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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): July 13, 1999
BEAR STEARNS ASSET BACKED SECURITIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-09532 13-3836437
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
245 Park Avenue
New York, New York 10167
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 272-4095
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<PAGE>
Item 5. Other Events.
On June 17, 1999, an Indenture was entered into, dated as of June 17,
1999 (the "Indenture"), by and between GMACM Revolving Home Equity Loan Trust
1999-1, as Issuer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee. The Indenture is annexed hereto as Exhibit 4.1.
On June 17, 1999, a Servicing Agreement was entered into, dated as of
June 17, 1999 (the "Servicing Agreement"), by and among GMAC Mortgage
Corporation, as Servicer, GMACM Revolving Home Equity Loan Trust 1999-1, as
Issuer, and Norwest Bank Minnesota, National Association, as Indenture
Trustee. The Servicing Agreement is annexed hereto as Exhibit 10.1.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.1. Indenture
10.1. Servicing Agreement
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant 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
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Jonathan Lieberman
Authorized Signatory
Dated: July 27, 1999
<PAGE>
Exhibit Index
Exhibit
4.1. Servicing Agreement
10.1. Indenture
<PAGE>
EXHIBIT 4.1
===============================================================================
GMAC MORTGAGE CORPORATION
as Servicer,
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1,
as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
-------------------------
SERVICING AGREEMENT
Dated as of June 17, 1999
-------------------------
===============================================================================
<PAGE>
Table of Contents
Page
ARTICLE I
Definitions
Section 1.01 Definitions....................................................2
Section 1.02 Other Definitional Provisions..................................2
Section 1.03 Interest Calculations..........................................3
ARTICLE II
Representations and Warranties
Section 2.01 Representations and Warranties Regarding the Servicer..........4
Section 2.02 Representations and Warranties of the Issuer...................5
Section 2.03 Enforcement of Representations and Warranties..................5
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 The Servicer...................................................7
Section 3.02 Collection of Certain Mortgage Loan Payments...................9
Section 3.03 Withdrawals from the Custodial Account........................11
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses......................................................13
Section 3.05 Modification Agreements.......................................14
Section 3.06 Trust Estate; Related Documents...............................14
Section 3.07 Realization Upon Defaulted Mortgage Loans.....................15
Section 3.08 Issuer and Indenture Trustee to Cooperate.....................17
Section 3.09 Servicing Compensation; Payment of Certain Expenses by
Servicer......................................................18
Section 3.10 Annual Statement as to Compliance.............................18
Section 3.11 Annual Servicing Report.......................................18
Section 3.12 Access to Certain Documentation and Information Regarding
the Mortgage Loans............................................19
Section 3.13 Maintenance of Certain Servicing Insurance Policies...........19
Section 3.14 Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged
Property......................................................19
Section 3.15 Optional Repurchase of Mortgage Loans.20
Section 3.16 Recording of Assignments......................................20
Section 3.17 Pre-Funding Account...........................................20
Section 3.18 Funding Account...............................................21
Section 3.19 Capitalized Interest Account..................................22
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders.................................24
ARTICLE V
Note Payment Account
Section 5.01 Note Payment Account..........................................27
ARTICLE VI
The Servicer
Section 6.01 Liability of the Servicer.....................................28
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer..................................28
Section 6.03 Limitation on Liability of the Servicer and Others............28
Section 6.04 Servicer Not to Resign........................................29
Section 6.05 Delegation of Duties..........................................29
Section 6.06 Payment of Indenture Trustee's and Owner Trustee's
Fees and Expenses; Indemnification............................30
ARTICLE VII
Default
Section 7.01 Servicing Default.............................................32
Section 7.02 Indenture Trustee to Act; Appointment of Successor............34
Section 7.03 Notification to Securityholders...............................35
ARTICLE VIII
Miscellaneous Provisions
Section 8.01 Amendment.....................................................36
Section 8.02 GOVERNING LAW.................................................36
Section 8.03 Notices.......................................................36
Section 8.04 Severability of Provisions....................................36
Section 8.05 Third-Party Beneficiaries.....................................37
Section 8.06 Counterparts..................................................37
Section 8.07 Effect of Headings and Table of Contents......................37
Section 8.08 Termination Upon Purchase by the Servicer or Liquidation
of All Mortgage Loans; Partial Redemption.....................37
Section 8.09 Certain Matters Affecting the Indenture Trustee...............38
Section 8.10 Owner Trustee Not Liable for Related Documents................38
EXHIBIT A - MORTGAGE LOAN SCHEDULE..........................................A-1
EXHIBIT B - POWER OF ATTORNEY...............................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE.....................................C-1
<PAGE>
EXECUTION COPY
This Servicing Agreement, dated as of June 17, 1999 (the "Agreement"),
is among GMAC Mortgage Corporation, as servicer (the "Servicer"), the GMACM
Revolving Home Equity Loan Trust 1999-1, as issuer (the "Issuer"), and Norwest
Bank Minnesota, National Association, as indenture trustee (the "Indenture
Trustee").
WITNESSETH:
WHEREAS, pursuant to the terms of the Purchase Agreement (as defined
herein), GMAC Mortgage Corporation, as seller (in such capacity, the "Seller"),
will sell to Bear Stearns Asset Backed Securities, Inc. ("BSABS"), as purchaser
(in such capacity, the "Purchaser"), the Initial Mortgage Loans on the Closing
Date, and may sell Subsequent Mortgage Loans on one or more Subsequent Transfer
Dates, together with the Related Documents on the Closing Date and any
Subsequent Transfer Date, and thereafter all Additional Balances created on or
after the Cut-Off Date and any such Subsequent Transfer Date;
WHEREAS, BSABS, as depositor (in such capacity, the "Depositor"), will
sell the Initial Mortgage Loans and all of its rights under the Purchase
Agreement to the Issuer, together with the Related Documents on the Closing
Date, and thereafter all Additional Balances relating thereto created on or
after the Cut-Off Date;
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 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 not otherwise defined herein shall have the
meanings assigned to such terms in the Definitions contained in Appendix A to
the indenture dated as of June 17, 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 Other Definitional Provisions.
(a) 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.
(b) 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.
(c) 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"; "or" shall include "and/or"; and the term
"proceeds" shall have the meaning ascribed thereto in the UCC.
(d) 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.
(e) 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 the Principal Balance of a Mortgage Loan
shall be made on a daily basis using a 365-day year. All calculations of
interest on the Securities shall be made on the basis of the actual number of
days in an Interest Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest penny with one-half of one penny being rounded
up.
<PAGE>
ARTICLE II
Representations and Warranties
Section 2.01 Representations and Warranties Regarding the Servicer.
The Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Mortgage Loans, as of the Closing Date:
(a) the Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. The Servicer 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 properties owned or leased by it requires
such qualification and in which the failure to so qualify would have a material
adverse effect (not in the ordinary course of business) on the business,
properties, assets, or condition (financial or other) of the Servicer;
(b) the Servicer has the power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement;
(c) the 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 Servicer will not violate any
material provision of any existing law or regulation or any order or decree of
any court applicable to the Servicer or any provision of the Articles of
Incorporation or Bylaws of the Servicer, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Servicer is a
party or by which the Servicer may be bound; and
(e) no litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of the
Servicer threatened, against the Servicer or any of its properties or with
respect to this Agreement or the Securities which in the opinion of the
Servicer has a reasonable likelihood of resulting in a material adverse effect
on the transactions contemplated by this Agreement.
The foregoing representations and warranties shall survive any
termination of the Servicer hereunder.
Section 2.02 Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to the Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Mortgage Loans, as of the Closing Date:
(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 limited liability
companies. 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 bound.
Section 2.03 Enforcement of Representations and Warranties. The
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 Seller pursuant to the Purchase
Agreement. Upon the discovery by the Seller, the Depositor, the Servicer, the
Indenture Trustee, the Enhancer, the Issuer, or the Custodian of a breach of
any of the representations and warranties made in the Purchase Agreement, in
respect of any Mortgage Loan which 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 (the Custodian
being so obligated under the Custodial Agreement). The Servicer shall promptly
notify the Seller of such breach and request that, pursuant to the terms of the
Purchase Agreement, the Seller either (i) cure such breach in all material
respects within 90 days from the date the Seller was notified of such breach or
(ii) purchase such Mortgage Loan from the Issuer at the price and in the manner
set forth in Section 3.1(b) of the Purchase Agreement; provided, that the
Seller shall, subject to the conditions set forth in the Purchase Agreement,
have the option to substitute an Eligible Substitute Loan or Loans for such
Mortgage Loan. In the event that the Seller elects to substitute one or more
Eligible Substitute Loans pursuant to Section 3.1(b) of the Purchase Agreement,
the Seller shall deliver to the Issuer with respect to such Eligible Substitute
Loans, the original Loan Agreement, the Mortgage, and such other documents and
agreements as are required by the Purchase Agreement. Payments due with respect
to Eligible Substitute Loans in the month of substitution shall not be
transferred to the Issuer and will be retained by the Servicer and remitted by
the Servicer to the Seller on the next succeeding Payment Date provided a
payment at least equal to the applicable Minimum Monthly Payment has been
received by the Issuer for such month in respect of the Mortgage Loan to be
removed. The Servicer shall amend or cause to be amended the Mortgage Loan
Schedule to reflect the removal of such Mortgage Loan and the substitution of
the Eligible Substitute Loans and the Servicer shall promptly deliver the
amended Mortgage Loan Schedule to the Owner Trustee and Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure
such breach or purchase or substitute for such Mortgage Loan as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Mortgage Loans, against the Seller. In connection with the
purchase of or substitution for any such Mortgage Loan by the Seller, the
Issuer shall assign to the Seller all of its right, title and interest in
respect of the Purchase Agreement applicable to such Mortgage Loan. Upon
receipt of the Repurchase Price, or upon completion of such substitution, the
Servicer shall notify the Custodian, and the Custodian shall deliver the
Mortgage Files to the Servicer, together with all relevant endorsements and
assignments prepared by the Servicer that the Indenture Trustee shall execute.
<PAGE>
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01 The Servicer.
(a) The Servicer shall service and administer the Mortgage Loans in a
manner generally consistent with the terms of the Program Guide and in a manner
consistent with the terms of this Agreement and that shall be normal and usual
in its general mortgage servicing activities. The Servicer shall have full
power and authority, acting alone or through a Subservicer, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable, it being understood, however, that the 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 and the Program
Guide. Without limiting the generality of the foregoing, the 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 Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. In addition, the
Servicer may, at its own discretion and on behalf of the Indenture Trustee,
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
Servicer a limited power of attorney substantially in the form of Exhibit B
hereto.
If the Mortgage did not have a Lien senior to the related Mortgage
Loan on the related Mortgaged Property as of the related Cut-Off Date, then the
Servicer, in such capacity, may not consent to the placing of a Lien senior to
that of the Mortgage on the related Mortgaged Property. If the Mortgage had a
Lien senior to the related Mortgage Loan on the related Mortgaged Property as
of the related Cut-Off Date, then the Servicer, in such capacity, may consent
to the refinancing of such prior senior Lien; provided, that (i) the resulting
CLTV of such Mortgage Loan is no higher than the greater of the CLTV prior to
such refinancing or 70% CLTV (or 80% CLTV for those borrowers with a FICO
"credit score" of 720 or greater) and (ii) the interest rate for the loan
evidencing the refinanced senior Lien is no higher than the interest rate on
the loan evidencing the existing senior Lien immediately prior to the date of
such refinancing (meaning, in the case of an adjustable rate loan, a
substantially similar index and a gross margin no higher than that of the
existing senior Lien); provided, however, that if the loan evidencing the
existing senior Lien prior to the date of refinancing is an adjustable rate
loan and the loan evidencing the refinanced senior Lien is a fixed rate loan,
then the interest rate on the loan evidencing the refinanced senior Lien may be
up to 2.0% higher than the then-current mortgage rate of the loan evidencing
the existing senior Lien and (iii) the loan evidencing the refinanced senior
Lien is not subject to negative amortization.
In connection with servicing the Mortgage Loans, the Servicer may take
reasonable actions to encourage or effect the termination of Loan Agreements
that have become dormant.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) 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.
(b) The Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Mortgage
Loans. References in this Agreement to actions taken or to be taken by the
Servicer in servicing the Mortgage Loans include actions taken or to be taken
by a Subservicer on behalf of the Servicer and any amount actually received by
such Subservicer in respect of a Mortgage Loan shall be deemed to have been
received by the Servicer whether or not actually received by the Servicer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Servicer and the Subservicer have
agreed. With the approval of the Servicer, a Subservicer may delegate its
servicing obligations to third-party servicers, but such Subservicers will
remain obligated under the related Subservicing Agreements. The Servicer and
the Subservicer may enter into amendments to the related Subservicing
Agreements; provided, however, 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 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, however, that in the event of termination of any Subservicing
Agreement by the Servicer or the Subservicer, the Servicer shall either act as
servicer of the related Mortgage Loan or enter into a Subservicing Agreement
with a successor Subservicer which will be bound by the terms of the related
Subservicing Agreement. The Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of the Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
In the event that the rights, duties and obligations of the Servicer
are terminated hereunder, any successor to the Servicer in its sole discretion
may, to the extent permitted by applicable law, terminate the existing
Subservicing Agreement with any Subservicer in accordance with the terms of the
applicable Subservicing Agreement or assume the terminated Servicer's rights
and obligations under such subservicing arrangements which termination or
assumption will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Servicer, for the
benefit of the Indenture Trustee, the Enhancer and the Securityholders, 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 a Mortgage Loan. Such
enforcement, including, without limitation, 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 Servicer, in its good faith business judgment, would require were
it the owner of the related Mortgage Loans. The Servicer shall pay the costs of
such enforcement at its own expense, and shall be reimbursed therefor only (i)
from 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) from a specific recovery of costs, expenses or attorneys fees
against the party against whom such enforcement is directed.
Section 3.02 Collection of Certain Mortgage Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement and
generally consistent with the Program Guide, follow such collection procedures
as shall be normal and usual in its general mortgage servicing activities.
Consistent with the foregoing, and without limiting the generality of the
foregoing, the Servicer may in its discretion (i) waive any late payment
charge, penalty interest or other fees which 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 Servicer's policies with respect
to home equity mortgage loans; and provided further, that notwithstanding such
arrangement, such Mortgage Loans will be included in the information regarding
delinquent Mortgage Loans set forth in the Servicing Certificate. The Servicer
may also extend the Due Date for payment due on a Mortgage Loan in accordance
with the Program Guide; provided, however, that the Servicer shall first
determine that any such waiver or extension will not impair the coverage of any
related insurance policy or materially adversely affect the Lien of the related
Mortgage or the interests of the Securityholders or the Enhancer. Consistent
with the terms of this Agreement, the Servicer may also waive, modify or vary
any term of any Mortgage Loan (including reduce the Credit Limit with respect
to any HELOC) or consent to the postponement of strict compliance with any such
term or in any manner grant indulgence to any Mortgagor if in the Servicer's
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Securityholders or the Enhancer;
provided, however, that the Servicer may not modify or permit any Subservicer
to modify any Mortgage Loan (including without limitation any modification that
would change the Loan Rate, forgive the payment of any principal or interest
(unless in connection with the liquidation of the related Mortgage Loan) or
extend the final maturity date of such Mortgage Loan) unless such Mortgage Loan
is in default or, in the judgment of the Servicer, such default is reasonably
foreseeable. In addition, if a HELOC is in default or, in the judgment of the
Servicer, such default is reasonably foreseeable, the Servicer may, through
modification, convert such HELOC to a fully amortizing HEL. Notwithstanding the
foregoing, with respect to any HELOC, the Servicer (i) in its sole discretion
may permit the related Mortgagor (or may enter into a modification agreement
that will allow such Mortgagor) to make monthly payments, with respect to any
Billing Cycle during the related Draw Period, in a minimum amount that will be
equal to the related finance charge for such Billing Cycle and (ii) may reduce
the amount of the Credit Limit (to an amount no less than the then-current
Principal Balance of such HELOC) in connection with any refinancing of a senior
Lien pursuant to the second paragraph of Section 3.01(a) of this Agreement.
(b) The Servicer shall establish a Custodial Account, which shall be
an Eligible Account, in which the Servicer shall deposit or cause to be
deposited any amounts representing payments and collections in respect of the
Initial Mortgage Loans received by it subsequent to the Cut-Off Date or, with
respect to the Subsequent Mortgage Loans, the Subsequent Cut-off Date (other
than in respect of the payments referred to in the following paragraph), 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 (without duplication):
(i) all payments of principal of or interest on the Mortgage
Loans received or advanced by the Servicer, net of any portion of the
interest thereof retained by any Subservicer as subservicing fees;
(ii) the aggregate Repurchase Price of the Mortgage Loans
purchased by the Servicer pursuant to Section 3.15;
(iii) Net Liquidation Proceeds, net of any related Foreclosure
Profit;
(iv) all proceeds of any Mortgage Loans repurchased by the Seller
pursuant to the Purchase Agreement, and all Substitution Adjustment
Amounts required to be deposited in connection with the substitution
of an Eligible Substitute Loan pursuant to the Purchase Agreement;
(v) Insurance Proceeds, other than Net Liquidation Proceeds,
resulting from any insurance policy maintained on a Mortgaged
Property; and
(vi) amounts required to be paid by the Servicer pursuant to
Section 8.08;
provided, however, that with respect to each Collection Period, the 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 to the Custodial Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Custodial Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties,
payable by Mortgagors, or amounts received by the Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments and similar items. In the event any amount not required to be
deposited in the Custodial Account is so deposited, the Servicer may at any
time withdraw such amount from the Custodial Account, any provision herein to
the contrary notwithstanding. The Custodial Account may contain funds that
belong to one or more trust funds created for the notes or certificates of
other series and may contain other funds respecting payments on Mortgage Loans
or other mortgage loans belonging to the Servicer or serviced or serviced by it
on behalf of others. Notwithstanding such commingling of funds, the Servicer
shall keep records that accurately reflect the funds on deposit in the
Custodial Account that have been identified by it as being attributable to the
Mortgage Loans and shall hold all collections in the Custodial Account to the
extent they represent collections on the Mortgage Loans for the benefit of the
Trust, the Enhancer, the Securityholders and the Indenture Trustee, as their
interests may appear. The Servicer shall retain all Foreclosure Profits as
additional servicing compensation.
The Servicer, in its sole discretion, may deposit into the Custodial
Account amounts representing installments of interest on Mortgage Loans that
were delinquent as of the end of any Collection Period. If the Servicer makes
any such advances of delinquent interest, the Servicer shall be entitled to
reimburse itself by withdrawing from the Custodial Account, as provided herein,
any amounts so advanced. The Servicer may cause the institution maintaining the
Custodial Account to invest any funds in the Custodial Account in Permitted
Investments (including obligations of the Servicer or any of its Affiliates, if
such obligations otherwise qualify as Permitted Investments), which investments
shall mature not later than the Business Day preceding the next succeeding
Payment Date, and which investments shall not be sold or disposed of prior to
maturity. Except as provided above, all income and gain realized from any such
investment shall inure to the benefit of the Servicer and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred in
respect of the principal amount of any such investments shall be deposited in
the Custodial Account by the Servicer out of its own funds immediately as
realized.
(c) The Servicer shall require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to
the Servicer, in one or more accounts meeting the requirements of an Eligible
Account, and shall require all such funds to be invested in Permitted
Investments, unless all such collections are remitted on a daily basis to the
Servicer for deposit into the Custodial Account.
Section 3.03 Withdrawals from the Custodial Account. The Servicer
shall, from time to time as provided herein, make withdrawals from the
Custodial Account of amounts on deposit therein pursuant to Section 3.02 that
are attributable to the Mortgage Loans for the following purposes:
(a) on each Determination Date, the Servicer shall determine the
aggregate amounts to be withdrawn from the Custodial Account and applied
pursuant to Section 3.05(a) of the Indenture and, prior to the close of
business on the Business Day prior to the related Payment Date, shall withdraw
such amounts from the Custodial Account and deposit into the Note Payment
Account to be distributed by the Paying Agent in accordance with and in the
order or priority set forth in Section 3.05(a) of the Indenture for such
Payment Date, in accordance with the Servicer's Certificate;
(b) prior to the commencement of the Rapid Amortization Period, to pay
to the Seller the amount of any Additional Balances as and when created during
the related Collection Period, and, prior to the commencement of the Managed
Amortization Period, any Subsequent Mortgage Loans on the related Subsequent
Transfer Date;
(c) to the extent deposited to the Custodial Account, to reimburse
itself or the related Subservicer for previously unreimbursed expenses incurred
in maintaining individual insurance policies pursuant to Section 3.04, or
Liquidation Expenses, paid pursuant to Section 3.07 or otherwise reimbursable
pursuant to the terms of this Agreement (to the extent not payable pursuant to
Section 3.09), such withdrawal right being limited to amounts received on
particular 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 related Net Liquidation Proceeds or the proceeds of the purchase
of such Mortgage Loan;
(d) to pay to itself out of each payment received on account of
interest on a Mortgage Loan as contemplated by Section 3.09, an amount equal to
the related Servicing Fee (to the extent not retained pursuant to Section
3.02), and to pay to any Subservicer any subservicing fees not previously
withheld by such Subservicer;
(e) prior to the commencement of the Managed Amortization Period, to
deposit Principal Collections into the Funding Account to the extent not
otherwise applied toward the purchase of Additional Balances or Subsequent
Mortgage Loans;
(f) to the extent deposited in the Custodial Account, to pay to itself
as additional servicing compensation any (i) interest or investment income
earned on funds deposited in the Custodial Account that it is entitled to
withdraw pursuant to Sections 3.02(b) and 5.01, and (ii) Foreclosure Profits
(to the extent permitted by law);
(g) to pay to itself or the Seller, with respect to any Mortgage Loan
or property acquired in respect thereof that has been purchased or otherwise
transferred to the Seller, the Servicer or other entity, all amounts received
thereon and not required to be distributed to Securityholders as of the date on
which the related Purchase Price or Repurchase Price is determined;
(h) to withdraw any other amount deposited in the Custodial Account
that was not required to be deposited therein pursuant to Section 3.02;
(i) to pay to itself, with respect to any Mortgage Loan for which it
has made an advance of delinquent interest, any previously unreimbursed
advances of such amounts theretofore made to the extent of receipts of late
recoveries of such payments from the related Mortgagors, out of related Net
Liquidation Proceeds or the proceeds of the purchase of such Mortgage Loans;
and
(j) at its option, for as long as it is the sole Certificateholder, to
pay to itself from amounts otherwise required to be remitted to the
Distribution Account, all amounts payable to it as a Certificateholder on the
related Payment Date.
Since, in connection with withdrawals pursuant to clauses (c), (d),
(f) and (g), the Servicer's entitlement thereto is limited to collections or
other recoveries on the related Mortgage Loan, the Servicer shall keep and
maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for
the purpose of justifying any withdrawal from the Custodial Account pursuant to
such clauses. Notwithstanding any other provision of this Agreement, the
Servicer shall be entitled to reimburse itself for any previously unreimbursed
expenses incurred pursuant to Section 3.07 or otherwise reimbursable pursuant
to the terms of this Agreement that the Servicer determines to be otherwise
nonrecoverable (except with respect to any Mortgage Loan as to which the
Repurchase Price has been paid), by withdrawal from the Custodial Account of
amounts on deposit therein attributable to the Mortgage Loans on any Business
Day prior to the Payment Date succeeding the date of such determination.
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses. To the extent permitted under the related Loan Agreement and
Mortgage, and to the extent the Servicer receives notice that a hazard
insurance policy has been cancelled, the Servicer shall cause to be maintained
for each Mortgage Loan hazard insurance naming the Servicer or related
Subservicer as loss payee thereunder providing extended coverage in an amount
which is 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; provided, however, that such coverage may
not be less than the minimum amount required to fully compensate for any loss
or damage on a replacement cost basis. The Servicer shall use its best efforts
to monitor that hazard insurance is maintained as described in the previous
sentence in the same manner as it would for mortgage loans in its own
portfolio. The Servicer shall also cause to be maintained on property acquired
upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount which is 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 Servicer under
any such policies (other than amounts to be applied to the restoration or
repair of the related Mortgaged Property or property thus acquired or amounts
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures) shall be deposited in the Custodial Account to the extent called
for by Section 3.02. In cases in which any Mortgaged Property is located at any
time during the life of a Mortgage Loan in a federally designated flood area,
to the extent permitted under the related Loan Agreement and Mortgage, and to
the extent the Servicer receives notice that the related flood insurance has
been cancelled. All such flood insurance shall be in amounts equal to the
lesser of (i) the amount required to compensate for any loss or damage to the
related Mortgaged Property on a replacement cost basis and (ii) the maximum
amount of such insurance available for such Mortgaged Property under the
national flood insurance program (assuming that the area in which such
Mortgaged Property is located is participating in such program). The Servicer
shall use its best efforts to monitor such flood insurance as described in the
previous sentence in the same manner as it would for mortgage loans in its own
portfolio. The Servicer shall be under no obligation to require that any
Mortgagor maintain earthquake or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a 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. If the Servicer shall obtain and maintain a blanket
policy consistent with its general mortgage servicing activities insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in the first sentence of
this Section 3.04, it being understood and agreed that such policy may contain
a deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.04 and there shall have
been a loss which would have been covered by such policy, deposit in the
Custodial Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Servicer shall be
made on the last Business Day of the Collection Period in the month in which
payments under any such policy would have been deposited in the Custodial
Account. In connection with its activities as servicer of the Mortgage Loans,
the Servicer agrees to present, on behalf of itself, the Issuer and the
Indenture Trustee, claims under any such blanket policy.
Section 3.05 Modification Agreements. The Servicer or the related
Subservicer, as the case may be, shall be entitled to (a) 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 and other comparable instruments with respect to
the Mortgage Loans and with respect to the related Mortgaged Properties (and
the Issuer and the Indenture Trustee each shall promptly execute any such
documents on request of the Servicer) and (b) approve the granting of an
easement thereon in favor of another Person, any alteration or demolition of
such Mortgaged Properties 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 Loans, that the security for, and the
timely and full collectability of, such Mortgage Loans would not be adversely
affected thereby. A partial release pursuant to this Section 3.05 shall be
permitted only if the CLTV for the related Mortgage Loan after such partial
release does not exceed the CLTV for such Mortgage Loan as of the related
Cut-Off Date. Any fee collected by the Servicer or the related Subservicer for
processing such request will be retained by the Servicer or such Subservicer as
additional servicing compensation.
Section 3.06 Trust Estate; Related Documents.
(a) When required by the provisions of this Agreement, the Issuer or
the Indenture Trustee shall execute instruments to release property from the
terms of the Trust Agreement, Indenture or Custodial Agreement, as applicable,
or convey the Issuer's or the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Agreement. No party relying upon an instrument executed by the Issuer or
the Indenture Trustee as provided in this Section 3.06 shall be bound to
ascertain the Issuer's or the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) If from time to time the Servicer shall deliver to the Custodian
copies of any written assurance, assumption agreement or substitution agreement
or other similar agreement pursuant to Section 3.05, the Custodian shall check
that each of such documents purports to be an original executed copy (or a copy
of the original executed document if the original executed copy has been
submitted for recording and has not yet been returned) 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 with
the Related Documents. If any such documents submitted by the Servicer do not
meet the above qualifications, such documents shall promptly be returned by the
Custodian to the Servicer, with a direction to the Servicer to forward the
correct documentation.
(c) Upon receipt of a Request for Release from the 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 such
Mortgage Loan has been terminated or that substantially all Net Liquidation
Proceeds that have been determined by the Servicer in its reasonable judgment
to be finally recoverable have been recovered, and upon deposit to the
Custodial Account of such final monthly payment, prepayment in full together
with accrued and unpaid interest to the date of such payment with respect to
such Mortgage Loan or, if applicable, Net Liquidation Proceeds, the Custodian
shall promptly release the Related Documents to the Servicer. The Indenture
Trustee shall execute such Related Documents, along with such documents as the
Servicer or the related Mortgagor may request to evidence satisfaction and
discharge of such Mortgage Loan, upon request of the Servicer. If from time to
time and as appropriate for the servicing or foreclosure of any Mortgage Loan,
the Servicer requests the Custodian to release the Related Documents and
delivers to the Custodian a trust receipt reasonably satisfactory to the
Custodian and signed by a Responsible Officer of the Servicer, the Custodian
shall release such Related Documents to the Servicer. If such Mortgage Loans
shall be liquidated and the Custodian receives a certificate from the Servicer
as provided above, then, upon request of the Servicer, the Custodian shall
release the trust receipt to the Servicer.
Section 3.07 Realization Upon Defaulted Mortgage Loans. With respect
to any Mortgage Loan that comes into and continues in default, the Servicer
shall decide whether to (i) foreclose upon the related Mortgaged Property, (ii)
write off the unpaid Principal Balance thereof as bad debt, (iii) take a deed
in lieu of foreclosure, (iv) accept a short sale, (v) arrange for a repayment
plan, (vi) agree to a modification in accordance with this Agreement or (vii)
take an unsecured note in each case subject to the rights of any related first
Lien holder; provided, that in connection with the foregoing, if the 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 Servicer shall not cause the
Issuer or the Indenture Trustee to acquire title to such Mortgaged Property in
a foreclosure or similar proceeding. In connection with such decision, the
Servicer shall follow such practices (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 Servicer) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general mortgage
servicing activities and as shall be required or permitted by the Program
Guide; provided, that the Servicer shall not be liable in any respect hereunder
if the Servicer is acting in connection with any such foreclosure or attempted
foreclosure which is not completed or other conversion in a manner that is
consistent with the provisions of this Agreement. The foregoing is subject to
the proviso that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or attempted foreclosure which is not completed
or towards the correction of any default on a related senior mortgage loan or
restoration of any property unless it shall determine that such expenditure
will increase the related Net Liquidation Proceeds. In the event of a
determination by the Servicer that any such expenditure previously made
pursuant to this Section 3.07 will not be reimbursable from Net Liquidation
Proceeds, the Servicer shall be entitled to reimbursement of its funds so
expended pursuant to Section 3.03.
Notwithstanding any provision of this Agreement, a Mortgage Loan may
be deemed to be finally liquidated if substantially all amounts expected by the
Servicer to be received in connection therewith have been received; provided,
however, that any subsequent collections with respect to any such Mortgage Loan
shall be deposited into the Custodial Account. For purposes of determining the
amount of any Net Liquidation Proceeds, Insurance Proceeds or other unscheduled
collections, the Servicer may take into account minimal 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 an asset of the Issuer
until such time as such property shall be sold. Consistent with the foregoing
for purposes of all calculations hereunder, so long as the related Mortgage
Loan shall be considered to be an outstanding Mortgage Loan, it shall be
assumed that, notwithstanding that the indebtedness evidenced by the related
Loan Agreement shall have been discharged, such Loan Agreement 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, as
well as any recovery resulting from a collection of Net Liquidation Proceeds or
Insurance Proceeds, shall be applied in the following order of priority: first,
to reimburse the Servicer or the related Subservicer in accordance with this
Section 3.07; second, to pay the Servicer or the related Subservicer all
Servicing Fees payable therefrom; third, to pay accrued and unpaid interest on
such Mortgage Loan, at the Net Loan Rate to the Payment Date on which such
amounts are to be deposited in the Note Payment Account or Distribution
Account; and fourth, as a recovery of principal on such Mortgage Loan. Any
remaining amount shall constitute Foreclosure Profits.
Section 3.08 Issuer and Indenture Trustee to Cooperate. On or before
each Payment Date, the Servicer will notify the Indenture Trustee or the
Custodian, with a copy to the Issuer, of the termination of or the payment in
full and the termination of any Mortgage Loan during the preceding Collection
Period. Upon receipt of payment in full, the Servicer is authorized to execute,
pursuant to the authorization contained in Section 3.01, an instrument of
satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and be
delivered to the Person entitled thereto. It is understood and agreed that any
expenses incurred in connection with such instrument of satisfaction or
transfer shall be reimbursed from amounts deposited in the Custodial Account.
From time to time and as appropriate for the servicing or foreclosure of any
Mortgage Loan, the Custodian shall, upon request of the Servicer and delivery
to the Custodian, with a copy to the Issuer, of a Request for Release, in the
form attached hereto as Exhibit C, signed by a Servicing Officer, release or
cause to be released the related Mortgage File to the Servicer. The Issuer or
Indenture Trustee shall promptly execute such documents, in the forms provided
by the Servicer, as shall be necessary for the prosecution of any such
proceedings or the taking of other servicing actions. Such trust receipt shall
obligate the Servicer to return such Mortgage File to the Custodian (as
specified in such receipt) when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to that specified
above, such trust receipt shall be released to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related
Assignment of Mortgage in accordance with the provisions of the Purchase
Agreement, the Indenture Trustee or the Issuer shall, if so requested in
writing by the Servicer, promptly execute an appropriate assignment in the form
provided by the Servicer to assign such Mortgage Loan for the purpose of
collection to the Servicer (any such assignment shall unambiguously indicate
that the assignment is for the purpose of collection only), and, upon such
assignment, such assignee for collection will thereupon bring all required
actions in its own name and otherwise enforce the terms of such Mortgage Loan
and deposit or credit the Net Liquidation Proceeds, exclusive of Foreclosure
Profits, received with respect thereto into the Custodial Account. In the event
that all delinquent payments due under any such Mortgage Loan are paid by the
Mortgagor and any other defaults are cured, then the assignee for collection
shall promptly reassign such Mortgage Loan to the Indenture Trustee and return
all Related Documents to the place where the related Mortgage File was being
maintained.
In connection with the Issuer's obligation to cooperate as provided in
this Section 3.08 and all other provisions of this Agreement requiring the
Issuer to authorize or permit any actions to be taken with respect to the
Mortgage Loans, 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, expressly agrees, on behalf of the Issuer, to
take all such actions on behalf of the Issuer and to promptly execute and
return all instruments reasonably required by the Servicer in connection
therewith; provided, that if the Servicer requests a signature of the Indenture
Trustee, on behalf of the Issuer, then the Servicer shall deliver to the
Indenture Trustee an Officer's Certificate stating that such signature is
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
Section 3.09 Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee in
accordance with Section 3.03 as compensation for its services in connection
with servicing the Mortgage Loans. Moreover, late payment charges and other
receipts not required to be deposited in the Custodial Account as specified in
Section 3.02 shall be retained by the Servicer as additional servicing
compensation. The Servicer shall be required to pay all expenses incurred by it
in connection with its activities hereunder (including payment of all other
fees and expenses not expressly stated hereunder to be for the account of the
Securityholders), including the fees and expenses of the Owner Trustee,
Indenture Trustee and the Custodian, and shall not be entitled to reimbursement
therefor.
Section 3.10 Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Issuer, the Indenture Trustee,
the Depositor and the Underwriter, with a copy to the Enhancer, beginning March
31, 2000, and on or before March 31 of each year thereafter, an Officer's
Certificate stating that (i) a review of the activities of the Servicer during
the preceding calendar year and of its performance under any servicing
agreements to which it is a party, including 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 Servicer has complied in all material
respects with the minimum servicing standards set forth in the Uniform Single
Attestation Program for Mortgage Bankers and has fulfilled all of its material
obligations in all material respects throughout such year, or, if there has
been material noncompliance with such servicing standards or a default in the
fulfillment in all material respects of any such obligation, such statement
shall include a description of such noncompliance or specify each such default,
as the case may be, known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Issuer and the Indenture
Trustee, with a copy to the Enhancer, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice by means of an Officer's Certificate of any event which with the giving
of notice or the lapse of time or both, would become a Servicing Default.
Section 3.11 Annual Servicing Report. Beginning March 31, 2000, and on
or before March 31 of each year thereafter, the Servicer at its expense shall
cause a firm of nationally recognized independent public accountants (which
firm may also render other services to the Servicer) to furnish a report to the
Issuer, the Indenture Trustee, the Depositor, the Underwriter, the Enhancer and
each Rating Agency stating its opinion that, on the basis of an examination
conducted by such firm substantially in accordance with standards established
by the American Institute of Certified Public Accountants, the assertions made
pursuant to Section 3.10 regarding compliance with the minimum servicing
standards set forth in the Uniform Single Attestation Program for Mortgage
Bankers during the preceding calendar year are fairly stated in all material
respects, subject to such exceptions and other qualifications that, in the
opinion of such firm, such accounting standards require it to report. In
rendering such statement, such firm may rely, as to matters relating to the
direct servicing of Mortgage Loans by Subservicers, upon comparable statements
for examinations conducted by independent public accountants substantially in
accordance with standards established by the American Institute of Certified
Public Accountants (rendered within one year of such statement) with respect to
such Subservicers.
Section 3.12 Access to Certain Documentation and Information Regarding
the Mortgage Loans. Whenever required by statute or regulation, the Servicer
shall provide to the Enhancer, any Securityholder upon reasonable request (or a
regulator for a Securityholder) or the Indenture Trustee, reasonable access to
the documentation regarding the Mortgage Loans. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Servicer. Nothing in this Section 3.12 shall
derogate from the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding Mortgagors, and the failure of
the Servicer to provide access as provided in this Section 3.12 as a result of
such obligation shall not constitute a breach of this Section 3.12.
Section 3.13 Maintenance of Certain Servicing Insurance Policies. The
Servicer shall, during the term of its service as servicer, maintain in force
and effect (i) a policy or policies of insurance covering errors and omissions
in the performance of its obligations as Servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and fidelity bond shall be at least equal to the coverage that would
be required by FNMA or FHLMC, whichever is greater, for Persons performing
servicing for mortgage loans purchased by such entity.
Section 3.14 Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged Property. The Servicer
shall prepare and deliver all federal and state information reports with
respect to the Mortgage Loans when and as required by all applicable state and
federal income tax laws. In particular, with respect to the requirement under
Section 6050J of the Code to the effect that the Servicer or Subservicer shall
make reports of foreclosures and abandonments of any mortgaged property for
each year beginning in 1999, the Servicer or Subservicer shall file reports
relating to each instance occurring during the previous calendar year in which
the Servicer (a) on behalf of the Issuer, acquired an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Mortgage Loan, or (b) knew or had reason to know that any
Mortgaged Property had been abandoned. The reports from the Servicer or
Subservicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J and Section 6050H (reports relating to
mortgage interest received) of the Code.
Section 3.15 Optional Repurchase of Mortgage Loans.
(a) Notwithstanding any provision in Section 3.07 to the contrary, the
Servicer, at its option and in its sole discretion, may repurchase any Mortgage
Loan delinquent in payment for a period of 60 days or longer for a price equal
to the Repurchase Price.
(b) The Servicer, at its option and in its sole discretion, may
repurchase any Mortgage Loan for a price equal to the Repurchase Price (i) if
the related Mortgage did not have a Lien senior to it as of the related Cut-Off
Date, and the related Mortgagor requests the placement of a Lien on the related
Mortgaged Property senior to that of such Mortgage or (ii) with respect to any
HELOC, if the Mortgagor requests an increase in the Credit Limit above the
Credit Limit of such HELOC as of the related Cut-Off Date or (iii) if the
Mortgagor refinances the Lien senior to that of the related Mortgage resulting
in a CLTV above the previous CLTV for such Mortgage Loan.
Section 3.16 Recording of Assignments. If the credit rating of the
parent of the Servicer is reduced to below "BBB" by Standard & Poor's or below
"A3" by Moody's, the Servicer shall, within 60 days after written notification
of such reduction in credit rating by Standard & Poor's, Moody's or the
Enhancer, the Servicer, at its own expense, shall complete and submit for
recording in the appropriate public office for real property records the
Assignments of Mortgage for each Mortgage Loan. While such assignment to be
recorded is being recorded, the Custodian shall retain a photocopy of such
assignment. If any assignment is lost or returned unrecorded to the Custodian
because of any defect therein, the Servicer shall prepare a substitute
assignment or cure such defect, as the case may be, and the Servicer shall
cause such assignment to be recorded in accordance with this paragraph.
Section 3.17 Pre-Funding Account.
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Pre-Funding Account,
Norwest Bank Minnesota, National Association, as Indenture Trustee for GMACM
Revolving Home Equity Loan Trust 1999-1" (the "Pre-Funding Account"). On the
Closing Date, the Seller shall deposit into the Pre-Funding Account an amount
equal to the Original Pre-Funded Amount from the proceeds of the sale of the
Securities. On each Subsequent Transfer Date, the Servicer shall instruct the
Indenture Trustee in writing to 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 and purchased with funds on deposit in the Pre-Funding
Account, and to pay such amount to or upon the order of the Seller upon
satisfaction of the conditions set forth in this Agreement, in the Purchase
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 first be applied toward the purchase of Additional
Balances, to the extent available on such Payment Date, and any amounts
remaining thereafter shall be deposited into the Funding Account.
(c) The Servicer may cause the institution maintaining the Pre-Funding
Account to invest any funds therein in Permitted Investments having a maturity
of up to 90 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 shall be advanced by the Servicer for deposit
into the Note Payment Account (which advance shall be reimbursed to the
Servicer from such investment earnings at maturity). At any time when the
Indenture Trustee is maintaining the Pre-Funding Account, any request by the
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 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 Note Payment Account, and
may be withdrawn therefrom in accordance with Section 3.19 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 Servicer out
of its own funds immediately as realized.
Section 3.18 Funding Account.
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Funding Account, Norwest
Bank Minnesota, National Association, as Indenture Trustee for GMACM Revolving
Home Equity Loan Trust 1999-1" (the "Funding Account"). On each Payment Date
during the Revolving Period, the Servicer shall withdraw from the Custodial
Account and deposit into the Funding Account the aggregate amount of Principal
Collections remaining after the purchase of all Additional Balances and
Subsequent Mortgage Loans on or prior to such Payment Date.
(b) The Servicer may cause the institution maintaining the Funding
Account to invest any funds therein in Permitted Investments having a maturity
of up to 90 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 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. At any time when the Indenture Trustee is maintaining the
Funding Account, any request by the 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 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 Note Payment Account. The amount of any net losses incurred
in respect of the principal amount of any such investment shall be deposited
into the Funding Account by the Servicer out of its own funds immediately as
realized.
(c) From time to time withdrawals shall be made from the Funding
Account by the Servicer as follows:
(i) on each Payment Date during the Revolving Period, any amounts
on deposit in the Funding Account shall be withdrawn and applied, to
the extent available, in the following order:
(A) to the Seller, as payment for Additional Balances, if
any, in an amount equal to (1) the aggregate of all Draws during
the related Collection Period or (2) if the Seller has directed
the Servicer to apply amounts on deposit in the Custodial Account
representing Principal Collections received during such
Collection Period to the purchase of Additional Balances, the
excess, if any, of the aggregate of all Draws during the related
Collection Period over Principal Collections for such Collection
Period; and
(B) to the Seller, as payment for Subsequent Mortgage Loans,
if any, in an amount equal to (1) the aggregate Principal Balance
of all such Subsequent Mortgage Loans during the related
Collection Period or (2) if the Seller has directed the Servicer
to apply amounts on deposit in the Custodial Account representing
Principal Collections for such Collection Period not applied
toward the purchase of Additional Balances or toward the purchase
of Subsequent Mortgage Loans, the excess, if any, of the
aggregate Principal Balance of all such Subsequent Mortgage Loans
over such Principal Collections; and
(ii) on the last Payment Date during the Revolving Period, any
amounts remaining on deposit in the Funding Account, after giving
effect to clause (i) above, shall be deposited into the Note Payment
Account for payment to the Noteholders pursuant to Section 3.05 of the
Indenture.
Section 3.19 Capitalized Interest Account.
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Capitalized Interest
Account, Norwest Bank Minnesota, National Association, as Indenture Trustee for
GMACM Revolving Home Equity Loan Trust 1999-1" (the "Capitalized Interest
Account"). The Indenture Trustee shall, promptly upon receipt, deposit in the
Capitalized Interest Account and retain therein the Interest Coverage Amount.
If the Indenture Trustee shall not have received an investment direction from
the Seller, the Indenture Trustee shall invest funds on deposit in the
Capitalized Interest Account in Permitted Investments of the kind described in
clause (v) of the definition of Permitted Investments having a maturity date no
later than the next succeeding Payment Date. The Servicer shall deposit into
the Capitalized Interest Account the amount of any net loss incurred in respect
of any such Permitted Investment immediately upon realization of such loss
without any right of reimbursement therefor. The Servicer shall be the owner of
the Capitalized Interest Account and shall report all items of income,
deduction, gain or loss arising therefrom.
(b) On each Payment Date during the Pre-Funding Period and on the
Payment Date immediately after the end of the Pre-Funding Period, the Indenture
Trustee shall withdraw from the Capitalized Interest Account and deposit into
the Note Payment Account an amount equal to the lesser of (i) the Capitalized
Interest Requirement for such Payment Date and (ii) the excess, if any, of (A)
the amount necessary to pay interest for the related Interest Period at the
Note Rate on the related Note Balances of the Notes immediately prior to such
Payment Date over (B) the funds on deposit in the Note Payment Account on such
Payment Date (after giving effect to all other deposits of funds into the Note
Payment Account on such Payment Date other than any Policy Draw Amount pursuant
to Section 3.28(a)(i) of the Indenture).
(c) In connection with each Subsequent Transfer Date occurring in the
Pre-Funding Period, the Servicer, at its option, may recalculate the Interest
Coverage Amount taking into account the amount remaining in the Pre-Funding
Account following the sale of Subsequent Mortgage Loans to the Trust on such
date. The recomputed Interest Coverage Amount shall be not less than the amount
necessary to cover the Capitalized Interest Requirement for each remaining
Payment Date in the Pre-Funding Period. With the written consent of the
Enhancer (which consent shall not be unreasonably withheld), on any such
Subsequent Transfer Date, the Servicer shall instruct the Indenture Trustee to
pay to it from funds in the Capitalized Interest Account the excess of the
amount on deposit therein over the recomputed Interest Coverage Amount.
(d) Upon the earlier of (i) termination of the Trust Agreement in
accordance with Section 8.01 thereof and (ii) the Payment Date following the
end of the Pre-Funding Period, any amount remaining on deposit in the
Capitalized Interest Account shall be withdrawn by the Indenture Trustee and
paid to the Seller.
<PAGE>
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders.
(a) With respect to each Payment Date, on the Business Day following
the related Determination Date, the Servicer shall forward to the Indenture
Trustee, and the Indenture Trustee, pursuant to Section 3.26 of the Indenture,
shall forward or cause to be forwarded by mail to each Certificateholder, each
Noteholder, the Enhancer, the Depositor, the Owner Trustee, the Certificate
Paying Agent and each Rating Agency, a statement setting forth the following
information as to the Notes and Certificates, to the extent applicable:
(i) the aggregate amount of (a) Interest Collections, (b)
Principal Collections (and, with respect to any Payment Date relating
to the Managed Amortization Period, Net Principal Collections) and (c)
Substitution Adjustment Amounts for such Collection Period;
(ii) the amount of such distribution as principal to the
Noteholders;
(iii) the amount of such distribution as interest to the
Noteholders, the amount thereof, if any, payable in respect of unpaid
Interest Shortfalls, and the amount of any Interest Shortfalls for the
related Payment Date;
(iv) the Policy Draw Amount, if any, for such Payment Date and
the aggregate amount of prior draws on the Policy thereunder not yet
reimbursed;
(v) the amount of such distribution to the Certificateholders;
(vi) the aggregate Principal Balance of the Mortgage Loans as of
the end of the preceding Collection Period;
(vii) the number and aggregate Principal Balances of Mortgage
Loans (a) as to which the Minimum Monthly Payment is delinquent for
30-59 days, 60-89 days and 90 or more days, respectively, (b) the
related Mortgaged Property of which has been foreclosed upon and (c)
as to which the related Mortgaged Property has become REO Property, in
each case as of the end of the preceding Collection Period; provided,
however, that such information shall not be provided on the statements
relating to the first Payment Date;
(viii) the Weighted Average Net Loan Rate for the related
Collection Period;
(ix) prior to the second Determination Date following the
commencement of the Rapid Amortization Period, the aggregate amount of
Additional Balances created during the previous Collection Period
conveyed to the Issuer prior to the commencement of the Rapid
Amortization Period;
(x) the aggregate Liquidation Loss Amounts with respect to the
related Collection Period, the amount distributed as principal to
Noteholders in respect of Liquidation Loss Amounts and the aggregate
of the Liquidation Loss Amounts from all Collection Periods to date
expressed as dollar amount and as a percentage of the aggregate
Cut-Off Date Principal Balances of the Mortgage Loans;
(xi) the aggregate Note Balance of each Class of Notes and the
Certificate Balance of the Certificates after giving effect to the
distribution of principal on such Payment Date;
(xii) the Percentage Interest applicable to each of the
Securities, after application of payments made on such Payment Date;
and
(xiii) the Outstanding Overcollateralization Amount immediately
following such Payment Date.
In the case of information furnished pursuant to clauses (ii) and
(iii) above, the amounts shall be expressed as an aggregate dollar amount per
Term Note, Variable Funding Note or Certificate, as applicable, with a $25,000
denomination.
If a Managed Amortization Event, a Rapid Amortization Event or a
Servicing Default shall occur, on the Business Day following the related
Determination Date, the Servicer shall forward to the Indenture Trustee, and
the Indenture Trustee, pursuant to Section 3.26 of the Indenture, shall forward
or cause to be forwarded by mail to each Certificateholder, each Noteholder,
the Enhancer, the Depositor, the Owner Trustee, the Certificate Paying Agent
and each Rating Agency, a statement to such effect, including, in the case of a
Rapid Amortization Event or a Servicing Default, the nature thereof. Such
statement may be included in, or separate from, the regular statement sent to
Securityholders.
(b) The Servicer shall forward to the Indenture Trustee any other
information reasonably requested by the Indenture Trustee necessary 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
Servicer shall furnish a written statement to the Certificate Paying Agent and
the Indenture Trustee setting forth the aggregate amounts required to be
withdrawn from the Custodial Account and deposited into the Note Payment
Account or Distribution Account on the Business Day preceding the related
Payment Date pursuant to Section 3.03. The determination by the Servicer of
such amounts shall, in the absence of obvious error, be deemed to be
presumptively correct for all purposes hereunder, and the Owner Trustee and the
Indenture Trustee shall be protected in relying upon the same without any
independent check or verification. In addition, upon the Issuer's written
request, the Servicer shall promptly furnish such information reasonably
requested by the Issuer that is reasonably available to the Servicer to enable
the Issuer to perform its federal and state income tax reporting obligations.
<PAGE>
ARTICLE V
Note Payment Account
Section 5.01 Note Payment Account. The Indenture Trustee shall
establish and maintain an Eligible Account entitled "Norwest Bank Minnesota,
National Association, as Indenture Trustee, for the benefit of the
Securityholders, the Certificate Paying Agent and the Enhancer, pursuant to the
Indenture, dated as of June 17, 1999, between GMACM Revolving Home Equity Loan
Trust 1999-1 and Norwest Bank Minnesota, National Association" (the "Note
Payment Account"). On each Payment Date, amounts on deposit in the Note Payment
Account shall be distributed by the Indenture Trustee in accordance with
Section 3.05 of the Indenture. The Indenture Trustee may invest or cause the
institution maintaining the Note Payment Account to invest the funds therein in
Permitted Investments selected by the Indenture Trustee and designated in the
name of the Indenture Trustee, which investments shall mature not later than
the Business Day next preceding the Payment Date next following the date of
such investment (except that (i) any investment in the institution with which
the Note Payment Account is maintained may mature on such Payment Date and (ii)
any other investment may mature on such Payment Date if the Indenture Trustee
shall advance funds on such Payment Date to the Note Payment Account in the
amount payable on such investment on such Payment Date, pending receipt thereof
to the extent necessary to make distributions on the Notes) and shall not be
sold or disposed of prior to maturity. All income and gain realized from any
such investment shall be for the benefit of the Indenture Trustee and shall be
subject to its withdrawal or order from time to time. The amount of any losses
incurred in respect of any such investments shall be deposited in the Note
Payment Account by the Indenture Trustee out of its own funds immediately as
realized.
<PAGE>
ARTICLE VI
The Servicer
Section 6.01 Liability of the Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Servicer herein.
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. Any corporation into which the Servicer may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any corporation succeeding to the business of the
Servicer, shall be the successor of the 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 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 mortgage loans,
is reasonably satisfactory to the Enhancer (provided, that such consent to
assignment may not be unreasonably withheld), is willing to service the
Mortgage Loans and executes and delivers to the Issuer (with a copy to the
Enhancer) an agreement, in form and substance reasonably satisfactory to the
Enhancer, that contains 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 Servicer under this Agreement; and provided further, that no
Rating Event will occur as a result of such assignment and delegation (as
evidenced by a letter to such effect from each Rating Agency), if determined
without regard to the Policy; and provided further, that the Owner Trustee
shall receive an Opinion of Counsel to the effect that such assignment or
delegation will not cause the Issuer 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 Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer 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, however, that this provision shall not protect the
Servicer or any such Person against any liability that would otherwise be
imposed 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
of its obligations and duties hereunder. The Servicer and any director or
officer or employee or agent of the Servicer 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 Servicer and any director,
officer, employee or agent of the Servicer shall be indemnified by the Issuer
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Securities, including
any amount paid to the Owner Trustee or 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 of its obligations
and duties hereunder. The Servicer shall not be under any obligation to appear
in, prosecute or defend any legal action that is 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, however, that
the Servicer may in its sole discretion undertake any such 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 Servicer shall be entitled to be reimbursed therefor. The Servicer's right
to indemnity or reimbursement pursuant to this Section 6.03 shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01
with respect to any losses, expenses, costs or liabilities arising prior to
such resignation or termination (or arising from events that occurred prior to
such resignation or termination).
Section 6.04 Servicer Not to Resign. Subject to the provisions of
Section 6.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon 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 any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and
nature carried on by the Servicer or its subsidiaries or Affiliates at the date
of this Agreement or (b) upon satisfaction of the following conditions: (i) the
Servicer shall have proposed a successor servicer to the Issuer and the
Indenture Trustee in writing and such proposed successor servicer is reasonably
acceptable to the Issuer, the Indenture Trustee and the Enhancer; (ii) each
Rating Agency shall have delivered a letter to the Issuer, the Enhancer and the
Indenture Trustee prior to the appointment of the successor servicer stating
that the proposed appointment of such successor servicer as Servicer hereunder
will not cause a Rating Event, if determined without regard to the Policy; and
(iii) such proposed successor servicer is reasonably acceptable to the
Enhancer, as evidenced by a letter to the Issuer and the Indenture Trustee;
provided, however, that no such resignation by the Servicer shall become
effective until such successor servicer or, in the case of (a) above, the
Indenture Trustee, as pledgee of the Mortgage Loans, shall have assumed the
Servicer's responsibilities and obligations hereunder or the Indenture Trustee,
as pledgee of the Mortgage Loans, shall have designated a successor servicer in
accordance with Section 8.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections
7.01 and 7.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Indenture Trustee and the Enhancer.
Section 6.05 Delegation of Duties. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, that agrees to conduct such duties in
accordance with standards comparable to those with which the Servicer complies
pursuant to Section 3.01. Such delegation shall not relieve the Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 6.04.
Section 6.06 Payment of Indenture Trustee's and Owner Trustee's Fees
and Expenses; Indemnification.
(a) After the Closing Date, the Servicer covenants and agrees to pay
to the Owner Trustee, the Indenture Trustee and any co-trustee of the Indenture
Trustee or the Owner Trustee from time to time, and the Owner Trustee, 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 Trust Agreement
and the Indenture and in the exercise and performance of any of the powers and
duties under the Trust Agreement or the Indenture, as the case may be, of the
Owner Trustee, the Indenture Trustee and any co-trustee, and the Servicer will
pay or reimburse the Indenture Trustee and any co-trustee upon request for all
reasonable expenses, disbursements and advances incurred or made by the
Indenture Trustee or any co-trustee in accordance with any of the provisions of
this Agreement except any such expense, disbursement or advance as may arise
from its negligence, willful misfeasance or bad faith. In addition, the
Indenture Trustee shall be entitled to be reimbursed from the Servicer for all
reasonable costs associated with the transfer of servicing from the predecessor
servicer pursuant to Section 7.02 hereunder, including, without limitation, any
reasonable 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 Servicer agrees to indemnify the Indenture Trustee and the
Owner Trustee for, and to hold the Indenture Trustee and the Owner Trustee, as
the case may be, harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on the part of the
Indenture Trustee or the Owner Trustee, as the case may be, arising out of, or
in connection with, the acceptance and administration of the Issuer and the
assets thereof, including the costs and expenses (including reasonable legal
fees and expenses) of defending the Indenture Trustee or the Owner Trustee, as
the case may be, 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 or
Owner Trustee, as the case may be, shall have given the Servicer
written notice thereof promptly after the Indenture Trustee or Owner
Trustee, as the case may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Issuer,
the Indenture Trustee or Owner Trustee, as the case may be, shall
cooperate and consult fully with the Servicer in preparing such
defense; and
(iii) notwithstanding anything in this Agreement to the contrary,
the Servicer shall not be liable for settlement of any claim by the
Indenture Trustee or the Owner Trustee, as the case may be, entered
into without the prior consent of the Servicer.
No termination of this Agreement shall affect the obligations created by this
Section 6.06 of the Servicer to indemnify the Indenture Trustee and the Owner
Trustee under the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Servicer in this Section 6.06(b) shall not pertain to any loss, liability or
expense of the Indenture Trustee or the Owner Trustee, including the costs and
expenses of defending itself against any claim, incurred in connection with any
actions taken by the Indenture Trustee or the Owner Trustee at the direction of
the Noteholders or Certificateholders, as the case may be, pursuant to the
terms of this Agreement.
<PAGE>
ARTICLE VII
Default
Section 7.01 Servicing Default.
(a) If any one of the following events (each, a "Servicing Default")
shall occur and be continuing:
(i) any failure by the Servicer to deposit in the Custodial
Account, the Funding Account, the Note Payment Account or the
Distribution 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 Servicer by the Issuer or the Indenture
Trustee, or to the Servicer, the Issuer and the Indenture Trustee by
the Enhancer;
(ii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in the Securities or in this Agreement, which
failure, in each case, materially and adversely affects the interests
of the Securityholders or the Enhancer, and which failure continues
unremedied for a period of 45 days after the date on which written
notice of such failure, requiring the same to be remedied, and stating
that such notice is a "Notice of Default" hereunder, shall have been
given to the Servicer by the Issuer or the Indenture Trustee, or to
the Servicer, the Issuer and the Indenture Trustee by the Enhancer;
(iii) the entry against the Servicer of a decree or order by a
court or 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
proceedings, 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; or
(iv) the Servicer shall voluntarily go into liquidation, 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 proceedings of or relating to the Servicer
or of or relating to 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 proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer and such decree or order shall have
remained in force undischarged, unbonded or unstayed for a period of
60 days; or the 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;
then, and in every such case, so long as a Servicing Default shall not have
been remedied by the Servicer, either the Issuer, the Indenture Trustee (with
the consent of the Enhancer) or the Enhancer, by notice then given in writing
to the Servicer, the Issuer and the Indenture Trustee, may terminate all of the
rights and obligations of the Servicer as servicer under this Agreement other
than its right to receive servicing compensation and expenses for servicing the
Mortgage Loans hereunder during any period prior to the date of such
termination, and the Issuer, the Enhancer or the Indenture Trustee (with the
consent of the Enhancer), may exercise any and all other remedies available at
law or equity. Any such notice to the Servicer shall also be given to each
Rating Agency, the Enhancer and the Issuer. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Securities or the Mortgage Loans or
otherwise, shall pass to and be vested in the Indenture Trustee, as pledgee of
the Mortgage Loans, pursuant to and under this Section 7.01; and, without
limitation, the Indenture Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any
and all documents and 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 and related documents, or otherwise. The Servicer agrees to cooperate with
the Issuer, the Enhancer and Indenture Trustee, as the case may be, in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Indenture Trustee
for the administration by it of all cash amounts relating to the Mortgage Loans
that shall at the time be held by the Servicer and to be deposited by it in the
Custodial Account, or that have been deposited by the Servicer in the Custodial
Account or thereafter received by the Servicer with respect to the Mortgage
Loans. All reasonable costs and expenses (including, but not limited to,
attorneys' fees) incurred in connection with amending this Agreement to reflect
such succession as Servicer pursuant to this Section 7.01 shall be paid by the
predecessor Servicer (or if the predecessor Servicer is the Indenture Trustee,
the initial Servicer) upon presentation of reasonable documentation of such
costs and expenses.
(b) Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late
collection of a payment on a Mortgage Loan which was due prior to the notice
terminating the Servicer's rights and obligations hereunder and received after
such notice, that portion to which the Servicer would have been entitled
pursuant to Sections 3.03 and 3.09 as well as its Servicing Fee in respect
thereof, and any other amounts payable to the Servicer hereunder the
entitlement to which arose prior to the termination of its activities
hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under paragraph (a)(i) or (ii) above, after the applicable grace periods
specified therein, shall not constitute a Servicing Default if such delay or
failure could not be prevented by the exercise of reasonable diligence by the
Servicer and such delay or failure was caused by an act of God or the public
enemy, acts of declared or undeclared war, public disorder, rebellion or
sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence shall not relieve the Servicer
from using reasonable efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Agreement. The Servicer shall
provide the Indenture Trustee, the Enhancer and the Securityholders with notice
of any such failure or delay by it, together with a description of its efforts
to so perform its obligations. The Servicer shall immediately notify the
Indenture Trustee, the Enhancer and the Issuer in writing of any Servicing
Default.
Section 7.02 Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 7.01 or sends a notice pursuant to Section
6.04, the Indenture Trustee as pledgee of the Mortgage Loans shall be the
successor in all respects to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
immediately assume all of the obligations of the Servicer to make advances on
Mortgage Loans under Section 3.02(b) and will be subject to all other
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof as soon as practicable, but in no
event later than 90 days after the Indenture Trustee becomes successor
Servicer. Nothing in this Agreement or in the Trust Agreement shall be
construed to permit or require the Indenture Trustee to (i) succeed to the
responsibilities, duties and liabilities of the initial Servicer in its
capacity as Seller under the Purchase Agreement, (ii) be responsible or
accountable for any act or omission of the Servicer prior to the issuance of a
notice of termination hereunder, (iii) require or obligate the Indenture
Trustee, in its capacity as successor Servicer, to purchase, repurchase or
substitute any Mortgage Loan, (iv) fund any Additional Balances with respect to
any Mortgage Loan, (v) fund any losses on any Permitted Investment directed by
any other Servicer, or (vi) be responsible for the representations and
warranties of the Servicer. As compensation therefor, the Indenture Trustee
shall be entitled to such compensation as the Servicer would have been entitled
to hereunder if no such notice of termination had been given. Notwithstanding
the foregoing, if the Indenture Trustee is (x) unwilling to act as successor
Servicer, or (y) legally unable so to act, the Indenture Trustee as pledgee of
the Mortgage Loans may (in the situation described in clause (x)) or shall (in
the situation described in clause (y)) appoint or petition a court of competent
jurisdiction to appoint any established housing and home finance institution,
bank or other mortgage loan servicer having a net worth of not less than
$10,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder; provided, that any such successor Servicer shall be acceptable to
the Enhancer, as evidenced by the Enhancer's prior written consent, which
consent shall not be unreasonably withheld; and provided further, that the
appointment of any such successor Servicer will not result in a Rating Event,
if determined without regard to the Policy. Pending appointment of a successor
to the 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 Servicer would otherwise have
received pursuant to Section 3.09 (or such lesser compensation as the Indenture
Trustee and such successor shall agree). The appointment of a successor
Servicer shall not affect any liability of the predecessor Servicer that may
have arisen under this Agreement prior to its termination as Servicer
(including the obligation to purchase Mortgage Loans pursuant to Section 3.01,
to pay any deductible under an insurance policy pursuant to Section 3.04 or to
indemnify the Indenture Trustee pursuant to Section 6.06), nor shall any
successor Servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Notwithstanding the foregoing, the Indenture Trustee, in its capacity as
successor Servicer, shall not be responsible for the lack of information and/or
documents that it cannot obtain through reasonable efforts.
(b) Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during its term as Servicer (i) continue to service and
administer the Mortgage Loans for the benefit of the Securityholders, (ii)
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.13 and (iii) be
bound by the terms of the Insurance Agreement.
(c) Any successor Servicer, including the Indenture Trustee, shall not
be deemed in default or to have breached its duties hereunder if the
predecessor Servicer shall fail to deliver any required deposit to the
Custodial 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 to the Servicer pursuant to this Article VII or
Section 6.04, the Indenture Trustee shall give prompt written notice thereof to
the Securityholders, the Enhancer, the Issuer 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; provided, that any such amendment shall be
accompanied by a letter from each Rating Agency to the effect that such
amendment will not result in a Rating Event, if determined without regard to
the Policy; and provided further, that the Enhancer and the Indenture Trustee
shall consent thereto.
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 at or mailed by certified mail, return receipt requested,
to (a) in the case of the Servicer, 100 Witmer Road, Horsham, Pennsylvania
19044, Attention: Anthony Renzi, (b) in the case of the Enhancer, Ambac
Assurance Corporation, One State Street Plaza, 17th Floor, New York, New York
10004: Attention: Structured Finance - Mortgage Backed Securities, (c) in the
case of Moody's, Home Mortgage Loan Monitoring Group, 4th Floor, 99 Church
Street, New York, New York 10001, (d) in the case of Standard & Poor's, 26
Broadway, 15th Floor, New York, New York 10004, Attention: Residential Mortgage
Surveillance Group, (e) in the case of the Owner Trustee, Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Norma Closs and (f) in the case of the Issuer, GMACM
Revolving Home Equity Loan Trust 1999-1, c/o the Owner Trustee at the address
set forth in clause (e) above, and (g) in the case of the Indenture Trustee,
11000 Broken Land Parkway, Columbia, Maryland 21044, Attention: Corporate
Trust; or, with respect 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. Any notice required or permitted to be mailed to a
Securityholder shall be given by first class mail, postage prepaid, at the
address of such Securityholder as shown in the Note Register or Certificate
Register, as the case may be. Any notice so mailed within the time prescribed
in this Agreement shall be conclusively presumed to have been duly given,
whether or not the related Securityholder receives such notice. Any notice or
other document required to be delivered or mailed by the Indenture Trustee to
any Rating Agency shall be given on a reasonable efforts basis and only as a
matter of courtesy and accommodation, and the Indenture Trustee shall have no
liability for failure to deliver any such notice or document to any Rating
Agency.
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 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
Enhancer, the Owner Trustee and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, 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 such counterparts 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 the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 8.08 Termination Upon Purchase by the Servicer or Liquidation
of All Mortgage Loans; Partial Redemption.
(a) The respective obligations and responsibilities of the Servicer,
the Issuer and the Indenture Trustee created hereby 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 Servicer from the Issuer of all Mortgage
Loans and REO Property if the aggregate Term Note Balance as of any
date is less than 10% of the Initial Term Note Balance (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 (and, in the case of REO Property, the
unpaid Principal Balance of the related mortgage loan), plus accrued
and unpaid interest thereon at the weighted average of the Loan 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
unpaid Servicing Fee shall be deemed to have been paid at such time)
plus any Interest Shortfall and interest owed thereon to the Term
Noteholders.
If such right is exercised by the Servicer, the Servicer shall deposit the
amount calculated pursuant to clause (ii) above with the Indenture Trustee
pursuant to Section 4.10 of the Indenture and, upon the receipt of such
deposit, the Indenture Trustee or Custodian shall release to the Servicer, the
files pertaining to the Mortgage Loans being purchased.
(b) The Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the related Mortgage Loans are to
be released to the Servicer, appropriate documents assigning each such Mortgage
Loans from the Indenture Trustee or the Issuer to the Servicer or the
appropriate party.
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 Related Documents. The
recitals contained herein shall be taken as the statements of the Servicer, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of
this Agreement, of any Basic Document or Related Document, or of the
Certificates (other than the signatures of the Owner Trustee on the
Certificates) or the Notes. 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 Certificateholders
under the Trust Agreement or the Noteholders under the Indenture, including the
compliance by the Depositor, the Seller or the Servicer with any warranty or
representation made under any Basic Document or the accuracy of any such
warranty or representation, or any action of the Certificate Paying Agent, the
Certificate Registrar or the Indenture Trustee taken in the name of the Owner
Trustee.
<PAGE>
IN WITNESS WHEREOF, the Servicer, the Issuer and the Indenture Trustee
have caused this Agreement to be duly executed by their respective officers or
representatives all as of the day and year first above written.
GMAC MORTGAGE CORPORATION,
as Servicer
By: _______________________________________
Name:
Title:
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1,
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 A
MORTGAGE LOAN SCHEDULE
<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 June 17,
1999 (the "Indenture"), between GMACM Revolving Home Equity Loan Trust 1999-1
and the Indenture Trustee, a national banking association organized and
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 GMAC Mortgage Corporation, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania, its
true and lawful Attorney-in-Fact, with full power and authority to sign,
execute, acknowledge, deliver, file for record, 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 Mortgages securing a Mortgage Loan and
the related Mortgage Notes for which the undersigned is acting as Indenture
Trustee for various Securityholders (whether the undersigned is named therein
as mortgagee or beneficiary or has become mortgagee by virtue of endorsement of
such Mortgage Note secured by any such Mortgage) and for which GMAC Mortgage
Corporation is acting as Servicer pursuant to a Servicing Agreement dated as of
June 17, 1999 (the "Servicing Agreement").
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage, where said modification or
re-recording is for the purpose of correcting the Mortgage to conform same
to the original intent of the parties thereto or to correct title errors
discovered after such title insurance was issued and said modification or
re-recording, in either instance, does not adversely affect the Lien of
the Mortgage as insured.
2. The subordination of the Lien of a Mortgage to an easement in favor of a
public utility company or a government agency or unit with powers of
eminent domain; this section shall include, without limitation, the
execution of partial satisfactions/releases, partial reconveyances or the
execution of requests to trustees to accomplish same.
3. With respect to a Mortgage, 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, without limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Mortgage, in
accordance with state law and the Mortgage;
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 or state law to expeditiously complete said
transactions.
4. The conveyance of the properties to the 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/release of a Mortgage or full reconveyance upon
payment and discharge of all sums secured thereby, including, without
limitation, cancellation of the related Mortgage Note.
7. The assignment of any Mortgage and the related Mortgage Note, in
connection with the repurchase of the Mortgage Loan secured and evidenced
thereby.
8. The full assignment of a Mortgage upon payment and discharge of all sums
secured thereby in conjunction with the refinancing thereof, including,
without limitation, the endorsement of the related Mortgage Note.
9. The modification or re-recording of a Mortgage, where said modification or
re-recording is for the purpose of any modification pursuant to Section
3.01 of the Servicing Agreement.
10. The subordination of the Lien of a Mortgage, where said subordination is
in connection with any modification pursuant to Section 3.01 of the
Servicing Agreement, and the execution of partial satisfactions/releases
in connection with such same Section 3.01.
The undersigned gives said Attorney-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 hereby does ratify and confirm to all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in Appendix A to the Indenture.
<PAGE>
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 has 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 17th day of June, 1999, before me the undersigned, Notary
Public of said State, personally appeared _____________________, personally
known to me to be duly authorized officers of Norwest Bank Minnesota, National
Association that executed the within instrument and personally known to me to
be the persons who executed the within instrument on behalf of Norwest Bank
Minnesota, National Association therein named, and acknowledged to me such
Norwest Bank Minnesota, National Association executed the within instrument
pursuant to its by-laws.
WITNESS my hand and official seal.
Notary Public in and for the
State of ________________________
After recording, please mail to:
Attn: ______________________
<PAGE>
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Mortgage Loans, we request the
release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Mortgage Loan
Prepaid in Full Mortgage Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
- ------------------------------------
GMAC Mortgage Corporation
Authorized Signature
******************************************************************
TO CUSTODIAN/INDENTURE TRUSTEE: Please acknowledge this request, and check off
documents being enclosed with a copy of this form. You should retain this form
for your files in accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Loan Agreement
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ___________________________
<PAGE>
Name
Title
Date
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1,
Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Indenture Trustee
------------------------
INDENTURE
------------------------
Dated as of June 17, 1999
HOME EQUITY LOAN-BACKED TERM NOTES
HOME EQUITY LOAN-BACKED VARIABLE FUNDING NOTES
<TABLE>
<CAPTION>
Table of Contents
Page
ARTICLE I
Definitions
<S> <C> <C>
Section 1.01. Definitions.................................................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act...........................................2
Section 1.03. Rules of Construction.......................................................................2
ARTICLE II
Original Issuance of Notes
Section 2.01. Form........................................................................................4
Section 2.02. Execution, Authentication and Delivery......................................................4
ARTICLE III
Covenants
Section 3.01. Collection of Payments with Respect to the Mortgage Loans...................................6
Section 3.02. Maintenance of Office or Agency.............................................................6
Section 3.03. Money for Payments to Be Held in Trust; Paying Agent........................................6
Section 3.04. Existence...................................................................................7
Section 3.05. Payment of Principal and Interest; Defaulted Interest.......................................8
Section 3.06. Protection of Trust Estate..................................................................9
Section 3.07. Opinions as to Trust Estate................................................................10
Section 3.08. Performance of Obligations; Servicing Agreement............................................10
Section 3.09. Negative Covenants.........................................................................11
Section 3.10. Annual Statement as to Compliance..........................................................11
Section 3.11. Recordation of Assignments.................................................................12
Section 3.12. Representations and Warranties Concerning the Mortgage Loans...............................12
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 Consolidate, etc................................................................13
Section 3.17. Successor or Transferee....................................................................14
Section 3.18. No Other Business..........................................................................15
Section 3.19. No Borrowing...............................................................................15
Section 3.20. Guarantees, Loans, Advances and Other Liabilities..........................................15
Section 3.21. Capital Expenditures.......................................................................15
Section 3.22. Owner Trustee Not Liable for Certificates or Related Documents.............................15
Section 3.23. Restricted Payments........................................................................15
Section 3.24. Notice of Events of Default................................................................16
Section 3.25. Further Instruments and Acts...............................................................16
Section 3.26. Statements to Noteholders..................................................................16
Section 3.27. Determination of Note Rate.................................................................16
Section 3.28. Payments under the Policy..................................................................16
Section 3.29. Replacement Enhancement....................................................................17
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01. The Notes; Increase of Maximum Variable Funding Balance; Variable Funding Notes............18
Section 4.02. Registration of and Limitations on Transfer and Exchange of Notes; Appointment of
Certificate Registrar......................................................................19
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes.................................................21
Section 4.04. Persons Deemed Owners......................................................................22
Section 4.05. Cancellation...............................................................................22
Section 4.06. Book-Entry Notes...........................................................................22
Section 4.07. Notices to Depository......................................................................23
Section 4.08. Definitive Notes...........................................................................23
Section 4.09. Tax Treatment..............................................................................23
Section 4.10. Satisfaction and Discharge of Indenture....................................................24
Section 4.11. Application of Trust Money.................................................................25
Section 4.12. Subrogation and Cooperation................................................................25
Section 4.13. Repayment of Monies Held by Paying Agent...................................................26
Section 4.14. Temporary Notes............................................................................26
ARTICLE V
Default and Remedies
Section 5.01. Events of Default..........................................................................27
Section 5.02. Acceleration of Maturity; Rescission and Annulment.........................................27
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..................28
Section 5.04. Remedies; Priorities.......................................................................30
Section 5.05. Optional Preservation of the Trust Estate..................................................31
Section 5.06. Limitation of Suits........................................................................31
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and Interest......................32
Section 5.08. Restoration of Rights and Remedies.........................................................32
Section 5.09. Rights and Remedies Cumulative.............................................................32
Section 5.10. Delay or Omission Not a Waiver.............................................................33
Section 5.11. Control by Noteholders.....................................................................33
Section 5.12. Waiver of Past Defaults....................................................................33
Section 5.13. Undertaking for Costs......................................................................34
Section 5.14. Waiver of Stay or Extension Laws...........................................................34
Section 5.15. Sale of Trust Estate.......................................................................34
Section 5.16. Action on Notes............................................................................36
Section 5.17. Performance and Enforcement of Certain Obligations.........................................36
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee................................................................38
Section 6.02. Rights of Indenture Trustee................................................................39
Section 6.03. Individual Rights of Indenture Trustee.....................................................39
Section 6.04. Indenture Trustee's Disclaimer.............................................................39
Section 6.05. Notice of Event of Default.................................................................40
Section 6.06. Reports by Indenture Trustee to Noteholders................................................40
Section 6.07. Compensation and Indemnity.................................................................40
Section 6.08. Replacement of Indenture Trustee...........................................................40
Section 6.09. Successor Indenture Trustee by Merger......................................................41
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee..........................42
Section 6.11. Eligibility; Disqualification..............................................................43
Section 6.12. Preferential Collection of Claims Against Issuer...........................................43
Section 6.13. Representations and Warranties.............................................................43
Section 6.14. Directions to Indenture Trustee............................................................44
Section 6.15. Indenture Trustee May Own Securities.......................................................44
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders.....................45
Section 7.02. Preservation of Information; Communications to Noteholders.................................45
Section 7.03. Reports by Issuer..........................................................................45
Section 7.04. Reports by Indenture Trustee...............................................................46
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money........................................................................47
Section 8.02. Trust Accounts.............................................................................47
Section 8.03. Officer's Certificate......................................................................47
Section 8.04. Termination Upon Distribution to Noteholders...............................................48
Section 8.05. Release of Trust Estate....................................................................48
Section 8.06. Surrender of Notes Upon Final Payment......................................................48
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of Noteholders.....................................49
Section 9.02. Supplemental Indentures With Consent of Noteholders........................................50
Section 9.03. Execution of Supplemental Indentures.......................................................51
Section 9.04. Effect of Supplemental Indenture...........................................................51
Section 9.05. Conformity with Trust Indenture Act........................................................52
Section 9.06. Reference in Notes to Supplemental Indentures..............................................52
ARTICLE X
Miscellaneous
Section 10.01. Compliance Certificates and Opinions, etc..................................................53
Section 10.02. Form of Documents Delivered to Indenture Trustee...........................................54
Section 10.03. Acts of Noteholders........................................................................55
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Enhancer and Rating Agencies..................56
Section 10.05. Notices to Noteholders; Waiver.............................................................56
Section 10.06. Alternate Payment and Notice Provisions....................................................57
Section 10.07. Conflict with Trust Indenture Act..........................................................57
Section 10.08. Effect of Headings.........................................................................57
Section 10.09. Successors and Assigns.....................................................................57
Section 10.10. Severability...............................................................................57
Section 10.11. Benefits of Indenture......................................................................58
Section 10.12. Legal Holidays.............................................................................58
Section 10.13. GOVERNING LAW..............................................................................58
Section 10.14. Counterparts...............................................................................58
Section 10.15. Recording of Indenture.....................................................................58
Section 10.16. Issuer Obligation..........................................................................58
Section 10.17. No Petition................................................................................59
Section 10.18. Inspection.................................................................................59
Signatures and Seals........................................................................................81
Acknowledgments ............................................................................................82
</TABLE>
<PAGE>
EXHIBITS
Exhibit A-1 - Form of Term Notes
Exhibit A-2 - Form of Variable Funding Notes
Exhibit B - Form of 144A Investment Representation for Term
Notes and Capped Funding Notes
Exhibit C - Form of Investor Representation Letter for Term
Notes and Capped Funding Notes
Appendix A - Definitions
<PAGE>
This Indenture, dated as of June 17, 1999, is between GMACM Revolving
Home Equity Loan Trust 1999-1, a Delaware business trust, as issuer (the
"Issuer"), and Norwest Bank Minnesota, National Association, as indenture
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 Noteholders of the Issuer's
Series 1999-1 Home Equity Loan-Backed Term Notes and Home Equity Loan-Backed
Variable Funding Notes (together 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 in and to whether now existing or
hereafter created (a) the Initial Mortgage Loans and any Subsequent Mortgage
Loans; (b) all funds on deposit from time to time in the Note Payment Account
and in all proceeds thereof; (c) all funds on deposit from time to time in the
Capitalized Interest Account (other than any income thereon), the Pre-Funding
Account and the Funding Account;(d) the Policy and (e) all present and future
claims, demands, causes and choses in action in respect of any or all of the
foregoing and all payments on or under, and all proceeds of every kind and
nature whatsoever in respect of, any or all of the foregoing and all payments
on or under, and all proceeds of every kind and nature whatsoever in the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Trust Estate" or the
"Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in
this Indenture.
The 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
pursuant to the Insurance Agreement (regardless of whether such amounts relate
to the Notes or the Certificates), 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 of the
Notes, 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 not otherwise defined herein shall have the
meanings assigned to such terms in the Definitions attached hereto as Appendix
A, which is incorporated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act (the
"TIA"), 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 meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) 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;
(c) "or" includes "and/or";
(d) "including" means "including without limitation";
(e) words in the singular include the plural and words in the
plural include the singular;
(f) the term "proceeds" has the meaning ascribed thereto in the
UCC; and
(g) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
Original Issuance of Notes
Section 2.01. Form. The Term Notes and the Variable Funding Notes, in
each case together with the Indenture Trustee's certificate of authentication,
shall be in substantially the forms set forth in Exhibits A-1 and A-2,
respectively, 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 the Notes, as evidenced by their execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of such Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes,
as evidenced by their execution of such Notes.
The terms of the Notes set forth in Exhibits A-1 and A-2 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 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 Term Notes for original issue in an aggregate initial principal amount
of $250,000,000 and Variable Funding Notes for original issue in an aggregate
initial principal amount of zero. The Variable Funding Balance of the Variable
Funding Notes in the aggregate may not exceed the Maximum Variable Funding
Balance.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes, and the Term Notes shall be issuable in
minimum denominations of $25,000 and integral multiples of $1,000 in excess
thereof.
Each Variable Funding Note shall be initially issued with a Variable
Funding Balance of $0 or, if applicable, with a Variable Funding Balance in an
amount equal to the Balance Differential for the Collection Period related to
the Payment Date following the date of issuance of such Variable Funding Note
pursuant to Section 4.01(c).
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 with itself the Note
Payment Account in which the Indenture Trustee shall, subject to the terms of
this paragraph, deposit, on the same day as it is received from the Servicer,
each remittance received by the Indenture Trustee with respect to the Mortgage
Loans. 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
herein from monies on deposit in the Note Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer will
maintain in the City of Minneapolis, Minnesota, an office or agency where,
subject to satisfaction of conditions set forth herein, Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the 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, 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 3.01 shall be made on behalf of the Issuer
by the Indenture Trustee or by the Paying Agent, and no amounts so withdrawn
from the Note Payment Account for payments of Notes shall be paid over to the
Issuer except as provided in this Section 3.03. The Issuer hereby appoints the
Indenture Trustee to act as initial Paying Agent hereunder. The Issuer will
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 if the Indenture Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section
3.03, 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 and the Enhancer 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 the payment of Notes, if at
any time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment;
(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 by the Servicer
pursuant to Section 4.01 of the 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 the 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 Noteholder 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, but not limited
to, mailing notice of such repayment to Noteholders the Notes of which have
been called but have not been surrendered for redemption or whose right to or
interest in monies due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address
of record for each such Noteholder).
Section 3.04. Existence. The Issuer will keep in full 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 will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Mortgage Loans and each other
instrument or agreement included in the Trust Estate.
Section 3.05. Priority of Distributions; Defaulted Interest.
(a) In accordance with Section 3.03(a) of the Servicing
Agreement, the priority of distributions on each Payment Date is as follows:
(i) to the Note Payment Account, for payment to the
Noteholders by the Paying Agent, pro rata, interest for the related Interest
Period at the Note Rate on the related Note Balances of the Notes immediately
prior to such Payment Date, including any Policy Draw Amount deposited into
the Note Payment Account pursuant to Section 3.28(a)(i), excluding any
Interest Shortfalls;
(ii) during the Amortization Periods, to the Note Payment
Account, for payment to the Noteholders by the Paying Agent, pro rata, the
Principal Distribution Amount for such Payment Date, after giving effect to
any amount on deposit in the Note Payment Account on such Payment Date in
respect of Section 3.28(a)(ii);
(iii) to the Enhancer, the amount of the Premium for the
Policy, with interest thereon as provided in the Insurance Agreement;
(iv) to the Enhancer, to reimburse it for prior draws made
on the Policy, with interest thereon as provided in the Insurance Agreement;
(v) during the Revolving Period, to the Funding Account,
the amount (but not in excess of the amount, if any, of Excess Spread)
necessary to be applied on such Payment Date so that the Outstanding
Overcollateralization Amount for such Payment Date is not less than the
Overcollateralization Target Amount;
(vi) during the Amortization Periods, to the Note Payment
Account, for payment to the Noteholders by the Paying Agent, pro rata, as
principal, the amount (but not in excess of the amount, if any, of Excess
Spread) necessary to be applied on such Payment Date so that the Outstanding
Overcollateralization Amount for such Payment Date is not less than the
Overcollateralization Target Amount;
(vii) to the Enhancer, any other amounts owed to the
Enhancer pursuant to the Insurance Agreement;
(viii) to the Note Payment Account, for payment to the
Noteholders by the Paying Agent, pro rata, any Interest Shortfalls not
previously paid, together with interest thereon at the Note Rate (as adjusted
from time to time), based on the amount remaining unpaid with respect thereto;
(ix) during the Amortization Periods, to the Indenture
Trustee, any amounts owing to the Indenture Trustee pursuant to Section 6.07
to the extent remaining unpaid;
(x) to the Noteholders, the amount of any Unpaid Principal
Amount, with interest thereon for the applicable Interest Periods at the Note
Rate (as adjusted from time to time); and
(xi) any remaining amount, to the Distribution Account, for
distribution to the Certificateholders by the Certificate Paying Agent;
provided, that such amounts may, at the direction of the Seller be deposited
instead into the Funding Account during the Revolving Period in connection
with any optional repurchase of Mortgage Loans by the Servicer pursuant to
Section 3.15 of the Servicing Agreement;
provided, that (i) on the Final Payment Date, the amount to be paid pursuant
to clause (ii) above shall be equal to the sum of the Term Note Balance and
the Variable Funding Balance immediately prior to such Payment Date. For
purposes of the foregoing, the Note Balance of the Notes on each Payment Date
during the Amortization Periods will be reduced (any such reduction, an
"Unpaid Principal Amount") by the pro rata portion allocable to the related
Notes of all Liquidation Loss Amounts for such Payment Date, but only to the
extent that such Liquidation Loss Amounts are not otherwise covered by
payments made pursuant to clause (ii) above or by a draw on the Policy, and
the Outstanding Overcollateralization Amount is zero, and (ii) on each Payment
Date the limitation set forth in the parenthetical clause in clauses (v) and
(vi) above shall not apply with respect to such Payment Date unless the
Indenture Trustee has received on or before such Payment Date an Officer's
Certificate of the Servicer to the effect that such limitation shall apply
with respect to such Payment Date.
On each Payment Date, the Paying Agent shall apply, from amounts on
deposit in the Note Payment Account, the amounts and in the order of priority
set forth above.
Amounts paid to Noteholders shall be paid in respect of the Term
Notes or Variable Funding Notes, as the case may be, 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
Noteholder of record thereof on the immediately preceding Record Date by wire
transfer to an account specified in writing by such Noteholder reasonably
satisfactory to the Indenture Trustee, or by check or money order mailed to
such Noteholder at such Noteholder's address appearing in the Note Register,
the amount required to be distributed to such Noteholder on such Payment Date
pursuant to such Noteholder's Notes; provided, that the Indenture Trustee
shall not pay to any such Noteholder any amounts required to be withheld from
a payment to such Noteholder by the Code.
(b) Principal of each Note shall be due and payable in full on
the Final Payment Date as provided in the applicable form of Note set forth in
Exhibits A-1 and A-2. All principal payments on the Term Notes and the
Variable Funding 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
Payment Date or other final Payment Date, as applicable. Such notice shall be
mailed no later than five Business Days prior to the Final Payment Date or
such other final Payment Date and shall specify that payment of the principal
amount and any interest due with respect to such Note at the Final Payment
Date or such other final Payment Date will be payable only upon presentation
and surrender of such Note, and shall specify the place where such Note may be
presented and surrendered for such final payment.
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 will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest
(and the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) cause the 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 in such Trust Estate
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 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 has yet been delivered pursuant to Section 3.07(b)) unless the 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 3.06.
Section 3.07. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the
Indenture Trustee and the Owner Trustee an Opinion of Counsel at the expense
of the Issuer either stating that, in the opinion of such counsel, such action
has been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the
lien and security interest in the Mortgage Loans and reciting the details of
such action, or stating that, in the opinion of such counsel, no such action
is necessary to make such lien and security interest effective.
(b) On or before December 31st in each calendar year, beginning
in 2000, the Issuer shall furnish to the Indenture Trustee an Opinion of
Counsel at the expense of the Issuer either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording,
filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements
as is necessary to maintain the lien and security interest in the Mortgage
Loans and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest in the
Mortgage Loans until December 31 in the following calendar year.
Section 3.08. Performance of Obligations; Servicing Agreement.
(a) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents
and in the instruments and agreements included in the Trust Estate.
(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 of the documents relating to the Mortgage
Loans 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 of the documents
relating to the Mortgage Loans or any such instrument, except such actions as
the Servicer is expressly permitted to take in the Servicing Agreement.
(d) The Issuer may retain an administrator and 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) (i) 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, (ii) permit any
lien, charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof or (iii) 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 Purchase 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 the fiscal year ending on December 31,
1999), 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 provisions of 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.
Section 3.11. Recordation of Assignments. The Issuer shall enforce
the obligation of the Seller under the Purchase Agreement to submit or cause
to be submitted for recordation all Assignments of Mortgages within 60 days of
receipt of recording information by the Servicer.
Section 3.12. Representations and Warranties Concerning the Mortgage
Loans. The Indenture Trustee, as pledgee of the Mortgage Loans, shall have the
benefit of the representations and warranties made by the Seller in Section
3.1(a) and Section 3.1(b) of the Purchase Agreement concerning the Mortgage
Loans and the right to enforce the remedies against the Seller provided in
such Section 3.1(a) or Section 3.1(b) to the same extent as though such
representations and warranties 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 to be recorded under Section
2.1 of the Purchase Agreement. Except as expressly provided in the Purchase
Agreement or in the Servicing Agreement with respect to any specific Mortgage
Loan, the Indenture Trustee shall not execute any endorsement or assignment or
otherwise release or transfer such record title to any of the Mortgage Loans
until such time as the remaining Trust Estate may be released pursuant to
Section 8.05(b).
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee.
Solely for purposes of perfection under Section 9-305 of the UCC or other
similar applicable law, rule or regulation of the state in which such property
is held by the Servicer, the Indenture Trustee hereby acknowledges that the
Servicer is acting as agent and bailee of the Indenture Trustee in holding
amounts on deposit in the Custodial Account pursuant to Section 3.02 of the
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 Servicer pursuant to Section 3.06(c) of the Servicing
Agreement, and any other items constituting a part of the Trust Estate which
from time to time come into the possession of the Servicer. It is intended
that, by the Servicer's acceptance of such agency pursuant to Section 3.02 of
the Servicing Agreement, the Indenture Trustee, as a 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 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 (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section
3.15 if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions
imposed in such order.
Section 3.16. Issuer May 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 or the
District of Columbia 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 all 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) the Enhancer shall have consented thereto and each
Rating Agency shall have notified the Issuer that such transaction will not
cause a Rating Event, without taking into account the Policy;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee and the
Enhancer) to the effect that such transaction will not have any material
adverse tax consequence to the Issuer, 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 III 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 assumes, 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 agrees 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 Noteholders of the Notes, (D) unless otherwise provided in
such supplemental indenture, expressly agrees to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense arising
under or related to this Indenture and the Notes and (E) expressly agrees 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) the Enhancer shall have consented thereto, and each
Rating Agency shall have notified the Issuer that such transaction will not
cause a Rating Event, if 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 III 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 shall 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 and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
Section 3.19. No Borrowing. The 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, Loans, Advances and Other Liabilities.
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 other 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. Owner Trustee Not Liable for Certificates or Related
Documents. The recitals contained herein shall be taken as the statements of
the Issuer, and the Owner Trustee assumes no responsibility for the
correctness of the recitals contained herein. The Owner Trustee makes no
representations as to the validity or sufficiency of this Indenture or any
other Basic Document, of the Certificates (other than the signatures of the
Owner Trustee on the Certificates) or the Notes, or of any Related Documents.
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 Certificateholders under the Trust Agreement or
the Noteholders under this Indenture, including, the compliance by the
Depositor or the Seller with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation, or any action of the Certificate Paying Agent, the
Certificate Registrar or the Indenture Trustee taken in the name of the Owner
Trustee.
Section 3.23. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii)
set aside or otherwise segregate any amounts for any such purpose; provided,
however, that the Issuer may make, or cause to be made, (x) distributions to
the Owner Trustee and the Certificateholders as contemplated by, and to the
extent funds are available for such purpose under, the Trust Agreement and (y)
payments to the Servicer pursuant to the terms of the Servicing Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions
from the Custodial Account except in accordance with this Indenture and the
other Basic Documents.
Section 3.24. Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Enhancer and the Rating Agencies prompt written notice
of each Event of Default hereunder and under the Trust Agreement.
Section 3.25. Further Instruments and Acts. Upon request of the
Indenture Trustee, 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 purposes of this Indenture.
Section 3.26. Statements to Noteholders. On each Payment Date, each
of the Indenture Trustee and the Certificate Registrar shall forward by mail
to the Enhancer, the Depositor, the Owner Trustee, each Rating Agency, each
Noteholder and each Certificateholder, respectively, the Servicer's
Certificate relating to such Payment Date delivered pursuant to Section 4.01
of the Servicing Agreement.
Section 3.27. Determination of Note Rate. On the second LIBOR
Business Day immediately preceding (i) the Closing Date in the case of the
first Interest Period and (ii) the first day of each succeeding Interest
Period, the Indenture Trustee shall determine LIBOR and the Note Rate for such
Interest Period and shall inform the Issuer, the Servicer and the Depositor by
means of the Indenture Trustee's online service.
Section 3.28. 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, as
specified by the Servicer in writing to the Indenture Trustee. The Indenture
Trustee shall deposit or cause to be deposited such Policy Draw Amount into
the Note Payment Account on such Payment Date to the extent such amount
relates to clause (i) of the definition of "Policy Draw Amount". To the extent
such amount relates to clause (ii) of the definition of "Policy Draw Amount",
the Indenture Trustee shall (i) during the Revolving Period, deposit such
amount into the Funding Account as Principal Collections and (ii) during the
Amortization Periods, deposit such amount into the Note Payment Account.
(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 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.
Section 3.29. Replacement Enhancement The Issuer (or the 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, 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 (without taking the Policy into
account); and provided further, that issuer of any such instrument or facility
and the timing and mechanism for drawing on such additional enhancement shall
be 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; Increase of Maximum Variable Funding
Balance; Variable Funding Notes.
(a) The Term Notes shall be registered in the name of a nominee
designated by the Depository. Beneficial Owners will hold interests in the
Term Notes through the book-entry facilities of the Depository in minimum
initial Term Note Balances of $25,000 and integral multiples of $1,000 in
excess thereof. The Capped Funding Notes will be issued as physical notes in
fully registered form in minimum initial Capped Funding Balances of $1,000,000
and integral multiples of $100,000 in excess thereof, together with any
additional amount necessary to cover (i) the aggregate initial Capped Funding
Balance of the Capped Funding Notes surrendered at the time of the initial
denominational exchange thereof (with such initial Capped Funding Balance in
each case being deemed to be the Capped Funding Balance of the Capped Funding
Notes at the time of such initial denominational exchange thereof) or (ii) the
aggregate initial Capped Funding Balance of any Capped Funding Notes issued in
an exchange described in subsection (d) below.
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 Term Notes for the
purposes of exercising the rights of Noteholders of Term Notes hereunder.
Except as provided in the next succeeding paragraph of this Section 4.01, the
rights of Beneficial Owners with respect to the Term 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
Term Notes as to which they are the Beneficial Owners. Requests and directions
from, and votes of, the Depository as Noteholder of the Term 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, no Term Note may be transferred by the
Depository except to a successor Depository that agrees to hold such Note for
the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint
a successor Depository. If no successor Depository has been appointed within
30 days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the
Issuer by the Owner Trustee, not in its individual capacity but solely as
Owner Trustee, authenticated by the Note Registrar and delivered by the
Indenture Trustee to or upon the order of the Issuer.
(b) On each Payment Date, the aggregate Variable Funding Balance
of the Variable Funding Notes shall be increased by an amount equal to the
Balance Differential for such Payment Date, subject to the Maximum Variable
Funding Balance and the terms and conditions set forth below.
(c) The Variable Funding Note issued on the Closing Date shall
bear the Designation "VFN-1" and each new Variable Funding Note will bear
sequential numerical designations in the order of their issuance.
(d) Subject to the following conditions, the Variable Funding
Notes may be exchanged pursuant to Section 4.02 for one or more Capped Funding
Notes. The Indenture Trustee shall not be required to authenticate any such
Capped Funding Note unless a form of such Capped Funding Note has been
provided by the Issuer to the Indenture Trustee at the Issuer's expense. Prior
to any such exchange, the party requesting the exchange must provide an
Opinion of Counsel, addressed to the Enhancer, the Issuer and the Indenture
Trustee, to the effect that the Capped Funding Notes shall qualify for federal
income tax purposes as indebtedness of the Issuer and the Issuer will not be
characterized as an association (or a publicly traded partnership) taxable as
a corporation or a taxable mortgage pool within the meaning of Section 7701(i)
of the Code. If required by the Opinion of Counsel, the Capped Funding Notes
may be issued concurrently with a reduction in the Variable Funding Balance of
the Variable Funding Notes and an equivalent increase in the Certificate
Balance of the Certificates, pursuant to Section 3.12 of the Trust Agreement.
Upon receipt of the Opinion of Counsel, the Indenture Trustee shall issue
Capped Funding Notes with a Capped Funding Balances equal to the Capped
Funding Balance permitted under such Opinion of Counsel, in minimum
denominations as set forth in subsection (a) above. The Capped Funding Notes
shall bear the designation "Capped" in addition to any other applicable
designation. Any Security Balance not represented by either a Capped Funding
Note or an increase in the Certificate Balance of the Certificates referred to
above shall result in the issuance of a new Variable Funding Note having an
initial Variable Funding Balance equal to the excess of the outstanding
Variable Funding Balance of the Variable Funding Note so surrendered over the
initial Capped Funding Balances of the Capped Funding Notes and an increase in
the Certificate Balance of the Certificates referred to above. The Indenture
Trustee and the Issuer agree to cooperate with each other and the party
requesting the exchange of Variable Funding Notes for Capped Funding Notes,
the Enhancer, the Depositor, the Seller and the Owner Trustee and to cause no
unreasonable delay in issuing Capped Funding Notes in connection with this
Section and Section 3.12 of the Trust Agreement.
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 Indenture Trustee's Corporate Trust Office a Note
Register in which, subject to such reasonable regulations as it may prescribe,
the Note Registrar shall provide for the registration of Notes and of
transfers and exchanges of Notes as herein provided. The Issuer hereby
appoints the Indenture Trustee as the initial Note Registrar.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the Corporate Trust
Office, 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.
No Variable Funding Note, other than any Capped Funding Notes, may be
transferred. Subject to the provisions set forth below, Capped Funding Notes
may be transferred, provided that with respect to the initial transfer thereof
by the Seller prior written notification of such transfer shall have been
given to the Rating Agencies and to the Enhancer by the Seller.
No transfer, sale, pledge or other disposition of a Capped Funding
Note shall be made unless such transfer, sale, pledge or other disposition is
exempt from the registration requirements of the Securities Act, and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event of any such transfer, the Indenture Trustee or the Issuer
shall require the transferee to execute either (i)(a) an investment letter in
substantially the form attached hereto as Exhibit B (or in such form and
substance reasonably satisfactory to the Indenture Trustee and the Issuer)
which investment letters shall not be an expense of the Owner Trustee, the
Indenture Trustee, the Servicer, the Depositor or the Issuer and which
investment letter states that, among other things, such transferee (a) is a
"qualified institutional buyer" as defined under Rule 144A, acting for its own
account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (b) is aware that the proposed transferor intends to rely
on the exemption from registration requirements under the Securities Act,
provided by Rule 144A or (ii) the Indenture Trustee shall require the
transferee to execute an investment letter in substantially the form of
Exhibit C acceptable to and in form and substance reasonably satisfactory to
the Issuer and the Indenture Trustee certifying to the Issuer and the
Indenture Trustee the facts surrounding such transfer, which investment letter
shall not be an expense of the Indenture Trustee or the Issuer. Any Noteholder
of a Capped Funding Note that does not execute such a certificate or transfer
letter shall be deemed to have made the representations set forth therein. The
Noteholder of a Capped Funding Note desiring to effect such transfer shall,
and does hereby agree to, indemnify the Indenture Trustee, the Enhancer and
the Issuer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.
Subject to the foregoing, at the option of the Noteholders, Notes may
be exchanged for other Notes of like tenor, in each case 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
Note Registrar. With respect to any surrender of Capped Funding Notes for
exchange, the new Notes delivered in exchange therefor will bear the
designation "Capped" in addition to any other applicable designations.
Whenever any Notes are so surrendered for exchange, the Indenture Trustee
shall execute and the Note Registrar shall authenticate and deliver the Notes
which the Noteholder making the exchange is entitled to receive. Each Note
presented or surrendered for registration of transfer or exchange shall (if so
required by the Note Registrar) be duly endorsed by, or be accompanied by a
written instrument of transfer in form reasonably satisfactory to the Note
Registrar duly executed by, the Noteholder thereof or his attorney duly
authorized in writing with such signature guaranteed by a commercial bank or
trust company located or having a correspondent located in The City of New
York. Notes delivered upon any such transfer or exchange will evidence the
same obligations, and will be entitled to the same rights and privileges, as
the Notes surrendered.
No service charge shall be imposed for any registration of transfer
or exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
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 3.09 of the Trust Agreement in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges
thereof pursuant to Section 3.05 of the Trust Agreement. 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 of the same
class; provided, however, that if any such destroyed, lost or stolen Note, but
not a mutilated Note, shall have become or within seven days shall be due and
payable, 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 such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such replacement
Note (or such payment) from the Person to whom it was delivered or any Person
taking such replacement Note from such Person to whom such replacement Note
was delivered or any assignee of such Person, except a bona fide purchaser,
and shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by the
Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section 4.03,
the Issuer may require the payment by the Noteholder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute
an original additional contractual obligation of the Issuer, whether or not
the mutilated, destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in whose
name any Note is registered (as of the day of determination) as the owner of
such Note for the purpose of receiving payments of principal of and interest,
if any, on such Note and for all other purposes whatsoever, whether or not
such Note be overdue, and none of the Issuer, the Indenture Trustee or 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 which 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
4.05, 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 unless the
Issuer shall direct by an Issuer Request that they be destroyed or returned to
it; provided, however, that such Issuer Request is timely and the Notes have
not been previously disposed of by the Indenture Trustee.
Section 4.06. Book-Entry Notes. The Term Notes, upon original
issuance, shall be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Depository, by, or on behalf of, the Issuer. Such Term 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 such 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 4.06 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 Term
Notes, and shall have no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 4.06
conflict with any other provisions of this Indenture, the provisions of this
Section 4.06 shall control;
(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 such Owners of Term Notes and the Depository and/or the
Depository Participants. Unless and until Definitive Term Notes are issued
pursuant to Section 4.08, the initial Depository will make book-entry
transfers among the Depository Participants and receive and transmit payments
of principal of and interest on the Notes to such Depository Participants; and
(e) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders of Term Notes
evidencing a specified percentage of the Term Note Balances of the Term Notes,
the Depository shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Beneficial Owners and/or
Depository Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Term Notes and has delivered such
instructions to the Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other
communication to the Noteholders of the Term Notes is required under this
Indenture, unless and until Definitive Term 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 of the Term Notes to the Depository, and shall have no obligation
to the Beneficial Owners.
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 Term 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, (iii) the Indenture Trustee receives actual knowledge of a
proposed transfer of a Term Note to an "accredited investor" in accordance
with Section 4.02 hereof, or (iv) after the occurrence of an Event of Default,
Beneficial Owners of Term Notes representing beneficial interests aggregating
at least a majority of the aggregate Term Note Balance of the Term Notes
advise the Depository in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Beneficial
Owners, then the Depository shall notify all Beneficial Owners and the
Indenture Trustee of the occurrence of any such event and of the availability
of Definitive Term Notes to Beneficial Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Term Notes representing
the Book-Entry Notes by the Depository (or Percentage Interest of the
Book-Entry Notes being transferred pursuant to clause (iii) above),
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Term 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 each 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 Noteholders of the Definitive
Notes as Noteholders.
Section 4.09. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness. The Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of its Note (and each Beneficial Owner by
its acceptance of an interest in the applicable Book-Entry Note), agree to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness.
Section 4.10. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections
3.03, 3.04, 3.06, 3.09, 3.16, 3.18 and 3.19, (v) 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 (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them, and the Indenture Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 4.03 and (ii) Notes for
whose payment 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
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Final Payment Date
within one year, or
c. have been declared immediately due and payable pursuant
to Section 5.02.
and the Issuer, in the case of a. or b. 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 (which will mature prior to the date
such amounts are payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes
and Certificates then outstanding not theretofore delivered to the
Indenture Trustee for cancellation when due on the Final Payment
Date;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder and under the Insurance Agreement by the Issuer;
and
(C) the Issuer has delivered to the Indenture Trustee and the
Enhancer an Officer's Certificate and an Opinion of Counsel, each
meeting the applicable requirements of Section 10.01 and each stating
that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with
and, if the Opinion of Counsel relates to a deposit made in
connection with Section 4.10(A)(2)b. above, such opinion shall
further be to the effect that such deposit will not have any material
adverse tax consequences to the Issuer, any Noteholders or any
Certificateholders.
Section 4.11. Application of Trust Money. All monies deposited with
the Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the
Securityholders of Securities, of all sums due and to become due thereon for
principal and interest; but 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.
(a) The Issuer and the Indenture Trustee acknowledge that (i) to
the extent the Enhancer makes payments under the Policy on account of
principal of or interest on the Mortgage Loans, the Enhancer will be fully
subrogated to the rights the Noteholders to receive such principal of and
interest on the Mortgage Loans, and (ii) the Enhancer shall be paid such
principal and interest only from the sources and in the manner provided herein
and in the Insurance Agreement for the payment of such principal and interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request by the Enhancer for action to preserve or enforce the
Enhancer's rights or interest under this Indenture or the Insurance Agreement,
consistent with this Indenture and without limiting the rights of the
Noteholders as otherwise set forth in the 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:
(i) institute Proceedings for the collection of all amounts
then payable on the Notes or under this Indenture in respect to the Notes and
all amounts payable under the Insurance Agreement and to enforce any judgment
obtained and collect from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private Sales (as defined in
Section 5.15 hereof) called and conducted in any manner permitted by law;
(iii) file or record all assignments that have not
previously been recorded;
(iv) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture; and
(v) 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.
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 Paying Agent (other than the Indenture
Trustee) under the provisions of this Indenture with respect to such 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, such Paying Agent shall
be released from all further liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of any
Definitive Notes, the 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 will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of the
Definitive Notes, the temporary Notes shall be exchangeable for Definitive
Notes upon surrender of the temporary Notes at the office or agency of the
Indenture Trustee, without charge to the 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 clause (iii) of the definition of
"Event of Default" written notice in the form of an Officer's Certificate of
its status 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 Servicer shall
purchase all of the Mortgage Loans pursuant to Section 8.08 of the Servicing
Agreement, then and in every such case the Indenture Trustee, the Enhancer or
the Noteholders of Notes representing not less than a majority of the
aggregate Note Balance of the Notes, with the written consent of the Enhancer,
may declare the Notes to be immediately due and payable by a notice in writing
to the Issuer (and to the Indenture Trustee if given by Noteholders); and upon
any such declaration, the unpaid principal amount of the Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
At any time after such 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 V, the Enhancer or the Noteholders of
Notes representing a majority of the aggregate Note Balance of the Notes, with
the written consent of the Enhancer, by written notice to the Issuer and the
Indenture Trustee, may in writing waive the related Event of Default and
rescind and annul such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee
a sum sufficient to pay:
(i) all payments of principal of and interest on the Notes
and all other amounts that would then be due hereunder or upon the Notes if
the Event of Default giving rise to such acceleration had not occurred;
(ii) 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
(iii) all Events of Default, other than the nonpayment of
the principal of the 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 default in the payment of (i)
any interest on any Note when the same becomes due and payable, and such
default continues for a period of five days, or (ii) the principal of or any
installment of the principal of any Note when the same becomes due and
payable, the Issuer shall, upon demand of the Indenture Trustee, pay to it,
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,
and in addition thereto 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 10.17 hereof, may
institute a Proceeding for the collection of the sums so due and unpaid, and
may prosecute such Proceeding 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 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 10.17 hereof, 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) If there shall be pending, relative to the Issuer or 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 other
similar law, or if 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 if there shall be any other comparable judicial
Proceedings relative to the Issuer or other any other obligor on the Notes, or
relative to the creditors or property of the Issuer or such other obligor,
then the Indenture Trustee, irrespective of whether the principal of any Notes
shall then be due and payable as therein expressed or by declaration or
otherwise, and irrespective of whether the Indenture Trustee shall have made
any demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims 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 and 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 predecessor Indenture Trustee, except as a
result of negligence, willful misconduct or bad faith) and of the Noteholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations,
to vote on behalf of the Noteholders in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the Indenture
Trustee on their 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 proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay
to the Indenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence, willful misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment
or composition affecting the Notes or the rights of any Noteholder thereof or
to authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or
proceedings 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 of the Term
Notes or the Variable Funding Notes, as applicable.
(g) In any Proceedings to which the Indenture Trustee shall be a
party (including any Proceedings involving the interpretation of any provision
of this Indenture), 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 Proceedings.
Section 5.04. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be
continuing, then the Indenture Trustee, subject to the provisions of Section
10.17 hereof, with the written consent of the Enhancer may, or, at the written
direction of the Enhancer, shall, do one or more of the following, in each
case subject to Section 5.05:
(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 obtained, and collect from the Issuer and any other obligor on the
Notes monies 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 rights
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 Enhancer, which consent will not
be unreasonably withheld, and the Noteholders of 100% of the aggregate Note
Balance of the Notes, (B) the proceeds of such sale or liquidation
distributable to Noteholders are sufficient to discharge in full all amounts
then due and unpaid upon the Notes for principal and interest and to reimburse
the Enhancer for any amounts drawn under the Policy and any other amounts due
the Enhancer under the Insurance Agreement 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 they would
have become due if the Notes had not been declared due and payable, and the
Indenture Trustee obtains the consent of the Enhancer, which consent will not
be unreasonably withheld, and the Noteholders of 66 2/3% of the aggregate Note
Balance of the Notes. In determining such sufficiency or insufficiency with
respect to clause (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, provided that 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 Servicer as provided in the
Servicing Agreement.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out such money or property in the
following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.07;
SECOND: to the Noteholders for amounts due and unpaid on the
related Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable
on such Notes for interest from amounts available in the Trust
Estate for such Noteholders;
THIRD: to the Noteholders for amounts due and unpaid on the
related Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable
on such Notes for principal, from amounts available in the Trust
Estate for such Noteholders, until the respective Note Balances
of such Notes have been reduced to zero;
FOURTH: to the payment of all amounts due and owing the Enhancer
under the Insurance Agreement;
FIFTH: to the Certificate Paying Agent for amounts due under
Article VIII of the Trust Agreement; and
SIXTH: to the payment of the remainder, if any, 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 5.04. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder a notice
that states the record date, the 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 (but shall at the written
direction of the Enhancer), elect to take and maintain possession of the Trust
Estate. It is the desire of the parties hereto and the Noteholders that there
be at all times sufficient funds for the payment of principal of and interest
on the Notes and other obligations of the Issuer including payment to the
Enhancer, and the Indenture Trustee shall take such desire into account when
determining whether or not 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, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless and subject to the provisions of Section 10.17
hereof:
(a) such Noteholder shall have previously given written notice
to the Indenture Trustee of a continuing Event of Default;
(b) the Noteholders of not less than 25% of the aggregate Note
Balance of the Notes 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 Noteholder or Noteholders shall have offered the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities to 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
Noteholders of a majority of the aggregate Note Balance of the Notes or by the
Enhancer.
It is understood and intended that no Noteholder shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Noteholders
or to obtain or to seek to obtain priority or preference over any other
Noteholders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders,
each representing less than a majority of the aggregate Note Balance of the
Notes, then the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.
Section 5.07. Unconditional Rights of Noteholders to Receive
Principal and Interest. Notwithstanding any other provisions in this
Indenture, the Noteholder of any Note shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest, if
any, on such Note on or after the respective due dates thereof expressed in
such Note or in this Indenture and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent of
such 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 and in every such case the Issuer, the
Indenture Trustee and the Noteholders 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 and the Noteholders 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, 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 any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
Section 5.11. Control by Noteholders. The Enhancer (so long as no
Enhancer Default exists) or the Noteholders of a majority of the aggregate
Note Balance of Notes with the consent of the Enhancer, 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 be in conflict with any rule of law
or with this Indenture;
(b) subject to the express terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be by the
Enhancer (so long as no Enhancer Default exists) or by the Noteholders of
Notes representing not less than 100% of the aggregate Note Balance of the
Notes with the consent of the Enhancer;
(c) if the conditions set forth in Section 5.05 shall 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 Noteholders of
Notes representing less than 100% of the aggregate Note Balance of the Notes
to sell or liquidate the Trust Estate shall be of no force and 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 Noteholders set forth in this Section, subject
to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
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 (so long as no Enhancer Default exists) or the Noteholders of not
less than a majority of the aggregate Note Balance of the Notes, 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 any of the Notes or (b) in respect of a covenant
or provision hereof that cannot be modified or amended without the consent of
the Noteholder of each Note. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Noteholders shall be restored to their respective
former positions and rights hereunder; but 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; but 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. All parties to this Indenture
agree, and each Noteholder by such Noteholder's acceptance of the related 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; but the provisions of this Section 5.13
shall not apply to (a) any Proceeding instituted by the Indenture Trustee, (b)
any Proceeding instituted by any Noteholder, or group of Noteholders, in each
case holding in the aggregate more than 10% of the aggregate Note Balance of
the Notes or (c) any Proceeding instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates 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, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it shall not hinder, delay or impede the execution of any power herein granted
to the Indenture Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 5.15. Sale of Trust Estate.
(a) The power to effect any sale or other disposition (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 5.15. 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, but shall continue unimpaired
until the entire Trust Estate shall have been sold or all amounts payable on
the Notes and under this Indenture and under the Insurance Agreement shall
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) the Noteholders of all Notes 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 Noteholders under the Notes, the
Certificateholders under the Certificates 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 (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 the
Enhancer consents to such Sale (which consent shall not be unreasonably
withheld), and the Noteholders of Notes representing at least 66 2/3% of the
aggregate Note Balance of the Notes 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 Section 5.15(b).
(c) Unless the Noteholders and the Enhancer shall 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 paragraph (ii) of subsection (b) of this Section 5.15
has not been established by the Indenture Trustee and no Person bids an amount
equal to or greater than such amount, then the Indenture Trustee shall bid an
amount at least $1.00 more 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, with the consent of the
Enhancer, purchase the property offered for sale, and upon compliance with the
terms of sale may hold, retain and possess and dispose of such property,
without further accountability, and may, in paying the purchase money
therefor, deliver any Notes or claims for interest thereon in lieu of cash up
to the amount which shall, upon distribution of the net proceeds of such sale,
be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the
Noteholders thereof after being appropriately stamped to show such partial
payment;
(ii) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any Sale thereof and, subject to
any requirements of, and to the extent permitted by, applicable law in
connection therewith, may purchase all or any portion of the Trust Estate in a
private sale. In lieu of paying cash therefor, the Indenture Trustee may 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 Noteholders and
the Certificateholders 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 the Sale and of any Proceedings
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 such a Sale shall be
bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
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 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 upon any of the 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 Enhancer or
the Indenture Trustee, with the written consent of the Enhancer, to do so, the
Issuer, in its capacity as owner of the Mortgage Loans, shall, with the
written consent of the Enhancer, 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 Seller and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Purchase Agreement
and the Servicing Agreement, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Purchase Agreement and the 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
Seller or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Purchase
Agreement and the Servicing Agreement.
(b) If an Event of Default shall have occurred and be
continuing, the Indenture Trustee, as pledgee of the Mortgage Loans, subject
to the rights of the Enhancer under the Servicing Agreement, may, and at the
direction (which direction shall be in writing or by telephone (confirmed in
writing promptly thereafter)) of the Noteholders of 66 2/3% of the aggregate
Note Balance of the Notes, shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Seller or the Servicer under
or in connection with the Purchase Agreement and the Servicing Agreement,
including the right or power to take any action to compel or secure
performance or observance by the Seller or the Servicer, as the case may be,
of each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Purchase
Agreement and the 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 take all
actions 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 or use 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 and conforming to the requirements of this
Indenture; provided, however, that the Indenture Trustee shall examine the
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
(a) of this Section 6.01;
(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 pursuant to Section 5.11 or any direction from
the Enhancer that the Enhancer is entitled to give under 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.
(h) With respect to each Payment Date, on the Business Day
following the related Determination Date, the Indenture Trustee shall forward
or cause to be forwarded by mail to the Enhancer and the Servicer, a statement
setting forth, to the extent applicable, (i) during the Pre-Funding Period,
the Pre-Funded Amount as of such Payment Date and any transfers of funds in
connection therewith, and (ii) during the Revolving Period, the amount of
Principal Collections to be deposited into the Funding Account in respect of
such Payment Date, and the amount on deposit in the Funding Account as of such
Payment Date, after giving effect to any amounts so deposited therein.
Section 6.02. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on 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 any
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 hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee, and the Indenture
Trustee shall not be 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 which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, 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 Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights 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.
However, 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 (i) responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, (ii) accountable for the
Issuer's use of the proceeds from the Notes or (iii) responsible for any
statement of the Issuer in this Indenture or 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 thereon.
Section 6.05. Notice of Event of Default. If an Event of Default
shall occur and be continuing, and if such Event of Default is known to a
Responsible Officer of the Indenture Trustee, then the Indenture Trustee shall
give notice thereof to the Enhancer. The Indenture Trustee shall mail to each
Noteholder notice of such Event of Default within 90 days after it occurs.
Except in the case of an Event of Default with respect to the payment of
principal of or interest on any Note, the Indenture Trustee may withhold such
notice if and 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 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 such information 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 and Indemnity. The Indenture Trustee shall
be compensated and indemnified by the Servicer in accordance with Section 6.06
of the Servicing Agreement. All amounts owing the Indenture Trustee hereunder
in excess of such amount, as well as any amount owed to the Indenture Trustee
in accordance with Section 6.06 of the Servicing Agreement, to the extent the
Servicer has failed to pay such amount, shall be paid solely as provided in
Section 3.05 hereof (subject to the priorities set forth therein). The
Indenture Trustee's compensation shall not be limited by any law on
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 it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall indemnify the Indenture Trustee
against any and all loss, liability or expense (including attorneys' fees)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Indenture Trustee shall notify the
Issuer promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder. The Issuer shall defend any such claim, and the
Indenture Trustee may have separate counsel and the Issuer shall pay the fees
and expenses of such counsel. The Issuer is not obligated to reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Indenture Trustee through the Indenture Trustee's own willful misconduct,
negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of an Event of Default
specified in clause (iv) or (v) 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 6.08. The Indenture
Trustee may resign at any time by so notifying the Issuer and the Enhancer.
The Enhancer or the Noteholders of a majority of aggregate Note Balance of the
Notes may remove the Indenture Trustee by so notifying the Indenture Trustee
and the Enhancer (if given by such Noteholders) 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 with the consent
of the Enhancer, which consent shall not be unreasonably withheld. 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 to the Issuer.
Thereupon, the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the 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, then the retiring
Indenture Trustee, the Issuer or the Noteholders of a majority of aggregate
Note Balance of the Notes 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 any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.07 shall continue for
the benefit of the retiring 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, then the resulting, surviving or
transferee corporation without any further act shall be the successor
Indenture Trustee; provided, that such corporation or banking association
shall be otherwise qualified and eligible under Section 6.11. The Indenture
Trustee shall provide the Rating Agencies with written notice of any such
transaction occurring after the Closing Date.
If at the time of any such succession by merger, conversion or
consolidation, any of the Notes shall have been authenticated but not
delivered, then any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated. If at such time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases, such certificates
shall have the full force 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 provisions of this Indenture, at
any time, for the purpose of meeting any legal requirement of any jurisdiction
in which any part of the Trust 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, of all or any part of
the Issuer, 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 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust 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. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Indenture on its behalf and in its name. If any
separate trustee or co-trustee shall die, 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,
however, 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). An Indenture Trustee that has resigned
or been removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 6.13. Representations and Warranties. The Indenture Trustee
hereby represents and warrants that:
(a) The Indenture Trustee is duly organized, validly existing
and in good standing under the laws of the United States of America with power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently 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 corporate 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 articles of organization
or bylaws of the Indenture Trustee or any agreement or other instrument to
which the Indenture Trustee is a party or by which it is bound.
(d) To the Indenture Trustee's best 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 its properties (A) asserting
the invalidity of this Indenture, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Indenture or (C) 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.
(e) The Indenture Trustee does not have notice of any adverse
claim (as such terms are used in Section 8-302 of the UCC in effect in the
State of Delaware) 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
assets of the Trust in trust for the Noteholders and the Enhancer;
(b) to authenticate and deliver the Notes substantially in the
form prescribed by Exhibit A 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.
Section 6.15. Indenture Trustee May Own Securities. The Indenture
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities with the same rights it would have if it were not
Indenture Trustee.
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 (a) 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 (b) at such other
times as the Indenture Trustee and the Enhancer may request in writing, within
30 days after receipt by the Issuer of any such request, a list of similar
form and content as of a date not more than 10 days prior to the time such
list is furnished; provided, however, that 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 7.01 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
under 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 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 Section 7.03(a) 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, beginning with January 1, 2000,
the Indenture Trustee shall mail to each Noteholder as required by TIA ss.
313(c) and to the Enhancer 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 Noteholders
shall be filed by the Indenture Trustee with the Commission, if required, and
each stock exchange, if any, on which the Term Notes are listed. The Issuer
shall notify the Indenture Trustee if and when the Term 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 and the Enhancer, the Note Payment
Account as provided in Section 3.01 of this Indenture.
(b) All monies deposited from time to time in the Note Payment
Account pursuant to the Servicing Agreement and all deposits therein pursuant
to this Indenture are for the benefit of the Noteholders, and all investments
made with such monies, including all income or other gain from such
investments, are for the benefit of the Indenture Trustee as provided in the
Servicing Agreement.
On each Payment Date, the Indenture Trustee shall distribute all
amounts on deposit in the Note Payment Account to the Noteholders in respect
of the Notes and, in its capacity as Certificate Paying Agent, to the
Certificateholders from the Distribution Account in the order of priority set
forth in Section 3.05 (except as otherwise provided in Section 5.04(b)).
The Indenture Trustee may invest any funds in the Note Payment
Account in Permitted Investments selected by the Indenture Trustee maturing no
later than the Business Day preceding the next succeeding Payment Date (except
that (i) any investment in the institution with which the Note Payment Account
is maintained may mature on such Payment Date and (ii) any other investment
may mature on such Payment Date if the Indenture Trustee shall advance funds
on such Payment Date to the Note Payment Account in the amount payable on such
investment on such Payment Date, pending receipt thereof to the extent
necessary to make distributions on the Notes) and shall not be sold or
disposed of prior to the maturity.
Section 8.03. Officer's Certificate. The Indenture Trustee shall
receive at least seven days' 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 also 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 complied with.
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 the Noteholders, the Certificate Paying Agent on behalf of the
Certificateholders and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in no event shall
the trust created hereby continue beyond the expiration of 21 years from the
death of the survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James's, living on the
date hereof.
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 Person relying upon an instrument executed by the Indenture
Trustee as provided in Article VIII hereunder 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 8.05 only upon receipt of an Issuer
Request accompanied by an Officers' Certificate and a letter from the Enhancer
stating that the Enhancer has no objection to such request from the Issuer.
(d) The Indenture Trustee shall, at the request of the Issuer or
the Depositor, 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 Noteholder 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.
(a) Without the consent of the Noteholders of any Notes but with
prior notice to the Rating Agencies 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:
(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Noteholders or the Enhancer, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be inconsistent
with any other provision herein or in any supplemental indenture;
(vi) 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 or the Enhancer;
(vii) 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
(viii) 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 indenture shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel to the
effect that the execution of such supplemental indenture will not give rise to
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.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Request, may, without the consent of any Noteholder but with prior
notice to the Rating Agencies and the Enhancer, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Noteholders under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, (i) adversely affect in any material respect the interests
of any Noteholder or the Enhancer or (ii) cause the Issuer to be subject to an
entity level tax.
Section 9.02. Supplemental Indentures With Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Request,
may, with prior notice to the Rating Agencies and with the consent of the
Enhancer and the Noteholders of not less than a majority of the Note Balances
of each Class of Notes affected thereby, 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 provisions to, or changing
in any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Noteholder of each Note affected thereby:
(a) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof or the Note
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, or 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 Noteholders of which is required for any such supplemental
indenture, or the consent of the Noteholders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(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 "Noteholder";
(d) reduce the percentage of the aggregate Note Balance of the
Notes 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 9.02 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 Noteholder of each Note affected thereby;
(f) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of interest
or principal due on any 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 Noteholder 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 Noteholders of all Notes, 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 (as defined in
Section 10.03) under this Section 9.02 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 9.02, the Indenture
Trustee shall mail to the Noteholders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX 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 the terms and
conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as in
effect at the time of such amendment or supplement 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 IX may, and if required by the Indenture Trustee,
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new 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 and to the Enhancer (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) (i) 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, 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 deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
(ii) 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 clause (i) 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 clause
(i) above and this clause (ii), is 10% or more of the aggregate Note Balance
of the Notes, 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 of the Notes.
(iii) Whenever any property or securities are to be
released from the lien of this Indenture, the Issuer shall 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.
(iv) 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 clause (iii) 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 clause (v) 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
clause (iii) above and this clause (iv), equals 10% or more of the aggregate
Note Balance of the Notes, 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 of the Notes.
(v) Notwithstanding any provision of this Indenture, the
Issuer may, without compliance with the requirements of the other provisions
of this Section 10.01, (A) collect upon, sell or otherwise dispose of the
Mortgage Loans as and to the extent permitted or required by the Basic
Documents or (B) 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 (A) or (B) above that occurred
during the preceding six calendar months (or such longer period, in the case
of the first such Officer's Certificate) 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 Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Seller 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 Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in
person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" 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) conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section 10.03.
(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 the Noteholder of any Note shall bind the
Noteholder 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, etc., to Indenture Trustee, Issuer, Enhancer
and Rating Agencies. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders or other documents provided or permitted
by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is to
be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at its Corporate Trust
Office. The Indenture Trustee shall promptly transmit any notice received by
it from the Noteholders to the Issuer,
(b) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to: GMACM Revolving Home
Equity Loan Trust 1999-1, in care of the Owner Trustee, or at any other
address previously furnished in writing to the Indenture Trustee by the
Issuer. The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee, or
(c) the Enhancer by the Issuer, the Indenture Trustee or by any
Noteholders shall be sufficient for every purpose hereunder to in writing and
mailed, first-class postage pre-paid, or personally delivered or telecopied
to: Ambac Assurance Corporation, One State Street Plaza, 17th Floor, New York,
New York 10004, Attention: Structured Finance - Mortgage Backed Securities,
telecopier number (212) 363-1459. The Enhancer shall promptly transmit any
notice received by it from the Issuer, the Indenture Trustee or the
Noteholders to the Issuer or Indenture Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, to
(i) in the case of Moody's, at the following address: Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007 and (ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's, 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Asset Backed Surveillance Department; or, as to each of the
foregoing Persons, at such other address as shall be designated by written
notice to the other foregoing Persons.
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 affected by such
event, at such Person'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 particular 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 a 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 the Rating Agencies,
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. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Noteholder
providing for a method of payment, or notice by the Indenture Trustee to such
Noteholder, that is different from the methods provided for in this Indenture
for such payments or notices. The Issuer shall furnish to the Indenture
Trustee a copy of each such agreement and the Indenture Trustee shall cause
payments to be made and notices to be given in accordance with such
agreements.
Section 10.07. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
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 by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
Section 10.08. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
Section 10.09. Successors and Assigns. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee
in this Indenture shall bind its successors, co-trustees and agents.
Section 10.10. Severability. In case any provision in this Indenture
or in the Notes shall be held invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions hereof shall not in
any way be affected or impaired thereby.
Section 10.11. 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 10.12. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the 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 10.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.14. Counterparts. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 10.15. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which counsel 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 or
any other Person secured hereunder or for the enforcement of any right or
remedy granted to the Indenture Trustee under this Indenture.
Section 10.16. 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 VI, VII and VIII of the Trust Agreement.
Section 10.17. 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 United States federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the other Basic Documents.
Section 10.18. Inspection. The Issuer agrees that, on reasonable
prior notice, it shall 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 law (and all reasonable applications for confidential treatment
are unavailing) and except to the extent that the Indenture Trustee may
reasonably determine that such disclosure is consistent with its obligations
hereunder.
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.
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1,
as Issuer
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:
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:
------------------------------------
Name:
Title:
STATE OF )
----------------
) ss.:
COUNTY OF -------------- )
On this 17th day of June 1999, before me personally appeared _________, to me
known, who being by me duly sworn, did depose and say, that [he][she] resides
at ________, that [he][she] is the __________ of Wilmington Trust Company, the
Owner Trustee, one of the corporations described in and which executed the
above instrument; that [he][she] knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation; and that [he][she]
signed [his][her] name thereto by like order.
--------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 17th day of June 1999, before me personally appeared _______, to me
known, who being by me duly sworn, did depose and say, that [he][she] resides
at __________; that [he][she] is the _________ of Norwest Bank Minnesota,
National Association, as Indenture Trustee, one of the corporations described
in and which executed the above instrument; that [he][she] knows the seal of
said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
corporation; and that [he][she] signed [his][her] name thereto by like order.
--------------------------------
Notary Public
EXHIBIT A-1
FORM OF TERM NOTES
UNLESS THIS TERM 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 TERM 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 TERM NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TERM NOTE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS TERM NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
SELLER, THE DEPOSITOR, THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE
OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS
EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan-Backed Term Note
Registered Principal Amount:
$250,000,000
No. R-1 Note Rate: Floating
CUSIP NO.
GMACM Revolving Home Equity Loan Trust 1999-1, a business trust duly
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
Cede & Co. or its registered assigns, the principal sum of two hundred and
fifty million dollars ($250,000,000), 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 Term Notes pursuant to Section 3.05 of the indenture dated as of June
17, 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 Term Note
shall be due and payable on the Payment Date in June 2027, 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 Term 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 Shortfalls (as further described in the Indenture). The
Note Rate for each Interest Period will be a floating rate equal to the least
of (i) LIBOR plus 0.29% per annum (or, on any Payment Date on which the
aggregate Term Note Balance is less than 10% of the initial Term Note Balance,
LIBOR plus 0.58% per annum), (ii) the Net Loan Rate and (iii) 14.5% per annum.
LIBOR for each applicable Interest Period will be determined on the second
LIBOR Business Day immediately preceding (i) the Closing Date in the case of
the first Interest Period and (ii) the first day of each succeeding Interest
Period by the Indenture Trustee as set forth in the Indenture. All
determinations of LIBOR by the Indenture Trustee shall, in the absence of
manifest error, be conclusive for all purposes, and each holder of this Term
Note, by accepting this Term Note, agrees to be bound by such determination.
Interest on this Term Note will accrue 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.
Interest will be computed on the basis of the actual number of days in each
Interest Period and a year assumed to consist of 360 days. Principal of and
interest on this Term Note shall be paid in the manner specified on the
reverse hereof.
Principal of and interest on this Term Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Term Note shall be applied first to interest due
and payable on this Term Note as provided above and then to the unpaid
principal of this Term Note.
Reference is made to the further provisions of this Term Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Term Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Term
Note shall not be entitled to any benefit under the Indenture referred to on
the reverse hereof, or be valid or obligatory for any purpose.
This Term Note is one of a duly authorized issue of Term Notes of the
Issuer, designated as its Home Equity Loan-Backed Term Notes (the "Term
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 of the Term Notes. The Term Notes are subject to
all terms of the Indenture.
The Term Notes and the Variable Funding 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 Term Note is entitled to the benefits of an irrevocable and
unconditional financial guaranty insurance policy issued by Ambac Assurance
Corporation.
Principal of and interest on this Term Note will be payable on each
Payment Date, commencing on July 19, 1999, as described in the Indenture.
"Payment Date" means the eighteenth day of each month, or, if any such date is
not a Business Day, then the next succeeding Business Day.
The entire unpaid principal amount of this Term Note shall be due and
payable in full on the Payment Date in June 2027 pursuant to the Indenture, to
the extent not previously paid on a prior Payment Date. Notwithstanding the
foregoing, if an Event of Default shall have occurred and be continuing, then
the Indenture Trustee, the Enhancer or the Noteholders of Notes representing
not less than a majority of the aggregate Note Balance of the Notes, with the
consent of the Enhancer, may declare the Notes to be immediately due and
payable in the manner provided in Section 5.02 of the Indenture. All principal
payments on the Term Notes shall be made pro rata to the Noteholders of Term
Notes entitled thereto.
Any installment of interest or principal, if any, 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 related Noteholder on the preceding Record
Date, by wire transfer to an account specified in writing by such Noteholder
reasonably satisfactory to the Indenture Trustee as of the preceding Record
Date or, if no such instructions have been delivered to the Indenture Trustee,
by check or money order to such Noteholder mailed to such Noteholder's address
as it appears in the Note Register, the amount required to be distributed to
such Noteholder on such Payment Date pursuant to such Noteholder's Notes;
provided, however, that the Indenture Trustee shall not pay to such Noteholder
any amount required to be withheld from a payment to such Noteholder by the
Code. Any reduction in the principal amount of this Term Note (or any one or
more predecessor Term Notes) effected by any payments made on any Payment Date
shall be binding upon all future Noteholders of this Term Note and of any Term
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Term Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the registered Noteholder hereof as of the Record Date
preceding such Payment Date by notice mailed or transmitted by facsimile prior
to such Payment Date, and the amount then due and payable shall be payable
only upon presentation and surrender of this Term Note at the address
specified in such notice of final payment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Term Note may be registered on the Note
Register upon surrender of this Term Note for registration of transfer at the
Corporate Trust Office of the Indenture Trustee, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or such Noteholder'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
Exchange Act, and thereupon one or more new Term 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 Term Note, but the Note
Registrar shall require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of this Term Note.
Each Noteholder or Beneficial Owner of a Term Note, by its acceptance
of a Term Note, or, in the case of a Beneficial Owner of a Term Note, a
beneficial interest in a Term 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 Seller, the Servicer, the Depositor or the
Indenture Trustee on the Term 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 its individual capacity, (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 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 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.
Each Noteholder or Beneficial Owner of a Term Note, by its acceptance
of a Term Note or, in the case of a Beneficial Owner of a Term Note, a
beneficial interest in a Term Note, covenants and agrees by accepting the
benefits of the Indenture that such Noteholder or Beneficial Owner will not at
any time institute against the Depositor, the Seller, the Servicer, GMAC
Mortgage Group, Inc. or the Issuer, or join in any institution against the
Depositor, the Seller, the Servicer, GMAC Mortgage Group, Inc. or the Issuer
of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Term Notes, the Indenture
or the other Basic Documents.
The Issuer has entered into the Indenture and this Term Note is
issued with the intention that, for federal, state and local income, single
business and franchise tax purposes, the Term Notes will qualify as
indebtedness of the Issuer. Each Noteholder of a Term Note, by its acceptance
of a Term Note (and each Beneficial Owner of a Term Note by its acceptance of
a beneficial interest in a Term Note), agrees to treat the Term 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
Term 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 this Term Note
is registered (as of the day 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 Term Note 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 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 Noteholders of the Term
Notes under the Indenture at any time by the Issuer and the Indenture Trustee
with the consent of the Enhancer and the Noteholders of Notes representing a
majority of the aggregate Note Balance of the Notes then Outstanding and with
prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the Noteholders of Notes representing specified percentages of the
Notes Balances of the Notes, on behalf of the Noteholders of all Notes, 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 Noteholder of this Term Note (or any one of more
predecessor Term Notes) shall be conclusive and binding upon such Noteholder
and upon all future Noteholders of this Term Note and of any Term 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 upon this
Term Note. 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 Noteholders of the Term Notes issued thereunder but with prior
notice to the Rating Agencies and the Enhancer.
The term "Issuer" as used in this Term Note includes any successor or
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 of Term Notes under the Indenture.
The Term Notes are issuable only in registered form in denominations
as provided in the Indenture, subject to certain limitations therein set
forth.
This Term Note and the Indenture shall be construed in accordance
with the laws of the State of New York, without reference to its conflicts of
law provisions, 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 Term
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 Term 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 in its
individual capacity, Norwest Bank Minnesota, National Association in its
individual capacity, 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 Term Note or the performance of, or the failure to perform, any of the
covenants, obligations or indemnifications contained in the Indenture. The
Noteholder of this Term 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 Noteholder 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 Term Note.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and
not in its individual capacity, has caused this Term Note to be duly executed.
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
Dated: June 17, 1999
By:
---------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Term Notes referred to in the within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Indenture Trustee
Dated: June 17, 1999
By:
-----------------------------------
Authorized Signatory
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 Term Note and all rights thereunder, and hereby irrevocably
constitutes and appoints__________________________________________________
___________________________, attorney, to transfer said Term Note on the books
kept for registration thereof, with full power of substitution in the
premises.
Dated:___________________ _______________________*/
Signature Guaranteed:
_______________________*/
- -----------------------
* NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Variable Funding 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.
<PAGE>
EXHIBIT A-2
FORM OF VARIABLE FUNDING NOTES
THIS VARIABLE FUNDING NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO
SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT
FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS
TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.02 OF THE INDENTURE
REFERRED TO HEREIN.
THE PRINCIPAL OF THIS VARIABLE FUNDING NOTE IS PAYABLE IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS VARIABLE FUNDING NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ON THE FACE HEREOF.
THIS VARIABLE FUNDING NOTE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF THE SELLER, THE DEPOSITOR, THE SERVICER, THE INDENTURE TRUSTEE,
THE OWNER TRUSTEE OR GMAC MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE
AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE INDENTURE OR THE OTHER BASIC
DOCUMENTS.
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan-Backed Variable Funding Note
Registered Maximum Variable
Funding Balance: $50,000,000
VFN-1 Note Rate: Floating
GMACM Revolving Home Equity Loan Trust 1999-1, a business trust duly
organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
GMAC Mortgage Corporation or its registered assigns, the principal amount set
forth on Schedule A attached hereto (or otherwise owing hereunder as
determined pursuant to the Indenture as defined below), payable on each
Payment Date in an amount equal to the pro rata portion allocable hereto
(based on the Variable Funding Balances of all Variable Funding Notes
immediately prior to such Payment Date) of the aggregate amount, if any,
payable from the Note Payment Account in respect of principal on the Variable
Funding Notes pursuant to Section 3.05 of the indenture dated as of June 17,
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 Variable
Funding Note shall be due and payable on the Payment Date in June 2027, to the
extent not previously paid on a prior Payment Date. Capitalized terms used
herein that are not otherwise defined have the meanings ascribed thereto in
Appendix A to the Indenture.
Interest on this Variable Funding Note 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 Shortfalls (as further described in
the Indenture). The Note Rate for each Interest Period will be a floating rate
equal to the least of (i) LIBOR plus 0.29% per annum (or, on any Payment Date
on which the aggregate Term Note Balance is less than 10% of the initial Term
Note Balance, LIBOR plus 0.58% per annum), (ii) the Net Loan Rate and (iii)
14.5% per annum. All determinations of LIBOR by the Indenture Trustee shall,
in the absence of manifest error, be conclusive for all purposes, and each
Noteholder of this Variable Funding Note, by accepting this Variable Funding
Note, agrees to be bound by such determination. Interest on this Variable
Funding Note will accrue for each Payment Date from the most recent Payment
Date on which interest has been paid (or, in the case of the First Payment
Date, from the Closing Date) to but excluding such Payment Date. Interest will
be computed on the basis of the actual number of days in each Interest Period
and a year assumed to consist of 360 days. Principal of and interest on this
Variable Funding Note shall be paid in the manner specified on the reverse
hereof.
Principal of and interest on this Variable Funding Note are payable
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Variable Funding Note shall be applied
first to interest due and payable on this Variable Funding Note as provided
above and then to the unpaid principal of this Variable Funding Note.
Reference is made to the further provisions of this Variable Funding
Note set forth on the reverse hereof, which shall have the same effect as
though fully set forth on the face of this Variable Funding Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this
Variable Funding Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.
This Variable Funding Note is one of a duly authorized issue of
Variable Funding Notes of the Issuer, designated as its Home Equity
Loan-Backed Variable Funding Notes (herein called the "Variable Funding
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 of the Variable Funding Notes. The Variable
Funding Notes are subject to all terms of the Indenture.
The Variable Funding Notes and the Term 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 Variable Funding Note is entitled to the benefits of an
irrevocable and unconditional financial guaranty insurance policy issued by
Ambac Assurance Corporation.
Principal of and interest on this Variable Funding Note will be
payable on each Payment Date, commencing on July 19, 1999, as described in the
Indenture. "Payment Date" means the eighteenth day of each month, or, if any
such day is not a Business Day, then the next succeeding Business Day.
The entire unpaid principal amount of this Variable Funding Note
shall be due and payable in full on the Payment Date in June 2027 pursuant to
the Indenture, to the extent not previously paid on a prior Payment Date.
Notwithstanding the foregoing, if an Event of Default shall have occurred and
be continuing, then the Indenture Trustee, the Enhancer or the Noteholders of
Notes representing not less than a majority of the aggregate Note Balance of
the Notes, with the consent of the Enhancer, may declare the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Variable Funding Notes shall be made
pro rata to the Noteholders of Variable Funding Notes entitled thereto.
Payments of interest on this Variable Funding Note due and payable on
each Payment Date, together with the installment of principal, if any, to the
extent not in full payment of this Variable Funding Note, shall be made by
check mailed to the Person whose name appears as the registered Noteholder of
this Variable Funding Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date. Any reduction in the
principal amount of this Variable Funding Note (or any one or more predecessor
Variable Funding Notes) effected by any payments made on any Payment Date
shall be binding upon all future holders of this Variable Funding Note and of
any Variable Funding Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds
are expected to be available, as provided in the Indenture, for payment in
full of the then remaining unpaid principal amount of this Variable Funding
Note on a Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the registered Noteholder
hereof as of the Record Date preceding such Payment Date by notice mailed or
transmitted by facsimile prior to such Payment Date and the amount then due
and payable shall be payable only upon presentation and surrender of this
Variable Funding Note at the address specified in such notice of final
payment.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Variable Funding Note may be registered on
the Note Register upon surrender of this Variable Funding Note for
registration of transfer at the Corporate Trust Office of the Indenture
Trustee, duly endorsed by, and accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by, the Noteholder
hereof or such Noteholder'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 Variable Funding 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 Variable Funding Note, but the Note Registrar
shall require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any registration of transfer or
exchange of this Variable Funding Note.
Each Noteholder of a Variable Funding Note, by its acceptance of a
Variable Funding 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 Seller, the Servicer, the Depositor or the Indenture
Trustee on the Variable Funding 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 its individual capacity, (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 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 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.
Each Noteholder of a Variable Funding Note covenants and agrees by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor, the Seller, the Servicer, GMAC Mortgage
Group, Inc. or the Issuer, or join in any institution against the Depositor,
the Seller, the Servicer, GMAC Mortgage Group, Inc. or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Variable Funding Notes, the
Indenture or the other Basic Documents.
No transfer, sale, pledge or other disposition of a Variable Funding
Note shall be made unless such transfer, sale, pledge or other disposition is
exempt from the registration requirements of the Securities Act, and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event of any such transfer, the Indenture Trustee or the Issuer
shall require the transferee to execute either (i)(a) an investment letter in
substantially the form attached to the Indenture as Exhibit B (or in such form
and substance reasonably satisfactory to the Indenture Trustee and the Issuer)
which investment letters shall not be an expense of the Trust, the Owner
Trustee, the Indenture Trustee, the Servicer, the Depositor or the Issuer and
which investment letter states that, among other things, such transferee (a)
is a "qualified institutional buyer" as defined under Rule 144A, acting for
its own account or the accounts of other "qualified institutional buyers" as
defined under Rule 144A, and (b) is aware that the proposed transferor intends
to rely on the exemption from registration requirements under the Securities
Act, provided by Rule 144A or (ii) the Indenture Trustee shall require the
transferee to execute an investment letter in substantially the form of
Exhibit C to the Indenture, acceptable to and in form and substance reasonably
satisfactory to the Issuer and the Indenture Trustee certifying to the Issuer
and the Indenture Trustee the facts surrounding such transfer, which
investment letter shall not be an expense of the Indenture Trustee or the
Issuer. Any Noteholder of a Variable Funding Note that does not execute such a
certificate or transfer letter shall be deemed to have made the
representations set forth therein. The Noteholder of a Variable Funding Note
desiring to effect such transfer shall, and does hereby agree to, indemnify
the Indenture Trustee, the Enhancer and the Issuer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
The Issuer has entered into the Indenture and this Variable Funding
Note is issued with the intention that, for federal, state and local income,
single business and franchise tax purposes, the Variable Funding Notes will
qualify as indebtedness of the Issuer. Each Noteholder of a Variable Funding
Note, by its acceptance of a Variable Funding Note, agrees to treat the
Variable Funding 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
Variable Funding Note, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this
Variable Funding Note (as of the day of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for
all purposes, whether or not this Variable Funding Note 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 Noteholders of the
Variable Funding Notes under the Indenture at any time by the Issuer and the
Indenture Trustee with the consent of the Enhancer and the Noteholders of
Notes representing a majority of the aggregate Note Balance of the Notes at
the time Outstanding and with prior notice to the Rating Agencies. The
Indenture also contains provisions permitting the Noteholders of Notes
representing specified percentages of the aggregate Note Balance of the Notes,
on behalf of the Noteholders of all Notes, 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 Noteholder
of this Variable Funding Note (or any one of more predecessor Variable Funding
Notes) shall be conclusive and binding upon such Noteholder and upon all
future Noteholders of this Variable Funding Note and of any Variable Funding
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 upon
this Variable Funding Note. The Indenture also permits the Indenture Trustee
to amend or waive certain terms and conditions set forth in the Indenture
without the consent of Noteholders of the Variable Funding Notes issued
thereunder but with prior notice to the Rating Agencies and the Enhancer.
The term "Issuer" as used in this Variable Funding 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 of Variable Funding Notes under the Indenture.
The Variable Funding Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Variable Funding Note and the Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflicts of law provisions, 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
Variable Funding 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 Variable Funding 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 in its
individual capacity, Norwest Bank Minnesota, National Association in its
individual capacity, 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 Variable Funding Note or performance of, or omission to perform, any of
the covenants, obligations or indemnifications contained in the Indenture. The
Noteholder of this Variable Funding 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 Noteholder 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 Variable
Funding Note.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and
not in its individual capacity, has caused this Variable Funding Note to be
duly executed.
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
Dated: June 17, 1999
By: _____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Variable Funding Notes referred to in the within mentioned
Indenture.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Indenture Trustee
Dated: June 17, 1999
By: ____________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee: ___________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
___________________________
(name and address of assignee)
the within Variable Funding Note and all rights thereunder, and hereby
irrevocably constitutes and appoints _____________________, attorney,
to transfer said Variable Funding Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: __________________ ________________________________/*
Signature Guaranteed:
_______________________________//
- -----------------
/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Variable Funding 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.
<TABLE>
<CAPTION>
SCHEDULE A
GMACM REVOLVING HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan-Backed Variable Funding Note
<S> <C> <C> <C> <C>
Variable Funding Authorized Signature
Date Percentage Interest Principal Payment Balance Outstanding of Indenture Trustee
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
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</TABLE>
EXHIBIT B
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
The undersigned buyer (the "Buyer"), intends to acquire the Rule 144A
Securities described above from the seller (the "Seller").
1. The Buyer warrants and represents to, and covenants with, the
Indenture Trustee and the Issuer (as defined in the indenture dated as of June
17, 1999 (the "Indenture"), between GMACM Revolving Home Equity Loan Trust
1999-1, as Issuer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee, pursuant to Section 4.02 of the Indenture, as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Rule 144A
Securities.
c. The Buyer has been furnished with all
information regarding the Rule 144A Securities that it has requested
from the Seller, the Indenture Trustee, the Owner Trustee or the
Servicer.
d. Neither the Buyer nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed
of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with
respect to the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security with, any person in any
manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Rule 144A Securities under the
1933 Act or that would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, nor will it act, nor has it authorized
or will it authorize any person to act, in such manner with respect
to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer"
as that term is defined in Rule 144A under the 1933 Act and has
completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. The Buyer is aware that the
sale to it is being made in reliance on Rule 144A. The Buyer is
acquiring the Rule 144A Securities for its own account or the
accounts of other qualified institutional buyers, understands that
such Rule 144A Securities may be resold, pledged or transferred only
(i) to a person reasonably believed to be a qualified institutional
buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or
(ii) pursuant to another exemption from registration under the 1933
Act.
3. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same document.
IN WITNESS WHEREOF, the Buyer has executed this document as of the
date set forth below.
- ----------------------------------------
Print Name of Buyer
By:
------------------------------------
Name:
Title:
Taxpayer Identification:
No.
----------------------------
Date:
-------------------------
ANNEX 1 TO EXHIBIT B
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $______________________** in
securities (except for the excluded securities referred to below) as of the
end of the Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
- ------------------------
** Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a state or
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a state, its political subdivisions, or any agency
or instrumentality of the state or its political subdivisions,
for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended.
___ Investment Adviser. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940, as
amended.
___ SBIC. The Buyer is a Small Business Investment Company licensed
by the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958, as amended.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940, as amended.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or
its political subdivisions, for the benefit of its employees, or
(b) employee benefit plans within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, but is not a
trust fund that includes as participants individual retirement
accounts or H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject
to a repurchase agreement and (vii) currency, interest rate and commodity
swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used
the cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are consolidated with
the Buyer in its financial statements prepared in accordance with generally
accepted accounting principles and if the investments of such subsidiaries are
managed under the Buyer's direction. However, such securities were not
included if the Buyer is a majority-owned, consolidated subsidiary of another
enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Rule 144A
Securities are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for
a third party unless the Buyer has obtained a current representation letter
from such third party or taken other appropriate steps contemplated by Rule
144A to conclude that such third party independently meets the definition of
"qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of Rule 144A
Securities will constitute a reaffirmation of this certification as of the
date of such purchase.
-------------------------------
Print Name of Buyer
By:
----------------------------
Name:
Title:
Date:
----------------------------
<PAGE>
ANNEX 2 TO EXHIBIT B
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A
under the Securities Act of 1933 ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser (as defined below).
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year. For purposes of determining the amount of securities owned
by the Buyer or the Buyer's Family of Investment Companies, the cost of such
securities was used.
____ The Buyer owned $________________ in securities
(other than the excluded securities referred to
below) as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other
than the excluded securities referred to below) as of the
end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that
have the same investment adviser or investment advisers (each, an "Adviser")
that are affiliated (by virtue of being majority owned subsidiaries of the
same parent or because one investment adviser is a majority owned subsidiary
of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement and
(vi) currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that
each of the parties to which this certification is made are relying and will
continue to rely on the statements made herein because one or more sales to
the Buyer will be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer's own account.
6. The undersigned will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
-------------------------------
Print Name of Buyer
By:____________________________
Name:
Title:
IF AN ADVISER:
--------------------------------
Print Name of Buyer
Date:_____________________________
EXHIBIT C
FORM OF INVESTOR REPRESENTATION LETTER
- ----------, ----
GMACM Revolving Home Equity Loan Trust 1999-1
c/o Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890 0001
Norwest Bank Minnesota, National Association
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Administration
Re: Home Equity Loan-Backed Capped Funding Notes,
Series 1999-1
--------------------------------------------
Ladies and Gentlemen:
_____________(the "Purchaser") intends to purchase from ________
(the "Seller") $____________ Capped Funding Notes of Series 1999-1 (the
"Notes"), issued pursuant to the indenture dated as of June 17, 1999 (the
"Indenture"), between GMACM Revolving Home Equity Loan Trust 1999-1, as issuer
(the "Issuer"), and Norwest Bank Minnesota, National Association, as indenture
trustee (the "Indenture Trustee"). Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in Appendix A to the
Indenture. The Purchaser hereby certifies, represents and warrants to, and
covenants with, the Issuer and the Indenture Trustee that:
1. The Purchaser understands that (a) the Notes
have not been and will not be registered or qualified under
the Securities Act of 1933, as amended (the "Act") or any
state securities law, (b) the Company is not required to so
register or qualify the Notes, (c) the Notes may be resold
only if registered and qualified pursuant to the provisions
of the Act or any state securities law, or if an exemption
from such registration and qualification is available, (d)
the Indenture contains restrictions regarding the transfer
of the Notes and (e) the Notes will bear a legend to the
foregoing effect.
2. The Purchaser is acquiring the Notes for its own
account for investment only and not with a view to or for
sale in connection with any distribution thereof in any
manner that would violate the Act or any applicable state
securities laws.
3. The Purchaser is (a) a substantial,
sophisticated institutional investor having such knowledge
and experience in financial and business matters, and, in
particular, in such matters related to securities similar to
the Notes, such that it is capable of evaluating the merits
and risks of investment in the Notes, (b) able to bear the
economic risks of such an investment and (c) an "accredited
investor" within the meaning of clauses (1), (2), (3) or (7)
of Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has
had an opportunity to review a copy of the Indenture and
such other information concerning the Notes, the Mortgage
Loans and the Company as has been requested by the Purchaser
from the Company or the Seller and is relevant to the
Purchaser's decision to purchase the Notes. The Purchaser
has had any questions arising from such review answered by
the Company or the Seller to the satisfaction of the
Purchaser.
5. The Purchaser has not and will not nor has it
authorized or will it authorize any person to (a) offer,
pledge, sell, dispose of or otherwise transfer any Note, any
interest in any Note or any other similar security to any
person in any manner, (b) solicit any offer to buy or to
accept a pledge, disposition of other transfer of any Note,
any interest in any Note or any other similar security from
any person in any manner, (c) otherwise approach or
negotiate with respect to any Note, any interest in any Note
or any other similar security with any person in any manner,
(d) make any general solicitation by means of general
advertising or in any other manner or (e) take any other
action, that (as to any of (a) through (e) above) would
constitute a distribution of any Note under the Act, that
would render the disposition of any Note a violation of
Section 5 of the Act or any state securities law, or that
would require registration or qualification pursuant
thereto. The Purchaser will not sell or otherwise transfer
any of the Notes, except in compliance with the provisions
of the Indenture.
Very truly yours,
-------------------------------------
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
APPENDIX A
DEFINITIONS
Addition Notice: With respect to the transfer of Subsequent Mortgage
Loans to the Issuer pursuant to Section 2.2 of the Purchase Agreement (in
substantially the form set forth in Exhibit 3 to such agreement), a notice
given to the Rating Agencies, the Indenture Trustee, the Enhancer and the Owner
Trustee, which shall be given not later than seven Business Days prior to the
related Subsequent Transfer Date, of the Seller's designation of Subsequent
Mortgage Loans to be sold to the Issuer and the aggregate principal balance as
of the Subsequent Cut-off Date of such Subsequent Mortgage Loans.
Additional Balance: With respect to any HELOC, any future Draw made by
the related Mortgagor pursuant to the related Loan Agreement after the Cut-Off
Date or Subsequent Cut-off Date; provided, however, that during the Rapid
Amortization Period, any Draw shall be an Excluded Amount, shall not be
acquired by the Trust and shall not be an Additional Balance.
Additional Certificate Balance: With respect to the issuance of Capped
Funding Notes pursuant to Section 4.01(d) of the Indenture, the amount, if any,
required in accordance with the Opinion of Counsel in connection therewith to
be added to the Certificate Balances of the Certificates in accordance with
Section 3.12 of the Trust Agreement.
Affiliate: 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.
Aggregate Balance Differential: With respect to any Payment Date and
any Variable Funding Note, the sum of all Balance Differentials that have been
added to the Variable Funding Balance of such Variable Funding Note prior to
such Payment Date.
Amortization Periods: Collectively, the Managed Amortization Period
and the Rapid Amortization Period.
Appraised Value: With respect to any Mortgaged Property, either (x)
the value as generally set forth in an appraisal of such Mortgaged Property
used to establish compliance with the underwriting criteria then in effect in
connection with the later of the application for the Mortgage Loan secured by
such Mortgaged Property or (in the case of a HELOC) any subsequent increase or
decrease in the related Credit Limit, or to reduce or eliminate the amount of
any primary insurance, or (y) if the sales price of such Mortgaged Property is
considered in accordance with the underwriting criteria applicable to the
related Mortgage Loan, the lesser of (i) the appraised value referred to in (x)
above and (ii) the sales price of such Mortgaged Property.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the conveyance of such Mortgage, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering Mortgage Loans secured by Mortgaged Properties located in
the same jurisdiction.
Authorized Newspaper: A newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
Authorized Officer: With respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter).
Balance Differential: With respect to any Payment Date:
(a) during the Revolving Period, the amount, if any, by which (i) the
sum of the aggregate Principal Balance of all Subsequent Mortgage Loans and the
amount of any Additional Balances transferred to the Trust Estate during the
related Collection Period exceeds (ii) the sum of (A) Principal Collections for
such Collection Period; (B) the amount on deposit in the Funding Account as of
such Payment Date, and (C) the Pre-Funded Amount as of such Payment Date (but
only to the extent of the aggregate Principal Balance of Subsequent Mortgage
Loans in clause (i) above for any Payment Date other than the Payment Date
relating to the end of the Pre-Funding Period); and
(b) during the Managed Amortization Period, the amount, if any, by
which the amount of any Additional Balances transferred to the Trust Estate
during the related Collection Period exceeds Principal Collections for such
Collection Period.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basic Documents: The Trust Agreement, the Indenture, the Purchase
Agreement, the Insurance Agreement, the Policy, the Servicing Agreement, the
Custodial Agreement, any Subsequent Transfer Agreement and the other documents
and certificates delivered in connection with any of the above.
Beneficial Owner: With respect to any Note, the Person who 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).
Billing Cycle: With respect to any Mortgage Loan and Due Date, the
calendar month preceding such Due Date.
Book-Entry Notes: 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: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the States of New York, Pennsylvania,
Minnesota, Maryland or Delaware are required or authorized by law to be closed.
Business Trust Statute: Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code ss.ss.3801 et seq., as the same may be amended from time to time.
Capitalized Interest Account: The account established and maintained
pursuant to Section 3.19 of the Servicing Agreement.
Capitalized Interest Requirement: With respect to each Payment Date
during the Pre-Funding Period, the excess, if any of (i) the sum of (A) the
amount of interest accrued at the Note Rate for the related Interest Period 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) and (B)
the amount of any fees paid to the Enhancer, the Owner Trustee and the
Indenture Trustee over (ii) the amount of reinvestment earnings for the related
Interest Period on funds on deposit in the Pre-Funding Account.
Capped Funding Balance: With respect to any date of determination and
Capped Funding Note, the outstanding principal balance of such Capped Funding
Note as of such date.
Capped Funding Note: Any Capped Funding Note issued in connection with
an exchange pursuant to Section 4.01(d) of the Indenture.
Certificate Balance: With respect to any Payment Date and any
Certificate, the Initial Certificate Balance reduced by all payments of
principal on such Certificate prior to such Payment Date.
Certificate Distribution Amount: For any Payment Date, the amount
distributable on the Certificates collectively equal to the pro rata percentage
(based on the outstanding Security Balances of the Securities) of the aggregate
of the Principal Distribution Amount and the Liquidation Loss Distribution
Amount for such Payment Date.
Certificate Paying Agent: The meaning specified in Section 3.10 of the
Trust Agreement.
Certificate Percentage Interest: With respect to any Payment Date, the
Percentage Interest as stated on the face of such Certificate, which percentage
may be recalculated in accordance with Section 3.03 of the Trust Agreement.
Certificate Register: The register maintained by the Certificate
Registrar in which the Certificate Registrar shall provide for the registration
of Certificates and of transfers and exchanges of Certificates.
Certificate of Trust: The Certificate of Trust filed for the Trust
pursuant to Section 3810(a) of the Business Trust Statute.
Certificate Registrar: Initially, the Indenture Trustee, in its
capacity as Certificate Registrar.
Certificateholder: 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 of any of them shall be deemed not to be outstanding and the
registered holder will not be considered a Certificateholder 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 Certificateholders if
the pledgee 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 Persons.
Certificates: The certificates in substantially the form set forth in
Exhibit A to the Trust Agreement.
Closing Date: June 17, 1999.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Collateral: The meaning specified in the Granting Clause of the
Indenture.
Collection Period: With respect to any Mortgage Loan and Payment Date,
the calendar month preceding any such Payment Date.
Collections: With respect to any Collection Period, all Interest
Collections and Principal Collections during such Collection Period.
Combined Loan-to-Value Ratio: With respect to (a) each HELOC, the
ratio, expressed as a percentage, of the sum of (i) the Credit Limit and (ii)
any outstanding principal balance, at origination of such HELOC, of all other
mortgage loans, if any, secured by senior or subordinate liens on the related
Mortgaged Property, to the Appraised Value, or, when not available, the Stated
Value, and (b) with respect to each HEL, the ratio, expressed as a percentage,
of the sum of (i) the initial principal balance of such HEL and (ii) any
outstanding principal balance, at origination of such HEL, of all other
mortgage loans, if any, secured by senior or subordinate liens on the related
Mortgaged Property, to the Appraised Value, or, when not available, the Stated
Value.
Commission: The Securities and Exchange Commission.
Corporate Trust Office: With respect to the Indenture Trustee,
Certificate Registrar, Certificate Paying Agent and Paying Agent, the principal
corporate trust office of the Indenture Trustee and Note Registrar 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. With respect to the Owner Trustee, the principal corporate
trust office of the Owner Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of the execution
of this Trust Agreement is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration.
Credit Limit: With respect to any HELOC, the maximum Principal Balance
permitted under the terms of the related Loan Agreement.
Custodial Account: The account or accounts created and maintained by
the Servicer pursuant to Section 3.02(b) of the Servicing Agreement, in which
the Servicer shall deposit or cause to be deposited certain amounts in respect
of the Mortgage Loans.
Custodial Agreement: Any Custodial Agreement among the Custodian, the
Indenture Trustee, the Issuer and the Servicer relating to the custody of the
Mortgage Loans and the Related Documents.
Custodian: Bank of Maryland, a Maryland banking association, and its
successors and assigns.
Cut-Off Date: The close of business on June 1, 1999.
Cut-Off Date Principal Balance: With respect to any Initial Mortgage
Loan or Subsequent Mortgage Loan, the unpaid principal balance thereof as of
the close of business on the last day of the Billing Cycle immediately prior to
the Cut-Off Date or Subsequent Cut-off Date, as the case may be.
Debt Service Reduction: With respect to any Mortgage Loan, a reduction
in the scheduled payment for such Mortgage Loan by a court of competent
jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction
constituting a Deficient Valuation or any reduction that results in a permanent
forgiveness of principal.
Default: Any occurrence which is or with notice or the lapse of time
or both would become an Event of Default.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the related Mortgaged Property in an
amount less than the then outstanding indebtedness under such Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
scheduled payment that constitutes a permanent forgiveness of principal, which
valuation or reduction results from a proceeding under the Bankruptcy Code.
Definitive Notes: The meaning specified in Section 4.06 of the
Indenture.
Deleted Loan: A Mortgage Loan replaced or to be replaced with an
Eligible Substitute Loan.
Depositor: Bear Stearns Asset Backed Securities, Inc., a Delaware
corporation, or its successor in interest.
Depository: The Depository Trust Company or a successor appointed by
the Indenture Trustee with the approval of the Issuer. 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 Commission
thereunder.
Depository Participant: A Person for whom, from time to time, the
Depository effects book-entry transfers and pledges of securities deposited
with the Depository.
Determination Date: With respect to any Payment Date, the 13th day of
the month in which such Payment Date occurs or if such day is not a Business
Day, the next succeeding Business Day.
Distribution Account: The account or accounts created and maintained
by the Certificate Paying Agent pursuant to Section 3.10(c) of the Trust
Agreement. The Certificate Paying Agent will make all distributions on the
Certificates from money on deposit in the Distribution Account.
Draw: With respect to any HELOC, a borrowing by the related Mortgagor
under the related Loan Agreement.
Draw Period: With respect to each HELOC, the period consisting of
either the first five, ten or fifteen years after the date of origination of
such HELOC, during which the related Mortgagor is permitted to make Draws.
Due Date: With respect to the Mortgage Loans, the 15th day of the
month.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the short-term debt obligations of
which have been rated by each Rating Agency in its highest rating category
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 each Rating Agency)
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 Custodial
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
Custodial Account and the Note Payment 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 each Rating
Agency (as evidenced in writing by each Rating Agency that use of any such
account as the Custodial Account or the Note Payment Account will not cause a
Rating Event (if determined without regard to the Policy).
Eligible Substitute Loan: A Mortgage Loan substituted by the Seller
for a Deleted Loan, which must, on the date of such substitution, as confirmed
in an Officers' Certificate delivered to the Indenture Trustee, (i) have 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 Deleted Loan (the amount of any
shortfall to be deposited by the Seller in the Custodial Account in the month
of substitution); (ii) comply with each representation and warranty set forth
in clauses (ii) through (xxxi) of Section 3.1(b) of the Purchase Agreement,
other than clauses (viii), (xiii), (xiv), (xxiii)(B), (xxiv)(B), (xxv) and
(xxvi), as of the date of substitution; (iii) have a Loan Rate, Net Loan Rate
and Gross Margin no lower than and not more than 1% per annum higher than the
Loan Rate, Net Loan Rate and Gross Margin, respectively, of the Deleted Loan as
of the date of substitution; (iv) have a CLTV at the time of substitution no
higher than that of the Deleted Loan at the time of substitution; (v) have a
remaining term to stated maturity not greater than (and not more than one year
less than) that of the Deleted Loan and (vi) not be 30 days or more delinquent.
Enhancer: Ambac Assurance Corporation, a Wisconsin-domiciled stock
insurance corporation, any successor thereto or any replacement Enhancer
substituted pursuant to the Indenture.
Enhancer Default: If the Enhancer fails to make a payment required
under the Policy in accordance with its terms.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Event of Default: 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 the principal of, any installment of
the principal of or interest on any Note when the same becomes due and payable,
and such default shall continue for a period of five days;
(b) there occurs a default in the observance or performance in any
material respect 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 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 that has a material adverse effect on the
Noteholders or the Enhancer, 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 Enhancer or the Noteholders of at least 25% of the aggregate
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;
(c) 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; or
(d) 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.
Excess Spread: With respect to any Payment Date, the excess, if any,
of (i) Interest Collections for the related Collection Period over (ii) the
aggregate amount specified in Sections 3.05(a)(i) and 3.05(a)(iii) of the
Indenture for such Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Excluded Amount: For any Payment Date during the Rapid Amortization
Period, the portion of the balance with respect to each HELOC attributable to
all Draws not transferred to the Trust Estate, and the portion of the Principal
Collections and Interest Collections thereon for each Collection Period
allocated to such Excluded Amount based on a pro rata allocation between the
related Excluded Amount and the Principal Balance of such HELOC in proportion
to the respective amounts outstanding as of the end of the calendar month
preceding such Collection Period.
Expenses: The meaning specified in Section 7.02 of the Trust
Agreement.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Final Payment Date: The Payment Date in June 2027.
Fiscal Year: The fiscal year of the Trust, which shall end on December
31 of each year.
FNMA: The Federal National Mortgage Association, or any successor
thereto.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of Liquidation Proceeds net of
Liquidation Expenses exceeds (ii) the Principal Balance of such Liquidated
Mortgage Loan (plus accrued and unpaid interest thereon at the applicable Loan
Rate from the date interest was last paid through the date of receipt of the
final Liquidation Proceeds) immediately prior to the final recovery of the
related Liquidation Proceeds.
Funding Account: The account established and maintained pursuant to
Section 3.18 of the Servicing Agreement.
Grant: 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.
Gross Margin: With respect to any HELOC, the percentage set forth as
the "Margin" for such HELOC on the Mortgage Loan Schedule.
HEL: Each closed-end, fixed rate home equity loan included in the
Trust Estate.
HELOC: Each adjustable-rate, home equity line of credit included in
the Trust Estate.
Indemnified Party: The meaning specified in Section 7.02 of the Trust
Agreement.
Indenture: The indenture dated as of June 17, 1999 between the Issuer
and the Indenture Trustee.
Indenture Trustee: Norwest Bank Minnesota, National Association, and
its successors and assigns or any successor indenture trustee appointed
pursuant to the terms of the Indenture.
Independent: When used with respect to any specified Person, such
Person (i) is in fact independent of the Issuer, any other obligor on the
Notes, the Seller, the Depositor and any Affiliate of any of the foregoing
Persons, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller,
the Depositor or any Affiliate of any of the foregoing Persons and (iii) is not
connected with the Issuer, any such other obligor, the Seller, the Depositor or
any Affiliate of any of the foregoing Persons as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
Independent Certificate: A certificate 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 Order
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" in this Indenture and that the signer is Independent within
the meaning thereof.
Index: With respect to any HELOC, the prime rate from time to time for
the adjustment of the Loan Rate set forth as such on the related Loan
Agreement.
Initial Certificate Balance: zero.
Initial Mortgage Loans: The HELs and HELOCs initially transferred by
the Depositor to the Issuer on the Closing Date, which are listed on the
Mortgage Loan Schedule on such date.
Initial Term Note Balance: $250,000,000.
Initial Variable Funding Balance: zero.
Insolvency Event: With respect to a specified Person, (a) the filing
of a decree or order for relief by a court having jurisdiction in the premises
in respect of such Person or any substantial part of its property in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due or the admission by such Person in writing (as to which the Indenture
Trustee shall have notice) of its inability to pay its debts generally, or the
adoption by the Board of Directors or managing member of such Person of a
resolution which authorizes action by such Person in furtherance of any of the
foregoing.
Insurance Agreement: The Insurance and Indemnity Agreement dated as of
June 17, 1999 among the Servicer, the Seller, the Depositor, the Issuer, the
Indenture Trustee and the Enhancer, including any amendments and supplements
thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Enhancer) pursuant to any insurance policy covering a Mortgage Loan which are
required to be remitted to the Servicer, or amounts required to be paid by the
Servicer pursuant to the next to last sentence of Section 3.04 of the Servicing
Agreement, net of any component thereof (i) covering any expenses incurred by
or on behalf of the Servicer in connection with obtaining such proceeds, (ii)
that is applied to the restoration or repair of the related Mortgaged Property,
(iii) released to the related Mortgagor in accordance with the Servicer's
normal servicing procedures or (iv) required to be paid to any holder of a
mortgage senior to such Mortgage Loan.
Interest Collections: With respect to any Payment Date, the sum of all
payments by or on behalf of Mortgagors and any other amounts constituting
interest (including without limitation such portion of Insurance Proceeds, Net
Liquidation Proceeds and Repurchase Prices as is allocable to interest on the
applicable Mortgage Loan) as is paid by the Seller or the Servicer or is
collected by the Servicer under the Mortgage Loans, reduced by the Servicing
Fee for the related Collection Period and by any fees (including annual fees)
or late charges or similar administrative fees paid by Mortgagors during the
related Collection Period. The terms of the related Loan Agreement shall
determine the portion of each payment in respect of such Mortgage Loan that
constitutes principal or interest.
Interest Coverage Amount: The amount to be paid from proceeds received
from the sale of the Notes for deposit into the Capitalized Interest Account
pursuant to Section 3.19 of the Servicing Agreement on the Closing Date, which
amount initially shall be $_______, and thereafter, shall be the amount
computed in accordance with Section 3.19.
Interest Period: With respect to any Payment Date other than the first
Payment Date, the period beginning on the preceding Payment Date and ending on
the day preceding such Payment Date, and in the case of the first Payment Date,
the period beginning on the Closing Date and ending on the day preceding the
first Payment Date.
Interest Rate Adjustment Date: With respect to each HELOC, the date or
dates on which the Loan Rate is adjusted in accordance with the related Loan
Agreement.
Interest Shortfall: On any Payment Date for which the related Note
Rate has been determined pursuant to clause (ii) 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 clause (i) of the definition of Note Rate (but not at a rate in
excess of 14.50% per annum) over (b) the interest actually accrued on the Notes
during such Interest Period. Interest Shortfalls will not be included as
interest payments on the Notes for such Payment Date and such amount will
accrue interest at the Note Rate (as adjusted from time to time) and will be
paid on future Payment Dates only to the extent funds are available therefor as
set forth in Section 3.05(a) of the Indenture.
Issuer or Trust: The GMACM Revolving Home Equity Loan Trust 1999-1, a
Delaware business trust, or its successor in interest.
Issuer Request: A written order or request signed in the name of the
Issuer by any one of its Authorized Officers and delivered to the Indenture
Trustee.
LIBOR: As to any Interest Period, (a) for any Interest Period other
than the first Interest Period, the rate for United States dollar deposits for
one month that 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 or (b) with respect to the first Interest Period, the
rate for United States dollar deposits for one month that 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 such page on such 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 Servicer and the Enhancer), 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: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section 6.02 of the Servicing
Agreement shall not be deemed to constitute a Lien.
Liquidated Mortgage Loan: With respect to any Payment Date, any
Mortgage Loan in respect of which the Servicer has determined, in accordance
with the servicing procedures specified in the 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: All out-of-pocket expenses (exclusive of
overhead) incurred by or on behalf of the Servicer in connection with the
liquidation of any Mortgage Loan and not recovered under any insurance policy,
including 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 such
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: With respect to any Payment Date and any
Mortgage Loan that became a Liquidated Mortgage Loan during the related
Collection Period, the unrecovered portion of the Principal Balance of such
Mortgage Loan at the end of such Collection Period, after giving effect to the
Net Liquidation Proceeds applied in reduction of such Principal Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
including amounts drawn under the Policy) if any received in connection with
the liquidation of any Mortgage Loan or related REO Property, whether through
trustee's sale, foreclosure sale or otherwise.
Loan Agreement: With respect to a HEL, the promissory note, or, with
respect to a HELOC, the credit line agreement, pursuant to which the related
Mortgagor agrees to pay the indebtedness evidenced thereby and secured by the
related Mortgage as modified or amended.
Loan Rate: With respect to any Mortgage Loan and any day, the per
annum rate of interest applicable under the related Loan Agreement.
Lost Note Affidavit: With respect to any Mortgage Loan as to which the
original Loan Agreement has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Loan
Agreement has been lost, misplaced or destroyed (together with a copy of the
related Loan Agreement, if available).
Managed Amortization Event: The occurrence of any date prior to the
commencement of the Managed Amortization Period on which the amount on deposit
in the Funding Account equals or exceeds $10,000,000.
Managed Amortization Period: The period beginning on the first Payment
Date following the end of the Revolving Period and ending on the earlier of (i)
December 31, 2004 and (ii) the occurrence of a Rapid Amortization Event
Maximum Loan Rate: With respect to each HELOC, the maximum loan rate
thereon specified in the related Loan Agreement.
Maximum Variable Funding Balance: $50,000,000.
Minimum Monthly Payment: With respect to any Mortgage Loan and any
month, the minimum amount required to be paid by the related Mortgagor in such
month.
Moody's: Moody's Investors Service, Inc., or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The file containing the Related Documents pertaining to
a particular Mortgage Loan and any additional documents required to be added
thereto pursuant to the Purchase Agreement or the Servicing Agreement.
Mortgage Loan Schedule: The initial schedule of Initial Mortgage Loans
as of the Cut-Off Date set forth in Exhibit A of the Servicing Agreement, and
as of each Subsequent Cut-off Date, any Subsequent Mortgage Loans, which
schedule sets forth as to each Mortgage Loan (i) the Cut-Off Date Principal
Balance, (ii) in the case of a HELOC, the Credit Limit and Gross Margin, (iii)
the name of the related Mortgagor, (iv) in the case of a HELOC, the Maximum
Loan Rate, if any, (v) the loan number and (vi) the lien position of the
related Mortgage.
Mortgage Loans: At any time, all Initial Mortgage Loans and Subsequent
Mortgage Loans, including Additional Balances, if any, that have been sold to
the Issuer pursuant to, in the case of Initial Mortgage Loans, the Trust
Agreement, or, in the case of Subsequent Mortgage Loans, a Subsequent Transfer
Agreement, together with the Related Documents, and that remain subject to the
terms thereof.
Mortgaged Property: The underlying property, including real property
and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Loan Agreement.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses (but not including the
portion, if any, of such amount that exceeds the Principal Balance of such
Mortgage Loan at the end of the Collection Period immediately preceding the
Collection Period in which such Mortgage Loan became a Liquidated Mortgage
Loan).
Net Loan Rate: With respect to any Payment Date, the weighted average
of (i) the Loan Rates on the HELOCs and (ii) the Loan Rates on the HELs, in
each case as of the first day of the calendar month in which the related
Interest Period begins, net of the premium rate on the policy and the Servicing
Fee Rate, and, beginning on the thirteenth Payment Date, 50 basis points,
adjusted to an effective rate reflecting interest calculated on the basis of a
360-day year assumed to consist of twelve 30-day months.
Net Principal Collections: With respect to any Distribution Date, the
excess, if any, of Principal Collections for the related Collection Period over
the amount of Additional Balances created during the related Collection Period.
Note Balance: The Term Note Balance or the Variable Funding Balance,
as the context may require.
Note Owner or Owner: The Beneficial Owner of a Note.
Note Payment Account: The account established by the Indenture Trustee
pursuant to Section 8.02 of the Indenture and Section 5.01 of the Servicing
Agreement. Amounts deposited in the Note Payment Account will be distributed by
the Indenture Trustee in accordance with Section 3.05 of the Indenture.
Note Rate: A floating rate equal to the least of (i) (A) in the case
of the Term Notes, LIBOR plus 0.29% per annum (or, on any Payment Date on which
the aggregate Term Note Balance is less than 10% of the initial Term Note
Balance, LIBOR plus 0.58% per annum), or (B) in the case of the Variable
Funding Notes or any Capped Funding Notes, LIBOR plus 0.29% per annum or such
other rate agreed to in writing between the Noteholder of such Note and the
Indenture Trustee; provided, that any increase in the Note Rate on the Variable
Funding Notes shall be subject to the prior written approval of the Certificate
Insurer in its sole discretion; (ii) the Net Loan Rate and (iii) 14.50% per
annum.
Note Register: 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: 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 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 Noteholders if the pledgee
thereof establishes to the satisfaction of the Indenture Trustee or the Owner
Trustee such pledgee's right so to act with respect to such Notes and that such
pledgee is not the Issuer, any other obligor on the Notes or any Affiliate of
any of the foregoing Persons.
Notes: The Term Notes or the Variable Funding Notes, as the context
may require.
Officer's Certificate: With respect to the Servicer, a certificate
signed by the President, Managing Director, a Director, a Vice President or an
Assistant Vice President, of the Servicer and delivered to the Indenture
Trustee. 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: A written opinion of counsel. Any Opinion of
Counsel for the Servicer may be provided by in-house counsel for the Servicer
if reasonably acceptable to the Indenture Trustee, the Enhancer and the Rating
Agencies or counsel for the Depositor, as the case may be.
Original Pre-Funded Amount: The amount deposited from the proceeds of
the sale of the Securities into the Pre-Funding Account on the Closing Date,
which amount is approximately $68,624,160.20.
Outstanding: With respect to the Notes, as of the date of
determination, all Notes theretofore executed, authenticated and delivered
under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Indenture Trustee for cancellation; and
(ii) 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.
Outstanding Overcollateralization Amount: At any time, the amount (but
not less than zero), if any, by which (a) the sum of (i) the outstanding
Principal Balance of the Mortgage Loans, (ii) during the Pre-Funding Period,
the Pre-Funded Amount (excluding any investment earnings thereon), and (iii)
during the Revolving Period, the amount on deposit in the Funding Account
(excluding any investment earnings thereon), exceeds (b) the aggregate
outstanding Securities Balance.
Overcollateralization Target Amount: (a) With respect to any
Distribution Date on or prior to the 30th Distribution Date, 1.7% of the
aggregate Note Balance as of the Cut-Off Date, and (b) with respect to any
Distribution Date thereafter, the lesser of the amount set forth in clause (a)
and 3.4% of the aggregate Note Balance as of such Distribution Date, prior to
giving effect to any distributions to be made on such Distribution Date.
Owner Trustee: Wilmington Trust Company, not in its individual
capacity but solely as owner trustee, and its successors and assigns or any
successor Owner Trustee appointed pursuant to the terms of the Trust Agreement.
Paying Agent: 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: The 18th day of each month, or if such day is not a
Business Day, then the next Business Day.
Percentage Interest: With respect to any Note and Payment Date, the
percentage obtained by dividing the Note Balance of such Note by the aggregate
Note Balance prior to such Payment Date. With respect to any Certificate and
Payment Date, the percentage obtained by dividing the Certificate Balance of
such Certificate by the aggregate Certificate Balance prior to such Payment
Date.
Permitted Investments: One or more of the following:
(i) 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;
(ii) repurchase agreements on obligations specified in clause (i)
above 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
short-term rating category available;
(iii) 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 category 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 only Rating Agency is Standard & Poor's and 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+;
(iv) 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 category available; provided,
that such commercial paper shall have a remaining maturity of not more than 30
days;
(v) a money market fund or a qualified investment fund rated by each
Rating Agency in one of its two highest long-term rating category available
including any fund advised by the Indenture Trustee or an Affiliate thereof;
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will not cause a Rating
Event, and which are acceptable to the Enhancer, as evidenced in writing;
provided, that if the Servicer or any other Person controlled by the Servicer
is the issuer or the obligor of any obligation or security described in this
clause (vi), 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; and
(vii) GMAC Variable Denomination Adjustable Rate Demand Notes
constituting unsecured, senior debt obligations of General Motors Acceptance
Corporation as outlined in the prospectus dated June 17, 1998 rated by each
Rating Agency in its highest short-term rating category available;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) 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.
Person: Any legal individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Plan: The meaning specified in Section 3.05 of the Trust Agreement.
Plan Assets: The meaning specified in Section 3.05 of the Trust
Agreement.
Policy: The Certificate Guaranty Insurance Policy #AB0267BE, dated as
of the Closing Date, issued by the Enhancer.
Policy Draw Amount: With respect to any Payment Date, an amount, if
any, equal to the sum of (i) the amount by which accrued interest on the Notes
at the Note Rate on such Payment Date (exclusive of any Interest Shortfalls)
exceeds the amount on deposit in the Note Payment Account available for
interest distributions on such Payment Date and (ii) any Liquidation Loss
Amount not currently covered by the application of Excess Spread to the
Principal Distribution Amount, but only to the extent that the Outstanding
Overcollateralization Amount is zero.
Pool Balance: With respect to any date, the aggregate Principal
Balance of all Mortgage Loans as of such date and (during the Pre-Funding
Period) the Pre-Funded Amount.
Pre-Funded Amount: With respect to any date of determination during
the Pre-Funding Period, the amount on deposit in the Pre-Funding Account.
Pre-Funding Account: The account established and maintained pursuant
to Section 3.17 of the Servicing Agreement.
Pre-Funding Period: The period commencing on the Closing Date until
the earliest of (i) the date on which the amount on deposit in the Pre-Funding
Account is less than $100,000, (ii) December 31, 1999 or (iii) the occurrence
of a Managed Amortization Event or a Rapid Amortization Event.
Predecessor Note: With respect to any Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such 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 such mutilated, lost,
destroyed or stolen Note.
Principal Balance: With respect to any Mortgage Loan, other than a
Liquidated Mortgage Loan, and as of any day, the related Cut-Off Date Principal
Balance, plus (i) with respect to a HELOC, any Additional Balances in respect
of such HELOC conveyed to the Trust, minus (ii) all collections credited as
principal in respect of any such Mortgage Loan in accordance with the related
Loan Agreement (except, with respect to a HELOC, any such collections that are
allocable to any Excluded Amount) 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: With respect to any Payment Date and any
Mortgage Loan, the aggregate of the following amounts:
(i) 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 Servicer or the
related Subservicer;
(ii) any Liquidation Proceeds allocable as a recovery of principal
received in connection with such Mortgage Loan during the related Collection
Period;
(iii) if such Mortgage Loan was repurchased by the Seller pursuant to
the Purchase Agreement during the related Collection Period, 100% of the
Principal Balance thereof as of the date of such purchase; and
(iv) any 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 Custodial Account pursuant to clauses (iii), (vii) and (viii) of
Section 3.03 of the Servicing Agreement, other than any portion of such amounts
attributable to the Excluded Amount in respect of any Mortgage Loan that are
allocable to principal of such Mortgage Loan and not otherwise excluded from
the amounts specified in (i) through (iv) above.
Principal Distribution Amount: For any Payment Date (i) during the
Revolving Period, zero, (ii) during the Managed Amortization Period, Net
Principal Collections, and (iii) during the Rapid Amortization Period,
Principal Collections; provided, that on any Payment Date during the
Amortization Periods, the Principal Distribution Amount for such Payment Date
shall include, from Excess Spread, to the extent available, or, to the extent
not available, from a draw on the Policy (but only to the extent the
Outstanding Overcollateralization Amount is zero), an amount equal to the
aggregate of the Liquidation Loss Amounts for such Payment Date.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Program Guide: The GMACM Home Equity Servicing Guidelines.
Prospectus Supplement: The prospectus supplement dated June 10, 1999,
relating to the Term Notes.
Purchase Agreement: The mortgage loan purchase agreement dated as of
June 17, 1999, among the Seller, the Purchaser, the Issuer and the Indenture
Trustee.
Purchase Price: The meaning specified in Section 2.5(a) of the
Purchase Agreement.
Purchaser: Bear Stearns Asset Backed Securities, Inc., as purchaser
under the Purchase Agreement.
Rapid Amortization Event: Any one of the following events:
(a) the failure on the part of the Seller (i) to make any payment or
deposit required to be made under the Purchase Agreement within five Business
Days after the date such payment or deposit is required to be made; or (ii) to
observe or perform in any material respect any other covenants or agreements of
the Seller set forth in the Purchase Agreement, which failure continues
unremedied for a period of 60 days after written notice and such failure
materially and adversely affects the interests of the Securityholders or the
Enhancer; provided, however, that a Rapid Amortization Event shall not be
deemed to have occurred if the Seller has repurchased or caused to be
repurchased or substituted for the affected Mortgage Loan during such period
(or within an additional 60 days with the consent of the Indenture Trustee and
the Enhancer) in accordance with the provisions of the Indenture;
(b) if any representation or warranty made by the Seller in the
Purchase Agreement proves to have been incorrect in any material respect when
made and which continues to be incorrect in any material respect for a period
of 45 days with respect to any representation or warranty of the Seller made in
Section 3.1(a) of the Purchase Agreement or 90 days with respect to any
representation or warranty made in Section 3.1(b) of the Purchase Agreement
after written notice and as a result of which the interests of the
Securityholders or the Enhancer are materially and adversely affected;
provided, however, that a Rapid Amortization Event shall not be deemed to have
occurred if the Seller has repurchased or caused to be repurchased or
substituted for the affected Mortgage Loan during such period (or within an
additional 60 days with the consent of the Indenture Trustee and the Enhancer)
in accordance with the provisions of the Indenture;
(c) the entry against the Seller of a decree or order by a court or
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 proceedings, 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 Seller shall voluntarily go into liquidation, 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 Proceedings of or relating to the Seller or the Issuer or of or
relating to 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 Proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Seller or the Issuer and such decree or order
shall have remained in force undischarged, unbonded or unstayed for a period of
60 days; or the Seller or the Issuer 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;
(e) the Issuer shall become subject to regulation by the Commission as
an investment company within the meaning of the Investment Company Act of 1940,
as amended;
(f) a Servicing Default shall occur and be unremedied under the
Servicing Agreement and a qualified successor Servicer shall not have been
appointed;
(g) the aggregate of all draws on the Policy exceeds 1% of the Initial
Term Note Balance;
(h) the Issuer is determined to be an association (or a
publicly-traded partnership) taxable as a corporation or a taxable mortgage
pool for federal income tax purposes; or
(i) an event of default under the Insurance Agreement (except for a
default by the Enhancer, unless such Enhancer cannot be replaced without
additional expense).
In the case of any event described in (a), (b), (f), (g) or (i), a
Rapid Amortization Event shall be deemed to have occurred only if, after any
applicable grace period described in such clauses, any of the Indenture
Trustee, the Enhancer or, with the consent of the Enhancer, Securityholders
evidencing not less than 51% of the aggregate Securities Balance, by written
notice to the Seller, the Servicer, the Depositor and the Owner Trustee (and to
the Indenture Trustee, if given by the Enhancer or the Securityholders),
declare that a Rapid Amortization Event has occurred as of the date of such
notice. In the case of any event described in clauses (c), (d), (e) or (h), a
Rapid Amortization Event shall be deemed to have occurred without any notice or
other action on the part of the Indenture Trustee, the Securityholders or the
Enhancer immediately upon the occurrence of such event; provided, that any
Rapid Amortization Event may be waived and deemed of no effect with the written
consent of the Enhancer and each Rating Agency, subject to the satisfaction of
any conditions to such waiver.
Rapid Amortization Period: The period beginning on the earlier of (i)
the first Payment Date following the end of the Managed Amortization Period and
(ii) the occurrence of a Rapid Amortization Event, and ending upon the
termination of the Issuer.
Rating Agency: Each of Moody's and Standard & Poor's, or, if either
such organization or a successor thereto is no longer in existence, 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: The qualification, reduction or withdrawal by a Rating
Agency of its then-current rating of the Notes.
Record Date: With respect to the Term Notes and any Payment Date, the
Business Day next preceding such Payment Date and with respect to the
Certificates or the Variable Funding Notes and any Payment Date, the last
Business Day of the month preceding the month of such Payment Date.
Reference Bank Rate: With respect to any Interest Period, as follows:
the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of one 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 Balance of the 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 Servicer and the Enhancer, 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 aggregate Note
Balance of the Notes. If no such quotations can be obtained, the Reference Bank
Rate will be the Reference Bank Rate applicable to the preceding Interest
Period..
Reference Banks: Barclays Bank plc, National Westminster Bank and
Bankers Trust Company.
Related Documents: With respect to each Mortgage Loan, the documents
specified in Section 2.1(c) of the Purchase Agreement and any documents
required to be added to such documents pursuant to the Purchase Agreement, the
Trust Agreement or the Servicing Agreement.
REO Property: A Mortgaged Property that is acquired by the Trust in
foreclosure or by deed in lieu of foreclosure.
Representative: Bear, Stearns & Co. Inc., as representative of the
Underwriters.
Repurchase Event: With respect to any Mortgage Loan, either (i) a
discovery that, as of the Closing Date with respect to an Initial Mortgage Loan
or the related Subsequent Transfer Date with respect to any Subsequent Mortgage
Loan, the related Mortgage was not a valid lien on the related Mortgaged
Property subject only to (A) the lien of any prior mortgage indicated on the
Mortgage Loan Schedule, (B) the lien of real property taxes and assessments not
yet due and payable, (C) covenants, conditions, and restrictions, rights of
way, easements and other matters of public record as of the date of recording
of such Mortgage and such other permissible title exceptions as are customarily
accepted for similar loans and (D) other matters to which like properties are
commonly subject that do not materially adversely affect the value, use,
enjoyment or marketability of the related Mortgaged Property or (ii) with
respect to any Mortgage Loan as to which the Seller delivers an affidavit
certifying that the original Loan Agreement has been lost or destroyed, a
subsequent default on such Mortgage Loan if the enforcement thereof or of the
related Mortgage is materially and adversely affected by the absence of such
original Loan Agreement.
Repurchase Price: With respect to any Mortgage Loan required to be
repurchased on any date pursuant to the Purchase Agreement or purchased by the
Servicer pursuant to the Servicing Agreement, an amount equal to the sum of (i)
100% of the Principal Balance thereof (without reduction for any amounts
charged off) and (ii) unpaid accrued interest at the Loan Rate (or with respect
to the last day of the month in the month of repurchase, the Loan Rate will be
the Loan Rate in effect as to the second to last day in such month) on the
outstanding Principal Balance thereof from the Due Date to which interest was
last paid by the related Mortgagor to the first day of the month following the
month of purchase. No portion of any Repurchase Price shall be included in any
Excluded Amount for any Payment Date during the Rapid Amortization Period.
Responsible Officer: With respect to the Indenture Trustee, any
officer of the Indenture Trustee with direct responsibility for the
administration of the Trust Agreement 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.
Revolving Period: The period beginning on the Closing Date and ending
on the earlier of (i) December 31, 2000 and (ii) the occurrence of a Managed
Amortization Event or a Rapid Amortization Event.
Secretary of State: The Secretary of State of the State of Delaware.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Securities Balance: the Term Note Balance, Variable Funding Balance or
Certificate Balance, as the context may require.
Security: A Certificates or a Note, as the context may require.
Securityholder: Any Noteholder or Certificateholder.
Seller: GMAC Mortgage Corporation, a Pennsylvania corporation, and its
successors and assigns.
Servicer: GMAC Mortgage Corporation, a Pennsylvania corporation, and
its successors and assigns.
Servicing Agreement: The servicing agreement dated as of June 17, 1999
among the Servicer, the Issuer and the Indenture Trustee.
Servicing Certificate: A certificate completed and executed by a
Servicing Officer on behalf of the Servicer in accordance with Section 4.01 of
the Servicing Agreement.
Servicing Default: The meaning specified in Section 7.01 of the
Servicing Agreement.
Servicing Fee: With respect to any Mortgage Loan and any Collection
Period, the product of (i) the Servicing Fee Rate divided by 12 and (ii) the
Pool Balance as of the first day of such Collection Period.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the 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 (with a copy to the Enhancer) by the Servicer, as such
list may be amended from time to time.
Standard & Poor's: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. or its successor in interest.
Stated Value: With respect to any Mortgage Loan, the stated value of
the related Mortgaged Property determined in accordance with the Program Guide
and given by the related Mortgagor in his or her application.
Subsequent Cut-off Date: With respect to any Subsequent Mortgage Loan,
the date specified in the related Subsequent Transfer Agreement.
Subsequent Cut-off Date Principal Balance: With respect to any
Subsequent Mortgage Loan, the Principal Balance thereof as of the related
Subsequent Cut-off Date.
Subsequent Mortgage Loan: A HEL or HELOC sold by the Seller to the
Issuer pursuant to Section 2.2 of the Purchase Agreement, such HEL or HELOC
being identified on the Mortgage Loan Schedule attached to the related
Subsequent Transfer Agreement, as set forth in such Subsequent Transfer
Agreement.
Subsequent Transfer Agreement: Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Seller and the Issuer
substantially in the form of Exhibit 2 to the Purchase Agreement, by which the
related Subsequent Mortgage Loans are sold to the Issuer.
Subsequent Transfer Date: With respect to each Subsequent Transfer
Agreement, the date on which the related Subsequent Mortgage Loans are sold to
the Issuer.
Subservicer: Each Person that enters into a Subservicing Agreement as
a subservicer of Mortgage Loans.
Subservicing Agreement: The written contract between the Servicer and
any Subservicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.01 of the Servicing Agreement.
Substitution Adjustment Amount: With respect to any Eligible
Substitute Loan and any Deleted Loan, the amount, if any, as determined by the
Servicer, by which the aggregate principal balance of all such Eligible
Substitute 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 to the Securityholders in the month of substitution).
Tax Matters Partner: The Servicer.
Telerate Page 3750: The display page so designated on the Dow Jones
Telerate Service (or such other page as may replace page 3750 on such 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
such page on such 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 shall be the
Reference Bank Rate.
Term Note Balance: With respect to any Payment Date and any Term Note,
the Initial Term Note Balance thereof prior to such Payment Date reduced by all
payments of principal on such Term Note prior to such Payment Date.
Term Notes: The Home Equity Loan-Backed Term Notes, Series 1999-1.
Treasury Regulations: 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: The trust agreement dated as of June 17, 1999,
between the Owner Trustee and the Depositor.
Trust Estate: The meaning specified in the Granting Clause of the
Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939, as
amended from time to time, as in effect on any relevant date.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Underwriters: Bear, Stearns & Co. Inc. and Newman & Associates, Inc.
Underwriting Agreement: The underwriting agreement dated June 10,
1999, between the Depositor and the Representative.
Uniform Single Attestation Program for Mortgage Bankers: The Uniform
Single Attestation Program for Mortgage Bankers, as published by the Mortgage
Bankers Association of America and effective with respect to fiscal periods
ending on or after December 15, 1995.
Unpaid Principal Amount: As defined in Section 3.05(a) of the
Indenture.
Variable Funding Balance With respect to any Payment Date and any
Variable Funding Notes, the Initial Variable Funding Balance thereof prior to
such Payment Date (a) increased by the Aggregate Balance Differential for such
Variable Funding Note immediately prior to such Payment Date and (b) reduced by
all distributions of principal thereon prior to such Payment Date.
Variable Funding Notes: The Home Equity Loan-Backed Variable Funding
Notes, Series 1999-1, including any Capped Funding Notes.
