulating the activities of business trusts.
Such execution, delivery, authentication and performance will not conflict
with, or result in a breach or violation of, any mortgage, deed of trust,
lease or other agreement or instrument to which the Issuer is a party or by
which it may be bound.
Section 2.07. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor represents and warrants to the Indenture Trustee and the Enhancer,
as of the Closing Date and as of each Subsequent Transfer Date, that:
(a) Depositor is a corporation, validly existing and in good standing
under the laws of the State of Delaware, and has full power and authority to
own its assets and to transact the business in which it is currently engaged.
The Depositor is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the business
transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Depositor;
(b) Depositor has full power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated hereunder, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Depositor
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and by the
availability of equitable remedies;
(c) Depositor is not required to obtain the consent of any other Person
or any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement;
(d) the execution, delivery and performance of this Agreement by the
Depositor will not violate any provision of any existing law or regulation or
any order decree of any court applicable to the Depositor or any provision of
the articles of incorporation or bylaws of the Depositor, or constitute a
material breach of any mortgage, indenture, contract or other agreement to
which the Depositor is a party or by which it may be bound;
(e) no Proceeding of or before any court, tribunal or governmental body
is currently pending or, to the knowledge of the Depositor, threatened against
the Depositor or any of its properties or with respect to this Agreement or
the Securities; and
(f) this Agreement (i) constitutes a valid transfer and assignment to the
Trust of all right, title and interest of the Depositor in and to the Initial
Mortgage Loans, all monies due or to become due with respect thereto, all
proceeds of such Initial Mortgage Loans, such funds as are from time to time
on deposit in the Collection Account or Trustee Collection Account and all
other property specified in the definition of "Trust Estate" as being part of
the Trust Estate; or (ii) constitutes a grant of a security interest, as
defined in the UCC as in effect in the State of New York, in such property in
favor of the Trust or the Owner Trustee on behalf of the Trust; provided, that
if the Indenture Trustee obtains and maintains possession of the Mortgage File
for each Mortgage Loan, the Trust shall have a first priority perfected
security interest in such property.
The representations and warranties set forth in this Section shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representation or warranty that materially and
adversely affects the interests of the Securityholders or the Enhancer, the
party discovering such breach shall give prompt written notice to the other
parties hereto and to the Enhancer. Within 90 days of its discovery or its
receipt of notice of such breach or, with the prior written consent of a
Responsible Officer of the Indenture Trustee, such longer period specified in
such consent, the Depositor shall cure such breach in all material respects.
Section 2.08. Representations and Warranties of the Transferor Regarding
----------------------------------------------------------
the Mortgage Loans; Retransfer of Certain Mortgage Loans.
- --------------------------------------------------------
(a) The Transferor hereby reaffirms, for the benefit of the Depositor,
the Enhancer and the Issuer, the representations and warranties as to the
Mortgage Loans contained in Section 3.1 and Section 3.2 of the Purchase and
Sale Agreement, which are hereby incorporated by reference herein, and upon
which the Issuer is deemed to have relied in acquiring the Mortgage Loans.
Such representations and warranties shall speak as of the execution and
delivery of this Agreement and, unless otherwise specified, as of the Closing
Date in the case of the Initial Mortgage Loans and as of the related
Subsequent Transfer Date in the case of the Subsequent Mortgage Loans and any
Eligible Substitute Mortgage Loans, but shall survive the sale, transfer and
assignment of the Mortgage Loans to the Issuer (and, in the case of the
Initial Mortgage Loans, the Depositor) and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
With respect to the representations and warranties set forth in this
Section or incorporated by reference herein that are made to the best of
Transferor's knowledge or as to which the Transferor has no knowledge, if it
is discovered by the Depositor, the Master Servicer or a Responsible Officer
of the Indenture Trustee that the substance of such representation or warranty
is inaccurate, and such inaccuracy materially and adversely affects the value
of the related Mortgage Loan, then, notwithstanding the Transferor's lack of
knowledge with respect to the substance of such representation or warranty
being inaccurate at the time such representation or warranty was made, such
inaccuracy shall be deemed to be a breach of such representation or warranty.
Upon discovery by the Transferor or upon notice from the Depositor, the
Issuer, the Owner Trustee, the Indenture Trustee, the Enhancer or any
Custodian, as applicable, of a breach of any representation or warranty
referred to in paragraph (a) above that materially and adversely affects the
interests of the Issuer, the Enhancer or the Securityholders in any Initial
Mortgage Loan (or upon the occurrence of a Repurchase Event), the Transferor
shall, within 90 days of its discovery or its receipt of notice thereof
(notice of which shall be given to the Issuer by the Transferor, if it
discovers the same), (i) cure such breach or Repurchase Event in all material
respects or (ii) (A) repurchase such Initial Mortgage Loan from the Issuer at
the Repurchase Price thereof or (B) substitute one or more Eligible Substitute
Mortgage Loans for such Initial Mortgage Loan, in each case in the manner and
subject to the conditions and limitations set forth in Section 3.4 of the
Purchase and Sale Agreement.
(b) The representations and warranties set forth in this Section shall
survive delivery of the Mortgage Files to the Indenture Trustee pursuant to
Section 2.04 and the termination of the rights and obligations of the Master
Servicer pursuant to Section 6.04 or Article VII.
Section 2.09. Enforcement of Representations and Warranties. The Master
---------------------------------------------
Servicer, on behalf of and subject to the direction of the Indenture Trustee,
as pledgee of the Mortgage Loans, or the Issuer, shall enforce the
representations and warranties of the Transferor in Section 3.1 and Section
3.2 of the Purchase and Sale Agreement. Upon the discovery by the Transferor,
the Depositor, the Master Servicer, the Issuer, the Indenture Trustee, the
Enhancer or the Custodian of a breach of any of the representations and
warranties made by the Transferor in such Section in respect of any Mortgage
Loan that materially and adversely affects the interests of any Securityholder
or the Enhancer, the Person discovering such breach shall give prompt written
notice to the other foregoing Persons and to the Enhancer. The Master Servicer
shall promptly demand of the Transferor that it (i) cure such breach in all
material respects within, with respect to a breach of the representations and
warranties contained in Section 3.1 of the Purchase and Sale Agreement, 45
days, and with respect to a breach of the representations and warranties
contained in Section 3.2 of the Purchase and Sale Agreement, 90 days, in each
case from the date the Transferor was notified of such breach or (ii) purchase
the related Mortgage Loan from the Issuer or substitute an Eligible Substitute
Mortgage Loan (and remit to the Trustee Collection Account any concomitant
Substitution Adjustment Amount), in each case in the manner set forth in
Section 3.2 of the Purchase and Sale Agreement.
The obligation of the Transferor to accept a retransfer of a Mortgage
Loan as to which a breach has occurred and is continuing and to make any
required deposit into the Collection Account or Trustee Collection Account or
to substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole and exclusive remedy hereunder against the Transferor
respecting such breach available therefor; provided, that the Transferor shall
defend and indemnify the Issuer, the Owner Trustee and the Indenture Trustee
against all reasonable costs and expenses, and all losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and the amount
of any settlement entered into with the consent of the Transferor, such
consent not to be unreasonably withheld, that may be asserted against or
incurred by any of them as a result of any third-party action arising out of
any breach of any such representation or warranty. Notwithstanding the
foregoing, with regard to any breach of the representation and warranty set
forth in Section 3.2(y) of the Purchase and Sale Agreement, the sale and
assignment of the affected Mortgage Loans to the Trust shall be deemed void,
and the Transferor shall pay to the Trust the sum (i) the amount of the
related Principal Balances, plus accrued and unpaid interest thereon at the
applicable Mortgage Interest Rate to the date of payment, (ii) the amount of
any loss suffered by the Securityholders or the Enhancer with respect to the
affected Mortgage Loans and (iii) all amounts owing to the Enhancer pursuant
to the Insurance Agreement.
In connection with the purchase or substitution of any Mortgage Loan, the
Issuer shall assign to the Transferor all of its right, title and interest in
and to such Mortgage Loan. Upon receipt of the Repurchase Price, or upon the
completion of such substitution, the Master Servicer shall notify the
Custodian thereof, and the Custodian shall deliver the Mortgage Files to the
Master Servicer, together with all relevant endorsements and assignments
prepared by the Master Servicer that the Indenture Trustee shall execute.
<PAGE>
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Appointment of the Master Servicer.
----------------------------------
(a) Irwin Union Bank and Trust Company agrees to act as the Master
Servicer and to perform all servicing duties under this Agreement, subject to
the terms hereof.
(b) The Master Servicer shall service and administer the Mortgage Loans
in a manner consistent with the terms of this Agreement and as shall be normal
and usual in its general mortgage servicing activities, and shall have full
power and authority, acting alone or through Subservicers, to do any and all
things in connection with such servicing and administration as it may deem
necessary or desirable; provided, that the Master Servicer shall at all times
remain responsible to the Issuer and the Indenture Trustee, as pledgee of the
Mortgage Loans, for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Without limiting the generality of the
foregoing, the Master Servicer shall continue, and is hereby authorized and
empowered by the Issuer and the Indenture Trustee, as pledgee of the Mortgage
Loans, to execute and deliver, on behalf of itself, the Issuer, the Indenture
Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments with respect to the Mortgage Loans and the Mortgaged
Properties. The Issuer, the Indenture Trustee and the Custodian, as
applicable, shall furnish the Master Servicer with any powers of attorney or
other documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder. In addition, the
Master Servicer may, at its own discretion and on behalf of the Issuer, obtain
credit information in the form of a "credit score" from a credit repository.
On the Closing Date, the Indenture Trustee shall deliver to the Master
Servicer a limited power of attorney substantially in the form of Exhibit B
hereto.
In servicing and administering the Mortgage Loans, the Master Servicer
(i) shall employ procedures consistent with the Master Servicer's normal
servicing practices and in a manner consistent with recovery under any
insurance policy required to be maintained by a Mortgagor pursuant to the
related Mortgage Documents or by the Master Servicer pursuant to this
Agreement, and (ii) may take reasonable actions to encourage or effect the
termination of Loan Agreements that have not had an outstanding Principal
Balance for at least 6 months.
The relationship of the Master Servicer, and of any successor to the
Master Servicer as master servicer hereunder, to the Issuer under this
Agreement is intended by the parties to be that of an independent contractor
and not that of a joint venturer, partner or agent.
Any expenses incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on Mortgaged Property and foreclosure costs
may be added by the Master Servicer to the amount owing in respect of the
related Mortgage Loan where the terms of the related Mortgage Documents so
permit; provided, that the addition of any such expenses shall not be taken
into account for purposes of calculating the Principal Balance of such
Mortgage Loan or distributions to be made to the Securityholders. Such
expenses shall be recoverable by the Master Servicer pursuant to Section
3.04(c). Notwithstanding any other provision of this Agreement, the Master
Servicer shall at all times service the Mortgage Loans in a manner consistent
with the provisions of this paragraph.
(c) On and after such time as the Owner Trustee receives the resignation
of, or notice of the removal of, the Master Servicer from its rights and
obligations under this Agreement, and with respect to a resignation pursuant
to Section 6.04, after receipt by the Owner Trustee of the Opinion of Counsel
required pursuant to Section 6.04, the Indenture Trustee or its designee shall
assume all of the rights and obligations of the Master Servicer, subject to
Section 7.02. The Master Servicer shall, upon request of the Indenture Trustee
and at the expense of the Master Servicer, deliver to the Indenture Trustee
all documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Master Servicer, and shall otherwise use its
best efforts to effect the orderly and efficient transfer of servicing rights
and obligations to the assuming Person.
(d) The Master Servicer shall deliver a list of Servicing Officers to the
Issuer and the Indenture Trustee by the Closing Date, which list may from time
to time be amended, modified or supplemented by the subsequent delivery to the
Issuer and the Indenture Trustee of any superseding list of Servicing
Officers.
Section 3.02. Subservicing Agreements Between the Master Servicer and
-------------------------------------------------------
Subservicers.
- ------------
(a) The Master Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Mortgage
Loans and for the performance of any and all other activities of the Master
Servicer hereunder. References in this Agreement to actions taken or to be
taken by the Master Servicer in servicing the Mortgage Loans include actions
taken or to be taken by a Subservicer on behalf of the Master Servicer, and
any amount actually received by such Subservicer in respect of a Mortgage Loan
shall be deemed to have been received by the Master Servicer, whether or not
actually received by the Master Servicer. Each Subservicing Agreement shall be
upon such terms and conditions as are not inconsistent with this Agreement and
as the Master Servicer and the Subservicer shall have agreed. With the
approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicers shall remain
obligated under the related Subservicing Agreements. The Master Servicer and
the related Subservicers may enter into amendments to the Subservicing
Agreements; provided, that any such amendments shall not cause the Mortgage
Loans to be serviced in a manner that would be materially inconsistent with
the standards set forth in this Agreement. The Master Servicer shall be
entitled to terminate any Subservicing Agreement in accordance with the terms
and conditions thereof and without any limitation by virtue of this Agreement;
provided, that in the event of the termination of any Subservicing Agreement
by the Master Servicer or the related Subservicer, the Master Servicer shall
either act as servicer of the related Mortgage Loans or enter into a
Subservicing Agreement with a successor Subservicer that will be bound by the
terms of the related Subservicing Agreement. The Master Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
the Master Servicer, and nothing contained herein shall be deemed to limit or
modify such indemnification.
Each Subservicer shall be (i) a depository institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating, acquiring or servicing mortgage loans, and in either
case shall be authorized to transact business in those States in which (x) the
related Mortgaged Properties are situated and (y) qualification is required to
conduct a subservicing business operation. In addition, each Subservicer shall
obtain and preserve its qualifications to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Securities or
any Mortgage Loan, and to perform or cause to be performed its duties under
the related Subservicing Agreement, which shall provide that the Subservicer's
rights will automatically terminate upon the termination, resignation or other
removal of the Master Servicer under this Agreement. Each account used by any
Subservicer for the deposit of payments on any Mortgage Loan shall be an
Eligible Account. Irwin Home Equity Corporation shall be the initial
Subservicer.
(b) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Subservicer or any references to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Issuer and the Indenture Trustee for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement, without diminution of such obligation or liability by virtue of
such Subservicing Agreements or arrangements or by virtue of indemnification
from the related Subservicer, and to the same extent and under the same terms
and conditions as if the Master Servicer alone were servicing and
administering the Mortgage Loans.
As part of its servicing activities hereunder, the Master Servicer, for
the benefit of the Issuer and the Indenture Trustee, shall use reasonable
efforts to enforce the obligations of each Subservicer under the related
Subservicing Agreement to the extent that the non-performance of any such
obligation would have a material adverse effect on any Mortgage Loan. Such
enforcement, including the legal prosecution of claims, termination of
Subservicing Agreements and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent and at such time as the
Master Servicer, in its good faith business judgment, would require were it
the owner of the related Mortgage Loans. The Master Servicer shall pay the
costs of such enforcement at its own expense, and shall be reimbursed therefor
only from (i) a general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loan or (ii) a specific recovery of costs, expenses or
attorneys' fees against the Person against whom such enforcement is directed.
In the event the Master Servicer shall for any reason no longer be the
Master Servicer, the Indenture Trustee or its designee may (i) assume all of
the rights and obligations of the Master Servicer under each Subservicing
Agreement that the Master Servicer may have entered into, which assumption
shall not violate the terms of the related Subservicing Agreement, (ii)
notwithstanding anything to the contrary contained in each such Subservicing
Agreement, terminate the related Subservicer without being required to pay any
fee in connection therewith or (iii) assume the terminated Master Servicer's
rights and obligations under such subservicing arrangements, which termination
or assumption shall not violate the terms of the related Subservicing
Agreement.
(c) Prior to the close of business on the tenth calendar day of each
month in which the related Payment Date is to occur, the Master Servicer shall
furnish a statement to the Indenture Trustee, in writing or in an electronic
format as the Indenture Trustee shall reasonably request, setting forth all
information reasonably necessary to allow the Indenture Trustee to perform the
calculations for the distributions contemplated by Section 3.05 of the
Indenture and to prepare the statement required to be delivered pursuant to
Section 3.25 of the Indenture and Section 4.01 hereof.
Section 3.03. Collection of Mortgage Loan Payments. The Master Servicer
------------------------------------
shall use its best efforts to collect all payments called for under the terms
and provisions of the Mortgage Documents and shall, to the extent such
procedures shall be consistent with this Agreement and any applicable primary
mortgage insurance policy, follow such collection procedures as shall
constitute the Master Servicer's normal servicing practices. Consistent with
the foregoing, and without limiting the generality of the foregoing, the
Master Servicer may in its discretion (i) waive any late payment charge,
overlimit fee or other fees that may be collected in the ordinary course of
servicing a Mortgage Loan and (ii) arrange with a Mortgagor a schedule for the
payment of principal and interest due and unpaid; provided, that such
arrangement is consistent with the Master Servicer's policies with respect to
mortgage loans; and provided further, that notwithstanding such arrangement,
such Mortgage Loans shall be included in the information regarding delinquent
Mortgage Loans set forth in the Servicing Certificate. The Master Servicer may
also extend the Due Date for payment due on a Mortgage Loan in accordance with
its normal servicing practices; provided, that the Master Servicer shall first
determine that any such waiver or extension will not materially adversely
affect the Lien of the related Mortgage Documents or the interests of the
Issuer, the Enhancer or the Indenture Trustee. Consistent with the terms of
this Agreement, the Master Servicer may waive, modify or vary any term of any
Mortgage Loan, subject, if applicable, to the second paragraph of Section
3.01(b).
Consistent with the terms of this Agreement, the Master Servicer may
consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor; provided, that in the Master
Servicer's determination, such waiver, modification, postponement or
indulgence relates to a reasonable business purpose; and provided further,
that such waiver, modification, postponement or indulgence shall not
materially and adversely affect the interests of the Securityholders or the
Enhancer. Notwithstanding the foregoing, the Master Servicer may consent to
the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor with the consent of the Enhancer.
Section 3.04. Permitted Withdrawals from the Collection Account. The
-------------------------------------------------
Master Servicer is hereby authorized from time to time to make withdrawals
from the Collection Account for the following purposes:
(a) on each Master Servicer Remittance Date, to deposit the amount
required by Section 5.03 hereof for the related Payment Date into the Trustee
Collection Account;
(b) to the extent deposited into the Collection Account, to reimburse
itself or the related Subservicer for previously unreimbursed expenses
incurred in maintaining insurance policies pursuant to Section 3.05, for
Liquidation Expenses paid pursuant to Section 3.08 or for expenses otherwise
reimbursable pursuant to the terms of this Agreement to the extent not payable
pursuant to Section 3.08; such withdrawal right being limited to amounts
received in respect of the Mortgage Loans, other than any Repurchase Price in
respect thereof, that represent late recoveries of the payments for which such
advances were made, or from Liquidation Proceeds or the proceeds of the
purchase of such Mortgage Loans;
(c) to pay to itself out of each payment received in respect of interest
on a Mortgage Loan as contemplated by the last paragraph of Section 3.08, an
amount equal to the Servicing Fee, to the extent not retained pursuant to
Section 5.02;
(d) in respect of Periodic Advances previously made by the Master
Servicer, to reimburse itself out of late collections, Liquidation Proceeds,
or to the extent that it has determined such Periodic Advance is
nonrecoverable from other funds on deposit in the Collection Account or
collected on the Mortgage Loans;
(e) to pay to the Transferor, with respect to any Mortgage Loan or
Mortgaged Property that has been purchased or otherwise transferred to the
Transferor, all amounts received thereon that are not required to be
distributed to the Securityholders as of the date on which the related
Purchase Price or Repurchase Price is determined; and
(f) to withdraw any other amount deposited into the Collection Account
that was not required to be deposited therein pursuant to Section 5.02.
On each Master Servicer Remittance Date, the Master Servicer shall
transfer from the Collection Account to the Trustee Collection Account the
amount necessary for the Indenture Trustee to make the required distributions
pursuant to Section 3.05(a) of the Indenture. The Master Servicer shall keep
and maintain separate accounting on a loan-by-loan basis for the purpose of
justifying any withdrawal from the Collection Account pursuant to the
foregoing paragraphs. Notwithstanding any other provision of this Agreement,
the Master Servicer shall be entitled to reimburse itself for any previously
unreimbursed expenses relating to a Mortgage Loan incurred pursuant to Section
3.08 or otherwise reimbursable pursuant to the terms of this Agreement that
the Master Servicer determines to be otherwise nonrecoverable, except with
respect to any Mortgage Loan as to which the Purchase Price or Repurchase
Price shall have been paid, by withdrawal from the Collection Account, on any
Business Day prior to the Payment Date succeeding the date of such
determination, of amounts on deposit therein attributable to the Mortgage
Loan.
Section 3.05. Maintenance of Insurance.
------------------------
(a) With respect to each Mortgage Loan, the Master Servicer shall
maintain accurate records reflecting the fire and casualty insurance coverage
maintained by the related Mortgagors with respect to the Mortgaged Properties
in accordance with its normal servicing practices. The Master Servicer shall,
if it has received notice of a default or deficiency in respect of the payment
of any ground rents, taxes, assessments, water rates or casualty insurance
premiums or other charges that are or may become a Lien upon the related
Mortgaged Property, notify the related Mortgagor and the holder of the first
Lien on the related Mortgaged Property.
(b) To the extent permitted under the related Mortgage Documents, and to
the extent the Master Servicer receives notice that a hazard insurance policy
has been cancelled, the Master Servicer shall, to the extent consistent with
its normal servicing practices, cause to be maintained for each Mortgage Loan
hazard insurance naming the Master Servicer or the related Subservicer as loss
payee thereunder, and providing extended coverage in an amount at least equal
to the lesser of (i) the maximum insurable value of the improvements securing
such Mortgage Loan from time to time or (ii) the combined principal balance
owing on such Mortgage Loan and any mortgage loan senior to such Mortgage Loan
from time to time. The Master Servicer shall monitor the maintenance of any
such hazard insurance so obtained in accordance with its normal servicing
practices.
(b) The Master Servicer shall cause to be maintained with respect to any
REO Property fire insurance with extended coverage in an amount at least equal
to the amount necessary to avoid the application of any co-insurance clause
contained in the related hazard insurance policy. Amounts collected by the
Master Servicer under any such policies, other than amounts to be applied to
the restoration or repair of Mortgaged Property or REO Property or amounts
released to the Mortgagor in accordance with the Master Servicer's normal
servicing practices, shall be deposited into the Collection Account to the
extent provided in Section 5.02.
(c) If, upon the origination of a Mortgage Loan, the related Mortgaged
Property was in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, and flood
insurance has been made available, the Master Servicer shall cause to be
maintained, to the extent required by the related Mortgage Documents, a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration with a generally acceptable insurance
carrier, in an amount representing coverage at least equal to the lesser of
(i) the unpaid Principal Balance of such Mortgage Loan, (ii) the full
insurable value of such Mortgaged Property or (iii) the maximum amount of
insurance available under the Flood Disaster Protection Act of 1973, as
amended. With respect to any REO Property, the Master Servicer shall also
maintain, if applicable, flood insurance in an amount at least equal to the
lesser of (i) the maximum insurable value of the improvements that are a part
of such property and (ii) the Principal Balance owing on the related Mortgage
Loan at the time of foreclosure or grant of deed in lieu of foreclosure plus
accrued interest and related Liquidation Expenses.
(d) Pursuant to Section 3.03, any amounts collected by the Master
Servicer under any insurance policy maintained pursuant to this Section, other
than amounts to be applied to the restoration or repair of Mortgaged Property
or released to a Mortgagor in accordance with the Master Servicer's normal
servicing practices, shall be deposited into the Collection Account, subject
to withdrawal pursuant to Section 3.04. Any cost incurred by the Master
Servicer in maintaining any such insurance shall be added to the amount owing
under the related Mortgage Loan where the terms of the related Mortgage
Documents so permit; provided, that the addition of any such cost shall not be
taken into account for purposes of calculating the Principal Balance of such
Mortgage Loan or distributions to be made to Securityholders. Such costs shall
be recoverable by the Master Servicer pursuant to Section 3.04.
(e) The Master Servicer shall be under no obligation to maintain or
require any Mortgagor to maintain earthquake, title or other additional
insurance, and shall be under no obligation itself to maintain any such
additional insurance on property acquired in respect of any Mortgage Loan,
other than pursuant to such applicable laws and regulations as shall at any
time be in force and as shall require such additional insurance.
Section 3.06. Fidelity Bond; Errors and Omissions Policy.
------------------------------------------
(a) The Master Servicer shall maintain with a responsible company, and at
its own expense, a blanket fidelity bond (a "Fidelity Bond") and an errors and
omissions insurance policy (an "Errors and Omissions Policy"), in amounts as
are commercially available and at costs that are not generally regarded as
excessive by industry standards, with broad coverage with respect to all
officers, employees or other individuals acting in any capacity to handle
funds, money, documents or papers relating to the Mortgage Loans. Any Fidelity
Bond and Errors and Omissions Policy shall protect and insure the Master
Servicer against, without limitation, losses resulting from forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such officers,
employees or other individuals. Such Fidelity Bond shall also protect and
insure the Master Servicer against losses incurred in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section
requiring such Fidelity Bond and Errors and Omissions Policy shall diminish or
relieve the Master Servicer from its duties and obligations as set forth in
this Agreement. Upon the request of the Issuer or the Indenture Trustee, the
Master Servicer shall cause to be delivered to the Issuer or the Indenture
Trustee, as the case may be, a certified true copy of such Fidelity Bond or
Errors and Omissions Policy. The Master Servicer shall specify the underwriter
or underwriters with which any such insurance is maintained in writing to the
Issuer and the Indenture Trustee from time to time. Any such Fidelity Bond or
Errors and Omissions Policy shall not be canceled or modified in a manner
materially adverse to the Securityholders without the prior written consent of
the Issuer and the Indenture Trustee.
(b) The Master Servicer shall be deemed to have complied with this
provision if any of its Affiliates has such a Fidelity Bond and Errors and
Omissions Policy and, by the terms of such policy, the coverage afforded
thereunder extends to the Master Servicer. The Master Servicer shall cause
each Subservicer to maintain an Errors and Omissions Policy and a Fidelity
Bond meeting the requirements of this Section.
Section 3.07. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
---------------------------------------------------------
In any case in which a Mortgaged Property is about to be conveyed by the
related Mortgagor, whether by absolute conveyance, contract of sale or
otherwise, and whether or not such Mortgagor remains liable thereon, and the
Master Servicer has knowledge of such prospective conveyance, the Master
Servicer shall effect assumptions in accordance with the terms of any
due-on-sale provision contained in the related Mortgage Documents. The Master
Servicer shall enforce any due-on-sale provision contained in such Mortgage
Documents to the extent the requirements thereunder for an assumption of the
related Mortgage Loan have not been satisfied, to the extent permitted by such
Mortgage Documents, unless such provision is not exercisable under applicable
law or governmental regulations or, in the Master Servicer's judgment, such
exercise is reasonably likely to result in legal action by such Mortgagor, or
such conveyance is in connection with a permitted assumption of such Mortgage
Loan.
The Master Servicer or the related Subservicer, as the case may be, shall
be entitled to (i) execute assumption agreements, substitution agreements and
instruments of satisfaction or cancellation or of partial or full release or
discharge, or any other document contemplated by this Agreement or other
comparable instruments with respect to the Mortgage Loans and the related
Mortgaged Properties; and the Issuer and the Indenture Trustee each shall
promptly execute any such documents upon the request of the Master Servicer,
and (ii) approve the granting of an easement on Mortgaged Property in favor of
another Person, any alteration or demolition of such Mortgaged Property or
other similar matters, if it has determined, exercising its good faith
business judgment in the same manner as it would if it were the owner of the
related Mortgage Loan, that the security for, and the timely and full
collectability of, such Mortgage Loan would not be adversely affected thereby.
The Master Servicer shall notify the Indenture Trustee that any such
assumption or substitution agreement has been completed by forwarding to the
Indenture Trustee the original copy of such assumption or substitution
agreement, which the Indenture Trustee shall add to the related Mortgage File
and which shall, for all purposes, be considered part of such Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Master Servicer for entering into an
assumption or substitution of liability agreement shall be retained by the
Master Servicer as servicing compensation. A partial release pursuant to this
Section shall be permitted only if the Combined Loan-to-Value Ratio for the
related Mortgage Loan after such partial release does not exceed the Combined
Loan-to-Value Ratio for such Mortgage Loan as of the related Cut-Off Date.
Notwithstanding the provisions of this Section or any other provision of
this Agreement, the Master Servicer shall not be deemed to be in default,
breach or violation of any of its obligations hereunder by reason of any
conveyance by a Mortgagor of the related Mortgaged Property or any assumption
of a Mortgage Loan by operation of law with respect to which the Master
Servicer determines in good faith that it may be restricted by law from
preventing, for any reason whatsoever, or if the exercise of such right would
impair or threaten to impair any recovery under any applicable insurance
policy or, in the Master Servicer's judgment, would be reasonably likely to
result in legal action by such Mortgagor.
Section 3.08. Realization upon Defaulted Mortgage Loans. With respect to
-----------------------------------------
each Mortgage Loan that comes into and continues in default, the Master
Servicer shall exercise its reasonable judgment to determine whether to (a)
foreclose on the related Mortgaged Property, (b) write off the unpaid
Principal Balance thereof as bad debt, (c) take a deed in lieu of foreclosure,
(d) accept a short sale, (e) arrange for a repayment plan, (f) agree to a
modification thereof in accordance with this Agreement or (g) take an
unsecured note in each case subject to the rights of any related senior
lienholder; provided, that in connection with the foregoing, if the Master
Servicer has actual knowledge that any Mortgaged Property is affected by
hazardous or toxic wastes or substances and that the acquisition of such
Mortgaged Property would not be commercially reasonable, then the Master
Servicer shall not cause the Issuer or the Indenture Trustee to acquire title
to such Mortgaged Property in foreclosure or any similar Proceeding. In
connection with such decision, the Master Servicer shall follow such practices
and procedures, including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default if deemed to be
appropriate by the Master Servicer, as it shall deem necessary or advisable
and as shall be normal and usual in its general mortgage servicing activities;
provided, that the Master Servicer shall not be liable in any respect
hereunder if it is acting in connection with any such foreclosure or attempted
foreclosure or other conversion that is not completed in a manner that is
consistent with the provisions of this Agreement; and provided further, that
the Master Servicer shall in no event expend funds in connection with any
foreclosure or attempted foreclosure that is not completed or towards the
correction of any default on a related senior mortgage loan or restoration of
any property if it shall determine that such expenditure would not increase
the related Liquidation Proceeds. In the event of a determination by the
Master Servicer that any such expenditure previously made pursuant to this
Section will not be reimbursable from Liquidation Proceeds, the Master
Servicer shall be entitled to reimbursement of its funds so expended pursuant
to Section 3.04(b).
Notwithstanding any other provision of this Agreement, a defaulted
Mortgage Loan may be deemed to be finally liquidated if substantially all
amounts expected by the Master Servicer to be received in connection therewith
have been received; provided, that any subsequent collections with respect to
any such Mortgage Loan shall be deposited into the Collection Account. For
purposes of determining the amount of any Liquidation Proceeds or Insurance
Proceeds, or other unscheduled collections, the Master Servicer may take into
account amounts of additional receipts expected to be received or any
estimated additional Liquidation Expenses expected to be incurred in
connection with such Mortgage Loan.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, which shall hold the same on behalf
of the Issuer in accordance with Section 3.13 of the Indenture.
Notwithstanding any such acquisition of title and cancellation of the related
Mortgage Loan, such Mortgaged Property shall, except as otherwise expressly
provided herein, be considered to be an outstanding Mortgage Loan held as part
of the Trust Estate until such time as such Mortgaged Property shall be sold.
Consistent with the foregoing, for purposes of all calculations hereunder, so
long as such Mortgaged Property shall be considered to be an outstanding
Mortgage Loan, it shall be assumed that, notwithstanding that the indebtedness
evidenced by the related Mortgage Documents shall have been discharged, such
Mortgage Documents in effect at the time of any such acquisition of title
before any adjustment thereto by reason of any bankruptcy or similar
Proceeding or any moratorium or similar waiver or grace period will remain in
effect.
Any proceeds from foreclosure Proceedings or the purchase or repurchase
of any Mortgage Loan pursuant to the terms of this Agreement and any recovery
resulting from a collection of Liquidation Proceeds or Insurance Proceeds,
shall be applied in the following order of priority: (a) to reimburse the
Master Servicer or the related Subservicer in accordance with this Section;
(b) to pay to the Master Servicer or the related Subservicer all Servicing
Fees payable therefrom; (c) as accrued and unpaid interest on such Mortgage
Loan at the related Mortgage Interest Rate to the Payment Date in respect of
which such amounts are to be deposited into the Trustee Collection Account;
and (d) as a recovery of principal on such Mortgage Loan.
Section 3.09. Indenture Trustee to Cooperate; Release of Mortgage Files;
----------------------------------------------------------
Trust Estates; Related Documents.
- --------------------------------
(a) On or before each Payment Date, the Master Servicer shall notify the
Indenture Trustee or the Custodian (with a copy to the Issuer) of the
termination or payment in full of any Mortgage Loan during the preceding
Collection Period. Upon receipt of payment in full, the Master Servicer shall
be authorized to execute, pursuant to the authorization contained in the first
paragraph of Section 3.01 (b), if the Assignments of Mortgage have been
recorded if required pursuant hereto or pursuant to the Mortgage Loan Sale
Agreement or Purchase Agreement, an instrument of satisfaction regarding the
related Mortgage Documents, which instrument of satisfaction shall be recorded
by the Master Servicer if required by applicable law, and shall be delivered
to the Person entitled thereto. Any expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursable from amounts on
deposit in the Collection Account. From time to time and as appropriate for
the servicing or foreclosure of any Mortgage Loan, the Indenture Trustee or
the Custodian shall, upon request of the Master Servicer and delivery to the
Indenture Trustee or the Custodian (with a copy to the Issuer) of two copies
of a Request for Release in the form of Exhibit C hereto, which shall be
signed by a Servicing Officer or be in a mutually agreeable electronic format
that, in lieu of being manually signed by a Servicing Officer, emanate from a
Servicing Officer, release or cause to be released the related Mortgage File
to the Master Servicer, and the Issuer and the Indenture Trustee or the
Custodian shall promptly execute such documents, in the forms provided by the
Master Servicer, as shall be necessary for the prosecution of any such
Proceedings or the taking of other servicing actions. The Request for Release
shall obligate the Master Servicer to return such Mortgage File to the
Indenture Trustee or the Custodian (as specified therein) when the need
therefor by the Master Servicer no longer exists, unless such Mortgage Loan
shall have been liquidated. In such case, upon receipt of a certificate of a
Servicing Officer similar to that specified above, such Request for Release
shall be released to the Master Servicer.
If an Assignment of Mortgage has been recorded, in order to facilitate
the foreclosure of the Mortgaged Property securing a Mortgage Loan that is in
default following such recordation, the Indenture Trustee or the Issuer shall,
if so requested in writing by the Master Servicer, promptly execute an
appropriate assignment in the form provided by the Master Servicer to assign
such Mortgage Loan for the purpose of collection to the Master Servicer, and
any such assignment shall unambiguously indicate that such assignment is for
the purpose of collection only. Upon such assignment, the Master Servicer, as
assignee for collection, will thereupon bring all required actions in its own
name and otherwise enforce the terms of such Mortgage Loan and deposit into or
credit to the Collection Account any Liquidation Proceeds received with
respect thereto. In the event that all delinquent payments due under any such
Mortgage Loan are paid by the related Mortgagor and any other defaults are
cured, then the Master Servicer, as assignee for collection, shall promptly
reassign such Mortgage Loan to the Indenture Trustee and return all Mortgage
Documents and Related Documents to the place where the related Mortgage File
was being maintained.
The Indenture Trustee, as pledgee of the Mortgage Loans and as assignee
of record of the Mortgage Loans on behalf of the Issuer pursuant to Section
3.13 of the Indenture, shall, on behalf of the Issuer, take all such actions
on behalf of the Issuer and promptly execute and return all instruments
reasonably required by the Master Servicer in connection therewith; provided,
that if the Master Servicer requests a signature of the Indenture Trustee on
behalf of the Issuer, the Master Servicer shall deliver to the Indenture
Trustee an Officer's Certificate stating that such signature is necessary or
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
(b) Where the Issuer or the Indenture Trustee is required by this
Agreement to execute instruments to release property from the terms of the
Trust Agreement or the Indenture, as applicable, or convey the Issuer's or the
Indenture Trustee's interests in the same, the Issuer or the Indenture
Trustee, as applicable, shall do so in a manner and under circumstances that
are not inconsistent with the provisions of this Agreement. No Person relying
upon any instrument executed by the Issuer or the Indenture Trustee shall be
bound to ascertain the Issuer's or the Indenture Trustee's authority in
connection therewith, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.
(c) If from time to time the Master Servicer shall deliver to the
Custodian copies of any written assurance, assumption agreement or
substitution agreement or other similar agreement pursuant to Section 3.07,
the Custodian shall check that each of such documents purports to be an
original executed copy or, if the original executed copy has been submitted
for recordation and has not yet been returned, a copy of the original executed
document; and if so, shall file such documents, and upon receipt of the
original executed copy from the applicable recording office or receipt of a
copy thereof certified by the applicable recording office, shall file such
originals or certified copies in the related Mortgage File. If any such
documents submitted by the Master Servicer shall not meet the above
qualifications, then such documents shall promptly be returned by the
Custodian to the Master Servicer, with a direction to the Master Servicer to
forward the correct documentation.
(d) Upon receipt of two copies of a Request for Release from the Master
Servicer, substantially in the form of Exhibit C hereto, to the effect that a
Mortgage Loan has been the subject of a final payment or a prepayment in full
and has been terminated or that substantially all Liquidation Proceeds
determined by the Master Servicer in its reasonable judgment to be finally
recoverable have been recovered, and upon deposit into the Collection Account
of such final payment, prepayment in full or Liquidation Proceeds, the
Custodian shall promptly release the related Mortgage Documents and Related
Documents to the Master Servicer, and the Indenture Trustee shall execute the
same, along with such documents as the Master Servicer or the related
Mortgagor may request to evidence satisfaction and discharge of such Mortgage
Loan.
Section 3.10. Servicing Fee; Payment of Certain Expenses by Master
----------------------------------------------------
Servicer. The Master Servicer shall be entitled to receive the Servicing Fee
- --------
in accordance with Section 3.04(c) as compensation for its services in
connection with servicing the Mortgage Loans. Moreover, additional servicing
compensation in the form of late payment charges and other receipts not
required to be deposited into the Collection Account as specified in Section
5.02 may be retained by the Master Servicer. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder, including payment of all fees and expenses not expressly stated
hereunder to be for the account of the Securityholder, and shall not be
entitled to reimbursement therefor. The Issuer shall pay the initial fees and
expenses of the Indenture Trustee from the Trust Estate.
Section 3.11. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
the Mortgage Loans. Whenever required by statute or regulation, the Master
- ------------------
Servicer shall provide each Securityholder or any regulator therefor or the
Indenture Trustee with reasonable access to all documentation relating to the
Mortgage Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Master Servicer. Nothing in this Section shall limit the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding Mortgagors, and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation
shall not constitute a breach of this Section.
Section 3.12. Repurchase of Defaulted Loans. Notwithstanding any other
-----------------------------
provision of this Agreement, the Transferor, at its option and in its sole
discretion, may purchase any Mortgage Loan delinquent in payment for a period
of 60 days or more for a price equal to the Repurchase Price; provided that
the aggregate Principal Balance of the Mortgage Loans so purchased does not
exceed 10% of the aggregate Principal Balance of all Mortgage Loans
transferred to the Issuer. Notwithstanding any other provision of this
Agreement, the Transferor shall, upon notice from the Issuer received on or
before July 31, 1999, purchase any Mortgage Loan assigned to Pool B that is
delinquent in payment for a period of 60 days or more as of July 31, 1999 for
a price equal to the Repurchase Price. Notwithstanding any other provision of
this Agreement, the Transferor shall, upon notice from the Issuer received on
or before October 31, 1999, purchase any Mortgage Loan assigned to Pool C that
is delinquent in payment for a period of 60 days or more as of October 31,
1999 for a price equal to the Repurchase Price. Notice of any such purchase
shall be given to the Enhancer.
Section 3.13. Recordation of Assignments. The Master Servicer shall, at
--------------------------
its own expense, complete and submit for recordation in the appropriate public
office for real property records the Assignment of Mortgage for each Mortgage
Loan within 90 days of the Closing Date or the related Subsequent Transfer
Date, as the case may be. While such assignment is being recorded, the
Custodian shall retain a photocopy thereof. If any assignment is lost or
returned unrecorded to the Custodian because of any defect therein, the Master
Servicer shall prepare a substitute assignment or cure such defect, and the
Master Servicer shall cause such assignment to be recorded in accordance with
this Section. Notwithstanding the foregoing, no recordation of an Assignment
of Mortgage shall be required in any State with respect to which the Master
Servicer obtains an Opinion of Counsel acceptable to the Enhancer to the
effect that such recordation is not necessary to protect the Issuer's right,
title and interest in the related Mortgage Loans in such State.
Section 3.14. Annual Statement as to Compliance. The Master Servicer
---------------------------------
shall deliver to the Issuer, the Indenture Trustee, the Enhancer and each
Rating Agency, not later than May 31 of each year, commencing in 2000, an
Officer's Certificate stating as to each signer thereof that (i) a review of
the activities of the Master Servicer during the preceding calendar year and
of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Such Officer's Certificate shall be
accompanied by the statement required pursuant to Section 3.15.
Section 3.15. Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
Not later than May 31 of each year, commencing in 2000, the Master Servicer
shall deliver or cause to be delivered to the Issuer and the Enhancer a
report, prepared by the Independent Accountants of the Master Servicer,
stating that such Independent Accountants have examined the financial
statements of the Master Servicer (or an appropriate Affiliate thereof) for
the preceding 12 months ended December 31 (or such shorter period in the case
of the first such report) in accordance with generally accepted auditing
standards, which examination included such tests of the accounting records and
such other auditing procedures as they considered necessary in the
circumstances, and that as a part of such examination, certain standards,
documents and records of the Master Servicer or such Affiliate relating to the
servicing of the Mortgage Loans were reviewed and tested and nothing came to
the attention of such Independent Accountants that caused them to believe that
the servicing of the Mortgage Loans was not being conducted in accordance with
this Agreement, except for such exceptions as such firm shall believe to be
immaterial and such other exceptions as shall be set forth in such statement.
In the event such firm requires the Indenture Trustee to agree to the
procedures performed by such firm, the Master Servicer shall direct the
Indenture Trustee in writing to so agree; it being understood and agreed that
the Indenture Trustee shall deliver such letter of agreement in conclusive
reliance upon the direction of the Master Servicer, and the Indenture Trustee
need not make any independent inquiry or investigation as to, and shall have
no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
Section 3.16. Interest Carry-Forward Amounts. The amount of any
-----------------------------
distributions to be made to the Certificateholders pursuant to Section
3.05(a)(x) of the Indenture shall be reduced on each Payment Date by an amount
equal to the aggregate Interest Carry-Forward Amount. The amount of any such
reduction shall be applied toward such Interest Carry-Forward Amount, and
shall be limited to the aggregate amount of such amounts otherwise payable to
the Certificateholders without adjustment on account of Interest Carry-Forward
Amounts.
Section 3.17. Indemnification; Third-Party Claims. Each of the Master
-----------------------------------
Servicer and the Transferor (solely for the purpose of this Section, the
"Indemnifying parties") agrees to indemnify and to hold each of the Depositor,
the Issuer, the Enhancer, the Owner Trustee and the Indenture Trustee (solely
for the purpose of this Section, the "Indemnified Parties") harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Indemnified Parties may sustain in any way related to the failure of any one
or more of the Indemnifying Parties to perform their respective duties in
compliance with the terms of this Agreement. Each Indemnified Party and the
Master Servicer shall immediately notify the other Indemnified Parties if a
claim is made by a third party with respect to this Agreement, and the Master
Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable attorneys' fees, and promptly pay,
discharge and satisfy any judgment or decree that may be entered against the
Indemnified Parties in respect of such claim. The Indenture Trustee shall
reimburse the Master Servicer out of the Trust Estate in accordance with
Section 3.04(b) for all amounts advanced by it pursuant to the preceding
sentence, except where a claim relates directly to the failure of the Master
Servicer to service and administer the Mortgage Loans in compliance with the
terms hereof; provided, that the Master Servicer's indemnity hereunder shall
not be in any manner conditioned upon the availability of funds for such
reimbursement. If the Master Servicer or the Transferor is unable to pay any
such amounts owed to the Indenture Trustee, such amounts shall be paid to the
Indenture Trustee out of the Trust Estate pursuant to Section 3.05 of the
Indenture.
Section 3.18. Maintenance of Existence and Licenses; Merger or
------------------------------------------------
Consolidation of the Master Servicer. The Master Servicer shall keep in full
- ------------------------------------
force and effect its existence, rights and franchises, shall obtain and
preserve its qualification to do business in each jurisdiction necessary to
protect the validity and enforceability of this Agreement or any Mortgage Loan
and to perform its duties hereunder, and shall otherwise operate its business
so as to cause the representations and warranties under Section 2.05 to be
true and correct at all times.
Section 3.19. Letters of Credit.
-----------------
(a) At any time and from time to time the Master Servicer may cause to be
delivered to the Indenture Trustee, upon written notice to the Enhancer, one
or more Letters of Credit for deposit into the Capitalized Interest Account,
to be held by the Indenture Trustee in lieu of cash or Permitted Investments
otherwise required to be on deposit therein or in replacement of any other
Letter of Credit. The Indenture Trustee shall accept any such Letter of Credit
only if such Letter of Credit is accompanied by (i) an Opinion of Counsel to
the issuer thereof reasonably satisfactory to the Enhancer, the Indenture
Trustee, Standard and Poor's and Moody's to the effect that (A) such Letter of
Credit has been duly authorized, executed and delivered by the issuer thereof
and constitutes a valid and binding obligation of such issuer, subject only to
laws affecting creditors' rights generally, (B) such Letter of Credit does not
require registration under the Securities Act and (C) payments by the
Indenture Trustee in respect of the Securities, as provided in the Indenture,
derived from a draw by the Indenture Trustee under the Letter of Credit and
held in non-commingled funds would not constitute transfers avoidable under 11
U.S.C. Section 547(b) and recoverable from the Indenture Trustee or the
Securityholders under 11 U.S.C. Section 550(a) should the account party be a
debtor in a case under the United Stated Bankruptcy Code (U.S.C. Title 11) and
(ii) an opinion of tax counsel reasonably acceptable to the Enhancer and the
Indenture Trustee to the effect that delivery of such Letter of Credit either
in lieu of cash of Permitted Investments, or in replacement of any other
Letter of Credit, as the case may be, will not cause any tax to be imposed
upon the Trust Estate, including any tax imposed on "prohibited transactions"
under Section 860F(a)(1) of the Code or on "contributions after the startup
date" under Section 860G(d)(1) of the Code.
The Indenture Trustee may from time to time accept cash in replacement of
any Letter of Credit, but only upon the prior written consent of the Enhancer,
and upon delivery of any Opinion of Counsel that may be required by the
Enhancer, which Opinion of Counsel shall be furnished by, and shall be an
expense of, the Master Servicer. The Indenture Trustee shall give prompt
written notice of the delivery of any such cash to each Rating Agency.
Upon receipt of such Letter of Credit and Opinions of Counsel, the amount
available to be drawn under the Letter of Credit shall be deemed to be on
deposit in the Capitalized Interest Account for all purposes of this
Agreement. As soon as practicable after the delivery of any Letter of Credit,
or, in any event within two Business Days after the effective date thereof,
the Indenture Trustee shall surrender to the issuer of any Letter of Credit
being replaced, such Letter of Credit that is being replaced, or, if such
Letter of Credit is being delivered in replacement of amounts (other than
amounts represented by Letters of Credit) then on deposit in the Capitalized
Interest Account, withdraw from the Capitalized Interest Account and pay to
Master Servicer an amount equal to the amount then available to be drawn under
such Letter of Credit, up to the amount then on deposit in the Capitalized
Interest Account.
(b) If, as of any date that is five Business Days prior to the stated
expiration date of any such Letter of Credit, a Letter of Credit (which may be
a renewal or extension of the expiring Letter of Credit) in the same amount as
the amount then available for drawing under the expiring Letter of Credit has
not been delivered to the Indenture Trustee, the Indenture Trustee shall, on
the next Business Day thereafter, cause to be presented to the issuer of the
expiring Letter of Credit a draft in proper form for payment thereunder and
otherwise in conformity with the terms thereof for the full amount then
available to be drawn thereunder. Proceeds received in payment of each such
draft shall be deposited and held in the Capitalized Interest Account, at the
direction of the Indenture Trustee upon consultation with the Master Servicer
and the Enhancer.
(c) Upon discovery by the Enhancer or the Indenture Trustee that the
short-term or longterm debt obligations, if any, of any Letter of Credit Bank
have a rating lower than that required pursuant to the definition of the term
"Letter of Credit", the Person discovering such rating shall give prompt
written notice to the other such Person. If, within 15 days of its giving or
receipt of such notice, as the case may be, the Indenture Trustee has not
received a substitute Letter of Credit meeting the requirements of this
Agreement in replacement of such Letter of Credit, the Indenture Trustee shall
cause to be presented to the issuer of such Letter of Credit a draft in proper
form for payment thereunder and otherwise in conformity with the terms thereof
for the full amount available to be drawn thereunder. Proceeds received in
payment of each such draft shall be deposited and held in the payment of each
such draft shall be deposited and held in the Capitalized Interest Account, as
directed by the Enhancer.
(d) If any notice of acceleration pursuant to terms of any Letter of
Credit is delivered, (i) the Master Servicer shall replace or cause to be
replaced such accelerated Letter of Credit with a replacement Letter of Credit
(and the Indenture Trustee shall cause to be presented to the issuer of such
Letter of Credit a draft in proper form for payment thereunder and otherwise
in conformity with the terms thereof for the full amount available to be drawn
thereunder) within ten Business Days its receipt of such acceleration notice
or its notification thereof by the Enhancer or (ii) a draw shall be made on
the accelerated Letter of Credit by the Indenture Trustee, and the Indenture
Trustee shall deposit the amount of such draw into the Capitalized Interest
Account as directed by the Enhancer.
Section 3.20. Periodic Advances. If, on the Business Day prior to any
-----------------
Determination Date, the Master Servicer determines that any Monthly Payments
due on any Thirty-year Maturity Mortgage Loan or Home Equity Mortgage Loan
during the related Collection Period have not been received as of the close of
business on the second Business Day preceding such Determination Date, the
Master Servicer shall determine the amount of any Periodic Advance required to
be made with respect to such unpaid Monthly Payments on the related
Determination Date. The Master Servicer may, but shall not be required to,
make a periodic advance with respect to any High LTV Mortgage Loan for which a
Monthly Payment due during the related collection period has not been received
as of the close of business on the second Business Day preceding the related
Determination Date. The Master Servicer shall cause to be deposited in the
Trustee Collection Account on the Master Servicer Remittance Date an amount
equal to the Periodic Advance for the related Determination Date, which
deposit may be made in whole or in part from funds in the Collection Account
being held for future distribution or withdrawal on or in connection with
Payment Dates in subsequent months. Any funds being held for future
distribution to Securityholders and so used shall be replaced by the Master
Servicer from its own funds by deposit into the Collection Account on or
before the Determination Date corresponding to any such future Determination
Date to the extent that funds in the Collection Account for such future
Determination Date shall otherwise be less than the amount required to be
transferred to the Trustee Collection Account in respect of payments to
Securityholders required to be made on the Payment Date related to such future
Determination Date.
The Master Servicer shall be entitled to be reimbursed for any such
Periodic Advance on a priority basis out of late collections, Liquidation
Proceeds or, to the extent the Master Servicer has in good faith determined
any such Periodic Advance to be nonrecoverable, out of funds on deposit in the
Collection Account or the Trustee Collection Account. The Master Servicer
shall designate on its records the specific Mortgage Loans and related
installments (or portions thereof) as to which such Periodic Advance shall be
deemed to have been made, such designation, except in cases of manifest error,
being conclusive for purposes of withdrawals from the Collection Account or
Trustee Collection Account pursuant to Section 3.04.
<PAGE>
ARTICLE IV
SERVICING CERTIFICATE
Section 4.01. Servicing Certificate. With respect to each Payment Date,
---------------------
on the Business Day following the related Determination Date, the Master
Servicer shall forward to the Depositor, the Indenture Trustee and the
Enhancer, and the Indenture Trustee, pursuant to Section 3.25 of the
Indenture, shall forward or cause to be forwarded by mail to each
Securityholder, the Owner Trustee, each Paying Agent (if other than the
Indenture Trustee), the Enhancer and each Rating Agency, a Servicing
Certificate setting forth the following information, to the extent applicable:
(a) the aggregate amount of Collections received on the Mortgage Loans
(stated separately for each Group, for the High LTV Mortgage Loans, for the
Home Equity Mortgage Loans, for the Thirty-year Maturity Mortgage Loans and
also in the aggregate) during the related Collection Period;
(b) the aggregate amount of (i) Interest Collections and (ii) Principal
Collections (in each case stated separately for each Group, for the High LTV
Mortgage Loans, for the Home Equity Mortgage Loans, for the Thirty-year
Maturity Mortgage Loans and also in the aggregate) for such Collection Period;
(c) the Principal Distribution Amount for such Collection Period stating
separately the Base Principal Distribution Amount and the Additional Principal
Distribution Amount (in each case stated separately for each Group and also in
the aggregate);
(d) the amount distributable to each Class of Notes in respect of
interest;
(e) the amount of any Interest Carry-Forward Amounts;
(f) the amount, if any, to be distributed to the Certificateholders;
(g) any accrued and unpaid Servicing Fees for previous Collection Periods
and the Servicing Fee for such Collection Period;
(h) the Excess Spread (stated separately for each Group and also in the
aggregate), if any, for such Collection Period;
(i) the Liquidation Loss Amount (stated separately for each Group, for
the High LTV Mortgage Loans, for the Home Equity Mortgage Loans, for the
Thirty-year Maturity Mortgage Loans and also in the aggregate) and any
Subordination Deficit (stated separately for each Group and also in the
aggregate) for such Collection Period;
(j) the Pool Balance (stated separately for each Group and also in the
aggregate) as of the end of the preceding Collection Period and as of the end
of the second preceding Collection Period;
(k) the Note Balance for each Class of Notes after giving effect to any
distribution on such Payment Date and to any reduction on account of
Liquidation Loss Amounts;
(l) the Overcollateralization Amount and the Overcollateralization Target
Amount (stated separately for each Group);
(m) the Certificate Balance after giving effect to any distribution on
such Payment Date;
(n) the number and aggregate Principal Balances of Mortgage Loans (in
each case stated separately for each Group, for the High LTV Mortgage Loans,
for the Home Equity Mortgage Loans, for the Thirty-year Maturity Mortgage
Loans and also in the aggregate) (i) as to which the related Monthly Payment
is delinquent for 30-59 days, 60-89 days and 90 or more days, respectively,
and (ii) that have become related to REO Property, in each case as of the end
of the preceding Collection Period;
(o) whether a Servicing Default has occurred since the prior
Determination Date, specifying such Servicing Default;
(p) each amount to be distributed to the Enhancer pursuant to the Basic
Documents, stated separately for each Group and amount;
(q) the Policy Draw Amount, if any, for such Payment Date;
(r) the weighted average Mortgage Interest Rate for the related
Collection Period;
(s) during the Pre-Funding Period, the amount on deposit in the
Pre-Funding Account (including the allocation thereof as between Group I and
Group II) as of such Payment Date and any transfers of funds in connection
therewith;
(t) during the Pre-Funding Period, whether the Payment Date following the
next Determination Date is expected to be a Subsequent Transfer Date, and a
reasonable estimate of the aggregate Principal Balances and Group assignment
of the intended Subsequent Mortgage Loans; and
(u) the amount of any Periodic Advances.
The Indenture Trustee shall conclusively rely upon the information
contained in a Servicing Certificate for purposes of making distributions
pursuant to Section 3.05 of the Indenture, shall have no duty to inquire into
such information and shall have no liability in so relying. The format and
content of the Servicing Certificate may be modified by the mutual agreement
of the Master Servicer and the Indenture Trustee. The Master Servicer shall
give notice of any such change to each Rating Agency and the Enhancer.
The amounts furnished pursuant to clauses (e) and (g) above shall be
expressed as an aggregate dollar amount per each Class of Notes or
Certificates, as the case may be, with a $1,000 denomination.
The Master Servicer shall forward to the Indenture Trustee any other
information reasonably requested by the Indenture Trustee to make
distributions pursuant to Section 3.05 of the Indenture. Prior to the close of
business on the Business Day next succeeding each Determination Date, the
Master Servicer shall furnish a written statement to the Paying Agent and the
Indenture Trustee setting forth the aggregate amounts required to be withdrawn
from the Pre-Funding Account (including the allocation of such withdrawal
between amounts reserved for Group I Mortgage Loans and Group II Mortgage
Loans) and the Collection Account. The determination by the Master Servicer of
such amounts shall, in the absence of obvious error, be presumptively deemed
to be correct for all purposes hereunder, and the Owner Trustee and the
Indenture Trustee shall be protected in relying upon the same without any
independent verification thereof. In addition, upon the Issuer's written
request, the Master Servicer shall promptly furnish information reasonably
requested by the Issuer that is reasonably available to the Master Servicer to
enable the Issuer to perform its federal and state income tax reporting
obligations.
<PAGE>
ARTICLE V
THE ACCOUNTS
Section 5.01. Accounts. Prior to the Closing Date, the Master Servicer
--------
shall establish or cause to be established the following accounts, each of
which shall be an Eligible Account:
(a) an account (the "Collection Account") bearing a designation clearly
indicating that the funds on deposit therein are held for the benefit of the
Issuer, the Indenture Trustee, the Enhancer and the Securityholders;
(b) an account in the name of the Indenture Trustee (the "Capitalized
Interest Account"), bearing a designation clearly indicating that the funds on
deposit therein are held for the benefit of the Enhancer and the
Securityholders;
(c) an account in the name of the Indenture Trustee (the "Note Payment
Account"), bearing a designation clearly indicating that the funds on deposit
therein are held for the benefit of the Enhancer and the Noteholders;
(d) an account in the name of the Indenture Trustee (the "Pre-Funding
Account"), bearing a designation clearly indicating that funds on deposit
therein are held for the benefit of the Issuer, the Indenture Trustee, the
Enhancer and the Securityholders;
(e) an account in the name of the Indenture Trustee (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Enhancer and the
Certificateholders; and
(f) an account in the name of the Indenture Trustee (the "Trustee
Collection Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Enhancer and the
Securityholders.
Section 5.02. Collection Account. The Master Servicer shall deposit or
------------------
cause to be deposited any amounts representing payments and collections in
respect of the Mortgage Loans received by it subsequent to the related Cut-Off
Date, other than in respect of the payments referred to in the following
paragraph, into the Collection Account within one Business Day following
receipt thereof or otherwise on or prior to the Closing Date, including the
following payments and collections received or made by it:
(a) all payments of principal, interest and prepayment penalties in
respect of the Mortgage Loans received by the Master Servicer from the
Mortgagors or the related Subservicer, net of any portion of the interest
thereof retained by such Subservicer as subservicing fees and any Periodic
Advances for the related Collection Period;
(b) the aggregate Purchase Price or Repurchase Price of any Mortgage
Loans purchased by the Transferor pursuant to Section 2.09 or 3.12;
(c) any Liquidation Proceeds and Insurance Proceeds; and
(d) any Substitution Adjustment Amounts;
provided, that with respect to each Collection Period, the Master Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such
Collection Period.
The foregoing requirements respecting deposits into the Collection
Account are exclusive; provided, that without limiting the generality of the
foregoing, the Master Servicer need not deposit into the Collection Account
any amounts representing fees or late charges payable by Mortgagors. In the
event that any amount not required to be deposited into the Collection Account
is so deposited, the Master Servicer may at any time withdraw such amount from
the Collection Account, any provision herein to the contrary notwithstanding.
The Collection Account may contain funds respecting payments on other mortgage
loans belonging to the Master Servicer or serviced by it on behalf of others.
Notwithstanding such commingling of funds, the Master Servicer shall keep
records that accurately reflect the funds on deposit in the Collection Account
that have been identified by it as being attributable to the Mortgage Loans
and shall hold all collections in the Collection Account to the extent they
represent collections on the Mortgage Loans for the benefit of the Issuer, the
Indenture Trustee, the Enhancer and the Securityholders.
The Master Servicer shall direct in writing the institution maintaining
the Collection Account to invest funds therein only in Permitted Investments.
No Permitted Investment may be sold or disposed of at a gain prior to
maturity, unless the Master Servicer shall have obtained an Opinion of Counsel
at the Master Servicer's expense that such sale or disposition will not cause
the Trust to be to be treated as an association (or a publicly-traded
partnership) taxable as a corporation for federal income tax purposes. All net
income, other than any gain from a sale or disposition of the type referred to
in the preceding sentence, received from any such Permitted Investment shall
be paid to the Master Servicer as additional servicing compensation. The
amount of any losses incurred in respect therewith shall be deposited into the
Collection Account by the Master Servicer out of its own funds immediately as
incurred.
The Master Servicer shall require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to
the Master Servicer, in one or more accounts meeting the requirements of an
Eligible Account (and amounts on deposit therein shall be invested in
Permitted Investments), unless all such collections are remitted on a daily
basis to the Master Servicer for deposit into the Collection Account.
The Collection Account may, upon written notice to the Issuer, the
Indenture Trustee and the Enhancer, be transferred to a different institution,
provided that such transfer is to an Eligible Account.
Section 5.03. Trustee Collection Account. On each Master Servicer
--------------------------
Remittance Date, the Master Servicer shall transfer from the Collection
Account to the Trustee Collection Account the amount necessary for the
Indenture Trustee to make the required distributions pursuant to Section
3.05(a) of the Indenture. Such requirement respecting deposits into the
Trustee Collection Account is exclusive. On each Master Servicer Remittance
Date the Master Servicer shall deposit into the Trustee Collection Account
from its own funds an amount equal to the lesser of (i) the Prepayment
Interest Shortfalls for the related collection period and (ii) its Servicing
Fee for the related Collection Period prior to any reduction thereof on
account of any Prepayment Interest Shortfall. In the event that any amount not
required to be deposited into the Trustee Collection Account is so deposited,
the Master Servicer may at any time direct the Indenture Trustee to withdraw
such amount from the Trustee Collection Account and deliver it to or at the
direction of Master Servicer, any provision herein to the contrary
notwithstanding.
The Trustee may, but need not, invest funds in the Trustee Collection
Account, and if such funds are invested, they shall be invested only in
Permitted Investments. No Permitted Investment may be sold or disposed of at a
gain prior to maturity, unless the Indenture Trustee shall have obtained an
Opinion of Counsel at the Indenture Trustee's expense that such sale or
disposition will not cause the Trust to be to be treated as an association (or
a publicly-traded partnership) taxable as a corporation for federal income tax
purposes. All net income shall be for the account of the Indenture Trustee.
The amount of any losses incurred in respect therewith shall be deposited into
the Trustee Collection Account by the Indenture Trustee out of its own funds
immediately as incurred.
Section 5.04. Pre-Funding Account.
-------------------
(a) On the Closing Date, the Transferor shall deposit into the
Pre-Funding Account an amount equal to the Pre-Funded Amount from the proceeds
of the sale of the Securities. The Transferor shall designate the
$58,463,384.59 of such amount as allocated to Group I and $16,276,708.56 of
such amount is allocated to Group II. On each related Subsequent Transfer
Date, the Master Servicer shall instruct the Indenture Trustee in writing to
(i) withdraw from the Pre-Funding Account an amount equal to the aggregate
Principal Balance as of the related Subsequent Cut-Off Date of the Subsequent
Mortgage Loans to be sold to the Trust on such Subsequent Transfer Date, (ii)
allocate such withdrawal between amounts reserved for Group I and Group II as
indicated by the Master Servicer and (iii) pay such amount to or upon the
order of the Transferor upon satisfaction of the conditions set forth in this
Agreement and in the related Subsequent Transfer Agreement with respect
thereto.
(b) If the Pre-Funded Amount has not been reduced to zero at the close of
business on the last Payment Date of the Pre-Funding Period, after giving
effect to any withdrawal therefrom on such Payment Date, such remaining
Pre-Funded Amount shall be deposited into the Trustee Collection Account.
(c) The Master Servicer may cause the institution maintaining the
Pre-Funding Account to invest any funds therein in Permitted Investments
having a maturity of up to 180 days or maturing or otherwise available not
later than the Business Day preceding the related Payment Date on which funds
are scheduled to be withdrawn to purchase Subsequent Mortgage Loans; provided,
that any investment in an obligation of the institution with which the
Pre-Funding Account is maintained may mature on or before 10:30 a.m., New York
time, on such Payment Date; and provided further, that no such investment may
be sold or disposed of prior to maturity. Notwithstanding the foregoing, in
the event investment earnings have not matured on any Payment Date, the amount
of such earnings accrued as of such Payment Date may be advanced by the Master
Servicer for deposit into the Pre-Funding Account (which advance shall be
reimbursed to the Master Servicer from such investment earnings at maturity).
At any time when the Indenture Trustee is maintaining the Pre-Funding Account,
any request by the Master Servicer to invest funds on deposit therein shall be
in writing, delivered to the Indenture Trustee at or before 10:30 a.m., New
York time, if such investment is to be made on such day. The Master Servicer
shall certify that the requested investment is a Permitted Investment maturing
at or prior to the time required hereby. Any such investment shall be
registered in the name of the Indenture Trustee or its nominee, and to the
extent that any such investment is certificated, such investment shall be
maintained with the Indenture Trustee at its Corporate Trust Office. All net
income or other gain received from any such investment shall be deposited into
or credited to the Capitalized Interest Account, and may be withdrawn
therefrom in accordance with Section 5.05 hereof. The amount of any net losses
incurred in respect of the principal amount of any such investment shall be
deposited into the Pre-Funding Account by the Master Servicer out of its own
funds immediately as realized.
Section 5.05. Capitalized Interest Account. The Master Servicer shall
----------------------------
direct the Indenture Trustee to invest funds on deposit in the Capitalized
Interest Account in Permitted Investments or such other investment as may be
acceptable to the Enhancer. No such investment in the Capitalized Interest
Account shall mature later than the Business Day immediately preceding the
next succeeding Payment Date (except if such investment is an obligation of,
or is managed or advised by, the Indenture Trustee, in which case such
investment shall mature not later than such Payment Date, or such other date
as may be approved by the Enhancer). The Indenture Trustee shall identify by
book entry to its appropriate records the status of the Trust as secured party
with respect to the investments made with funds deposited into the Capitalized
Interest Account. Any net investment income on the Capitalized Interest
Account shall be deposited into or credited to the Capitalized Interest
Account as received. On the Closing Date, the Transferor shall make a cash
deposit from the proceeds of the sale of the Notes into the Capitalized
Interest Account (which amount may be evidenced by a Letter of Credit
delivered pursuant to Section 3.19).
On each Payment Date, the Capitalized Interest Requirement as specified
by the Master Servicer in a notice to the Indenture Trustee for such purpose,
shall, to the extent funds are available therefor, be withdrawn by the
Indenture Trustee from the Capitalized Interest Account and deposited into the
Trustee Collection Account to be distributed in accordance with Section
3.05(a) of the Indenture. At the end of the Pre-Funding Period, following any
required transfer pursuant to the immediately preceding sentence, the amount
on deposit in the Capitalized Interest Account shall be paid to the
Transferor.
<PAGE>
ARTICLE VI
THE MASTER SERVICER
Section 6.01. Liability of the Master Servicer. The Master Servicer shall
--------------------------------
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by it hereunder.
Section 6.02. Merger or Consolidation or Assumption of the Obligations of
-----------------------------------------------------------
the Master Servicer. Any Person into which the Master Servicer may be merged
- -------------------
or converted or with which it may be consolidated, any Person resulting from
any merger, conversion or consolidation to which the Master Servicer shall be
a party or any Person succeeding to the business of the Master Servicer, shall
be the successor of the Master Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
The Master Servicer may assign its rights and delegate its duties and
obligations under this Agreement; provided, that the Person accepting such
assignment or delegation shall be a Person qualified to service the Mortgage
Loans, shall be reasonably satisfactory to the Issuer and the Enhancer; and
the Indenture Trustee, as pledgee of the Mortgage Loans, shall be willing to
service the Mortgage Loans and shall execute and deliver to the Indenture
Trustee and the Issuer an agreement, in form and substance reasonably
satisfactory to the Indenture Trustee and the Issuer, containing an assumption
by such Person of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Master Servicer
under this Agreement; and provided further, that no Rating Agency, after
notice thereto, shall have notified the Indenture Trustee in writing that such
assignment and delegation would result in a Rating Event, determined without
regard to the Policy; and provided further, that the Owner Trustee shall have
received an Opinion of Counsel to the effect that such assignment or
delegation would not cause the Trust to be treated as an association (or a
publicly-traded partnership) taxable as a corporation for federal income tax
purposes.
Section 6.03. Limitation on Liability of the Master Servicer and Others.
---------------------------------------------------------
Neither the Master Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Issuer, the Owner Trustee, the
Indenture Trustee or the Securityholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement; provided, that this provision shall not protect the Master Servicer
or any such Person against any liability that would otherwise be imposed on it
by reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or by reason of its reckless disregard
thereof. The Master Servicer and any director, officer, employee or agent
thereof may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Master Servicer and any director, officer, employee or agent
thereof shall be indemnified by the Issuer and held harmless against any loss,
liability or expense incurred in connection with any Proceeding relating to
this Agreement or the Securities, including any amount paid to the Indenture
Trustee pursuant to Section 6.06(b), other than any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or gross negligence
in the performance of its duties hereunder or by reason of its reckless
disregard thereof. The Master Servicer shall be under no obligation to appear
in, prosecute or defend any legal action not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement, and that in its
opinion may involve it in any expense or liability; provided, that the Master
Servicer may in its sole discretion undertake any action that it may deem
necessary or desirable in respect of this Agreement, the rights and duties of
the parties hereto and the interests of the Securityholders. In such event,
the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and liabilities of the Issuer,
and the Master Servicer shall be entitled to reimbursement therefor. The
Master Servicer's right to indemnity or reimbursement pursuant to this Section
shall survive any resignation or termination of the Master Servicer pursuant
to Section 6.04 or Article VII in respect to any losses, expenses, costs or
liabilities arising prior to such resignation or termination or from events
that occurred prior to such resignation or termination.
Section 6.04. Master Servicer Not to Resign. Subject to the provisions of
-----------------------------
Section 6.02, the Master Servicer shall not assign this Agreement or resign
from the obligations and duties hereby imposed upon it except (a) upon a
determination that the performance of its obligations or duties hereunder are
no longer permissible under applicable law or are in material conflict by
reason of applicable law with other activities carried on by it or any
Affiliate thereof, the other activities of the Master Servicer so causing such
a conflict being of a type and nature carried on by the Master Servicer or
such Affiliate at the date of this Agreement or (b) upon the satisfaction of
the following conditions: (i) the Master Servicer shall have proposed a
successor master servicer to the Issuer and the Indenture Trustee in writing,
and such proposed successor master servicer shall be reasonably acceptable to
the Issuer and the Indenture Trustee; (ii) the Enhancer shall have consented
to such resignation and (iii) no Rating Agency, after prior notice thereto,
shall have delivered a letter to the Issuer and the Indenture Trustee prior to
the appointment of such proposed successor master servicer stating that such
proposed appointment would result in a Rating Event, determined without regard
to the Policy; provided, that no such resignation by the Master Servicer shall
become effective until such successor master servicer shall have assumed the
Master Servicer's responsibilities and obligations hereunder or the Indenture
Trustee shall have designated a successor master servicer in accordance with
Section 7.02. Any such determination permitting the resignation of the Master
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered
to the Issuer, the Indenture Trustee and the Enhancer.
Section 6.05. Delegation of Duties. In the ordinary course of its
--------------------
business, the Master Servicer may at any time delegate any of its duties
hereunder to any Person (including any Affiliate of the Master Servicer), that
agrees to conduct such duties in accordance with standards comparable to those
applicable to the Master Servicer hereunder. Such delegation shall not relieve
the Master Servicer of liability or responsibility with respect to such
duties, and shall not constitute a resignation of the Master Servicer pursuant
to Section 6.04.
Section 6.06. Indenture Trustee Fees and Expenses; Indemnification.
----------------------------------------------------
(a) After the Closing Date, the Master Servicer covenants and agrees to
pay, in accordance with Section 6.07 of the Indenture, from amounts on deposit
in the Collection Account, to the Indenture Trustee and any co-trustee from
time to time, and the Indenture Trustee and any such co-trustee shall be
entitled to, reasonable compensation, which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust, for all services rendered by each of them in the execution of the
trusts created under the Indenture and in the exercise and performance of any
of the powers and duties under the Indenture of the Indenture Trustee and any
such co-trustee. The Indenture Trustee and any such co-trustee shall be
entitled to payment or reimbursement in accordance with the Indenture from
amounts on deposit in the Collection Account, upon request therefrom for all
reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee or any such co-trustee, respectively, in accordance with any
of the provisions of this Agreement or the other Basic Documents, except any
such expenses, disbursements or advances as may arise from the negligence,
willful misfeasance or bad faith of the Indenture Trustee or such co-trustee,
as the case may be. The Indenture Trustee shall be entitled to be reimbursed
by the Master Servicer (or, if the Master Servicer is unable to fulfill such
obligation, in accordance with Section 3.05 of the Indenture) for all costs
associated with the transfer of servicing from the Master Servicer to the
Indenture Trustee, including without limitation, any costs or expenses
associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be
required by the Indenture Trustee to correct any errors or insufficiencies in
the servicing data or otherwise to enable the Indenture Trustee to service the
Mortgage Loans properly and effectively.
(b) The Indenture Trustee shall be indemnified and held harmless by the
Master Servicer for any loss, liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Indenture
Trustee, arising out of or in connection with the performance of its duties
under the Basic Documents (but not with respect to the performance of any of
its duties under the Administration Agreement), including the costs and
expenses (including reasonable attorneys' fees and expenses) of defending the
Indenture Trustee against any claim in connection with the exercise or
performance of any of its powers or duties under any Basic Document; provided,
that:
(i) with respect to any such claim, the Indenture Trustee shall have
given the Master Servicer and the Enhancer written notice thereof
promptly after the Indenture Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Indenture
Trustee shall cooperate and consult fully with the Master Servicer in
preparing such defense; and
(iii) notwithstanding anything herein to the contrary, the Master
Servicer shall not be liable for the settlement of any claim by the
Indenture Trustee entered into without the prior written consent of the
Master Servicer.
No termination of this Agreement shall affect the obligations created by
this Section of the Master Servicer to indemnify the Indenture Trustee under
the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided pursuant to
this paragraph shall not pertain to any loss, liability or expense of the
Indenture Trustee, including the costs and expenses of defending itself
against any claim, incurred in connection with (i) any actions taken by the
Indenture Trustee at the direction of the Securityholders pursuant to the
terms of the Basic Documents unless consented to by the Master Servicer or
(ii) any actions taken by the Indenture Trustee in its capacity as
administrator under the Administration Agreement.
Section 6.07. The Owner Trustee and its successors, assigns, agents and
servants (collectively the "Indemnified Parties") shall be indemnified,
defended and held harmless by the Master Servicer for any liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and
all reasonable costs, expenses and disbursements (including reasonable
attorney's fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") that may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of the Basic Documents, the Trust Estate or the administration of
the Trust Estate or the action or inaction of the Owner Trustee, provided
that:
(a) The Master Servicer shall not be liable for or required to indemnify
an Indemnified Party from and against Expenses arising or resulting from the
Owner Trustee's negligence with respect to the handling of funds, or with
respect to any other acts, willful misconduct, gross negligence or bad faith,
or as a result of any inaccuracy of an express representation or warranty
contained in Section 6.03 of the Trust Agreement;
(b) With respect to any such claim, the Indemnified Party shall have
given the Master Servicer and the Enhancer written note thereof promptly after
the Indemnified Party shall have actual knowledge thereof;
(c) While maintaining control over its own defense, the Indemnified Party
shall cooperate and consult fully with the Master Servicer in preparing such
defense;
(d) Notwithstanding anything to the contrary, the Master Servicer shall
not be liable for the settlement of any claim by an Indemnified Party entered
into without the prior written consent of the Master Servicer.
No termination of this Agreement shall affect the obligation created by
this Section of the Master Servicer to indemnify the Owner Trustee and the
Indemnified Parties under the conditions and to the extent set forth herein.
<PAGE>
ARTICLE VII
DEFAULT
Section 7.01. Default. If any one of the following events (each, a
-------
"Servicing Default") shall occur and be continuing:
(a) any failure by the Master Servicer to deposit into any Collection
Account or Trustee Collection Account any deposit required to be made under
the terms of this Agreement that continues unremedied for a period of five
Business Days after the date upon which written notice of such failure shall
have been given to the Master Servicer and the Enhancer by the Issuer or the
Indenture Trustee;
(b) any failure on the part of the Master Servicer to duly observe or
perform in any material respect any other covenants or agreements of the
Master Servicer set forth in this Agreement, which failure materially and
adversely affects the interests of any Securityholder, and which failure
continues unremedied for a period of 45 days after the date on which written
notice of such failure, requiting the same to be remedied, and stating that
such notice is a "Notice of Default" hereunder, shall have been given to the
Master Servicer and the Enhancer by the Issuer or the Indenture Trustee;
(c) the entry against the Master Servicer of a decree or order by a
court, agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, marshalling
of assets and liabilities or similar Proceeding, or for the winding up or
liquidation of its affairs; and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days;
(d) the Master Servicer shall voluntarily go into liquidation or consent
to the appointment of a conservator, receiver, liquidator or similar person in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar Proceeding of or relating to the Master Servicer or all or
substantially all of its property, or a decree or order of a court, 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
Proceeding, or for the winding-up or liquidation of the Master Servicer's
affairs, shall have been entered against the Master Servicer, and such decree
or order shall have remained in force undischarged, unbonded and unstayed for
a period of 60 days, or the Master Servicer 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 an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations; or
(e) the continuation of a Master Servicer Termination Delinquency Rate
Trigger or a Master Servicer Termination Loss Trigger (each as defined in the
Insurance Agreement);
then, in each case, the Master Servicer shall immediately notify the Enhancer,
the Indenture Trustee and the Owner Trustee in writing thereof and, for so
long as such Servicing Default shall not have been remedied by the Master
Servicer, then the Enhancer, the Issuer or the Indenture Trustee, by notice
then given in writing to the Master Servicer, may terminate all rights and
obligations of the Master Servicer hereunder, other than the Master Servicer's
right to receive servicing compensation and reimbursement of expenses
hereunder during any period prior to the date of such termination; and the
Enhancer, the Indenture Trustee or the Owner Trustee may exercise any and all
other remedies available at law or in equity. Any such notice to the Master
Servicer shall also be given to the Enhancer, each Rating Agency and the
Issuer. On or after receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this Agreement shall pass to
and be vested in the Indenture Trustee as pledgee of the Mortgage Loans
pursuant to this Section. Without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney in-fact or otherwise, any and all documents or other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Mortgage Loan or the related
Mortgage Documents or Related Documents, or otherwise. The Master Servicer
agrees to cooperate fully with the Enhancer, the Owner Trustee and the
Indenture Trustee in effecting the termination of the rights and
responsibilities of the Master Servicer hereunder, including the transfer to
the Indenture Trustee for the administration by it of all cash relating to the
Mortgage Loans that shall at the time be held by the Master Servicer for
deposit into the Collection Account, or that have been thereafter received by
the Master Servicer with respect to the Mortgage Loans. All reasonable costs
and expenses (including attorneys' fees) incurred in connection with amending
this Agreement to reflect such succession as Master Servicer pursuant to this
Section shall be paid by the predecessor Master Servicer (or if the
predecessor Master Servicer is the Indenture Trustee, the initial Master
Servicer and, in any event, if the initial Master Servicer cannot pay any such
amount, in accordance with Section 3.05 of the Indenture) upon presentation of
reasonable documentation of such costs and expenses.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive, out of any late
collection of a payment on a Mortgage Loan that was due prior to the notice
terminating the Master Servicer's rights and obligations hereunder and
received after such notice, that portion thereof to which the Master Servicer
would have been entitled hereunder, its Servicing Fee in respect thereof and
any other amounts payable to the Master Servicer hereunder the entitlement to
which arose prior to such termination.
Notwithstanding the foregoing, a delay in or failure of performance under
paragraph (a) or (b) above, after the expiration of the applicable grace
periods, shall not constitute a Servicing Default if such delay or failure
could not have been prevented by the exercise of reasonable diligence by the
Master Servicer and such delay or failure was caused by an Act of God, any act
of the public enemy, declared or undeclared war, public disorder, rebellion or
sabotage, or epidemic, landslide, lightning, fire, hurricane, earthquake or
flood. The preceding sentence shall not relieve the Master Servicer from using
reasonable efforts to perform its obligations hereunder in a timely manner in
accordance with the terms hereof, and the Master Servicer shall provide the
Enhancer, the Owner Trustee and the Indenture Trustee with notice of such
failure or delay by it, together with a description of its efforts to so
perform its obligations.
Section 7.02. Indenture Trustee to Act; Appointment of Successor.
--------------------------------------------------
(a) Within 90 days after the date the Master Servicer and the Indenture
Trustee receive a notice of termination pursuant to Section 7.01 or sends a
resignation notice pursuant to Section 6.04, the Indenture Trustee, as pledgee
of the Mortgage Loans, shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer hereunder and with respect to the
transactions set forth herein, and shall be subject to all responsibilities,
duties and liabilities relating thereto placed on the Master Servicer by the
terms hereof. Nothing in any Basic Document shall be construed to permit or
require the Indenture Trustee to (i) be responsible or accountable for any act
or omission of any prior Master Servicer prior to the issuance of the related
notice of termination hereunder, (ii) in its capacity as successor Master
Servicer, purchase, repurchase or substitute any Mortgage Loan or fund any
Additional Balances with respect thereto, (iii) fund any losses on any
Permitted Investment directed by any prior Master Servicer hereunder or (iv)
be responsible for the representations or warranties of any such prior Master
Servicer. As compensation therefor, the Indenture Trustee shall be entitled to
such compensation as the Master Servicer would have been entitled to hereunder
if no such notice of termination had been given. If the Enhancer desires to
have a Person other that the Indenture Trustee serve as successor Master
Servicer or if the Indenture Trustee is (i) unwilling to act as successor
Master Servicer or (ii) legally unable so to act, then the Enhancer shall
appoint or the Indenture Trustee may appoint, with the consent of the
Enhancer, or may petition a court of competent jurisdiction to appoint any
established mortgage loan servicing institution having a net worth of not less
than $10,000,000 as the successor to the Master Servicer hereunder with
respect to all or any part of the Master Servicer's responsibilities, duties
or liabilities hereunder; provided, that no Rating Agency, after prior notice
thereto, shall have notified the Indenture Trustee in writing that such the
appointment of such successor Master Servicer would result in a Rating Event,
determined without regard to the Policy. Notwithstanding the foregoing,
pending the appointment of a successor Master Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as provided above. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation that the Master Servicer would otherwise have received pursuant
to Section 3.10 (or such lesser compensation as the Indenture Trustee and such
successor shall agree). The appointment of a successor Master Servicer shall
not affect any liability of the predecessor Master Servicer that may have
arisen under this Agreement prior to its termination as Master Servicer, nor
shall any successor Master Servicer be liable for any acts or omissions of any
predecessor Master Servicer or for any breach by such Master Servicer of any
of its representations or warranties contained herein or in any other Basic
Document. The Indenture Trustee and such successor Master Servicer shall take
such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor Master Servicer, including the Indenture Trustee, (i)
shall be bound by the terms of the Insurance Agreement and (ii) shall not be
deemed to be in default or to have breached its duties hereunder if the
predecessor Master Servicer shall fail to make any required deposit into the
Collection Account or otherwise cooperate with any required servicing transfer
or succession hereunder.
Section 7.03. Notification to Securityholders. Upon any termination of or
-------------------------------
appointment of a successor Master Servicer hereunder, the Indenture Trustee
shall give prompt written notice thereof to the Issuer, the Indenture Trustee,
the Enhancer and each Rating Agency.
<PAGE>
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment. This Agreement may be amended from time to time
---------
by the parties hereto with the consent of the Enhancer; provided, that any
such amendment shall be accompanied by a letter from each Rating Agency to the
effect that the amendment will not result in a Rating Event, determined
without regard to the Policy.
Section 8.02. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.03. Notices. All demands, notices and communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if personally
delivered or mailed by certified mail, return receipt requested, (a) if to the
Depositor, to 245 Park Avenue, 4th Floor, New York, New York 10167, Attention:
Jonathan Lieberman (b) if to the Master Servicer, to 500 Washington Street,
Columbus, Indiana 47201, Attention: Ellen Mufson, Esq. and Gloria Curry (with
a copy to the Transferor and to Edwin Corbin and Fern Prosnitz, 12677 Alcosta
Blvd., Suite 500, San Ramon, California 94583); (c) if to the Transferor, to
500 Washington Street, Columbus, Indiana 47201, Attention: Ellen Mufson, Esq.
and Gloria Curry (with a copy to the Master Servicer and to Edwin Corbin and
Fern Prosnitz, Esq. 12677 Alcosta Blvd., Suite 500, San Ramon, California
94583); (d) if to the Enhancer, to One State Street Plaza, New York, NY 10004,
Attention: Howard Pfeifer; (e) if to Moody's, to 99 Church Street, 4th Floor,
New York, New York 10001, Attention: Home Mortgage Loan Monitoring Group; (f)
if to Standard & Poor's, to 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Residential Mortgage Surveillance Group; (g) if to the Owner
Trustee, to Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Irwin Home Equity Loan Trust 1999-2 (with a
copy to each Rating Agency and the Enhancer); (h) if to the Issuer, to c/o
Wilmington Trust Company, as Owner Trustee, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Irwin Home Equity
Loan Trust 1999-2; (i) if to the Indenture Trustee, to Norwest Center, Sixth
and Marquette, Minneapolis, Minnesota 55479-0070, Attention: Corporate Trust
(with a copy to the Indenture Trustee at 11000 Broken Land Parkway, Columbia,
Maryland 21044); and (j) as to each of the foregoing Persons, at such other
address as shall be designated by such Person in a written notice to the other
foregoing Persons.
Section 8.04. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement, and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Securities or the rights of the Securityholders.
Section 8.05. Third-Party Beneficiaries. This Agreement shall inure to
-------------------------
the benefit of and be binding upon the parties hereto, the Securityholders,
the Owner Trustee, the Enhancer and their respective successors and permitted
assigns. Except as otherwise provided herein, no other Person shall have any
right or obligation hereunder.
Section 8.06. Counterparts.
------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all of which shall
together constitute but one and the same instrument.
Section 8.07. Effect of Headings and Table of Contents. The Article and
----------------------------------------
Section headings herein and in the Table of Contents are for convenience of
reference only and shall not affect the construction hereof.
Section 8.08. Termination; Clean-Up Call.
--------------------------
(a) The respective obligations and responsibilities of the parties hereto
shall terminate upon the last action required to be taken by the Issuer
pursuant to the Trust Agreement and by the Indenture Trustee pursuant to the
Indenture, following the earlier of (i) the date on or before which the
Indenture or the Trust Agreement is terminated; or (ii) the purchase by the
Transferor of all Mortgage Loans pursuant to paragraph (b) below.
(b) Subject to the provisions of Paragraph (c) below, the Transferor
shall have the right to purchase the Mortgage Loans assigned to Group I and
any related portion of the Trust Estate on any date on which the aggregate of
the Principal Balances of the Mortgage Loans in Group I is less than 10% of
the aggregate of the Principal Balances of the Mortgage Loans as of the
initial Cut-Off Date plus the initial amount deposited to the Pre-Funding
Account and allocated to Group I (provided that a draw on the Policy would not
occur as a result of such purchase), at a price equal to 100% of the aggregate
unpaid Principal Balance of all such remaining Mortgage Loans, plus accrued
and unpaid interest thereon at the weighted average of the Mortgage Interest
Rates thereon up to the date preceding the Payment Date on which such amounts
are to be distributed to the Securityholders, plus any amounts due and owing
to the Enhancer under the Insurance Agreement and any amounts owed to the
Trustee hereunder or under the Indenture (and any unpaid Servicing Fee shall
be deemed to have been paid at such time) plus any Interest Carry-Forward
Amount and interest owed thereon to the Noteholders. Subject to the provisions
of Paragraph (c) below, the Transferor shall have the right to purchase the
Mortgage Loans assigned to Group II and any related portion of the Trust
Estate on any date on which the aggregate of the Principal Balances of the
Mortgage Loans in Group II is less than 10% of the aggregate of the Principal
Balances of the Mortgage Loans as of the initial Cut-Off Date plus the initial
amount deposited to the Pre-Funding Account and allocated to Group II
(provided that a draw on the Policy would not occur as a result of such
purchase), at a price equal to 100% of the aggregate unpaid Principal Balance
of all such remaining Mortgage Loans, plus accrued and unpaid interest thereon
at the weighted average of the Mortgage Interest Rates thereon up to the date
preceding the Payment Date on which such amounts are to be distributed to the
Securityholders, plus any amounts due and owing to the Enhancer under the
Insurance Agreement and any amounts owed to the Trustee hereunder or under the
Indenture (and any unpaid Servicing Fee shall be deemed to have been paid at
such time) plus any Interest Carry-Forward Amount and interest owed thereon to
the Noteholders. If either such right is exercised by the Transferor, the
Transferor shall deposit the amount calculated above with the Indenture
Trustee for distribution to the Securityholders and, upon the receipt of such
deposit, the Indenture Trustee or the Custodian shall release to the Master
Servicer the related Mortgage Files.
(c) The Master Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution at the time the Mortgage Loans are to be
released to the Transferor, appropriate documents assigning each such Mortgage
Loan from the Indenture Trustee or the Issuer to the Transferor.
Section 8.09. Certain Matters Affecting the Indenture Trustee. For all
-----------------------------------------------
purposes of this Agreement, in the performance of any of its duties or in the
exercise of any of its powers hereunder, the Indenture Trustee shall be
subject to and entitled to the benefits of Article VI of the Indenture.
Section 8.10. Owner Trustee Not Liable for Mortgage Documents or Related
----------------------------------------------------------
Documents. The Owner Trustee makes no representations as to the validity or
- ---------
sufficiency of this Agreement, any Basic Document, the Securities (other than
the signature of the Owner Trustee on the Certificates), or any Mortgage
Document or Related Document. The Owner Trustee shall at no time have any
responsibility or liability with respect to the sufficiency of the Trust
Estate or its ability to generate the payments to be distributed to the
Securityholders, including the compliance by the Transferor with any
representation or warranty made in any Basic Document or the accuracy of any
such representation or warranty, or any action of the Paying Agent, the
Certificate Paying Agent, the Certificate Registrar or the Indenture Trustee
taken in the name of the Owner Trustee.
Section 8.11. Policy. On or prior to the Closing Date, the Master
------
Servicer shall cause the Enhancer to deliver the Policy to the Indenture
Trustee for the benefit of the Noteholders.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Transferor, the Master Servicer,
the Issuer and the Indenture Trustee have caused this Agreement to be duly
executed by their respective officers or representatives as of the date and
year first above written.
BEAR STEARNS ASSET BACKED
SECURITIES, INC.,
By: /s/ Jonathan Lieberman
-----------------------------------
Name: Jonathan Lieberman
Title: Managing Director
IRWIN FUNDING CORP., as Transferor
By: /s/ Thomas D. Washburn
-------------------------------------
Name: Thomas D. Washburn
Title: President
IRWIN UNION BANK AND TRUST
COMPANY, as Master Servicer
By: /s/ Elena Delgado
-------------------------------------
Name: Elena Delgado
Title: Senior Vice President
Home Equity Lender
IRWIN HOME EQUITY LOAN TRUST
1999-2, as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Jill K. Morrison
-------------------------------------
Name: Jill K. Morrison
Title:
NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ Amy Wahl
--------------------------------------
Name: Amy Wahl
Title: Assistant Vice President
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
[TO BE PROVIDED UPON REQUEST]
<PAGE>
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That Norwest Bank Minnesota, National Association, as indenture trustee
(the "Indenture Trustee") under the indenture dated as of April 30, 1999 (the
"Indenture"), between Irwin Home Equity Loan Trust 1999-2 and the Indenture
Trustee, a national banking association existing under the laws of the United
States of America and having its principal office located at Norwest Center,
Sixth and Marquette, Minneapolis, Minnesota 55479-0070, hath made, constituted
and appointed, and does by these presents make, constitute and appoint Irwin
Union Bank and Trust Company ("Irwin"), a bank organized and existing under
the laws of the State of Indiana, as Master Servicer under the Sale and
Servicing Agreement (defined below) and Irwin Home Equity Corporation, an
Indiana corporation, as initial subservicer thereunder, its true and lawful
attorney-in-fact, with full power and authority to sign, execute, acknowledge,
deliver, file for recordation and record any instrument on its behalf and to
perform such other act or acts as may be customarily and reasonably necessary
and appropriate to effectuate the following enumerated transactions in respect
of any of the Mortgage Loans or the related Mortgaged Properties, Mortgage
Documents or Related Documents, for which the undersigned is acting as
Indenture Trustee (whether the undersigned is named therein as mortgagee or
beneficiary or has become mortgagee by virtue of endorsement of related
Mortgage Documents) and for which Irwin is acting as Master Servicer pursuant
to the sale and servicing agreement dated as of April 30, 1999 (the "Sale and
Servicing Agreement"). Capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in Appendix A to the
Indenture.
This appointment shall apply to the following enumerated transactions
only:
1. The modification or re-recording of a Mortgage Loan, where such
modification or re-recording is for the purpose of correcting the
Mortgage Loan to conform same to the original intent of the parties
thereto or to correct title errors discovered after such title insurance
was issued and such modification or re-recording, in either instance,
does not adversely affect the Lien of the Mortgage Loan as insured.
2. The subordination of the Lien of a Mortgage Loan to an easement in favor
of a public utility company or a government agency or unit with powers of
eminent domain; this paragraph shall include the execution of partial
satisfactions/releases, partial reconveyances or the execution of
requests to trustees to accomplish the same.
3. With respect to a Mortgage Loan, the foreclosure, the taking of a deed in
lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such
foreclosure, including any and all of the following acts:
a. the substitution of trustee(s) serving under a deed of trust, in
accordance with state law and such deed of trust;
b. statements of breach or non-performance;
c. notices of default;
d. cancellations/rescissions of notices of default and/or notices of
sale;
e. the taking of a deed in lieu of foreclosure; and
f. such other documents and actions as may be necessary under the terms
of the Mortgage Loan or state law to expeditiously complete such
transactions.
4. The conveyance of mortgaged properties to a mortgage insurer, or the
closing of the title to the property to be acquired as real estate owned,
or conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction and/or release of a Mortgage Loan or full
reconveyance upon payment and discharge of all sums secured thereby,
including cancellation of any related Mortgage Documents.
7. The assignment of any Mortgage Loan and the related Mortgage Documents in
connection with the repurchase of such Mortgage Loan.
8. The full assignment of a Mortgage Loan upon payment and discharge of all
sums secured thereby in conjunction with the refinancing thereof
including, without limitation, the endorsement of the related Mortgage
Documents.
9. The subordination of the Lien of a Mortgage Loan, where such
subordination is in connection with any modification pursuant to Section
3.01(b) of the Sale and Servicing Agreement, and the execution of partial
satisfactions or releases in connection with such Section.
10. Any other modification of the terms of a Mortgage Loan (including the
Mortgage Interest Rate thereon) made in accordance with the Sale and
Servicing Agreement.
The undersigned gives such attorneys-in-fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or
could do, and does hereby ratify and confirm to all that such attorneys-infact
shall lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of Attorney, and may be satisfied that
this Limited Power of Attorney shall continue in full force and effect has not
been revoked unless an instrument of revocation shall have been made in
writing by the undersigned.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Indenture Trustee
By:______________________________
Name:
Title:
<PAGE>
STATE OF )
) SS.
COUNTY' OF )
On this __ day of May, 1999, before me personally appeared _________,
personally known to me to be duly authorized officers of Norwest Bank
Minnesota, National Association ("Norwest Bank"), that executed the within
instrument and personally known to me to be the persons who executed the
within instrument on behalf of Norwest Bank therein named, and acknowledged to
me that Norwest Bank executed the within instrument pursuant to its bylaws.
WITNESS my hand and official seal.
-------------------------------------
Notary Public in and for the State of________
After recording, please mail to:
--------------------------------------
--------------------------------------
Attention:______________________________
<PAGE>
EXHIBIT C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, N.A.
1015 10 th Avenue S.E.
Minneapolis, MN 55414-0031
Attn: Inventory Control
Re: Custodial Agreement dated as of ____________, among __________
and Norwest Bank Minnesota, N.A., as Custodian
In connection with the administration of the Mortgage Loans held by you
as Custodian for the Owner pursuant to the above-captioned Custody Agreement,
we request the release, and hereby acknowledge receipt, of the Custodian's
Mortgage File for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
- --------------------
Mortgagor Name, Address & Zip Code:
- ----------------------------------
Reason for Requesting Documents (check one):
- -------------------------------
_____ 1. Mortgage Paid in Full
_____ 2. Foreclosure
_____ 3. Substitution
_____ 4. Other Liquidation (Repurchased, etc.)
_____ 5. Nonliquidation Reason:____________________________
Address to which Custodian should
Deliver the Custodian's Mortgage File: --------------------------
--------------------------
--------------------------
By:__________________________
(authorized signer)
Issuer: _______________________
Address: _____________________
Date: ________________________
Custodian
- ---------
Norwest Bank Minnesota, N.A.
Please acknowledge the execution of the above request by your signature and
date below:
- ------------------------------ ------------------
Signature Date
Documents returned to Custodian:
- ------------------------------ ------------------
Custodian Date
<PAGE>
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Transfer No. __ of Subsequent Mortgage Loans, dated as of ____________,
199__, among Irwin Union Bank and Trust Company, a bank organized under the
laws of the State of Indiana ("Irwin Union Bank"), as Seller (in such
capacity, the "Seller"), Irwin Funding Corp., a Delaware corporation, as
Transferor (the "Transferor"), Irwin Home Equity Loan Trust 1999-2, as issuer
(the "Issuer"), and Norwest Bank Minnesota, National Association, as indenture
trustee (in such capacity, the "Indenture Trustee").
WITNESSETH:
WHEREAS, the Seller and the Transferor are parties to the Mortgage Loan
Sale Agreement dated as of April 30, 1999 (the "Mortgage Loan Sale
Agreement"), between the Seller and the Transferor;
WHEREAS, the Transferor and Bear Stearns Asset Backed Securities, Inc.
("Bear Steams") are parties to the Purchase and Sale Agreement dated as of
April 30, 1999 (the "Purchase and Sale Agreement"), between Transferor and
Bear Stearns;
WHEREAS, the Transferor, Irwin Union Bank, the Issuer and the Indenture
Trustee are parties to the sale and servicing agreement dated as of April 30,
1999 (the "Sale and Servicing Agreement"), among the Transferor, Irwin Union
Bank, as master servicer (in such capacity, the "Master Servicer"), Bear
Stearns, as depositor (in such capacity, the "Depositor"), the Issuer and the
Indenture Trustee;
WHEREAS, pursuant to the Sale and Servicing Agreement and the Mortgage
Loan Sale Agreement, the Seller desires to convey certain Subsequent Mortgage
Loans (as hereinafter defined) to the Transferor and the Transferor desires to
convey such Subsequent Mortgage Loans to the Issuer; and
WHEREAS, the Issuer wishes to pledge such Subsequent Mortgage Loans to
the Indenture Trustee pursuant to the Indenture.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used herein that are not
-------------
otherwise defined shall have the meanings ascribed thereto in Appendix A to
the indenture dated as of April 30, 1999 (the "Indenture"), between the
Depositor and the Indenture Trustee.
"Agreement" means this Subsequent Transfer Agreement and all amendments
hereof and supplements hereto.
"Subsequent Cutoff Date" means, with respect to the Subsequent Mortgage
Loans conveyed hereby, ________, 199__.
"Subsequent Mortgage Loans" means the Mortgage Loans identified on the
Mortgage Loan Schedule specified in Section 1.02 hereof.
"Subsequent Transfer Date" means, with respect to the Subsequent Mortgage
Loans conveyed hereby, ________, 199__.
Section 2. Mortgage Loan Schedule. Annexed hereto is a supplement to
----------------------
Schedule A to the Sale and Servicing Agreement listing the Subsequent Mortgage
Loans to be conveyed by the Seller to the Transferor, and by the Transferor to
the Trust pursuant to this Agreement on the Subsequent Transfer Date.
Section 3. Conveyance of Subsequent Mortgage Loans by the Seller. Subject
-----------------------------------------------------
to the conditions set forth in Section 7, [in consideration of the
Transferor's delivery to or upon the order of the Seller of an amount equal to
$ ] [as a capital contribution to the Transferor in the amount of $ ] (i.e.,
the aggregate Principal Balance of the Subsequent Mortgage Loans as of the
Subsequent Cutoff Date), the Seller does hereby sell, transfer, assign and
otherwise convey to the Transferor, without recourse (subject to the Seller's
obligations hereunder):
(a) all right, title and interest of the Seller in and to the Subsequent
Mortgage Loans listed on the Mortgage Loan Schedule attached hereto, and all
interest accrued after the Subsequent Cut-Off Date and principal received
relating to the Principal Balances of the Subsequent Mortgage Loans as of the
Subsequent Cut-Off Date, and any Additional Balances relating thereto;
(b) all right, title and interest of the Seller in the Lien on the
Mortgaged Properties created by the related Mortgage Documents;
(c) all right, title and interest of the Seller in any Liquidation
Proceeds and Insurance Proceeds covering the Subsequent Mortgage Loans or the
related Mortgaged Properties or Mortgagors; and
(d) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders.
Section 4. Conveyance of Subsequent Mortgage Loans by the Transferor.
---------------------------------------------------------
Subject to the conditions set forth in Section 7, in consideration of the
Indenture Trustee's delivery on behalf of the Trust to or upon the order of
the Transferor of an amount equal to $ ____________ (i.e., the aggregate
Principal Balance of the Subsequent Mortgage Loans as of the Subsequent
Cut-Off Date), the Transferor does hereby sell, transfer, assign and otherwise
convey to the Trust, without recourse (subject to the Transferor's obligations
hereunder);
(a) all right, title and interest of the Transferor in and to the
Subsequent Mortgage Loans listed on the Mortgage Loan Schedule attached
hereto, and all interest accrued after the Subsequent Cut-Off Date and
principal received relating to the Principal Balances of the Subsequent
Mortgage Loans as of the Subsequent Cut-Off Date, and any Additional Balances
relating thereto;
(b) all right, title and interest of the Transferor in the Lien on the
Mortgaged Properties created by the related Mortgage Documents; Servicing
Agreement
(c) all right, title and interest of the Transferor in any Liquidation
Proceeds and Insurance Proceeds covering the Subsequent Mortgage Loans or the
related Mortgaged Properties or Mortgagors; and
(d) any proceeds of the foregoing and all other assets included or to be
included in the Trust for the benefit of the Securityholders
Section 5. Representations and Warranties of Seller. The Seller does
----------------------------------------
hereby reaffirm the representations and warranties set forth in Section 3.1 of
the Mortgage Loan Sale Agreement for the benefit of the other parties hereto,
and further represents and warrants that the statements set forth in Section
3.2 (excluding subsections (n), (v), (w) and (x) thereof) with respect to the
Initial Mortgage Loans are true with respect to the Subsequent Mortgage Loans;
provided, that references therein to "Closing Date" and "Initial Cut-Off Date"
shall be deemed herein to be "Subsequent Transfer Date" and "Subsequent
Cut-Off Date". Such representations and warranties shall survive the sale,
transfer and assignment of the Subsequent Mortgage Loans to the Trust and the
pledge thereof to the Indenture Trustee.
Section 6. Representations and Warranties of Transferor. The Transferor
--------------------------------------------
does hereby reaffirm the representations and warranties set forth in Section
3.1 of the Purchase and Sale Agreement for the benefit of the Trust and the
Indenture Trustee, and further represents and warrants that the statements set
forth in Section 3.2 (excluding subsections (n), (v), (w) and (x) thereof)
with respect to the Initial Mortgage Loans are true with respect to the
Subsequent Mortgage Loans; provided, that references therein to "Closing Date"
and "Initial Cut-Off Date" shall be deemed herein to be "Subsequent Transfer
Date" and "Subsequent Cut-Off Date". Such representations and warranties shall
survive the sale, transfer and assignment of the Subsequent Mortgage Loans to
the Trust and the pledge thereof to the Indenture Trustee.
Section 7. Conditions Precedent. The obligation of the Trust to acquire
--------------------
the Subsequent Mortgage Loans hereunder is subject to the satisfaction, on or
prior to the Subsequent Transfer Date, of the following conditions precedent:
(i) each of the representations and warranties made by the Seller in Section 5
and (ii) each of the representations and warranties made by the Transferor in
Section 6, shall be true and correct as of the date of this Agreement and as
of the Subsequent Transfer Date.
The Indenture Trustee shall not be required to investigate or otherwise
verify satisfaction of the conditions listed above, but shall be entitled to
conclusively rely upon Opinions of Counsel and Officer's Certificates
confirming such fulfillment.
Section 8. Reaffirmation of Agreements. All terms, conditions and
---------------------------
provisions of the Mortgage Loan Sale Agreement are hereby reaffirmed and
incorporated by reference by the Seller and the Transferor as to the
Subsequent Mortgage Loans, and all terms, conditions and provisions of the
Sale and Servicing Agreement are hereby reaffirmed and incorporated by
reference by the Transferor as to the Subsequent Mortgage Loans.
Section 9. Governing Law. This Agreement shall be construed in accordance
-------------
with the laws of the State of New York and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws; provided, however, the immunities, authority and standard of
care of the Indenture Trustee shall be governed by the jurisdiction in which
its Corporate Trust Office is located.
<PAGE>
IN WITNESS WHEREOF, the Seller, the Transferor, the Issuer and the
Indenture Trustee have caused this Agreement to be duly executed and delivered
by their respective duly authorized officers as of the day and the year first
above written.
IRWIN UNION BANK AND TRUST
COMPANY, as Seller
By:_____________________________
Name:
Title:
IRWIN FUNDING CORP., as Transferor
By:______________________________
Name:
Title:
IRWIN HOME EQUITY LOAN TRUST
1999-2, as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:_______________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT F
FORM OF INITIAL/INTERIM CERTIFICATION OF
TRUSTEE
IRWIN HOME EQUITY CORPORATION TRUST 1999-2
------------------------------------------
The undersigned, a duly authorized representative of Norwest Bank
Minnesota, National Association, as Indenture Trustee (the "Indenture
Trustee") and pursuant to the Sale and Servicing Agreement dated April 30,
1999, between Bear Stearns Asset Backed Securities, Inc. as Depositor of the
Trust, Irwin Union Bank and Trust Company as Master Servicer, Irwin Funding
Corp. as Transferor, the Irwin Home Equity Loan Trust 1999-2 and Indenture
Trustee, (hereinafter as such agreement may have been, or may from time to
time be, amended, supplemented or otherwise modified, the "Sale and Servicing
Agreement"), does hereby certify as follows:
A. Capitalized terms used in this Certificate have their
respective meanings set forth in the Sale and Servicing Agreement. References
herein to certain subsections are references to the respective subsections of
the Sale and Servicing Agreement.
B. This Certificate is being delivered pursuant to Section
2.04.
C. The Undersigned is a Responsible Officer.
D. This Certificate is being delivered by the date specified in
Section 2.04
E. Pursuant to and in accordance with the limitations set forth
in Section 2.04,the Indenture Trustee hereby certifies and declares that, with
noted exceptions on attached schedule, (I) all documents required to be
delivered pursuant to Section 2.04 are in its possession, (ii) each such
document has been reviewed by it and has not been mutilated, damaged, torn, or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialed by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan.
IN WITNESS WHEREOF, the Indenture Trustee has caused this Certificate to
be duly executed this _____ day of ___________, 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Indenture Trustee
By: --------------------------
Authorized Officer
