---------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report: August 13, 1999
(Date of earliest event reported)
ACE Securities Corp.
--------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-56213 56-2088493
- ------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
6525 Morrison Boulevard
Suite 318
Charlotte, North Carolina 28211
- ------------------------------------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (704) 365-0569
No Change
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
------------
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 333-56213) pursuant to which the Registrant registered
issuances of ACE Securities Corp. asset backed securities, issuable in various
series, for sale in accordance with the provisions of the Securities Act of
1933, as amended (the "Act"). Reference is also hereby made to the Prospectus
dated July 26, 1999, and the related Prospectus Supplement, dated August 6,
1999 (collectively, the "Prospectus"), which were previously filed with the
Commission pursuant to Rule 424(b)(5), relating to the publicly offered ACE
Securities Corp. Home Loan Trust Asset Backed Notes, Series 1999-A, consisting
of the Class A Asset Backed Notes (the "Publicly Offered Securities").
Capitalized terms used but not defined herein have the meanings assigned to
such terms in the Prospectus.
The Publicly Offered Securities were sold to Deutsche Bank Securities Inc
(the "Underwriter") pursuant to the terms of an underwriting agreement dated
July 24, 1999, (the "Underwriting Agreement") among ACE Securities Corp.,
German American Capital Corporation and Deutsche Bank Securities Inc., as
Underwriter, as supplemented by a terms agreement dated August 6, 1999 (the
"Underwriting Terms Agreement"), among ACE Securities Corp., German American
Capital Corporation and Deutsche Bank Securities Inc., as Underwriter. A copy
of the Underwriting Agreement was previously filed with the Commission as
Exhibit 1.1 to a Current Report on Form 8-K dated June 24, 1999. A copy of the
Underwriting Terms Agreement is filed herewith as Exhibit 1.1.
The Publicly Offered Securities were issued pursuant to an Indenture
dated as of August 1, 1999 (the "Indenture") between ACE Securities Corp. Home
Loan Trust 1999-A (the "Issuer" or the "Trust") and First Union National Bank,
as Indenture Trustee (the "Indenture Trustee"). A copy of the Indenture is
filed herewith as Exhibit 4.1.
The Publicly Offered Securities are secured by the assets of the Trust
pursuant to the Indenture. The assets of the Trust primarily include a pool of
home loans (the "Home Loans") consisting of loans which are secured by
mortgages, deeds of trust or other similar security instruments. The Home
Loans consist of loans for which the related proceeds were used to finance (i)
property improvements, (ii) debt consolidation, or (iii) a combination of
property improvements, cash-out or other consumer purposes.
Payments of principal and interest due on the Notes are guaranteed by
MBIA Insurance Corporation ("MBIA") pursuant to an Insurance Agreement dated
as of August 1, 1999 (the "Insurance Agreement") among MBIA, as Insurer, GACC,
as Seller, GMAC Mortgage Corporation, as Servicer, ACE Securities Corp., as
Depositor, and First Union National Bank, as Indenture Trustee.
The Home Loans were sold by German American Capital Corporation to the
Registrant pursuant to the terms of a Home Loan Sale Agreement dated as of
August 1, 1999 (the "Home Loan Sale Agreement") and were simultaneously sold
by the Registrant to the Trust pursuant to the Sale and Servicing Agreement
(defined below).
The Home Loans will be serviced by GMAC Mortgage Corporation, pursuant to
the terms of a Sale and Servicing Agreement dated as of August 1, 1999 (the
"Sale and Servicing Agreement") among ACE Securities Corp. Home Loan Trust
1999-A, as Issuer, ACE Securities Corp. as Depositor, GMAC Mortgage
Corporation, as Servicer, and First Union National Bank, as Indenture Trustee.
A copy of the Sale and Servicing Agreement is filed herewith as Exhibit 10.1.
The Home Loan Pool consists of 14,072 Home Loans having a Pool Principal
Balance as of the August 1, 1999 Cut-Off Date of approximately $437,721,096.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit No. Description
----------- -----------
1.1* Underwriting Agreement
1.2 Underwriting Terms Agreement
1.3 Indenture
1.4 Insurance Agreement
10.1 Sale and Servicing Agreement
- --------------------
* Incorporated by reference to the Registrant's Current Report on Form 8-K
dated June 24, 1999, filed with the Securities and Exchange Commission on
July 13, 1999 (File No. 333-56213).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
ACE SECURITIES CORP.
By: /s/ Elizabeth Eldridge
----------------------------
Name: Elizabeth Eldridge
Title: Vice President
Dated: August 26, 1999
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description Page No.
- ----------- ----------- --------
1.1* Underwriting Agreement
1.2 Underwriting Terms Agreement
4.1 Indenture
4.2 Insurance Agreement
10.1 Sale and Servicing Agreement
- --------------------
* Incorporated by reference to the Registrant's Current Report on Form 8-K
dated June 24, 1999, filed with the Securities and Exchange Commission on
July 13, 1999 (File No. 333-56213).
ACE SECURITIES CORP.
Home Loan Trust 1999-A Asset Backed Securities
Series 1999-A
TERMS AGREEMENT
August 6, 1999
To: ACE Securities Corp., as depositor under the Sale and Servicing Agreement
dated as of August 1, 1999 (the "Agreement").
Re: Underwriting Agreement dated July 24, 1999 (the "Standard Terms").
Series Designation: Series 1999-A.
Terms of the Series 1999-A Securities: ACE Securities Corp. Home Loan
Trust 1999-A Asset Backed Securities, Series 1999-A, Class A Notes and Class R
Certificate (the "Securities"). Only the Class A Notes (the "Offered
Securities") are being sold pursuant to the terms hereof. The Offered
Securities are to be issued pursuant to an indenture dated as of August 1,
1999 (the "Indenture"), between ACE Securities Corp. Home Loan Trust 1999-A,
as issuer and First Union National Bank, as indenture trustee and will be
secured under the Indenture by the Collateral (as defined in the Indenture).
The Collateral will consist primarily of a pool of Home Loans having the
characteristics described in the Prospectus Supplement dated the date hereof.
Registration Statement: File Number 333-56213.
Ratings: It is a condition of closing that at the Closing Date the
Class A Notes be rated "AAA" by Standard & Poor's Ratings Services, a division
of the McGraw-Hill Companies, Inc. and "Aaa" by Moody's Investors Service.
Terms of Sale of Offered Securities: The Depositor agrees to sell to
Deutsche Bank Securities Inc. (the "Underwriter") and Deutsche Bank Securities
Inc. agrees to purchase from the Depositor the Offered Securities in the
principal amounts and prices set forth on Schedule 1. The purchase price for
each class of the Offered Securities shall be the applicable Purchase Price
Percentage set forth in Schedule 1 multiplied by the applicable principal
amount.
Cut-off Date: August 1, 1999
Closing Date: 10:00 A.M., New York time, on or about August 12, 1999.
On the Closing Date, the Depositor will deliver the Offered Securities to the
Underwriter against payment therefor.
Underwriter-Provided Information: The Depositor and GACC each
acknowledge and agree that the information set forth in (i) the first sentence
of penultimate paragraph on the front cover of the Prospectus Supplement dated
August 6, 1999 (the "Prospectus Supplement") and (ii) in the first two
sentences of the second paragraph under the caption "Underwriting" in the
Prospectus Supplement constitute the only information furnished in writing by
or on behalf of the Underwriter for inclusion in the Registration Statement,
the Prospectus or the Prospectus Supplement, and the Underwriter confirms that
such statements are correct.
Performance of Certain Obligations. The Underwriter agrees to perform
the obligations and exercise the rights of the Depositor, all on behalf of the
Depositor, as specified in the Agreement and the Administration Agreement
dated as of June 3, 1998, between the Depositor and the Underwriter, as
administrative agent.
Incorporation of the Standard Terms: Each of the provisions of the
Standard Terms is incorporated herein by reference in its entirety and shall
be deemed to be a part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein and each of the representations
and warranties set forth therein shall be deemed to have been made on and as
of the date of this Terms Agreement, and the Standard Terms and this Terms
Agreement shall be construed as, together, one and the same agreement. Without
limiting the foregoing, Sections 16 through 20 of the Standard Terms are
incorporated herein by reference in their entirety.
Underwriting Compensation: GACC agrees to pay to the Underwriter an
underwriting fee of $930,155.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement among the Underwriter, German American Capital Corporation and ACE
Securities Corp.
Very truly yours,
DEUTSCHE BANK SECURITIES INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
ACE SECURITIES CORP.
By:
-----------------------------------
Name:
Title:
GERMAN AMERICAN CAPITAL CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Schedule 1
Initial
Interest Principal Purchase
Class Rate Amount (1) Price Percentage
- ----- -------- ---------- ----------------
A 7.749%(2) $372,062,000 99.749949%
- ----------
(1) Approximate.
(2) Subject to increase as described in the Prospectus Supplement.
EXECUTION
INDENTURE
between
ACE SECURITIES CORP. HOME LOAN TRUST 1999-A,
as Issuer
and
FIRST UNION NATIONAL BANK
as Indenture Trustee
Dated as of August 1, 1999
ACE SECURITIES CORP. HOME LOAN TRUST 1999-A
Asset Backed Notes, Series 1999-A
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions....................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act..............6
Section 1.03. Rules of Construction..........................................7
ARTICLE II
THE NOTES
Section 2.01. Form...........................................................7
Section 2.02. Execution, Authentication, Delivery and Dating.................8
Section 2.03. Registration; Registration of Transfer and Exchange............8
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes.....................9
Section 2.05. Persons Deemed Note Owners....................................10
Section 2.06. Payment of Principal and Interest; Defaulted Interest.........11
Section 2.07. Cancellation..................................................11
Section 2.08. Conditions Precedent to the Authentication of the Notes.......12
Section 2.09. Release of Collateral.........................................14
Section 2.10. Book-Entry Notes..............................................14
Section 2.11. Notices to Clearing Agency....................................15
Section 2.12. Definitive Notes..............................................15
Section 2.13. Tax Treatment.................................................16
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest.............................16
Section 3.02. Maintenance of Office or Agency...............................16
Section 3.03. Money for Payments to Be Held in Trust........................17
Section 3.04. Existence.....................................................18
Section 3.05. Protection of Collateral......................................19
Section 3.06. Annual Opinions as to Collateral..............................19
Section 3.07. Performance of Obligations; Servicing of Home Loans...........19
Section 3.08. Negative Covenants............................................21
Section 3.09. Annual Statement as to Compliance.............................22
Section 3.10. Covenants of the Issuer.......................................22
Section 3.11. Servicer's Obligations........................................22
Section 3.12. Restricted Payments...........................................22
Section 3.13. Issuer May Consolidate, etc., Only on Certain Terms...........23
Section 3.14. Successor or Transferee.......................................24
Section 3.15. Treatment of Notes as Debt for Tax Purposes...................25
Section 3.16. Notice of Events of Default...................................25
Section 3.17. Further Instruments and Acts..................................25
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.......................25
Section 4.02. Application of Trust Money....................................26
Section 4.03. Repayment of Moneys Held by Paying Agent......................26
ARTICLE V
REMEDIES
Section 5.01. Events of Default.............................................27
Section 5.02. Acceleration of Maturity; Rescission and Annulment............28
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee................. ........................29
Section 5.04. Remedies; Priorities..........................................31
Section 5.05. Optional Preservation of the Collateral.......................32
Section 5.06. Limitation of Suits...........................................33
Section 5.07. Unconditional Rights of Noteholders to Receive
Principal and Interest..................... ..................33
Section 5.08. Restoration of Rights and Remedies............................34
Section 5.09. Rights and Remedies Cumulative................................34
Section 5.10. Delay or Omission Not a Waiver................................34
Section 5.11. Control by Noteholders........................................34
Section 5.12. Waiver of Past Defaults.......................................35
Section 5.13. Undertaking for Costs.........................................35
Section 5.14. Waiver of Stay or Extension Laws..............................35
Section 5.15. Action on Notes...............................................36
Section 5.16. Performance and Enforcement of Certain Obligations............36
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee...................................36
Section 6.02. Rights of Indenture Trustee...................................38
Section 6.03. Individual Rights of Indenture Trustee........................38
Section 6.04. Indenture Trustee's Disclaimer................................39
Section 6.05. Notices of Default............................................39
Section 6.06. Reports by Indenture Trustee to Holders.......................39
Section 6.07. Compensation and Indemnity....................................39
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......................... ...................41
Section 6.11. Eligibility; Disqualification.................................42
Section 6.12. Preferential Collection of Claims Against Issuer..............42
Section 6.13. Appointment of Agent..........................................42
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS'
Section 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders.................... .................43
Section 7.02. Preservation of Information; Communications
to Noteholders........ .......................................43
Section 7.03. Reports by Issuer.............................................43
Section 7.04. Reports by Indenture Trustee..................................44
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money...........................................44
Section 8.02. Trust Accounts; Distributions.................................45
Section 8.03. General Provisions Regarding Accounts.........................45
Section 8.04. Servicer's Monthly Statements.................................46
Section 8.05. Release of Collateral.........................................46
Section 8.06. Opinion of Counsel............................................46
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent
of Noteholders.................................... ...........46
Section 9.02. Supplemental Indentures with Consent of Noteholders...........48
Section 9.03. Execution of Supplemental Indentures..........................49
Section 9.04. Effect of Supplemental Indentures.............................49
Section 9.05. Conformity with Trust Indenture Act...........................50
Section 9.06. Reference in Notes to Supplemental Indentures.................50
Section 9.07. Amendments to Trust Agreement.................................50
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption...................................................50
Section 10.02. Form of Redemption Notice....................................51
Section 10.03. Notes Payable on Redemption Date; Provision for
Payment of Indenture Trustee and Note Insurer. ..............51
ARTICLE XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc....................51
Section 11.02. Form of Documents Delivered to Indenture Trustee.............53
Section 11.03. Acts of Noteholders..........................................53
Section 11.04. Notices, etc., to Indenture Trustee, Issuer, Rating
Agencies and Note Insurer............ .......................54
Section 11.05. Notices to Noteholders; Waiver...............................54
Section 11.06. Conflict with Trust Indenture Act............................55
Section 11.07. Effect of Headings and Table of Contents.....................55
Section 11.08. Successors and Assigns.......................................55
Section 11.09. Separability.................................................55
Section 11.10. Benefits of Indenture........................................55
Section 11.11. Legal Holidays...............................................56
Section 11.12. GOVERNING LAW................................................56
Section 11.13. Counterparts.................................................56
Section 11.14. Recording of Indenture.......................................56
Section 11.15. Trust Obligation.............................................56
Section 11.16. No Petition..................................................57
Section 11.17. Inspection...................................................57
Section 11.18. Grant of Noteholder Rights to Note Insurer...................57
Section 11.19. Third Party Beneficiary......................................57
Section 11.20. Suspension and Termination of Note Insurer's Rights..........57
Exhibits
EXHIBIT A Form of Notes
This Indenture dated as of August 1, 1999, between ACE SECURITIES
CORP. HOME LOAN TRUST 1999-A, a Delaware business trust, as Issuer (the
"Issuer"), and First Union National Bank, as Indenture Trustee (the "Indenture
Trustee"),
W I T N E S S E T H T H AT:
In consideration of the mutual covenants herein contained, the Issuer
and the Indenture Trustee hereby agree as follows for the benefit of each of
them and for the equal and ratable benefit of the holders of the Notes:
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants on
the Closing Date to the Indenture Trustee, as Indenture Trustee for the
benefit of the Holders of the Notes and the Note Insurer, all of the Issuer's
right, title and interest in and to: (i) the Trust Estate (as defined in the
Sale and Servicing Agreement); (ii) the Issuer's rights and benefits but none
of its obligations under the Sale and Servicing Agreement (including the
Issuer's right to cause the Seller to repurchase Home Loans from the Issuer
under certain circumstances described therein); (iii) the Trust Accounts, all
amounts and property in the Trust Accounts from time to time, and the Security
Entitlements to all Financial Assets credited to the Trust Accounts from time
to time; and (iv) the Issuer's rights and benefits but none of its obligations
under the Custodial Agreement, (v) the Issuer's rights and benefits but none
of its obligations under the Administration Agreement; (vi) the Issuer's
rights and benefits but none of its obligations under the Home Loan Sale
Agreement, (vii) all other property of the Trust from time to time and (viii)
all present and future claims, demands, causes of action and choses in action
in respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, insurance proceeds, condemnation awards, rights to payment
of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes and the Note Insurer, acknowledges such Grant, accepts the trusts
hereunder and agrees to perform the duties required of it in this Indenture to
the best of its ability to the end that the interests of the Holders of the
Notes and the Note Insurer may adequately and effectively be protected. The
Indenture Trustee agrees and acknowledges that the Indenture Trustee's Loan
Files will be held by the Custodian for the benefit of the Indenture Trustee
in Minneapolis, Minnesota. The Indenture Trustee further agrees and
acknowledges that each other item of Collateral that is physically delivered
to the Indenture Trustee will be held by the Indenture Trustee in Minneapolis,
Minnesota.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) Except as otherwise specified herein
or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture.
Act: The meaning specified in Section 11.03(a) hereof.
Administration Agreement: The Administration Agreement dated as of
August 1, 1999 between the Issuer and Bankers Trust Company, as administrator.
Administrator: Bankers Trust Company, or any successor thereto.
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 and the Note
Insurer on the Closing Date (as such list may be modified or supplemented from
time to time thereafter) and, so long as the Administration Agreement is in
effect, any officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified
on the list of Authorized Officers delivered by the Administrator to the
Indenture Trustee and the Note Insurer on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
Book-Entry Notes: A beneficial interest in any Class of Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 hereof.
Certificate of Trust: The certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for which from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
Collateral: The meaning specified in the Granting Clause of this
Indenture.
Corporate Trust Office: The principal office of the Indenture Trustee
at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located
at 230 South Tryon Street, 9th Floor, Charlotte, North Carolina 28288-1179;
Attention: Structured Finance Trust Group, or at such other address as the
Indenture Trustee may designate from time to time by notice to the
Noteholders, the Note Insurer and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee at the address designated by such
successor Indenture Trustee by notice to the Noteholders, the Note Insurer and
the Issuer.
Default: Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
Definitive Notes: The meaning specified in Section 2.12 hereof.
Depository Institution: Any depository institution or trust company,
including the Indenture Trustee, that (a) is incorporated under the laws of
the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c)
has outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated in the highest rating category by each Rating
Agency, or is otherwise acceptable to each Rating Agency.
Event of Default: The meaning specified in Section 5.01 hereof.
Executive Officer: With respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
Grant: Mortgage, 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 this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.
Highest Priority Class Notes: The Class A Notes.
Holder or Noteholder: The Person in whose name a Note is registered
on the Note Register.
Independent: When used with respect to any specified Person, that the
Person (a) is in fact independent of the Issuer, any other obligor on the
Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Seller or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Independent Certificate: A certificate or opinion to be delivered to
the Indenture Trustee and the Note Insurer under the circumstances described
in, and otherwise complying with, the applicable requirements of Section 11.01
hereof, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Trustee and the Note Insurer 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.
Issuer: ACE Securities Corp. Home Loan Trust 1999-A until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
Issuer Order and Issuer Request: A written order or request signed in
the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
Majority Highest Priority Class Noteholders: On any date, Holders of
Highest Priority Class Notes representing more than 50% of the Voting
Interests of the Highest Priority Class Notes then Outstanding.
Maturity Date: July 20, 2028.
Non-Priority Class: As of any date of determination, any outstanding
Class of Notes other than the Highest Priority Class Notes.
Note Depository Agreement: The agreement to be entered into among the
Issuer, the Administrator, the Indenture Trustee and The Depository Trust
Company, as the initial Clearing Agency, relating to the Book-Entry Notes.
Note Owner: With respect to a Book-Entry Note, the Person that is the
beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing
Agency), and with respect to a Definitive Note, the Person that is the
beneficial owner of such Note as reflected in the Note Register.
Note Register and Note Registrar: The respective meanings specified
in Section 2.03 hereof. The initial Note Registrar shall be Bankers Trust
Company.
Officer's Certificate: A certificate signed by any Authorized Officer
of the Issuer or the Administrator, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 hereof,
and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in this Indenture to an Officer's Certificate shall be to an
Officer's Certificate of any Authorized Officer of the Issuer or the
Administrator.
Opinion of Counsel: One or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be an employee of or
counsel to the Issuer and who shall be satisfactory to the Indenture Trustee
and the Note Insurer, and which opinion or opinions shall be addressed to the
Indenture Trustee, as Indenture Trustee, and the Note Insurer and shall comply
with any applicable requirements of Section 11.01 hereof and shall be in form
and substance satisfactory to the Indenture Trustee and the Note Insurer.
Outstanding: With respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has theretofore been deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
for such notice satisfactory to the Indenture Trustee has been made);
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser; provided, however, that in determining
whether the Holders of the requisite Voting Interests of the Outstanding
Notes have given any request, demand, authorization, direction, notice,
consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Seller or any Affiliate
of any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that the
Indenture Trustee knows to be owned in such manner shall be disregarded.
Notes owned in such manner that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of
the Indenture Trustee that the pledgee has the right so to act with
respect to such Notes and that the pledgee is not the Issuer, any other
obligor upon the Notes, the Seller or any Affiliate of any of the
foregoing Persons; and
(iv) Notes for which the related Maturity Date has occurred.
Outstanding Amount: The aggregate principal amount of all Notes, or
Class of Notes, as applicable, Outstanding at the date of determination.
Paying Agent: The Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
hereof and is authorized by the Issuer to make payments to and distributions
from the Note Distribution Account, including payments of principal of or
interest on the Notes on behalf of the Issuer. The initial Paying Agent shall
be Bankers Trust Company.
Predecessor Note: With respect to any particular Note, every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.04 hereof in lieu of a mutilated,
lost, destroyed or stolen Note shall be deemed to evidence the same debt as
the mutilated, lost, destroyed or stolen Note.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Rating Agency Condition: With respect to any action to which a Rating
Agency Condition applies, that each Rating Agency shall have been given 10
days' (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Servicer, the Note Insurer and the Issuer in writing that such
action will not result in a reduction or withdrawal of the then current rating
of the Notes.
Redemption Date: In the case of a redemption of the Notes pursuant to
Section 10.01 hereof, the Distribution Date specified by the Indenture Trustee
pursuant to such Section 10.01.
Registered Holder: The Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
Sale and Servicing Agreement: The Sale and Servicing Agreement dated
as of August 1, 1999, among the Issuer, the Depositor, the Servicer, and the
Indenture Trustee.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
Voting Interests: With respect to any Class of Notes, the percentage
equal to the product of (i) 100% and (ii) a fraction, the numerator of which
is equal to the Class Principal Amount of such Class of Notes and the
denominator of which is equal to the aggregate Class Principal Amount of all
Classes of Notes Outstanding.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein
have the respective meanings set forth in the Sale and Servicing Agreement for
all purposes of this Indenture.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
(a) Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
(b) All other TIA terms used in this Indenture that are defined in
the TIA, defined by TIA reference to another statute or defined by rule of the
Securities and Exchange Commission have the respective meanings assigned to
them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
requires:
(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
in the United States from time to time;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the plural
include the singular; and
(f) 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 (as provided in such agreements) 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
THE NOTES
Section 2.01. Form. The Notes shall be designated as the "ACE
Securities Corp. Home Loan Trust 1999-A Asset Backed Notes, Series 1999-A."
Each Class of Notes shall be in substantially the form set forth in Exhibit A
hereto, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution thereof.
Any portion of the text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods, all as determined by the
officers executing such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes are set forth in Exhibit A hereto. The terms of each Class of Notes
are part of the terms of this Indenture.
Section 2.02. Execution, Authentication, Delivery and Dating. The
Notes shall be executed on behalf of the Issuer by an Authorized Officer of
the Owner Trustee or the Administrator. The signature of any such Authorized
Officer on the Notes may be manual or facsimile. Notes bearing the manual or
facsimile signature of individuals who were at any time Authorized Officers of
the Owner Trustee or the Administrator shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Notes or did not hold such offices at
the date of such Notes. Subject to the satisfaction of the conditions set
forth in Section 2.08 hereof, the Indenture Trustee shall, upon Issuer Order,
authenticate and deliver the Notes for original issue in the aggregate
principal amounts with respect to each Class as specified below:
Class Class Principal Amount
----- ----------------------
A $372,062,000.00
The aggregate principal amounts of such Classes of Notes outstanding
at any time may not exceed such respective amounts.
The Notes that are authenticated and delivered by the Indenture
Trustee to or upon the order of the Issuer on the Closing Date shall be dated
the Closing Date. All other Notes that are authenticated after the Closing
Date for any other purpose under the Indenture shall be dated the date of
their authentication. The Notes shall be issuable as registered Notes in the
minimum denomination of $100,000 and integral multiples of $1 in excess
thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee or the Note Registrar by the manual
signature of one of its authorized signatories, and such certificate upon any
Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder.
Section 2.03. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. Bankers Trust Company initially shall be the "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of Note Registrar.
If a Person other than the Indenture Trustee or Bankers Trust Company
is appointed by the Issuer as Note Registrar, the Issuer will give the
Indenture Trustee and the Note Insurer prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Indenture Trustee and the Note Insurer
shall have the right to inspect the Note Register at all reasonable times and
to obtain copies thereof, and the Indenture Trustee and the Note Insurer shall
have the right to rely upon a certificate executed on behalf of the Note
Registrar by an Executive Officer thereof as to the names and addresses of the
Holders of the Notes and the principal amounts (or notional amounts) and
number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02 hereof,
the Issuer shall execute, and the Indenture Trustee or the Certificate
Registrar shall authenticate and the Noteholder shall be entitled to obtain
from the Indenture Trustee or the Certificate Registrar, in the name of the
designated transferee or transferees, one or more new Notes of the same Class
in any authorized denominations, of a like aggregate principal amount (or
notional amount).
At the option of the Holder, Notes may be exchanged for other Notes
of the same Class in any authorized denominations, of a like aggregate
principal amount (or notional amount), upon surrender of the Notes to be
exchanged at such office or agency. Whenever any Notes are so surrendered for
exchange, the Issuer shall execute, and the Indenture Trustee or the
Certificate Registrar shall authenticate and the Noteholder shall be entitled
to obtain from the Indenture Trustee or the Certificate Registrar, the Notes
which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agents' 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.
No service charge shall be made to a Holder or the Note Insurer for
any registration of transfer or exchange of Notes, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Sections 2.04 and 9.06 hereof not
involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to such
Note.
Section 2.04. 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 and
the Note Insurer such security or indemnity as may reasonably be required by
it to hold the Issuer, the Note Insurer and the Indenture Trustee harmless,
then, in the absence of notice to the Issuer, the Note Registrar, the Note
Insurer or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, an Authorized Officer of the Owner Trustee or the
Administrator on behalf of 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, or shall have been called for redemption, instead of
issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable or upon the Redemption Date without surrender
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the
Issuer, the Note Insurer 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, the Note Insurer or the Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note, other than the Note
Insurer, 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 in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.05. Persons Deemed Note Owners. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Note Insurer, the
Indenture Trustee and any agent of the Issuer, the Note Insurer or the
Indenture Trustee may treat the Person in whose name any Note is registered
(as of the day of determination) as the Note Owner 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 Note Insurer the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest at the related Interest Rate,
and such interest shall be payable on each Distribution Date as specified in
Exhibit A hereto, subject to Section 3.01 hereof. With respect to each
outstanding Class of LIBOR Securities, if any, the Indenture Trustee shall
determine LIBOR for each applicable Accrual Period on the second London
Business Day prior thereto. All interest payments on each Class of Notes shall
be made pro rata to the Noteholders of such Class 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
Distribution Date shall be paid to the Person in whose name such Note (or one
or more Predecessor Notes) is registered on the Record Date (or, in the case
of payment of Deferred Amounts, to the Person in whose name such Note was most
recently registered, if such Note has previously been surrendered to the
Indenture Trustee for final payment) by check mailed first-class postage
prepaid to such Person's address as it appears on the Note Register on such
Record Date, except that, unless Definitive Notes have been issued pursuant to
Section 2.12 hereof, with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payment will be made by wire transfer in immediately available
funds to the account designated by such nominee and except for the final
installment of principal payable with respect to such Note on a Distribution
Date or on the applicable Maturity Date for such Class of Notes (and except
for the Termination Price for any Note called for redemption pursuant to
Section 10.01) hereof, which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in
accordance with Section 3.03 hereof.
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the forms of the Notes set forth in
Exhibit A hereto. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes together with the amount of any Deferred Amounts in
respect thereof of a Class of Notes shall be due and payable, if not
previously paid, on the earlier of (i) the applicable Maturity Date, (ii) the
Redemption Date or (iii) the date on which an Event of Default shall have
occurred and be continuing, if the Indenture Trustee or the Majority Highest
Priority Class Noteholders shall have declared the Notes to be immediately due
and payable in the manner provided in Section 5.02 hereof.
All principal payments on each Class of Notes shall be made pro rata
to the Noteholders of such Class entitled thereto. The Indenture Trustee shall
notify the Person in whose name a Note is registered at the close of business
on the Record Date preceding the Distribution Date on which the Issuer expects
that the final installment of principal of and interest on such Note will be
paid. Such notice shall be mailed or transmitted by facsimile prior to such
final Distribution Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of such
installment. A copy of such form of notice shall be sent to the Note Insurer
by the Indenture Trustee. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.02 hereof.
Section 2.07. 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 promptly be 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 promptly
be cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu
of or in exchange for any Notes canceled as provided in this Section, except
as expressly permitted by this Indenture. All canceled 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 Order that they be destroyed or returned to it; provided, however,
that such Issuer Order is timely and the Notes have not been previously
disposed of by the Indenture Trustee.
Section 2.08. Conditions Precedent to the Authentication of the
Notes. The Notes may be authenticated by the Indenture Trustee, upon Issuer
Request and upon receipt by the Indenture Trustee of the following:
(a) An Issuer Order authorizing the execution and authentication of
such Notes by the Issuer.
(b) All of the items of Collateral that are to be delivered to the
Indenture Trustee or its designee.
(c) A Certificate of Fair Value certifying as to the value of the
Collateral.
(d) An executed counterpart of the Trust Agreement.
(e) An Opinion of Counsel addressed to the Indenture Trustee and the
Note Insurer to the effect that:
(i) all conditions precedent provided for in this Indenture relating
to the authentication of the Notes have been complied with;
(ii) the Owner Trustee has power and authority to execute, deliver
and perform its obligations under the Trust Agreement;
(iii) the Issuer has been duly formed, is validly existing as a
business trust under the laws of the State of Delaware, 12 Del. C.
Section 3801 et seq., and has power, authority and legal right to execute
and deliver this Indenture, the Administration Agreement, the Custodial
Agreement, the Insurance Agreement and the Sale and Servicing Agreement;
(iv) this Indenture creates a valid security interest in favor of
the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, in the Issuer's right, title and interest in and to the Home
Loans securing the obligations of the Issuer hereunder;
(v) the Notes have been duly authorized by the Issuer and, when duly
executed and delivered by the Owner Trustee, on behalf of the Issuer, and
authenticated by the Indenture Trustee in accordance with the terms of
this Indenture and delivered and paid for, will be validly issued and
outstanding and entitled to the benefits and security provided for by
this Indenture and will constitute the legal, valid and binding
obligations of the Issuer, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law;
(vi) this Indenture has been duly qualified under the Trust
Indenture Act;
(vii) no authorization, approval or consent of any governmental body
having jurisdiction in the premises which has not been obtained by the
Issuer is required to be obtained by the Issuer for the valid issuance
and delivery of the Notes, except that no opinion need be expressed with
respect to any such authorizations, approvals or consents as may be
required under any state securities or "blue sky" laws; and
(viii) any other matters as the Indenture Trustee may reasonably
request.
(f) An Officer's Certificate complying with the requirements of
Section 11.01 hereof and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, the Trust
Agreement, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it is bound, or any
order of any court or administrative agency entered in any Proceeding to
which the Issuer is a party or by which it may be bound or to which it
may be subject, and that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the Notes
applied for have been complied with;
(ii) the Issuer is the owner of all of the Home Loans, has not,
other than pursuant to this Indenture, assigned any interest or
participation in the Home Loans (or, if any such interest or
participation has been assigned, it has been released) and has the right
to Grant all of the Home Loans to the Indenture Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of its
right, title and interest in and to the Collateral, and has delivered or
caused the same to be delivered to the Indenture Trustee;
(iv) attached thereto are true and correct copies of letters signed
by each Rating Agency confirming that each of the Notes have been rated
"AAA" or the equivalent by each Rating Agency; and
(v) all conditions precedent provided for in this Indenture relating
to the authentication of the Notes have been complied with.
(g) The Opinions of Counsel to be delivered pursuant to subsection
(d) above may differ from the Opinions of Counsel described in such subsection
so long as such Opinions of Counsel so delivered are acceptable to the Note
Insurer, each Rating Agency and the Indenture Trustee, which shall be
conclusively evidenced by the delivery on the Closing Date of the Note
Insurance Policy and of each such Rating Agency's rating letter and by the
Indenture Trustee's authentication and delivery of the Notes, respectively,
and such acceptable opinions shall be deemed to be the Opinions of Counsel
required pursuant to subsection (d) above
Section 2.09. Release of Collateral. (a) Except as otherwise provided
in subsections (b) and (c) of this Section, Section 11.01 hereof and the terms
of the Basic Documents, the Indenture Trustee shall release property from the
lien of this Indenture only upon receipt by it and the Note Insurer of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel,
certificates in accordance with TIA Sections 3.14(c) and (d)(1), and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1)
or an Opinion of Counsel in lieu of such Independent Certificates to the
effect that the TIA does not require any such Independent Certificates;
provided that no such Independent Certificates or Opinion of Counsel in lieu
of such Independent Certificates shall be necessary in respect of property
released from the lien of the Indenture in accordance with the provisions
hereof if such property consists solely of cash. The Indenture Trustee shall
surrender the Note Insurance Policy upon satisfaction of the conditions in
Section 4.01.
(b) The Servicer, on behalf of the Issuer, shall be entitled to
obtain a release from the lien of this Indenture for any Home Loan and the
related Mortgaged Property at any time (i) after a payment by the Seller or
the Issuer of the Loan Purchase Price of the Home Loan, (ii) after a Qualified
Substitute Home Loan is substituted for such Home Loan and payment of the
Substitution Adjustment, if any, (iii) after liquidation of the Home Loan in
accordance with Section 5.12 of the Sale and Servicing Agreement and the
deposit of all net recoveries thereon in the Collection Account, (iv) upon the
termination of a Home Loan (due to, among other causes, a prepayment in full
of the Home Loan and sale or other disposition of the related Mortgaged
Property, or (v) as contemplated by Section 8.01 of the Sale and Servicing
Agreement. Any such release other than as contemplated by Section 8.01 of the
Sale and Servicing Agreement or pursuant to the preceding sentence shall be
subject to the condition that the Issuer shall have delivered to the Indenture
Trustee and the Note Insurer an Issuer Request (A) identifying the Home Loan
and the related Mortgaged Property to be released, (B) requesting the release
thereof, (C) setting forth the amount deposited in the Collection Account with
respect thereto, and (D) certifying that the amount deposited in the
Collection Account (x) equals the Loan Purchase Price of the Home Loan, in the
event a Home Loan and the related Mortgaged Property are being released from
the lien of this Indenture pursuant to item (i) above, (y) equals the
Substitution Adjustment related to the Qualified Substitute Home Loan and the
Deleted Home Loan released from the lien of the Indenture pursuant to item
(ii) above, or (z) equals the entire amount of net recoveries received with
respect to such Home Loan and the related Mortgaged Property in the event of a
release from the lien of this Indenture pursuant to items (iii) or (iv) above.
(c) The Indenture Trustee shall, if requested by the Servicer,
temporarily release or cause the Custodian temporarily to release to the
Servicer the Mortgage File pursuant to the provisions of Section 5.13 of the
Sale and Servicing Agreement upon compliance by the Servicer with the
provisions thereof; provided, however, that the Mortgage File shall have been
stamped to signify the Issuer's pledge to the Indenture Trustee under the
Indenture.
Section 2.10. Book-Entry Notes. The Notes, when authorized by an
Issuer Order, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by or on behalf of the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner will receive a
definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.12 hereof. Unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to such Note Owners
pursuant to Section 2.12 hereof:
(a) the provisions of this Section shall be in full force and effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including
the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section shall
control;
(d) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement. Unless
and until Definitive Notes are issued pursuant to Section 2.12 hereof, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Voting Interests of the Outstanding Notes, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has delivered
such instructions to the Indenture Trustee.
Section 2.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.12 hereof, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency and shall have no obligation to such Note Owners.
Section 2.12. Definitive Notes. If (i) the Issuer advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Book-Entry
Notes and the Administrator is unable to locate a qualified successor, (ii)
the Issuer at its option advises the Indenture Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or (iii)
after the occurrence of an Event of Default, Owners of the Book- Entry Notes
representing beneficial interests aggregating at least a majority of the
Voting Interests of the Outstanding Notes advise the Clearing Agency in
writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of such Note Owners, then the
Clearing Agency shall notify all Note Owners and the Indenture Trustee of the
occurrence of such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with
the instructions of the Clearing Agency. None of the Issuer, the Note Insurer,
the Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and each of them may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Notes, the Indenture Trustee shall recognize the Holders of the
Definitive Notes as Noteholders.
Section 2.13. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that for all
purposes, including federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. The Issuer, by entering into this Indenture, and
each Noteholder, by its acceptance of a Note (and each Note Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat
the Notes for all purposes, including federal, state and local income, single
business and franchise tax purposes, as indebtedness of the Issuer.
ARTICLE III
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay (or will cause to be paid duly and punctually) the
principal of and interest on the Notes in accordance with the terms of the
Notes and this Indenture. Without limiting the foregoing, unless the Notes
have been declared due and payable pursuant to Section 5.02 and monies
collected by the Indenture Trustee are being applied in accordance with
Section 5.04(b), subject to and in accordance with Section 8.02(c) hereof, the
Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on each Distribution Date deposited therein pursuant to
the Sale and Servicing Agreement (i) for the benefit of the Notes of each
Class, to the Holders thereof. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall
be limited in right of payment to amounts available from the Collateral and
any amounts received by the Indenture Trustee under the Note Insurance Policy
in respect of the Notes, as provided in this Indenture. The Issuer shall not
otherwise be liable for payments on the Notes. If any other provision of this
Indenture shall be deemed to conflict with the provisions of this Section
3.01, the provisions of this Section 3.01 shall control.
Section 3.02. Maintenance of Office or Agency. The Issuer will or
will cause the Administrator to maintain in the Borough of Manhattan in The
City of New York an office or agency where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The
Issuer hereby initially appoints the Administrator to serve as its agent for
the foregoing purposes and to serve as Paying Agent with respect to the Notes.
The Issuer will give prompt written notice to the Indenture Trustee of the
location, and of any change in the location, of any such office or agency. If
at any time the Issuer shall fail to maintain any such office or agency or
shall fail to furnish the Indenture Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to Be Held in Trust. As provided in
Section 8.02(a) and (b) hereof, all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the
Collection Account and the Note Distribution Account pursuant to Section
8.02(c) hereof shall be made on behalf of the Issuer by the Indenture Trustee
or by the Paying Agent, and no amounts so withdrawn from the Collection
Account and the Note Distribution Account for payments of Notes shall be paid
over to the Issuer except as provided in this Section.
On or before the Business Day preceding each Distribution Date and
the Redemption Date, the Paying Agent shall deposit or cause to be deposited
in the Note Distribution Account an aggregate sum sufficient to pay the
amounts due on such Distribution Date or the Redemption Date under the Notes,
such sum to be held in trust for the benefit of the Persons entitled thereto,
and (unless the Paying Agent is the Indenture Trustee) shall promptly notify
the Indenture Trustee of its action or failure so to act.
Any Paying Agent shall be appointed by Issuer Order with written
notice thereof to the Indenture Trustee and the Note Insurer. Any Paying Agent
appointed by the Issuer shall be a Person which would be eligible to be
Indenture Trustee hereunder as provided in Section 6.11 hereof. The Issuer
shall not appoint any Paying Agent (other than the Indenture Trustee) which is
not, at the time of such appointment, a Depository Institution.
The Issuer will cause each Paying Agent other than the Administrator
to execute and deliver to the Indenture Trustee and the Note Insurer 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, 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 Note Insurer notice of any
default by the Issuer (or any other obligor upon the Notes) 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 a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and
(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; provided, however, that with respect to
withholding and reporting requirements applicable to original issue discount,
the accrual of market discount or the amortization of premiums (if any) on the
Notes, the Issuer shall have first provided the calculations pertaining
thereto to the Indenture Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Paying Agent to pay to the 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 or
abandoned property, 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 two years after such amount has become due and payable
shall be discharged from such trust and be paid to the Issuer on Issuer
Request; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof (but only to the extent
of the amounts so paid to the Issuer), and all liability of the Indenture
Trustee 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 a newspaper of general
circulation in The City of New York customarily published in the English
language on each Business Day, 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 shall also adopt
and employ, at the expense and direction of the Issuer, any other reasonable
means of notification of such repayment (including, but not limited to,
mailing notice of such repayment to Holders whose Notes have been called but
have not been surrendered for redemption or whose right to or interest in
moneys due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for
each such Holder).
Section 3.04. Existence. (a) Subject to subparagraph (b) of this
Section 3.04, 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
subject to the prior written consent of the Note Insurer it becomes, or any
successor Issuer hereunder is or becomes, organized under the laws of any
other State or of the United States of America, in which case the Issuer will
keep in full effect its existence, rights and franchises under the laws of
such other jurisdiction) and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to Section
10.02 of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person succeeding to the Owner Trustee under the Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
Section 3.05. Protection of Collateral. The Issuer will from time to
time or upon the direction of the Note Insurer 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:
(a) provide further assurance with respect to the Grant of all or any
portion of the Collateral;
(b) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the purposes
hereof;
(c) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(d) enforce any rights with respect to the Collateral; or
(e) preserve and defend title to the Collateral and the rights of the
Indenture Trustee, the Noteholders and the Note Insurer in such Collateral
against the claims of all persons and parties.
The Issuer hereby designates the Administrator, its agent and
attorney-in-fact, to execute any financing statement, continuation statement
or other instrument required to be executed pursuant to this Section 3.05.
Section 3.06. Annual Opinions as to Collateral. On or before March
15th in each calendar year, beginning in 2000, the Issuer shall furnish to the
Indenture Trustee and the Note Insurer an Opinion of Counsel 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 created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien
and security interest of this Indenture until March 15th of the following
calendar year.
Section 3.07. Performance of Obligations; Servicing of Home Loans.
(a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from any
of such Person's material covenants or obligations under any instrument or
agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance
of other Persons (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties under this
Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee and the Note Insurer in an Officer's Certificate of the
Issuer shall be deemed to be action taken by the Issuer. Initially, the Issuer
has contracted with the Administrator to assist the Issuer in performing its
duties under this Indenture. Notwithstanding anything to the contrary herein,
the Issuer shall in all respects remain liable for its obligations hereunder
and under the Basic Documents.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, in the Basic Documents
and in the instruments and agreements included in the Collateral, including
but not limited to (i) filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of
this Indenture and the Sale and Servicing Agreement and (ii) recording or
causing to be recorded all Mortgages, Assignments of Mortgage, all intervening
Assignments of Mortgage and all assumption and modification agreements
required to be recorded by the terms of the Sale and Servicing Agreement, in
accordance with and within the time periods provided for in this Indenture
and/or the Sale and Servicing Agreement, as applicable. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without
the consent of the Indenture Trustee, the Note Insurer and the Holders of at
least a majority of the Voting Interests of the Outstanding Notes.
(d) If the Issuer shall have knowledge of the occurrence of an Event
of Default under the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee, the Note Insurer and the Rating Agencies
thereof, and shall specify in such notice the action, if any, the Issuer is
taking with respect to such default.
(e) As promptly as possible after the giving of notice to the
Servicer of the termination of the Servicer's rights and powers pursuant to
Section 7.01 of the Sale and Servicing Agreement, the Indenture Trustee shall
proceed in accordance with Section 7.02 of the Sale and Servicing Agreement.
(f) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without
the prior written consent of the Indenture Trustee and the Note Insurer unless
a Note Insurer Default has occurred and is continuing, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral
(except to the extent otherwise provided in the Sale and Servicing Agreement)
or the Basic Documents, or waive timely performance or observance by the
Servicer or the Depositor under the Sale and Servicing Agreement; and (ii)
that any such amendment shall not (A) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that are
required to be made for the benefit of the Noteholders or (B) reduce the
aforesaid percentage of the Notes that is required to consent to any such
amendment, without the consent of the Holders the Voting Interests of all
Outstanding Notes. If any such amendment, modification, supplement or waiver
shall so be consented to by the Indenture Trustee and the Note Insurer unless
a Note Insurer Default has occurred and is continuing, the Issuer agrees,
promptly following a request by the Indenture Trustee or the Note Insurer to
do so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Indenture Trustee
or the Note Insurer may deem necessary or appropriate in the circumstances.
Section 3.08. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(a) except as expressly permitted by this Indenture, the Home Loan
Sale Agreement or the Sale and Servicing Agreement, sell, transfer, exchange
or otherwise dispose of any of the properties or assets of the Issuer,
including those included in the Collateral, unless directed to do so by the
Indenture Trustee or the Note Insurer;
(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 Collateral;
(c) engage in any business or activity other than as permitted by the
Trust Agreement or other than in connection with, or relating to, the issuance
of Notes pursuant to this Indenture, or amend the Trust Agreement as in effect
on the Closing Date other than in accordance with Section 11.01 thereof;
(d) issue debt obligations under any other indenture;
(e) incur or assume any indebtedness or guaranty any indebtedness of
any Person, except for such indebtedness as may be incurred by the Issuer in
connection with the issuance of the Notes pursuant to this Indenture;
(f) dissolve or liquidate in whole or in part or merge or consolidate
with any other Person;
(g) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may expressly be permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Collateral or any part thereof or any interest
therein or the proceeds thereof (other than tax liens, mechanics' liens and
other liens that arise by operation of law, in each case on any of the
Mortgaged Properties and arising solely as a result of an action or omission
of the related Obligors) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Collateral;
(h) remove the Administrator without cause unless the Rating Agency
Condition shall have been satisfied in connection with such removal and the
Note Insurer shall have given its prior written consent;
(i) take any other action or fail to take any action which may cause
the Issuer to be taxable as (a) an association pursuant to Section 7701 of the
Code and the corresponding regulations or (b) as a taxable mortgage pool
pursuant to Section 7701(i) of the Code and the corresponding regulations; or
(j) made any expenditure by long-term or operating lease or otherwise
for capital assets (either realty or personalty).
Section 3.09. Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Note Insurer, within 120 days after
the end of each fiscal year of the Issuer (commencing in the fiscal year
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 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 throughout such year, or, if there has been a default in its
compliance with any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
Section 3.10. Covenants of the Issuer. All covenants of the Issuer in
this Indenture are covenants of the Issuer and are not covenants of the Owner
Trustee. The Owner Trustee is, and any successor Owner Trustee under the Trust
Agreement will be, entering into this Indenture solely as Owner Trustee under
the Trust Agreement and not in its respective individual capacity, and in no
case whatsoever shall the Owner Trustee or any such successor Owner Trustee be
personally liable on, or for any loss in respect of, any of the statements,
representations, warranties or obligations of the Issuer hereunder, as to all
of which the parties hereto agree to look solely to the property of the
Issuer.
Section 3.11. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with the Sale and Servicing Agreement.
Section 3.12. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be made, (x)
distributions to the Servicer, the Indenture Trustee, the Owner Trustee and
the Securityholders as contemplated by, and to the extent funds are available
for such purpose under, the Sale and Servicing Agreement, the Indenture or the
Trust Agreement and (y) payments to the Indenture Trustee pursuant to the
Administration Agreement. The Issuer will not, directly or indirectly, make or
cause to be made payments to or distributions from the Note Distribution
Account, the Collection Account except in accordance with this Indenture and
the Basic Documents.
Section 3.13. Issuer May Consolidate, etc., Only on Certain Terms.
(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 and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee and the Note Insurer, in form satisfactory to the Indenture
Trustee and the Note Insurer, 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;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee and the Note
Insurer) 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;
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Note Insurer, 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); and
(vii) the Note Insurer has given its prior written consent.
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person other than
in accordance with the Basic Documents, 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 (A) shall be a United States citizen or a Person
organized and existing under the United States of America or any State,
(B) expressly assumes, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee and the Note Insurer, in form
satisfactory to the Indenture Trustee and the Note Insurer, 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 Holders of the Notes
and the Note Insurer, (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, 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 Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee and the Note
Insurer) 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;
(vi) the Issuer shall have delivered to the Indenture Trustee and
the Note Insurer 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); and
(vii) the Note Insurer has given its prior written consent.
Section 3.14. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.13(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 3.13(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed by or performed on the
part of the Issuer with respect to the Notes immediately upon the delivery of
written notice to the Indenture Trustee and the Note Insurer stating that the
Issuer is to be so released.
Section 3.15. Treatment of Notes as Debt for Tax Purposes. The Issuer
shall, and shall cause the Administrator to, treat the Notes as indebtedness
for all purposes.
Section 3.16. Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Note Insurer and the Rating Agencies prompt written
notice of each Event of Default hereunder, each default on the part of the
Servicer or the Depositor of its obligations under the Sale and Servicing
Agreement and each default on the part of the Seller of its obligations under
the Home Loan Sale Agreement.
Section 3.17. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Note Insurer, the Issuer will execute and deliver
such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this
Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. 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, 3.05, 3.08 3.10, 3.12 and 3.16 hereof, (v) the rights, obligations
and immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 hereof and the obligations of the
Indenture Trustee under Section 4.02 hereof) 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 either (I) the Sale and Servicing Agreement has
been terminated pursuant to Section 8.01 thereof or (II) all of the following
have occurred:
(a) either
(i) 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 2.04 hereof and
(ii) Notes for the payment of which money has theretofore been
deposited in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03 hereof) shall have been delivered to the
Indenture Trustee for cancellation; or
(ii) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(A) shall have become due and payable, or
(B) will become due and payable within one year at the
Maturity Date (or, if one or more Classes of Notes have
different Maturity Dates, the latest Maturity Date), or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in the
name, and at the expense, of the Issuer,
(D) and the Issuer, in the case of clause (A), (B) or (C)
above, has irrevocably deposited or caused irrevocably to be
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 (including
Deferred Amounts to the extent required to be paid hereunder)
not theretofore delivered to the Indenture Trustee for
cancellation when due to the applicable Maturity Date of such
Class of Notes or the Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.01 hereof), as the
case may be; and
(b) the latest of (i) 18 months after payment in full of all
outstanding obligations under the Notes, (ii) the payment in full of all
unpaid fees and expenses of the Trust and all sums owing to the Note Insurer
under the Insurance Agreement and (iii) the date on which the Issuer has paid
or caused to be paid all other sums payable hereunder by the Issuer; and
(c) the Issuer shall have delivered to the Indenture Trustee and the
Note Insurer an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA or the Indenture Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements of
Section 11.01(a) hereof and, subject to Section 11.02 hereof, each stating
that all conditions precedent herein provided for, relating to the
satisfaction and discharge of this Indenture with respect to the Notes, have
been complied with.
Section 4.02. Application of Trust Money. All moneys deposited with
the Indenture Trustee pursuant to Sections 3.03 and 4.01 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,
as the Indenture Trustee may determine, to the Note Insurer and the Holders of
the particular Notes for the payment or redemption of which such moneys have
been deposited with the Indenture Trustee, of all sums due and to become due
thereon for principal and/or interest; but such moneys need not be segregated
from other funds except to the extent required herein or in the Sale and
Servicing Agreement or required by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the
Notes, all moneys 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 3.03 hereof and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.01. Events of Default. (a) "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) subject to Section 5.01(b) and notwithstanding that there
may be insufficient sums in the Note Distribution Account for
payment thereof on the related Distribution Date, default in the
payment of any interest on any Note when the same becomes due and
payable, and continuance of such default for a period of five (5)
days; or
(ii) subject to Section 5.01(b) and notwithstanding that there
may be insufficient sums in the Note Distribution Account for
payment thereof on the related Distribution Date, default in the
payment of any installment of principal when the same becomes due
and payable, and continuance of such default for a period of five
(5) days, or of the entire Principal Amount (including any Deferred
Amount to the extent required to be paid hereunder) of any Note on
the applicable Maturity Date; or
(iii) the existence of an unpaid Deferred Amount in respect of
any Highest Priority Class Notes; or
(iv) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture, the
Insurance Agreement, the Sale and Servicing Agreement or in any
certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation 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 the
Note Insurer, or to the Issuer and the Indenture Trustee by the
Holders of at least 25% of the Voting Interests of the Outstanding
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; or
(v) 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 Collateral 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
Collateral, 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
(vi) 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 Collateral, 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.
(b) The Issuer promptly shall deliver to the Indenture Trustee and
the Note Insurer, within five days after the occurrence thereof, written
notice in the form of an Officer's Certificate of any event which with the
giving of notice and the lapse of time would become an Event of Default under
clauses (iv) and (v) above, the status of such event 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 should occur and be continuing, then and in every such
case the Indenture Trustee may, and at the direction or upon the prior written
consent of the Note Insurer or the Majority Highest Priority Class Noteholders
with the written consent of the Note Insurer shall, declare all 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 such 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 has
been made and before a judgment or decree for payment of the moneys due has
been obtained by the Indenture Trustee as hereinafter in this Article V
provided, the Note Insurer or the Majority Highest Priority Class Noteholders
with the prior written consent of the Note Insurer, by written notice to the
Issuer and the Indenture Trustee, may 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/or interest on all Highest
Priority Class Notes and all other amounts that would then be due
hereunder or upon such Highest Priority Class Notes if the Event of
Default giving rise to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder plus all amounts due to the Note Insurer under the Basic
Documents and the reasonable compensation, expenses, disbursements
and advances of each of the Indenture Trustee and the Note Insurer
and its agents and counsel; and
(b) 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 hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
The Holders of Notes of a Non-Priority Class shall have no right to
exercise any remedies of Noteholders under this Article V, except to the
extent otherwise expressly provided herein.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in
the payment of any installment of principal when the same becomes due and
payable, and continuance of such default for a period of five (5) days, or of
the Principal Amount of any Note at the applicable Maturity Date, the Issuer
shall, upon demand of the Indenture Trustee made at the direction of the Note
Insurer, pay to the Indenture Trustee, for the benefit of the Holders of the
Notes and the Note Insurer, the whole amount then due and payable on such
Notes for principal and/or interest, with interest upon the overdue principal
and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest at the rate borne by the
Notes 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 the Note Insurer and their respective 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, shall at the direction of the Note Insurer, and if a Note
Insurer Default has occurred and is continuing, the Indenture Trustee may, and
shall at the direction of the Majority Highest Priority Class Noteholders,
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 upon such Notes and collect in the
manner provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee shall, at the direction of the Note Insurer, and if a Note Insurer
Default has occurred and is continuing, the Indenture Trustee may, in its
discretion, and shall, at the direction of the Majority Highest Priority Class
Noteholders, as more particularly provided in Section 5.04, proceed to protect
and enforce its rights and the rights of the Note Insurer and the Noteholders
by such appropriate Proceedings as the Indenture Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or
by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and
payable as 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, upon the
direction of the Note Insurer, by intervention in such Proceedings or
otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and/or interest owing and unpaid in respect of the Notes
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and Note Insurer, 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 or bad faith),
the Note Insurer and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee,
a standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders, the
Note Insurer and 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, the Note Insurer or the Holders of Notes allowed
in any judicial proceedings relative to the Issuer, its creditors
and its property;
(v) and any trustee, receiver, liquidator, custodian or other
similar official in any such Proceeding is hereby authorized by each
of such Noteholders and the Note Insurer to make payments to the
Indenture Trustee and, in the event that the Indenture Trustee shall
consent to the making of payments directly to such Noteholders and
the Note Insurer, 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 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 or the Note Insurer any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of
any Holder thereof or the Note Insurer 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,
attorneys and counsel, shall be for the ratable benefit of the Holders of the
Notes and the Note Insurer.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
Section 5.04. Remedies; Priorities.
(a) If an Event of Default shall have occurred, the Indenture Trustee
shall, at the direction of the Note Insurer, and if a Note Insurer Default has
occurred and is continuing, the Indenture Trustee may, do one or more of the
following (subject to Section 5.05 hereof):
(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, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys
adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the
Collateral;
(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, the Note Insurer or
the Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner, 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 Collateral following an Event of Default, unless (A) the Holders
of 100% of the Voting Interests of the Outstanding Notes consent thereto, (B)
the proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon such
Notes for principal (including any Deferred Amounts) and/or interest or (C)
the Indenture Trustee determines that the Collateral will not continue to
provide sufficient funds for the payment of principal of (including any
Deferred Amounts) 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 Holders of 66-2/3% of the Voting Interests of the
Highest Priority Class Notes. In determining such sufficiency or insufficiency
with respect to clauses (B) and (C) of this subsection, 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
Collateral for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out the money or property in the following
order:
first: to the Indenture Trustee for any costs or expenses
incurred by it in connection with the enforcement of the remedies
provided for in this Article V, and, if GMAC is no longer the
Servicer, for the Indenture Trustee Fee then due and to the Owner
Trustee and the Custodian for the Owner Trustee Fee and any
compensation to the Custodian then due;
second: to the Note Insurer for the Premium Amount then due and
unpaid;
third: to the Servicer for the Servicing Fee then due and
unpaid;
fourth: to the Noteholders for amounts due and unpaid on the
Notes for interest, pro rata according to the amounts due and
payable on the Notes for interest;
fifth: to the applicable Noteholders for amounts due and unpaid
on the Notes for principal, pro rata among the Holders of each such
Class of Notes, according to the amounts due and payable and in the
order and priorities set forth in Section 6.05(b)(i) of the Sale and
Servicing Agreement;
sixth: to the Note Insurer for any amounts then due and payable
under the Insurance Agreement;
seventh: pro rata, to the Servicer and the Depositor, any
outstanding amounts payable or reimbursable thereto under the Sale
and Servicing Agreement; and
eighth: to the Owner Trustee, for any amounts to be distributed
to the holders of the Residual Interest Certificates pursuant to the
Trust Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section. At least 15
days before such record date, the Indenture Trustee shall mail to each
Noteholder, the Note Insurer and the Issuer a notice that states the record
date, the payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Collateral. If the Notes
have been declared to be due and payable under Section 5.02 hereof following
an Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Collateral. 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 the Indenture Trustee
shall take such desire into account when determining whether or not to
maintain possession of the Collateral. In determining whether to maintain
possession of the Collateral, 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 Collateral for such purpose.
Section 5.06. Limitation of Suits. No Holder of any Note 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 for so long as a Note Insurer Default has not occurred
or is not continuing, and shall not have any such right if a Note Insurer
Default has occurred and is continuing, unless:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Majority Highest Priority Class Noteholders 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 Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceeding;
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Majority
Highest Priority Class Noteholders; and
(f) the Note Insurer has given its prior written consent.
It is understood and intended that no one or more Holders of Notes
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 Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes pursuant to this Section, each representing less than the Majority
Highest Priority Class Noteholders, 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 Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any,
on, and Deferred Amounts, if any, on such Note on or after the applicable
Maturity Date thereof expressed in such Note or in this Indenture (or, in the
case of redemption, on or after the Redemption Date) and to institute suit for
the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture
Trustee, the Note Insurer 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, the Note Insurer or to such Noteholder, then and in
every such case the Issuer, the Indenture Trustee, the Note Insurer 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, the Note Insurer
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 Note Insurer
or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee, the Note Insurer or any Holder of any Note to exercise
any right or remedy accruing upon any Default or Event of Default shall impair
any such right or remedy or constitute a waiver of any such Default or Event
of Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Indenture Trustee, the Note Insurer or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, the Note Insurer or by the Noteholders,
as the case may be, subject, in each case, however, to the right of the Note
Insurer to control any such right and remedy, except as provided in Section
11.20.
Section 5.11. Control by Noteholders. The Majority Highest Priority
Class Noteholders 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, however, 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 hereof, any
direction to the Indenture Trustee to sell or liquidate the Collateral shall
be by Holders of Notes representing not less than 100% of the Voting Interests
of all Class of Notes Outstanding;
(c) if the conditions set forth in Section 5.05 hereof have been
satisfied and the Indenture Trustee elects to retain the Collateral pursuant
to such Section, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the Highest
Priority Class Notes to sell or liquidate the Collateral 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 the Noteholders set forth in this
Section 5.11, subject to Section 6.01 hereof, 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
hereof the Note Insurer may, or with the prior written consent of the Note
Insurer, the Majority Highest Priority Class Noteholders may waive any past
Default or Event of Default and its consequences, except a Default (a) in the
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 Note Insurer or the Holder of each Note. In the case of any
such waiver, the Issuer, the Indenture Trustee, the Note Insurer and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and 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 Default or Event of Default or impair any right consequent
thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee or the Note Insurer, (b) any suit instituted by any
Noteholder, or group of Noteholders, in each case holding in the aggregate
more than 10% of the Voting Interests of the Outstanding Notes or (c) any suit
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 (or, in the case of redemption, on or after
the Redemption Date).
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 will not hinder, delay or impede the execution of any power herein granted
to the Indenture Trustee or the Note Insurer, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 5.15. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee, the Note Insurer or the
Noteholders shall be impaired by the recovery of any judgment by the Indenture
Trustee or the Note Insurer against the Issuer or by the levy of any execution
under such judgment upon any portion of the Collateral 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) hereof.
Section 5.16. Performance and Enforcement of Certain Obligations (a)
Promptly following a request from the Indenture Trustee or the Note Insurer to
do so and at the Administrator's expense, the Issuer shall take all such
lawful action as the Indenture Trustee may request to compel or secure the
performance and observance by the Depositor and the Servicer, as applicable,
of each of their obligations to the Issuer under or in connection with the
Sale and Servicing Agreement, or by the Seller of its obligations under or in
connection with the Home Loan Sale Agreement and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Sale and Servicing Agreement to the extent and in
the manner directed by the Indenture Trustee, or the Note Insurer including
the transmission of notices of default on the part of the Depositor, the
Seller or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Depositor, the Seller or the Servicer of each of their obligations under the
Sale and Servicing Agreement or the Home Loan Sale Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, with the prior written consent of the Note Insurer, and
shall at the direction of the Note Insurer or with the prior written consent
of the Note Insurer, and at the direction (which direction shall be in writing
or by telephone, confirmed in writing promptly thereafter) of the Majority
Highest Priority Class Noteholders shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Depositor or the
Servicer under or in connection with the Sale and Servicing Agreement, or
against the Seller under or in connection with the Home Loan Sale Agreement
including the right or power to take any action to compel or secure
performance or observance by the Depositor, 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 Sale and Servicing Agreement or the Home Loan Sale Agreement, as the case
may be, and any right of the Issuer to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default
has occurred and is 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 (b)
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 hereof.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section 6.01.
(e) 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.
(f) Money held in trust by the Indenture Trustee shall be segregated
from other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) 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; provided, however, that the Indenture Trustee
shall not refuse or fail to perform any of its duties hereunder solely as a
result of nonpayment of its normal fees and expenses and provided, further,
that nothing in this Section 6.01(g) shall be construed to limit the exercise
by the Indenture Trustee of any right or remedy permitted under this Indenture
or otherwise in the event of the Issuer's failure to pay the Indenture
Trustee's fees and expenses pursuant to Section 6.07 hereof. In determining
that such repayment or indemnity is not reasonably assured to it, the
Indenture Trustee must consider not only the likelihood of repayment or
indemnity by or on behalf of the Issuer but also the likelihood of repayment
or indemnity from amounts payable to it from the Collateral pursuant to
Section 6.07 hereof.
(h) 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.
(i) The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Event of Default (other than an
Event of Default pursuant to Section 5.01(a)(i) or (ii) hereof) unless a
Responsible Officer of the Indenture Trustee shall have received written
notice thereof or otherwise shall have actual knowledge thereof. In the
absence of receipt of notice or such knowledge, the Indenture Trustee may
conclusively assume that there is no Event of Default.
(j) The Administrator, on behalf of the Indenture Trustee, shall, and
hereby agrees that it will, hold the Note Insurance Policy in trust, and will
hold any proceeds of any claim on the Note Insurance Policy in trust solely
for the use and benefit of the Noteholders.
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 from the appropriate
party. The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on an Officer's Certificate or Opinion
of Counsel from the appropriate party.
(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. Notwithstanding anything to the
contrary herein, the Indenture Trustee shall remain liable for the performance
of any of its obligations hereunder or under the Basic Documents.
(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 such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith. Subject to the provisions of this Indenture, in no event shall the
appointment of any Custodian pursuant to a Custodial Agreement diminish the
obligations of the Indenture Trustee hereunder.
(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 with 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 other than as Indenture
Trustee 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 Paying Agent, 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 hereof.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, and shall not be accountable for the
Issuer's use of the proceeds from the Notes or responsible for any statement
of the Issuer in the 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.
Section 6.05. Notices of Default. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to the Note Insurer notice of the
Default after it occurs and each Noteholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal
of or interest on any Note (including payments pursuant to the mandatory
redemption provisions of such Note), the Indenture Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required
to enable such Holder to prepare its federal and state income tax returns.
Section 6.07. Compensation and Indemnity. As compensation for its
services hereunder, the Indenture Trustee shall be entitled to receive, on
each Distribution Date, investment income from the Note Distribution Account
and the Certificate Distribution Account as specified in Section 6.01 of the
Sale and Servicing Agreement (which compensation shall not be limited by any
law on compensation of a trustee of an express trust). The Seller agrees to
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 or
any of the other Basic Documents. The Indenture Trustee shall notify the
Issuer, the Note Insurer and the Seller promptly of any claim for which it may
seek indemnity. Failure by the Indenture Trustee so to notify the Issuer and
the Seller shall not relieve the Issuer or the Seller of its obligations
hereunder. The Issuer shall or shall cause the Seller to defend any such
claim, and the Indenture Trustee may have separate counsel reasonably
acceptable to the Seller and the Issuer shall or shall cause the Seller to pay
the reasonable fees and expenses of such counsel. Neither the Issuer nor the
Seller need reimburse any expense or indemnify against any loss, liability or
expense incurred by the Indenture Trustee through the Indenture Trustee's own
willful misconduct, negligence or bad faith.
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 in connection with the occurrence of a
Default specified in Section 5.01(a)(v) or (vi) hereof with respect to the
Issuer, the 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 Note
Insurer. The Note Insurer or the Holders of a Majority of the Voting Interests
of the Outstanding Notes with the consent of the Note Insurer may remove the
Indenture Trustee by so notifying the Indenture Trustee and may appoint a
successor Indenture Trustee acceptable to the Note Insurer. The Issuer shall
remove the Indenture Trustee upon the prior written consent of the Note
Insurer if:
(a) the Indenture Trustee fails to comply with Section 6.11 hereof;
(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;
(d) the Indenture Trustee otherwise becomes incapable of acting; or
(e) the Indenture Trustee breaches any representation or warranty or
covenant made by it under any Basic Document.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Note Insurer may and if it fails to the Issuer shall promptly appoint a
successor Indenture Trustee acceptable to the Note Insurer that satisfies the
eligibility requirements of Section 6.11.
The resigning or removed Indenture Trustee shall cooperate with the
Servicer and any successor Indenture Trustee in effecting the termination of
the resigning or removed Indenture Trustee's responsibilities and rights
hereunder and shall promptly provide such successor Indenture Trustee all
documents and records reasonably requested by it to enable it to assume the
Indenture Trustee's functions hereunder. The successor Indenture Trustee shall
deliver a written acceptance of its appointment to the retiring Indenture
Trustee, the Note Insurer and to the Issuer. Thereupon the resignation or
removal of the retiring Indenture Trustee shall become effective, and the
successor Indenture Trustee shall have all the rights, powers and duties of
the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee
to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Note Insurer, the Issuer or the Holders of a majority
of the Voting Interests of Outstanding Notes may petition any court of
competent jurisdiction for the appointment of a successor Indenture Trustee
acceptable to the Note Insurer. If the Indenture Trustee fails to comply with
Section 6.11 hereof, any Noteholder with the prior written consent of the Note
Insurer may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee
acceptable to the Note Insurer. Notwithstanding the replacement of the
Indenture Trustee pursuant to this Section 6.08, the Issuer's and the
Administrator's obligations under Section 6.07 hereof 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, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, however, that such corporation or banking association shall be
acceptable to the Note Insurer and otherwise be qualified and eligible under
Section 6.11 hereof. The Indenture Trustee shall provide the Note Insurer and
the Rating Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the
trusts created by this Indenture any of the Notes shall have been
authenticated but not delivered, any such successor to the Indenture Trustee
may adopt the certificate of authentication of any predecessor trustee, and
deliver such Notes so authenticated; and in case at that 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 which 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 Collateral may at the time be located,
the Indenture Trustee shall have the power, with the prior written consent of
the Note Insurer, and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co- trustees, or separate trustee or
separate trustees, of all or any part of the Trust Estate, and to vest in such
Person or Persons, in such capacity and for the benefit of the Noteholders and
the Note Insurer such title to the Collateral, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee or the Note Insurer
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 hereof and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof; provided that the Indenture Trustee shall deliver notice
of any such co-trustee or separate trustee to the Note Insurer.
(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 Collateral 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, jointly
with the Indenture Trustee, 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 Agreement 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 Section 310(a). The
Indenture Trustee shall be acceptable to the Note Insurer and 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 not less than "A" by S&P or shall otherwise be
acceptable to each Rating Agency. The Indenture Trustee shall comply with TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee which has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
Section 6.13. Appointment of Agent. The Indenture Trustee hereby
appoints Bankers Trust Company as its agent (referred to in the Basic
Documents as the "Administrator") and, as necessary, its attorney in fact, for
the purpose of performing the duties of the Indenture Trustee under this
Agreement and the Custodial Agreement relating to compliance with tax
requirements and related reporting obligations, SEC reporting, distributions
and related reporting requirements, registration, execution and authentication
of Notes in its capacity as Note Registrar, establishment and maintenance of
accounts and the holding of the Trust Estate (other than the Mortgage Files),
and such other obligations as are set forth in the Agency Agreement, including
but not limited to those obligations set forth in Section 6.01 of this
Agreement.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS'
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders. The Issuer will 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 Holders of Notes as of such Record Date, (b) at such other
times as the Indenture Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request, a list of similar form and content
as of a date not more than 10 days prior to the time such list is furnished;
provided, however, that so long as the Indenture Trustee is the Note
Registrar, no such list shall be required to be furnished. The Indenture
Trustee, or if the Indenture Trustee is no longer the Note Registrar, the
Issuer shall furnish to the Note Insurer in writing on an annual basis and at
such times as the Note Insurer shall request a copy of the list of
Noteholders.
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 Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 hereof and the names and addresses of Holders of
Notes 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.
The Indenture Trustee shall make such list available to the Note Insurer upon
request.
(b) Noteholders may communicate pursuant to TIA Section 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 Section 312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee and the Note Insurer,
within 15 days after the Issuer is required to file the same with
the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and
regulations prescribe) 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, the Note Insurer and the
Commission in accordance with the rules and regulations prescribed
from time to time by the Commission such additional information,
documents and reports with respect to compliance by the Issuer with
the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 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
Section 313(a), within 60 days after each March 1, beginning with March 1,
2000, the Indenture Trustee shall mail to the Note Insurer and each Noteholder
as required by TIA Section 313(c) a brief report dated as of such date that
complies with TIA Section 313(a). The Indenture Trustee also shall comply with
TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each securities
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any securities exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money.
(a) General. 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 Collateral, the Indenture Trustee may, and upon
written request of the Securities Insurer shall, 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 hereof.
(b) Claims Under Note Insurance Policy. The Notes will be insured by
the Note Insurance Policy pursuant to the terms set forth therein,
notwithstanding any provisions to the contrary contained in this Indenture or
the Sale and Servicing Agreement. All amounts received under the Note
Insurance Policy shall be used solely for the payment to Noteholders of
principal and interest on the Insured Notes.
Section 8.02. Trust Accounts; Distributions. (a) On or prior to the
Closing Date, the Issuer shall cause the Servicer to establish and maintain,
or the Indenture Trustee shall establish and maintain, in the name of the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer, or
on behalf of the Owner Trustee for the benefit of the Securityholders, the
Trust Accounts, as provided in the Sale and Servicing Agreement. The Issuer
shall cause the Servicer to, and the Paying Agent shall, deposit amounts into
each of the Trust Accounts in accordance with the terms hereof and the Sale
and Servicing Agreement.
(b) On each Distribution Date, to the extent funds are available in
the Note Distribution Account, the Indenture Trustee shall either retain funds
in the Note Distribution Account for distribution on such date in accordance
with Section 6.05 of the Sale and Servicing Agreement or make the withdrawals
from the Note Distribution Account and deposits into the Certificate
Distribution Account for distribution on such Distribution Date as required
pursuant to Section 6.05 of the Sale and Servicing Agreement.
(c) On each Distribution Date and each Redemption Date, to the extent
of the interest of the Indenture Trustee in the Certificate Distribution
Account (as provided in Section 6.07 of the Sale and Servicing Agreement), the
Indenture Trustee hereby authorizes the Owner Trustee or the Paying Agent, as
applicable, to make the distributions from the Certificate Distribution
Account as required pursuant to Sections 6.05 of the Sale and Servicing
Agreement.
(d) The Indenture Trustee shall make claims under the Note Insurance
Policy pursuant to Section 6.04 of the Sale and Servicing Agreement and in
accordance with the Note Insurance Policy. The Indenture Trustee shall deposit
any Insured Payment received from the Note Insurer in the Note Distribution
Account for payment to Insured Noteholders. With respect to claims under the
Note Insurance Policy for a Preference Amount, the Indenture Trustee shall
distribute such amount in accordance with the terms of the Note Insurance
Policy. All amounts received under the Note Insurance Policy shall be used
solely for the payment to Noteholders of principal and interest on the Insured
Notes.
Section 8.03. General Provisions Regarding Accounts. (a) So long as
no Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in accordance
with the provisions of the Sale and Servicing Agreement, and all income or
other gain from investments of moneys deposited in the Trust Accounts shall be
disbursed in accordance with the provisions of the Sale and Servicing
Agreement. The Issuer will not direct the Indenture Trustee to make any
investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest Granted and perfected in such account
will continue to be perfected in such investment or the proceeds of such sale,
in either case without any further action by any Person.
(b) Subject to Section 6.01(c) hereof, the Indenture Trustee shall
not in any way be held liable by reason of any insufficiency in any of the
Trust Accounts resulting from any loss on any Eligible Investment included
therein except (i) for losses attributable to the Indenture Trustee's failure
to make payments on such Eligible Investments issued by the Indenture Trustee,
in its commercial capacity as principal obligor and not as trustee, in
accordance with their terms and (ii) as expressly provided herein or in the
Sale and Servicing Agreement.
Section 8.04. Servicer's Monthly Statements. On each Distribution
Date, the Indenture Trustee shall deliver the Servicer's Monthly Remittance
Report with respect to such Distribution Date to DTC, the Rating Agencies and
the Note Insurer.
Section 8.05. Release of Collateral. (a) Subject to the payment of
its fees and expenses pursuant to Section 6.07 hereof, the Indenture Trustee
may, and when required by the provisions of this Indenture or the Sale and
Servicing Agreement 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 or the Sale and Servicing Agreement. No party
relying upon an instrument executed by the Indenture Trustee as provided in
this Article VIII shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Note Insurer, the Indenture Trustee and
the Servicer pursuant to this Indenture, the Sale and Servicing Agreement and
the Basic Documents have been paid, release any remaining portion of the
Collateral that secured the Notes from the lien of this Indenture and release
to the Issuer or any other Person entitled thereto any funds then on deposit
in the Trust Accounts. The Indenture Trustee shall release property from the
lien of this Indenture pursuant to this Subsection (b) only upon receipt by it
and the Note Insurer of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.01 hereof.
Section 8.06. Opinion of Counsel. The Indenture Trustee and the Note
Insurer shall receive at least seven days' prior notice when requested by the
Issuer to take any action pursuant to Section 8.05(a) hereof, accompanied by
copies of any instruments involved, and the Indenture Trustee and the Note
Insurer may also require, as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Indenture Trustee and the
Note Insurer, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of
the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to
express an opinion as to the fair value of the Collateral. Counsel rendering
any such opinion may rely, without independent investigation, on the accuracy
and validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies and with the prior written consent of the Note
Insurer, the Issuer and the Indenture Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
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 Holders of the Notes and the Note Insurer, 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 or to conform the provisions hereof to those of any
Offering Document, to obtain a rating for a Class of Securities from
a nationally recognized statistical rating organization, or to make
any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided,
however, that such action shall not adversely affect the interests
of the Holders of the Notes;
(vi) 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 hereof; or
(vii) 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 stating
that entering into such supplemental indenture will not (A) result in a
"substantial modification" of the Notes under Treasury Regulation Section
1.1001.3 or adversely affect the status of the Notes as indebtedness for
federal income tax purposes or (B) cause the Trust to be subject to an entity
level tax.
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, with the prior written
consent of the Note Insurer, when authorized by an Issuer Order, may, also
without the consent of any of the Holders of the Notes but with prior consent
of the Rating Agencies, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner
or eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that such action shall not, as evidenced by (i) an Opinion of Counsel
or (ii) satisfaction of the Rating Agency Condition, adversely affect in any
material respect the interests of any Noteholder.
Section 9.02. Supplemental Indentures with Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with prior consent of the Rating Agencies, the Note Insurer
and with the consent of the Holders of not less than a majority of the Voting
Interests of the Outstanding Notes, by Act of such Holders 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 Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby
and the Note Insurer if affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the Principal Amount (or Notional Amount)
thereof, the Interest Rate thereon or the Termination Price with respect
thereto, change the provisions of this Indenture relating to the application
of collections on, or the proceeds of the sale of, the Collateral 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 hereof, to the payment of any such amount
due on the Notes on or after the respective due dates thereof (or, in the case
of redemption, on or after the Redemption Date);
(b) reduce the percentage of the Voting Interests of the Outstanding
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required for
any waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definitions
of the term "Outstanding" or "Voting Interests";
(d) reduce the percentage of the Voting Interests of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Collateral pursuant to Section 5.04 hereof;
(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions
of this Indenture or the Basic Documents cannot be modified or waived without
the consent of the Holder of each Outstanding 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 Distribution Date (including the calculation
of any of the individual components of such calculation) or to affect the
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained herein; 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 Collateral or,
except as otherwise permitted or contemplated herein, terminate the lien of
this Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this Indenture.
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 Holders 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.
In connection with requesting the consent of the Noteholders pursuant
to this Section 9.02, the Indenture Trustee shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates a notice
setting forth in general terms the substance of such supplemental indenture.
It shall not be necessary for any Act of Noteholders 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.
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 hereof, 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. The Indenture Trustee shall
provide a fully executed copy of any supplemental indenture to this Indenture,
to the Note Insurer and each Rating Agency.
Section 9.04. Effect of Supplemental Indentures. 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
Holders of the Notes 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
then in effect 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 and the Note
Insurer 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.
Section 9.07. Amendments to Trust Agreement. Subject to Section 11.01
of the Trust Agreement, the Indenture Trustee shall, upon Issuer Order,
consent to any proposed amendment to the Trust Agreement or an amendment to or
waiver of any provision of any other document relating to the Trust Agreement,
such consent to be given without the necessity of obtaining the consent of the
Holders of any Notes but with the consent of the Note Insurer upon
satisfaction of the requirements under Section 11.1 of the Trust Agreement.
Nothing in this Section shall be construed to require that any Person
obtain the consent of the Indenture Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the
subject of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01. Redemption.
The Majority Residual Interestholders may, at their option, effect an
early redemption of the Notes on any Distribution Date on or after the
Distribution Date on which the Total Loan Balance declines to 10% or less of
the Cut-off Date Pool Balance. The Majority Residual Interestholders shall
effect such early redemption in the manner specified in and subject to the
provisions of Section 8.01 of the Sale and Servicing Agreement. If the
Majority Residual Interestholders do not exercise such option within three
calendar months of the date in which it is first entitled to do so, the Note
Insurer shall have the option to effect such early redemption in the manner
specified in and subject to the provisions of Section 8.01 of the Sale and
Servicing Agreement.
The Indenture Trustee shall furnish the Rating Agencies and the Note
Insurer notice of any such redemption in accordance with Section 10.02 hereof.
Section 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.01 hereof shall be given by the Indenture Trustee by first- class
mail, postage prepaid, or by facsimile mailed or transmitted not later than 10
days prior to the applicable Redemption Date to the Note Insurer and each
Holder of Notes, as of the close of business on the Record Date preceding the
applicable Redemption Date, at such Holder's address or facsimile number
appearing in the Note Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Termination Price; and
(c) the place where such Notes are to be surrendered for payment of
the Termination Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.02 hereof).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name of the Issuer and at the expense of the Servicer. Failure
to give to any Holder of any Note notice of redemption, or any defect therein,
shall not impair or affect the validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date; Provision for
Payment of Indenture Trustee and Note Insurer. The Notes to be redeemed shall,
following notice of redemption as required by Section 10.02 hereof (in the
case of redemption pursuant to Section 10.01) hereof, on the Redemption Date
become due and payable at the Termination Price and (unless the Issuer shall
default in the payment of the Termination Price) no interest shall accrue
thereon for any period after the date to which accrued interest is calculated
for purposes of calculating the Termination Price. The Issuer may not redeem
the Notes unless (i) all outstanding obligations under the Notes have been
paid in full and (ii) the Indenture Trustee has been paid all amounts to which
it is entitled hereunder and the Note Insurer has been paid all Reimbursement
Amounts to which it is entitled as of the applicable Redemption Date.
ARTICLE XI
MISCELLANEOUS
Section 11.01. 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 (except with respect to the
Servicer's servicing activity in the ordinary course of its business), the
Issuer shall furnish to the Indenture Trustee and the Note Insurer (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with and (iii) (if
required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except
that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 11.01(a)
hereof 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.
(c) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in subsection (b) above, the Issuer
shall also deliver to the Indenture Trustee and the Note Insurer 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 subsection (b) above and this subsection (c), is 10% or
more of the Outstanding Amount 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 Outstanding Amount of the
Notes.
(d) Whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee
and the Note Insurer an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value (within
90 days of such release) of the property or securities proposed to be released
and stating that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the provisions
hereof.
(e) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in subsection (d) above, the Issuer
shall also furnish to the Indenture Trustee and the Note Insurer an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property, other than 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
subsection (d) above and this subsection (e), equals 10% or more of the
Outstanding Amount 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 then Outstanding Amount of the Notes.
Section 11.02. 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 such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Servicer, the Depositor, the Issuer or the
Administrator, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Depositor, the Issuer or the
Administrator, 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 hereof.
Section 11.03. 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 hereof) conclusive in favor of the
Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 11.04. Notices, etc., to Indenture Trustee, Issuer, Rating
Agencies and Note Insurer. 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, the Note Insurer 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, or
(b) the Issuer by the Indenture Trustee, the Note Insurer or by any
Noteholder shall be sufficient for every purpose hereunder if in writing and
made, given, furnished or filed with the Issuer addressed to: ACE Securities
Corp. Home Loan Trust 1999-A, in care of Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Emmet R. Harmon, or at any other address previously furnished in writing to
the Indenture Trustee by the Issuer or the Administrator. The Issuer shall
promptly transmit any notice received by it from the Noteholders to the
Indenture Trustee.
Notices required to be given to the Rating Agencies and the Note
Insurer 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 the applicable address specified in the Sale and Servicing
Agreement.
Section 11.05. 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 his 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 duly been given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular 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 a Default
or Event of Default.
Section 11.06. 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 Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
Section 11.07. 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 11.08. 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 11.09. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
Section 11.10. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Collateral, any benefit or any legal or equitable right,
remedy or claim under this Indenture. Each Noteholder and Note Owner, by
acceptance of a Note or, in the case of a Note Owner, a beneficial interest in
a Note, consents to and agrees to be bound by the terms and conditions of this
Indenture.
Section 11.11. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
Section 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND TO THE EXTENT PERMITTED
BY LAW WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 11.13. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.14. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense of the Servicer accompanied by an
Opinion of Counsel (which may be counsel to the Indenture Trustee or any other
counsel reasonably acceptable to the Indenture Trustee and the Note Insurer)
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 11.15. Trust 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, except as expressly provided
for in Article VI hereof, 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 expressly have agreed
(it being understood that the Indenture Trustee and the Owner Trustee have no
such obligations in their individual capacity) and except that any such
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 11.16. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Depositor, the
Servicer or the Issuer, or join in any institution against the Depositor, the
Servicer 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 Basic
Documents
Section 11.17. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or
the Note Insurer, during the Issuer's normal business hours, to examine all
the books of account, records, reports and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by
Independent certified public accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as may
reasonably be requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
Section 11.18. Grant of Noteholder Rights to Note Insurer. In
consideration for the guarantee of the Insured Notes by the Note Insurer
pursuant to the Note Insurance Policy, the Noteholders hereby grant to the
Note Insurer the right to act as the holder of 100% of the Outstanding Notes
for the purpose of exercising the rights of the Holders of the Notes
hereunder, including the voting rights of such Holders, but excluding those
rights to distributions under Section 8.02 hereof; provided that the preceding
grant of rights to the Note Insurer by the Noteholders shall be subject to
Section 11.20 hereof. The rights of the Note Insurer to direct certain actions
and consent to certain actions of the Noteholders hereunder will terminate at
such time as the Class Principal Amount of each Class of Insured Notes has
been reduced to zero and the Note Insurer has been reimbursed for all Insured
Payments and any other amounts owed under the Note Insurance Policy and the
Insurance Agreement and the Note Insurer has no further obligation under the
Note Insurance Policy.
Section 11.19. Third Party Beneficiary. The parties hereto
acknowledge that the Note Insurer is an express third party beneficiary hereof
entitled to enforce any rights reserved to it hereunder as if it were actually
a party hereto.
Section 11.20. Suspension and Termination of Note Insurer's Rights.
(a) During the continuation of a Note Insurer Default, rights granted or
reserved to the Note Insurer hereunder shall vest instead in the Noteholders;
provided that the Note Insurer shall be entitled to any distributions in
reimbursement of the Note Insurer Reimbursement Amount, and the Note Insurer
shall retain those rights under Section 9.02 hereof to consent to any
supplement to this Indenture.
(b) At such time at either (i) the Class Principal Amount of each
Class of Insured Notes has been reduced to zero or (ii) the Note Insurance
Policy has been terminated following a Note Insurer Default, and in case of
either (i) or (ii) the Note Insurer has been reimbursed for all Insured
Payments and any other amounts owed under the Note Insurance Policy and the
Insurance Agreement (and the Note Insurer no longer has any obligation under
the Note Insurance Policy, except for breach thereof by the Note Insurer),
then the rights and benefits granted or reserved to the Note Insurer hereunder
(including the rights to direct certain actions and receive certain notices)
shall terminate and the Noteholders shall be entitled to exercise of such
rights and to receive such benefits of the Note Insurer following such
termination to the extent that such rights and benefits are applicable to the
Noteholders.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto
duly authorized and duly attested, all as of the day and year first above
written.
ACE SECURITIES CORP. HOME LOAN
TRUST 1999-A, as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:
-----------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Indenture Trustee
By:
-----------------------------
Name:
Title:
Accepted and Agreed to for
purposes of Section 6.07 only:
GERMAN AMERICAN CAPITAL CORPORATION,
as Seller
By:
-----------------------------
Name:
Title:
STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ___________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said ___________, not in its individual capacity, but solely as Owner Trustee
on behalf of ACE SECURITIES CORP. HOME LOAN TRUST 1999-A, a Delaware business
trust, and that such person executed the same as the act of said business
trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of __________,
1999.
Notary Public in and for the State of Delaware My commission expires:
STATE OF NORTH CAROLINA )
)
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of
___________________, a ________________________, and that such person executed
the same as the act of said corporation for the purpose and consideration
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ___ day of
_________,1999.
Notary Public in and for the State of North Carolina (Seal)
My commission expires:
EXHIBIT A
FORM OF NOTES
EXECUTION COPY
==============================================================================
MBIA INSURANCE CORPORATION,
as Insurer
GMAC MORTGAGE CORPORATION,
as Servicer
GERMAN AMERICAN CAPITAL CORPORATION,
as Seller
ACE SECURITIES CORP.,
as Depositor
ACE SECURITIES CORP. HOME LOAN TRUST 1999-A,
as Issuer
and
FIRST UNION NATIONAL BANK,
as Indenture Trustee
INSURANCE AGREEMENT
$372,062,000
ACE Securities Corp. Home Loan Trust 1999-A
Asset Backed Notes
Class A Notes
Dated as of August 1, 1999]
==============================================================================
TABLE OF CONTENTS
Page
Article I
DEFINITIONS..................................................................1
Article II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representation and Warranties of the Servicer,
the Seller and the Depositor.............................5
Section 2.02. Affirmative Covenants of the Servicer, the Seller
and the Depositor........................................9
Section 2.03. Negative Covenants of the Servicer, the Seller
and the Depositor.......................................16
Section 2.04. Representations and Warranties of the Issuer..............17
Section 2.05. Affirmative Covenants of the Issuer.......................19
Section 2.06. Negative Covenants of the Issuer..........................22
Section 2.07. Representations, Warranties and Covenants
of Indenture Trustee....................................23
Section 2.08. Representations, Warranties and Covenants
of Owner Trustee........................................25
Article III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy....................................26
Section 3.02. Payment of Fees and Premium...............................28
Section 3.03. Reimbursement and Additional Payment Obligation...........29
Section 3.04. Indemnification; Limitation of Liability..................30
Section 3.05. Payment Procedure.........................................33
Article IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement...........33
Section 4.02. Further Assurances and Corrective Instruments.............33
Section 4.03. Obligations Absolute......................................33
Section 4.04. Assignments; Reinsurance; Third-Party Rights..............35
Section 4.05. Liability of the Insurer..................................36
Section 4.06. Parties Will Not Institute Insolvency Proceedings.........36
Section 4.07. Indenture Trustee, Depositor, Seller and Servicer
To Join in Enforcement Action..........................36
Section 4.08. Subrogation...............................................36
Article V
DEFAULTS; REMEDIES
Section 5.01. Defaults..................................................37
Section 5.02. Remedies; No Remedy Exclusive.............................38
Section 5.03. Waivers...................................................39
Article VI
MISCELLANEOUS
Section 6.01. Amendments, Etc...........................................39
Section 6.02. Notices...................................................39
Section 6.03. Severability..............................................41
Section 6.04. Governing Law.............................................41
Section 6.05. Consent to Jurisdiction...................................41
Section 6.06. Consent of the Insurer....................................42
Section 6.07. Counterparts..............................................42
Section 6.08. Headings..................................................42
Section 6.09. Trial by Jury Waived......................................42
Section 6.10. Limited Liability.........................................43
Section 6.11. Entire Agreement..........................................43
INSURANCE AGREEMENT
This INSURANCE AGREEMENT (this "Insurance Agreement"), dated as of August 1,
1999 by and among GERMAN AMERICAN CAPITAL CORPORATION, as seller (together
with its permitted successors and assigns, the "Seller"), GMAC MORTGAGE
CORPORATION, in its capacity as Servicer under the Sale and Servicing
Agreement described below (together with its permitted successors and assigns,
the "Servicer"), ACE SECURITIES CORP., as the Depositor (the "Depositor"), ACE
SECURITIES CORP. HOME LOAN TRUST 1999-A, as the Issuer (the "Issuer"), MBIA
INSURANCE CORPORATION (the "Insurer") and FIRST UNION NATIONAL BANK, as
Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Indenture dated as of August 1, 1999 relating to the
$372,062,000 ACE Securities Corp. Home Loan Trust 1999-A Asset Backed Notes
Class A Notes (the "Obligations"), between the Issuer and the Indenture
Trustee (the "Indenture") provides for, among other things, the issuance of
asset-backed notes and the Insurer has issued its note guaranty insurance
policy (the "Policy") that guarantees certain payments on the Obligations;
WHEREAS, the Insurer shall be paid an insurance premium pursuant to
the Sale and Servicing Agreement, and the details of such premium are set
forth herein; and
WHEREAS, the Servicer, the Seller, the Depositor and the Issuer have
undertaken certain obligations in consideration for the Insurer's issuance of
the Policy;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
Article I
DEFINITIONS
The terms defined in this Article I shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context
clearly requires otherwise, in both singular and plural form, as appropriate.
Unless the context clearly requires otherwise, all capitalized terms used
herein and not otherwise defined in this Article I shall have the meanings
assigned to them in the Sale and Servicing Agreement or the Indenture. All
words used herein shall be construed to be of such gender or number as the
circumstances require. This "Insurance Agreement" shall mean this Insurance
Agreement as a whole and as the same may, from time to time hereafter, be
amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer
to this Insurance Agreement as a whole and not to any particular paragraph,
clause or other subdivision hereof, unless otherwise specifically noted.
"Agency Agreement" means the Agency Agreement dated as of August 1,
1999 between the Administrator and the Indenture Trustee.
"Business Day" means any day other than (i) a Saturday or a Sunday or
(ii) a day on which the Insurer is closed or a day on which banking
institutions in New York City, the State of Pennsylvania or in the city in
which the corporate trust office of the Indenture Trustee under the Indenture
is located are authorized or obligated by law or executive order to close.
"Code" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Commitment" means the letter of commitment from the Insurer to the
Seller dated August 11, 1999.
"Custodial Agreement" means the Custodial Agreement dated as of
August 1, 1999, among the Custodian, the Issuer, the Servicer, and the
Indenture Trustee as the same may be amended or supplemented from time to time
in accordance with the terms thereof.
"Custodian" means Norwest Bank Minnesota, N.A.
"Date of Issuance" means the date on which the Policy is issued as
specified therein.
"Default" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"Event of Default" means any event of default specified in Section
5.01 hereof.
"Financial Statements" means, with respect to the Seller and the
Servicer, the balance sheets and the statements of income, retained earnings
and cash flows and the notes thereto which have been provided to the Insurer.
"Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policy.
"Home Loan Sale Agreement" means the Home Loan Sale Agreement dated
as of August 1, 1999 between the Depositor and the Seller as the same may be
amended or supplemented from time to time in accordance with the terms
thereof.
"Indenture" means the Indenture dated August 1, 1999 between the
Issuer and the Indenture Trustee as the same may be amended or supplemented
from time to time in accordance with the terms thereof.
"Indenture Trustee" means First Union National Bank, a national
banking association, as Indenture Trustee under the Indenture, and any
successor Indenture Trustee under the Indenture.
"Indemnification Agreement" means the Indemnification Agreement dated
as of August 6, 1999 between the Insurer, the Seller and the Underwriter.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"Late Payment Rate" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank,
N.A.) plus 3%. The Late Payment Rate shall be computed on the basis of a year
of 365 days calculating the actual number of days elapsed. In no event shall
the Late Payment Rate exceed the maximum rate permissible under any applicable
law limiting interest rates.
"Liabilities" shall have the meaning ascribed to such term in Section
3.04(a) hereof.
"Losses" means (i) any actual out-of-pocket loss paid by the Insurer
or its respective parents, subsidiaries and affiliates or any shareholder,
director, officer, employee, agent or any "controlling person" (as such term
is used in the Securities Act) of any of the foregoing, and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, and any successor thereto, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency,
"Moody's" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.
"Obligor" means the original obligor under each Home Loan, including
any guarantor of such obligor and their respective successors.
"Offering Document" means the Prospectus dated July 26, 1999 and the
Prospectus Supplement thereto dated August 6, 1999, of the Issuer in respect
of the Obligations (and any amendment or supplement thereto) and any other
offering document in respect of the Obligations prepared by the Servicer, the
Seller, Depositor or the Issuer that makes reference to the Policy.
"Opinion Facts and Assumptions" means the facts and assumptions
contained in the insolvency opinion dated August 13, 1999 by Brown & Wood
under the heading "Assumptions of Fact" insofar as they relate to the Seller
and the Depositor.
"Owners" means registered holders of Obligations.
"Person" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner
trust, limited liability company, partnership or other organization or entity
(whether governmental or private).
"Premium" means the premium payable in accordance with Section 3.02
hereof.
"Premium Percentage" shall have the meaning ascribed to such term in
Section 3.02 hereof.
"Registration Statement" means the registration statement on Form
S-3, including a form of prospectus, relating to the Obligations, as amended
or supplemented to the date hereof.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of August 1, 1999, among the Servicer, the Depositor, the Issuer and
the Indenture Trustee as the same may be amended or supplemented from time to
time in accordance with the terms thereof.
"Securities Act" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other
nationally recognized rating agency designated by the Insurer.
"Term of the Insurance Agreement" shall be determined as provided in
Section 4.01 hereof.
"Transaction" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"Transaction Documents" means this Insurance Agreement, the
Indemnification Agreement, the Commitment, the Indenture, the Offering
Document, the Trust Agreement, the Agency Agreement, the Sale and Servicing
Agreement, Home Loan Sale Agreement, the Administration Agreement, the
Underwriting Agreement, the Custodial Agreement and the Obligations.
"Trust" means the trust created pursuant to the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of August 1,
1999 between the Depositor and the Owner Trustee as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Underwriter" means Deutsche Bank Securities Inc.
"Underwriting Agreement" means the Underwriting Agreement between the
Underwriter, the Seller and the Depositor with respect to the offer and sale
of the Obligations, as the same may be amended from time to time.
Article II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Seller and the
Depositor. The Seller and the Depositor represent, warrant and covenant as of
the Date of Issuance, each as to those matters relating to itself, as follows:
(a) Due Organization and Qualification. The Seller and the
Depositor are each a corporation, duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation. Each of the Seller and the Depositor is duly qualified
to do business, is in good standing and has obtained all licenses,
permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, in
each jurisdiction in which the failure to be so qualified or to
obtain such approvals would render any Transaction Document
unenforceable in any respect or would have a material adverse effect
upon the Transaction, the Owners or the Insurer.
(b) Power and Authority. Each of the Seller and the
Depositor has all necessary corporate power and authority to conduct
its business as currently conducted and, as described in the Offering
Document, to execute, deliver and perform its obligations under the
Transaction Documents and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Seller and the
Depositor have been duly authorized by all necessary corporate action
and do not require any additional approvals or consents of, or other
action by or any notice to or filing with any Person, including,
without limitation, any governmental entity or the Seller's or the
Depositor's stockholders, which have not previously been obtained or
given by the Seller or the Depositor.
(d) Noncontravention. None of the execution and delivery of
the Transaction Documents by the Seller or the Depositor, the
consummation of the Transaction contemplated thereby or the
satisfaction of the terms and conditions of the Transaction
Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of
incorporation or bylaws of the Seller or the Depositor or
any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in
effect having applicability to the Seller or the Depositor
or any of their material properties, including regulations
issued by an administrative agency or other governmental
authority having supervisory powers over the Seller or the
Depositor;
(ii) constitutes a default by the Seller or the
Depositor under or a breach of any provision of any loan
agreement, mortgage, indenture or other agreement or
instrument to which the Seller or the Depositor is a party
or by which any of its or their respective properties, which
are individually or in the aggregate material to the Seller
or the Depositor, is or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Seller or the
Depositor, except as contemplated by the Transaction
Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Seller, the Depositor
or any of its or their subsidiaries, or any properties or rights of
the Seller, the Depositor or any of its or their subsidiaries,
pending or, to the Seller's or the Depositor's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably
be expected to result in a Material Adverse Change with respect to
the Seller or Depositor.
(f) Valid and Binding Obligations. The Obligations, when
executed, authenticated and issued in accordance with the Indenture,
and the Transaction Documents (other than the Obligations), when
executed and delivered by the Seller and the Depositor, will
constitute the legal, valid and binding obligations of the Seller and
the Depositor, as applicable, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable
principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. Neither,
the Seller or the Depositor will at any time in the future deny that
the Transaction Documents constitute the legal, valid and binding
obligations of the Seller or the Depositor, as applicable.
(g) Financial Statements. The Financial Statements of the
Seller, copies of which have been furnished to the Insurer, (i) are,
as of the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of the Seller as of the dates and
for the periods indicated and (iii) have been prepared in accordance
with generally accepted accounting principles consistently applied,
except as noted therein (subject as to interim statements to normal
year-end adjustments). Since the date of the most recent Financial
Statements, there has been no Material Adverse Change in respect of
the Seller. Except as disclosed in the Financial Statements, the
Seller is not subject to any contingent liabilities or commitments
that, individually or in the aggregate, have a material possibility
of causing a Material Adverse Change in respect of the Seller.
(h) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Seller or the
Depositor in the conduct of its business violates any law,
regulation, judgment, agreement, order or decree applicable to any of
them that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to the Seller or the Depositor.
The Seller and the Depositor are not in breach of or in default under
any applicable law or administrative regulation of its respective
jurisdiction of incorporation, or any department, division, agency or
instrumentality thereof or of the United States or any applicable
judgment or decree or any loan agreement, note, resolution,
certificate, agreement or other instrument to which the Seller or the
Depositor is a party or is otherwise subject which, if enforced,
would have a material adverse effect on the ability of the Seller or
the Depositor, as the case may be, to perform its respective
obligations under the Transaction Documents.
(i) Taxes. The Seller and the Depositor and the Seller's and
the Depositor's parent company or companies have filed prior to the
date hereof all federal and state tax returns that are required to be
filed and paid all taxes, including any assessments received by them
that are not being contested in good faith, to the extent that such
taxes have become due, except for any failures to file or pay that,
individually or in the aggregate, would not result in a Material
Adverse Change with respect to the Seller or the Depositor.
(j) Accuracy of Information. Neither the Transaction
Documents, nor other information relating to the Home Loans, the
operations of the Seller or the Depositor (including origination of
loans) or information relating to the financial condition of the
Seller or the Depositor (collectively, the "Documents"), as amended,
supplemented or superseded, furnished to the Insurer by the Seller or
the Depositor contains any statement of a material fact by the Seller
or Depositor which was untrue or misleading in any material adverse
respect when made. Neither the Seller nor the Depositor has any
knowledge of circumstances that could reasonably be expected to cause
a Material Adverse Change with respect to the Seller or the
Depositor. Since the furnishing of the Documents, there has been no
change or any development or event involving a prospective change
known to the Seller or the Depositor that would render any of the
Documents untrue or misleading in any material respect.
(k) Compliance With Securities Laws. The Seller and the
Depositor represent and warrant that the offer and sale of the
Obligations comply in all material respects with all requirements of
law, including all registration requirements of applicable securities
laws. Without limitation of the foregoing, the Offering Document does
not contain any untrue statement of a material fact and does not omit
to state a material fact necessary to make the statements made
therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation is made
with respect to the information in the Offering Document set forth
under the heading "The MBIA Insurance Policy" or the consolidated
financial statements of the Insurer incorporated by reference in the
Offering Document. Neither the offer nor the sale of the Obligations
has been or will be in violation of the Securities Act or any other
federal or state securities laws. The Trust is not required to be
registered as an "investment company" under the Investment Company
Act.
(l) Transaction Documents. Each of the representations and
warranties of the Seller and the Depositor contained in the
Transaction Documents is true and correct in all material respects,
and the Seller and the Depositor hereby make each such representation
and warranty to, and for the benefit of, the Insurer as if the same
were set forth in full herein.
(m) Solvency, Fraudulent Conveyance. The Seller and the
Depositor are solvent and will not be rendered insolvent by the
Transaction and, after giving effect to the Transaction, none of the
Seller or the Depositor will be left with an unreasonably small
amount of capital with which to engage in its business, nor does the
Seller or the Depositor intend to incur, or believe that it has
incurred, debts beyond its ability to pay as they mature. None of the
Seller or the Depositor contemplates the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or
similar official in respect of the Seller or the Depositor or any of
their assets. The amount of consideration being received by the
Depositor upon the sale of the Obligations to the Underwriter
constitutes reasonably equivalent value and fair consideration for
the interest in the Home Loans evidenced by the Obligations. The
Seller is not transferring the Home Loans to the Depositor, the
Depositor is not transferring the Home Loans to the Trust and the
Depositor is not selling the Obligations to any Underwriter, as
provided in the Transaction Documents, with any intent to hinder,
delay or defraud any of the Seller's or the Depositor's creditors.
(n) Principal Place of Business. The principal place of
business of the Seller is located in New York, New York and the
principal place of business of the Depositor is located in Charlotte,
North Carolina.
(o) Opinion Facts and Assumptions. The Opinion Facts and
Assumptions insofar as they relate to the Seller and the Depositor
are true and correct as of the Date of Issuance.
Section 2.02. Affirmative Covenants of the Seller and the Depositor.
The Seller and the Depositor hereby agree that during the Term of the
Insurance Agreement, unless the Insurer shall otherwise expressly consent in
writing:
(a) Compliance With Agreements and Applicable Laws. The
Seller and the Depositor shall not be in default under the
Transaction Documents and shall comply with all material requirements
of any law, rule or regulation applicable to it. None of the Seller
or the Depositor shall agree to any amendment to or modification of
the terms of any Transaction Documents unless the Insurer shall have
given its prior written consent.
(b) Corporate Existence. Except as provided in Section 5.23
of the Sale and Servicing Agreement, the Seller, its successors and
assigns, and the Depositor, its successors and assigns, shall
maintain their corporate existence and shall at all times continue to
be duly organized under the laws of their respective jurisdictions of
incorporation and duly qualified and duly authorized (as described in
sections 2.01(a), (b) and (c) hereof) and shall conduct its business
in accordance with the terms of its certificate or articles of
incorporation and bylaws.
(c) Financial Statements; Accountants' Reports; Other
Information. The Seller and the Depositor shall keep or cause to be
kept in reasonable detail books and records of account of their
assets and business, including, but not limited to, books and records
relating to the Transaction. The Seller shall furnish or cause to be
furnished to the Insurer:
(i) Annual Financial Statements. As soon as
available, and in any event within 120 days after the close
of each fiscal year of the Seller, the audited consolidated
balance sheets of the Seller and their subsidiaries as of
the end of such fiscal year and the related audited
consolidated statements of income, changes in shareholders'
equity and cash flows for such fiscal year, all in
reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by the audit opinion of the
Seller's independent accountants (which shall be a
nationally recognized independent public accounting firms)
and by the certificate specified in Section 2.02(e) hereof.
(ii) Quarterly Financial Statements. As soon as
available, and within 120 days after each of the first three
fiscal quarters of each fiscal year of the Seller, the
unaudited consolidated balance sheets of the Seller and
their subsidiaries as of the end of such fiscal quarter and
the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for such
fiscal quarter, all in reasonable detail and stating in
comparative form the respective figures for the
corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the
certificate specified in Section 2.02(e) hereof.
(iii) Initial and Continuing Reports. On or before
the Closing Date, the Seller will provide the Insurer a copy
of the magnetic tape to be delivered to the Indenture
Trustee on the Closing Date setting forth as to each Home
Loan, the information required under the definition of "Home
Loan Schedule" at Section 1.01 of the Sale and Servicing
Agreement.
(iv) Certain Information. Upon the reasonable
request of the Insurer, the Seller shall promptly provide
copies of any requested proxy statements, financial
statements, reports and registration statements which the
Seller files with, or delivers to, the Commission or any
national securities exchange.
(v) Other Information. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Seller or the
Depositor pursuant to the terms of the Transaction Documents
and, promptly upon request, such other data as the Insurer
may reasonably request.
All financial statements specified in clause (i) of this
Section 2.02(c) shall be furnished in consolidated form for the
Seller and its subsidiaries in the event the Seller shall consolidate
its financial statements with its subsidiaries.
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports
and other information delivered by the Seller or the Depositor
pursuant to this Section 2.02(c) to the extent provided in Section
2.02(f) hereof.
(d) Reserved.
(e) Compliance Certificate. The Seller shall deliver to the
Insurer, concurrently with the delivery of the financial statements
required pursuant to Sections 2.02(c)(i) and (ii) hereof, one or more
certificates signed by an officer of the Seller authorized to execute
such certificates on behalf of the Seller stating that:
(i) to the best of such individual's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred, or if a Default or Event of Default has
occurred, specifying the nature thereof ; and
(ii) the attached financial statements submitted in
accordance with Sections 2.02(c)(i) or (ii) hereof, as the
case may be, are complete and correct in all material
respects and present fairly the financial condition and
results of operations of the Seller as of the dates and for
the periods indicated, in accordance with generally accepted
accounting principles consistently applied.
(f) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Seller shall, upon the reasonable request of the
Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the Seller
as they may relate to the Obligations, the obligations of
the Seller under the Transaction Documents, and the
Transaction;
(ii) to discuss the affairs, finances and accounts
of the Seller with the chief operating officer and the chief
financial officer of the Seller; and
(iii) with the Seller's consent, as applicable,
which consent shall not be unreasonably withheld, to discuss
the affairs, finances and accounts of the Seller with the
Seller's independent accountants, provided that an officer
of the Seller shall have the right to be present during such
discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of the Seller. The books and records of the Seller shall be
maintained at the address of the Seller designated herein for receipt
of notices, unless the Seller shall otherwise advise the parties
hereto in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions
(unless readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its
rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer
to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel
and accountants.
(g) Notice of Material Events. The Seller and the Depositor
shall be obligated (which obligation shall be satisfied as to each if
performed by the Seller or the Depositor) promptly to inform the
Insurer in writing of the occurrence of any of the following to the
extent any of the following relate to it:
(i) the submission of any claim or the initiation
or threat of any legal process, litigation or administrative
or judicial investigation, or rule making or disciplinary
proceeding by or against the Seller or the Depositor that
(A) would be required to be disclosed to the Commission or
to the Seller's or the Depositor's shareholders or (B) could
reasonably be expected to result in a Material Adverse
Change with respect to the Seller or the Depositor, or the
promulgation of any proceeding or any proposed or final rule
which would result in a Material Adverse Change with respect
to the Seller or the Depositor;
(ii) the submission of any claim or the initiation
or threat of any legal process, litigation or administrative
or judicial investigation in any federal, state or local
court or before any arbitration board, or any such
proceeding threatened by any government agency, which, if
adversely determined, would have a material adverse effect
on the Seller, the Depositor, the Owners or the Insurer;
(iii) any change in the location of the Seller's or
the Depositor's principal office or any change in the
location of the Seller's or the Depositor's books and
records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or
against the Seller or the Depositor under any applicable
bankruptcy, reorganization, liquidation, rehabilitation,
insolvency or other similar law now or hereafter in effect
or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or
may be, appointed or requested for the Seller or the
Depositor or any of its or their assets; or
(vi) the receipt of notice that (A) the Seller or
the Depositor is being placed under regulatory supervision,
(B) any license, permit, charter, registration or approval
necessary for the conduct of the Seller's or the Depositor's
business is to be, or may be suspended or revoked, or (C)
the Seller or the Depositor is to cease and desist any
practice, procedure or policy employed by the Seller or the
Depositor in the conduct of its business, and such cessation
is reasonably likely to result in a Material Adverse Change
with respect to the Seller or the Depositor.
(h) Financing Statements and Further Assurances. The Seller
and the Depositor shall, upon the request of the Insurer, from time
to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, within ten days of such request, such
amendments hereto and such further instruments and take such further
action as may be reasonably necessary to effectuate the intention,
performance and provisions of the Transaction Documents. In addition,
each of the Seller and the Depositor agrees to cooperate with S&P and
Moody's in connection with any review of the Transaction that may be
undertaken by S&P and Moody's after the date hereof and to provide
all information reasonably requested by S&P or Moody's.
(i) Maintenance of Licenses. The Seller and the Depositor,
respectively, or any successors thereof shall maintain or cause to be
maintained all licenses, permits, charters and registrations which
are material to the conduct of its business.
(j) Redemption of Obligations. The Seller and the Depositor
shall instruct the Indenture Trustee, upon redemption or payment of
all of the Obligations pursuant to the Indenture or otherwise, to
furnish to the Insurer a notice of such redemption and, upon a
redemption or payment of all of the Obligations, to surrender the
Policy to the Insurer for cancellation.
(k) Disclosure Document. Each Offering Document delivered
with respect to the Obligations shall clearly disclose that the
Policy is not covered by the property/casualty insurance security
fund specified in Article 76 of the New York Insurance Law.
(l) Reserved.
(m) Reserved.
(n) Closing Documents. The Seller and the Depositor shall
provide or cause to be provided to the Insurer a bound volume or
volumes of the Transaction Documents and an executed original copy of
each document executed in connection with the Transaction within 60
days after the date of closing. Upon the request of the Insurer, the
Seller and the Depositor shall provide or cause to be provided to the
Insurer a copy of each of the Transaction Documents on computer
diskette, in a format acceptable to the Insurer.
(o) Reserved.
(p) Reserved.
(q) Reserved.
Section 2.03. Negative Covenants of the Seller and the Depositor. The
Seller and the Depositor hereby agree that during the Term of the Insurance
Agreement, unless the Insurer shall otherwise expressly consent in writing:
(a) Impairment of Rights. Neither the Seller nor the
Depositor shall take any action, or fail to take any action, if such
action or failure to take action may result in a material adverse
change as described in clause (ii) of the definition of Material
Adverse Change with respect to the Seller or the Depositor, or may
interfere with the enforcement of any rights of the Insurer under or
with respect to the Transaction Documents. The Seller or the
Depositor shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Seller and the
Depositor shall furnish to the Insurer all information requested by
it that is reasonably necessary to determine compliance with this
Section (a).
(b) Adverse Selection Procedure. The Seller and the
Depositor will not use any adverse selection procedure in selecting
Home Loans to be transferred to the Indenture Trustee from the
outstanding mortgage loans that qualify under the Sale and Servicing
Agreement or the Home Loan Sale Agreement for inclusion in the Trust.
(c) Waiver, Amendments, Etc. Neither the Seller nor the
Depositor shall waive, modify or amend, or consent to any waiver,
modification or amendment of, any of the terms, provisions or
conditions of any of the Transaction Documents without the prior
written consent of the Insurer.
(d) Mortgage Loan Agreements; Charge-off Policy. Except as
otherwise permitted in the Sale and Servicing Agreement, the Seller
and the Depositor shall not alter or amend any Home Loan, their
respective collection policies or their respective charge-off
policies in a manner that materially adversely affects the Insurer
unless the Insurer shall have previously given its consent, which
consent shall not be withheld unreasonably.
Section 2.04. Representations and Warranties of the Issuer. As of the
Date of Issuance, the Issuer represents, warrants and covenants as follows:
(a) Due Organization and Qualification. The Issuer is a
business trust and is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The
Issuer is duly qualified to do business, is in good standing and has
obtained all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents to
which it is a party, in each jurisdiction in which the failure to be
so qualified or to obtain such approvals would render any Transaction
Document to which it is a party unenforceable in any respect or would
have a material adverse effect upon the Transaction, the Owner or the
Insurer.
(b) Power and Authority. The Issuer has all necessary power
and authority to conduct its business as currently conducted and, as
described in the Offering Document, to execute, deliver and perform
its obligations under the Transaction Documents to which it is a
party and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Issuer have been duly
authorized by all necessary corporate action and do not require any
additional approvals or consents, or other action by or any notice to
or filing with any Person, including, without limitation, any
governmental entity or the Issuer's owners, which have not previously
been obtained or given by the Issuer.
(d) Noncontravention. Neither the execution and delivery of
the Transaction Documents by the Issuer, the consummation of the
Transaction contemplated thereby nor the satisfaction of the terms
and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the Trust Agreement or any
law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to the Issuer or any of its material
properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Issuer;
(ii) constitutes a default by the Issuer under or a
breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the
Issuer is a party or by which any of its properties, which
are individually or in the aggregate material to the Issuer,
is or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Issuer except
as contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Issuer or any
properties or rights of the Issuer pending or, to the Issuer's
knowledge after reasonable inquiry, threatened, which, in any case,
could reasonably be expected to result in a Material Adverse Change
with respect to the Issuer.
(f) Valid and Binding Obligations. The Obligations, when
executed, authenticated and issued in accordance with the Indenture
and the Transaction Documents (other than the Obligations), when
executed and delivered by the Issuer, will constitute the legal,
valid and binding obligations of the Trust enforceable in accordance
with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general
equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws. The Issuer
will not at any time in the future deny that the Transaction
Documents constitute the legal, valid and binding obligations of the
Issuer.
(g) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Issuer in the
conduct of its business violates any law, regulation, judgment,
agreement, order or decree applicable to it that, if enforced, could
reasonably be expected to result in a Material Adverse Change with
respect to the Issuer. The Issuer is not in breach of or default
under any applicable law or administrative regulation of its
respective jurisdiction or incorporation, or any department,
division, agency or instrumentality thereof or of the United States
or any applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the
Issuer is a party or is otherwise subject which, if enforced, would
have a material adverse effect on the ability of the Issuer, to
perform its obligations under the Transaction Documents.
(h) Reserved.
(i) Taxes. The Issuer has filed prior to the date hereof all
federal and state tax returns that are required to be filed and paid
all taxes, including any assessments received by them that are not
being contested in good faith, to the extent that such taxes have
become due, except for any failures to file or pay that, individually
or in the aggregate, would not result in a Material Adverse Change
with respect to the Issuer.
(j) Transaction Documents. Each of the representations and
warranties of the Issuer contained in the Transaction Documents is
true and correct in all material respects, and the Issuer hereby
makes each such representation and warranty to, and for the benefit
of, the Insurer as if the same were set forth in full herein;
provided that the remedy for any breach of this paragraph shall be
limited to the remedies specified in the related Transaction Document
or in this Insurance Agreement.
(k) Solvency. The Issuer is solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the
Transaction, the Issuer will not be left with an unreasonably small
amount of capital with which to engage in its respective business,
nor does the Issuer intend to incur, or believe that it has incurred,
debts beyond its ability to pay as they mature. The Issuer does not
contemplate the commencement of insolvency, bankruptcy, liquidation
or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of
the Issuer or any of its assets.
(l) Principal Place of Business. The principal place of
business of the Issuer is located in Wilmington, Delaware.
(m) Investment Company Act. The Issuer is not an "investment
company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act. The Issuer is not required to be
registered as an "investment company" under the Investment Company
Act.
(n) No Consents. No authorization or approval or other
action by, and no notice to or filing with, any Person, including,
without limitation, any governmental entity or regulatory body, is
required for the due execution, delivery and performance by the
Issuer of the Transaction Documents or any other material document or
instrument to be delivered thereunder, except (in each case) such as
have been obtained or the failure of which to be obtained would not
be reasonably likely to have a material adverse effect on the
Transaction.
(o) No Material Event of Default. There is no material event
of default on the part of the Issuer under any agreement involving
financial obligations which would materially adversely impact the
financial conditions or operations of the Trust or its obligations
under any document associated with this Transaction.
Section 2.05. Affirmative Covenants of the Issuer. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The
Issuer shall not be in default under the Transaction Documents and
shall comply with all material requirements of any law, rule or
regulation applicable to it. The Issuer shall not agree to any
material amendment to or modification of the terms of any Transaction
Documents unless the Insurer shall have given its prior written
consent.
(b) Maintain Existence. The Issuer and its successors and
assigns shall maintain their existence and shall at all times
continue to be duly organized under the laws of its respective
jurisdiction and duly qualified and duly authorized and shall conduct
its business in accordance with the terms of its organizational
documents.
(c) Notice of Material Events. The Issuer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of
the following to the extent any of the following relate to it and to
the extent that it receives actual notice of the occurrence of any of
the following events:
(i) the submission of any claim or the initiation
or threat of any legal process, litigation or administrative
or judicial investigation, or rule making or disciplinary
proceeding by or against the Issuer that (A) could be
required to be disclosed to the Commission or to the
Issuer's owners or (B) could result in a Material Adverse
Change with respect to the Issuer or the promulgation of any
proceeding or any proposed or final rule which would result
in a Material Adverse Change with respect to the Issuer;
(ii) any change in the location of the Issuer's or
the Owner Trustee's principal place of business or any
change in the location of the Issuer's books and records;
(iii) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(iv) the commencement of any proceedings by or
against the Issuer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Issuer or any of its assets;
or
(v) the receipt of notice that (A) the Issuer is
being placed under regulatory supervision, (B) any license,
permit, charter, registration or approval necessary for the
conduct of the Issuer's business is to be, or may be
suspended or revoked, or (C) the Issuer is to cease and
desist any practice, procedure or policy employed by the
Issuer in the conduct of its business, and such cessation
may result in a Material Adverse Change with respect to the
Issuer.
(d) Financing Statements and Further Assurances. To the
extent provided in the Indenture, the Issuer will cause to be filed
all necessary financing statements or other instruments, and any
amendments or continuation statements relating thereto, necessary to
be kept and filed in such manner and in such places as may be
required by law to preserve and protect fully the interest of the
Indenture Trustee. The Issuer shall, upon the request of the Insurer,
from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, within ten days of such
request, such amendments hereto and such further instruments and take
such further action as may be reasonably necessary to effectuate the
intention, performance and provisions of the Transaction Documents to
which it is a party. In addition, the Issuer agrees to cooperate with
S&P and Moody's in connection with any review of the Transaction that
may be undertaken by S&P and Moody's after the date hereof.
(e) Maintenance of Licenses. The Issuer, or any successors
thereof, shall maintain all licenses, permits, charters and
registrations which are material to the conduct of its business.
(f) Third-Party Beneficiary. The Issuer agrees that the
Insurer shall have all rights of a third-party beneficiary in respect
of each Transaction Document and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for
the benefit of the Insurer.
(g) Tax Matters. The Issuer will take all actions necessary
to ensure that the Issuer is not taxable as an association (or
publicly traded partnership), a corporation or a taxable mortgage
pool.
(h) Financial Statements; Accountants' Reports; Other
Information. The Issuer shall keep or cause to be kept in reasonable
detail books and records of account of its assets and business,
including, but not limited to, books and records relating to the
Transaction. The Issuer shall furnish or cause to be furnished to the
Insurer promptly upon receipt thereof, copies of all schedules,
financial statements or other similar reports delivered to or by the
Issuer pursuant to the terms of the Transaction Documents and,
promptly upon request, such other data as the Insurer may reasonably
request.
(i) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Issuer shall, upon the reasonable request of the
Insurer, at its expense, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the Issuer
as they may relate to the Obligations, the obligations of
the Issuer under the Transaction Documents, and the
Transaction;
(ii) to discuss the affairs, finances and accounts
of the Issuer; and
(iii) with the Issuer's consent, as the case may
be, which consent shall not be unreasonably withheld, to
discuss the affairs, finances and accounts of the Issuer
with the Issuer's independent accountants, provided that a
representative of the Seller or the Issuer shall have the
right to be present during such discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of the Issuer. The books and records of the Issuer will be maintained
at the address of the Issuer designated herein for receipt of
notices, unless the Issuer shall otherwise advise the parties hereto
in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions
(unless readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its
rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer
to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel
and accountants.
(j) Financing Statements and Further Assurances. The Issuer
will cause to be filed all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to preserve and protect fully the
interest of the Indenture Trustee in the Trust.
(k) Maintenance of Trust. On or before each August 1
beginning in 2000, so long as any of the Obligations are outstanding,
the Issuer shall furnish to the Insurer and the Indenture Trustee an
officers' certificate either stating that such action has been taken
with respect to the recording, filing, rerecording and refiling of
any financing statements and continuation statements as is necessary
to maintain the interest of the Indenture Trustee created by the
Indenture with respect to the Trust and reciting the details of such
action or stating that no such action is necessary to maintain such
interests. Such officers' certificate shall also describe the
recording, filing, rerecording and refiling of any financing
statements and continuation statements that will be required to
maintain the interest of the Indenture Trustee in the Trust until the
date such next officers' certificate is due. The Issuer will use its
best efforts to cause any necessary recordings or filings to be made
with respect to the Trust.
Section 2.06. Negative Covenants of the Issuer. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Impairment of Rights. The Issuer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Issuer, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Issuer shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Issuer shall
furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this paragraph.
(b) Waiver, Amendments, Etc. Except in accordance with the
Transaction Documents, the Issuer shall not waive, modify or amend,
or consent to any waiver, modification or amendment of, any of the
material terms, provisions or conditions of the Transaction Documents
without the consent of the Insurer which consent shall not
unreasonably be withheld. Except upon the prior written consent of
the Insurer which consent shall not unreasonably be withheld, the
Issuer shall not allow the transfer, modification or amendment, nor
consent to any transfer, modification or amendment of the Certificate
of Trust issued pursuant to the Trust Agreement.
(c) Restrictions on Liens. The Issuer shall not, except as
contemplated by the Transaction Documents, (i) create, incur or
suffer to exist, or agree to create, incur or suffer to exist, or
consent to cause or permit in the future (upon the happening of a
contingency or otherwise) the creation, incurrence or existence of
any Lien or Restriction on Transferability of the Home Loans or (ii)
sign or file under the Uniform Commercial Code of any jurisdiction
any financing statement which names the Issuer as a debtor, or sign
any security agreement authorizing any secured party thereunder to
file such financing statement, with respect to the Home Loans.
(d) Successors. The Issuer shall not remove or replace, or
cause to be removed or replaced, the Servicer, the Indenture Trustee
or the Owner Trustee without the prior written approval of the
Insurer.
(e) Subsidiaries. The Issuer shall not form, or cause to be
formed, any subsidiaries.
(f) No Mergers. The Issuer shall not consolidate with or
merge into any Person or transfer all or any material amount of its
assets to any Person, liquidate or dissolve except as permitted by
the Trust Agreement and as contemplated by the Transaction Documents.
(g) Other Activities. The Issuer shall not (i) sell, pledge,
transfer exchange or otherwise dispose of any of its assets except as
permitted under the Transaction Documents; or (ii) engage in any
business or activity except as contemplated by the Transaction
Documents and as permitted by the Trust Agreement.
(h) Trust Agreement. The Issuer shall not amend the Trust
Agreement without the prior written consent of the Insurer.
Section 2.07. Representations, Warranties and Covenants of Indenture
Trustee The Indenture Trustee represents and warrants to, as of the Date of
Issuance, and covenants with the other parties hereto as follows:
(a) Due Organization and Qualification. The Indenture
Trustee is a national banking association, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. The Indenture Trustee is duly qualified to do
business, is in good standing and has obtained all licenses, permits,
charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as currently conducted and
as described in the Offering Document and the performance of its
obligations under the Transaction Documents, in each jurisdiction in
which the failure to be so qualified or to obtain such approvals
would render any Transaction Document unenforceable in any respect or
would have a material adverse effect upon the Transaction, the Owners
or the Insurer.
(b) Due Authorization. The execution, delivery and
performance of the Transaction Documents by the Indenture Trustee
have been duly authorized by all necessary corporate action and do
not require any additional approvals or consents of, or other action
by or any notice to or filing with any Person, including, without
limitation, any governmental entity or the Indenture Trustee's
stockholders, which have not previously been obtained or given by the
Indenture Trustee.
(c) Noncontravention. None of the execution and delivery of
the Transaction Documents by the Indenture Trustee, the consummation
of the Transaction contemplated thereby or the satisfaction of the
terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or
violation of any provision of the certificate or articles of
incorporation or bylaws of the Indenture Trustee or any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having
applicability to the Indenture Trustee or any of its
material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Indenture Trustee ;
(ii) constitutes a default by the Indenture Trustee
under or a breach of any provision of any loan agreement,
mortgage, indenture or other agreement or instrument to
which the Indenture Trustee is a party or by which any of
its properties, which are individually or in the aggregate
material to the Indenture Trustee, is or may be bound or
affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Indenture
Trustee, except as contemplated by the Transaction
Documents.
(d) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Indenture Trustee, or
any of its subsidiaries, or any properties or rights of the Indenture
Trustee, or any of its subsidiaries, pending or, to the Indenture
Trustee's knowledge after reasonable inquiry, threatened, which, in
any case, could reasonably be expected to result in a Material
Adverse Change with respect to the Indenture Trustee.
(e) Valid and Binding Obligations and Agreements. The
Transaction Documents (other than the Obligations), to which the
Indenture Trustee is a party, when executed and delivered by the
Indenture Trustee, will constitute the legal, valid and binding
obligations of the Indenture Trustee enforceable in accordance with
their respective terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general
equitable principles. The Indenture Trustee will not at any time in
the future deny that the Transaction Documents constitute the legal,
valid and binding obligations of the Indenture Trustee.
(f) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Indenture Trustee
in the conduct of its business violates any law, regulation,
judgment, agreement, order or decree applicable to any the Indenture
Trustee that, if enforced, could reasonably be expected to result in
a Material Adverse Change with respect to the Indenture Trustee. The
Indenture Trustee is not in breach of or in default under any
applicable law or administrative regulation of its jurisdiction of
organization, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree
or any loan agreement, note, resolution, certificate, agreement or
other instrument to which the Indenture Trustee is a party or is
otherwise subject which, if enforced, would have a material adverse
effect on the ability of the Indenture Trustee to perform its
obligations under the Transaction Documents.
(g) Transaction Documents. Each of the representations and
warranties of the Indenture Trustee contained in the Transaction
Documents is true and correct in all material respects, and the
Indenture Trustee hereby makes each such representation and warranty
to, and for the benefit of, the Insurer as if the same were set forth
in full herein.
(h) Compliance and Amendments. The Indenture Trustee shall
comply in all material respects with the terms and conditions of the
Transaction Documents to which it is a party and the Indenture
Trustee shall not agree to any amendment to or modification of the
terms of any of the Transaction Documents to which it is a party
unless the Insurer shall otherwise give its prior written consent.
(i) Preference Payments. With respect to any Preference
Amount (as defined in the Policy), the Indenture Trustee shall
provide to the Insurer upon the request of the Insurer:
(i) a certified copy of the final nonappealable
order of a court having competent jurisdiction ordering the
recovery by a trustee in bankruptcy as voidable preference
amounts included in previous distributions under Section
6.05 of the Sale and Servicing Agreement to any Owner
pursuant to the United States Bankruptcy Code, 11 U.S.C.
ss.ss. 101 et seq., as amended (the "Bankruptcy Code");
(ii) an opinion of counsel satisfactory to the
Insurer, and upon which the Insurer shall be entitled to
rely, stating that such order is final and is not subject to
appeal;
(iii) an assignment in such form as reasonably
required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Servicer, the Indenture
Trustee and any Owner relating to or arising under the Home
Loan against the debtor which made such preference payment
or otherwise with respect to such preference amount; and
(iv) appropriate instruments to effect (when
executed by the affected party) the appointment of the
Insurer as agent for the Indenture Trustee and any Owner in
any legal proceeding relating to such preference payment
being in a form satisfactory to the Insurer.
Section 2.08.Representations and Warranties of the Servicer. The
Servicer represents, warrants and covenants as of the Date of Issuance, as
follows:
(a) Due Organization and Qualification. The Servicer is a
corporation, duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. The Servicer is
duly qualified to do business, is in good standing and has obtained
all licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents to
which it is a party in each jurisdiction in which the failure to be
so qualified or to obtain such approvals would render any Transaction
Document to which it is a party unenforceable in any respect or would
have a material adverse effect upon the Transaction, the Owners or
the Insurer.
(b) Power and Authority. The Servicer has all necessary
corporate power and authority to conduct its business as currently
conducted and, as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents
to which it is a party and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents to which it is a party by
the Servicer, have been duly authorized by all necessary corporate
action and do not require any additional approvals or consents of, or
other action by or any notice to or filing with any Person,
including, without limitation, any governmental entity or the
Servicer's stockholders, which have not previously been obtained or
given by the Servicer.
(d) Noncontravention. None of the execution and delivery of
the Transaction Documents by the Servicer the consummation of the
Transaction contemplated thereby or the satisfaction of the terms and
conditions of the Transaction Documents to which it is a party:
(i) conflicts with or results in any breach or
violation of any provision of the certificate of
incorporation or bylaws of the Servicer or any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having
applicability to the Servicer or any of its material
properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Servicer;
(ii) constitutes a default by the Servicer under or
a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which the
Servicer is a party or by which any of its properties, which
are individually or in the aggregate material to the
Servicer is or may be bound or affected; or
(iii) results in or requires the creation of any
lien upon or in respect of any assets of the Servicer except
as contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Servicer or any of its
subsidiaries, or any properties or rights of the Servicer or any of
its subsidiaries, pending or, to the Servicer's, knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably
be expected to result in a Material Adverse Change with respect to
the Servicer.
(f) Valid and Binding Obligations. The Transaction Documents
to which it is a party (other than the Obligations), when executed
and delivered by the Servicer, will constitute the legal, valid and
binding obligations of the Servicer enforceable in accordance with
their respective terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general
equitable principles and public policy considerations as to rights of
indemnification for violations of federal securities laws.
(g) Financial Statements. The Financial Statements of the
Servicer, copies of which have been furnished to the Insurer, (i)
are, as of the dates and for the periods referred to therein,
complete and correct in all material respects, (ii) present fairly
the financial condition and results of operations of the Servicer as
of the dates and for the periods indicated and (iii) have been
prepared in accordance with generally accepted accounting principles
consistently applied, except as noted therein (subject as to interim
statements to normal year-end adjustments). Since the date of the
most recent Financial Statements, there has been no Material Adverse
Change in respect of the Servicer. Except as disclosed in the
Financial Statements, the Servicer is not subject to any contingent
liabilities or commitments that, individually or in the aggregate,
have a material possibility of causing a Material Adverse Change in
respect of the Servicer.
(h) Compliance With Law, Etc. No practice, procedure or
policy employed, or proposed to be employed, by the Servicer to the
Servicer's knowledge in the conduct of its business violates any law,
regulation, judgment, agreement, order or decree applicable to any of
them that, if enforced, could reasonably be expected to result in a
Material Adverse Change with respect to the Servicer. To the
Servicer's knowledge, the Servicer is not in breach of or in default
under any applicable law or administrative regulation of its
respective jurisdiction of incorporation, or any department,
division, agency or instrumentality thereof or of the United States
or any applicable judgment or decree or any loan agreement, note,
resolution, certificate, agreement or other instrument to which the
Servicer is a party or is otherwise subject which, if enforced, would
have a material adverse effect on the ability of the Servicer as the
case may be, to perform its respective obligations under the
Transaction Documents to which it is a party.
(i) Taxes. The Servicer has filed prior to the date hereof
all federal and state tax returns that are required to be filed and
paid all taxes, including any assessments received by them that are
not being contested in good faith, to the extent that such taxes have
become due, except for any failures to file or pay that, individually
or in the aggregate, would not result in a Material Adverse Change
with respect to the Servicer.
(j) Accuracy of Information. Neither the Transaction
Documents to which it is a party, nor other information relating to
the operations of the Servicer, (including servicing of loans) or
information relating to the financial condition of the Servicer
(collectively, the "Documents"), as amended, supplemented or
superseded, furnished to the Insurer by the Servicer contains any
statement of a material fact by the Servicer which was untrue or
misleading in any material adverse respect when made. The Servicer
has no knowledge of circumstances that could reasonably be expected
to cause a Material Adverse Change with respect to the Servicer.
Since the furnishing of the Documents, there has been no change or
any development or event involving a prospective change known to the
Servicer that would render any of the Documents untrue or misleading
in any material respect.
(k) Transaction Documents. Each of the representations and
warranties of the Servicer to which it is a party contained in the
Transaction Documents is true and correct in all material respects,
and the Servicer hereby makes each such representation and warranty
to, and for the benefit of, the Insurer as if the same were set forth
in full herein.
(l) Principal Place of Business. The principal place of
business of the Servicer is located in Horsham, Pennsylvania.
Section 2.09.Affirmative Covenants of the Servicer. The Servicer
hereby agrees that during the Term of the Insurance Agreement, unless the
Insurer shall otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The
Servicer shall not be in default under the Transaction Documents to
which it is a party and shall comply with all material requirements
of any law, rule or regulation applicable to it. The Servicer shall
not agree to any amendment to or modification of the terms of any
Transaction Documents to which it is a party unless the Insurer shall
have given its prior written consent.
(b) Corporate Existence. Except as provided in Section 5.23
of the Sale and Servicing Agreement, the Servicer, its successors and
assigns shall maintain its corporate existence and shall at all times
continue to be duly organized under the laws of their respective
jurisdictions of incorporation and duly qualified and duly authorized
(as described in sections 2.09(a), (b) and (c) hereof) and shall
conduct its business in accordance with the terms of its certificate
or articles of incorporation and bylaws.
(c) Financial Statements; Accountants' Reports; Other
Information. The Servicer shall keep or cause to be kept in
reasonable detail books and records of account of their assets and
business, including, but not limited to, books and records relating
to the Transaction. The Servicer shall furnish or cause to be
furnished to the Insurer:
(i) Annual Financial Statements. As soon as
available, and in any event within 120 days after the close
of each fiscal year of the Servicer, the audited
consolidated balance sheets of the Servicer and their
subsidiaries as of the end of such fiscal year and the
related audited consolidated statements of income, changes
in shareholders' equity and cash flows for such fiscal year,
all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in
the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently
applied, and accompanied by the audit opinion of the
Servicer's independent accountants (which shall be a
nationally recognized independent public accounting firms)
and by the certificate specified in Section 2.09(e) hereof.
(ii) Semi-Annual Financial Statements. As soon as
available, and in any event within 90 days after the second
fiscal quarters of each fiscal year of the Servicer, the
unaudited consolidated balance sheets of the Servicer and
its subsidiaries as of the end of such fiscal quarter and
the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for such
fiscal quarter, all in reasonable detail and stating in
comparative form the respective figures for the
corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the
certificate specified in Section 2.09(e) hereof.
(iii) Continuing Reports.. The Servicer shall
deliver to the Insurer not later than 12:00 noon, New York
City time, on each Distribution Date the report required by
Section 5.15 of the Sale and Servicing Agreement.
(iv) Computer Diskette. Beginning in November,
1999, the Servicer will deliver to the Insurer on a
quarterly basis, a computer diskette containing a quarterly
summary of the information provided to the Insurer pursuant
to clause (iii) of this subsection 2.09(c) and also
containing information similar to the information provided
in the Home Loan Schedule delivered to the Indenture Trustee
pursuant to the Sale and Servicing Agreement and described
in Exhibit C of the Sale and Servicing Agreement.
(v) Other Information. Promptly upon receipt
thereof, copies of all schedules, financial statements or
other similar reports delivered to or by the Servicer
pursuant to the terms of the Transaction Documents to which
it is a party and, promptly upon request, such other data as
the Insurer may reasonably request.
All financial statements specified in clause (i) of this
Section 2.09(c) shall be furnished in consolidated form for the
Servicer and all its subsidiaries in the event the Servicer shall
consolidate its financial statements with its subsidiaries..
The Insurer agrees that it and its agents, accountants and
attorneys shall keep confidential all financial statements, reports
and other information delivered by the Servicer pursuant to this
Section 2.09(c) to the extent provided in Section 2.09(f) hereof.
(d) Reserved.
(e) Compliance Certificate. The Servicer shall deliver to
the Insurer, concurrently with the delivery of the financial
statements required pursuant to Sections 2.09(c)(i) and (ii) hereof,
one or more certificates signed by an officer of the Servicer
authorized to execute such certificates on behalf of the Servicer
stating that:
(i) a review of the Servicer's performance under
the Transaction Documents to which it is a party during such
period has been made under such officer's supervision;
(ii) to the best of such individual's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred, or if a Default or Event of Default has
occurred, specifying the nature thereof and, if the Servicer
has a right to cure pursuant to Section 7.01 of the Sale and
Servicing Agreement, stating in reasonable detail
(including, if applicable, any supporting calculations) the
steps, if any, being taken by the Servicer to cure such
Default or Event of Default or to otherwise comply with the
terms of the agreement to which such Default or Event of
Default relates;
(iii) the attached financial statements submitted
in accordance with Sections 2.09(c)(i) or (ii) hereof, as
the case may be, are complete and correct in all material
respects and present fairly the financial condition and
results of operations of the Servicer as of the dates and
for the periods indicated, in accordance with generally
accepted accounting principles consistently applied; and
(iv) the Servicer has in full force and effect a
blanket fidelity bond (or direct surety bond) and an errors
and omissions insurance policy in accordance with the terms
and requirements of Section 5.08 of the Sale and Servicing
Agreement.
(f) Access to Records; Discussions With Officers and
Accountants. On an annual basis, or upon the occurrence of a Material
Adverse Change, the Servicer shall, upon the reasonable request of
the Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of the
Servicer as they may relate to the Obligations, the
obligations of the Servicer under the Transaction Documents
to which it is a party, and the Transaction;
(ii) to discuss the affairs, finances and accounts
of the Servicer with the chief operating officer and the
chief financial officer of the Servicer, as the case may be;
and
(iii) with the Servicer's consent, as applicable,
which consent shall not be unreasonably withheld, to discuss
the affairs, finances and accounts of the Servicer with the
Servicer's independent accountants, provided that an officer
of the Servicer shall have the right to be present during
such discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business
of the Servicer. The books and records of the Servicer shall be
maintained at the address of the Servicer designated herein for
receipt of notices, unless the Servicer shall otherwise advise the
parties hereto in writing.
The Insurer agrees that it and its shareholders, directors,
agents, accountants and attorneys shall keep confidential any matter
of which it becomes aware through such inspections or discussions
(unless readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its
rights or security under or to enforce the Transaction Documents,
provided that the foregoing shall not limit the right of the Insurer
to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel
and accountants.
(g) Notice of Material Events. The Servicer shall be
obligated promptly to inform the Insurer in writing of the occurrence
of any of the following to the extent any of the following relate to
it:
(i) the submission of any claim or the initiation
of any legal process, litigation or administrative or
judicial investigation, or rule making or disciplinary
proceeding by or against the Servicer, that (A) would be
required to be disclosed to the Commission or to the
Servicer's shareholders or (B) could reasonably be expected
to result in a Material Adverse Change with respect to the
Servicer, or the promulgation of any proceeding or any
proposed or final rule which would result in a Material
Adverse Change with respect to the Servicer;
(ii) the submission of any claim or the initiation
of any legal process, litigation or administrative or
judicial investigation in any federal, state or local court
or before any arbitration board, or any such proceeding
threatened by any government agency, which, if adversely
determined, would have a material adverse effect on the
Servicer, the Owners or the Insurer;
(iii) any change in the location of the Servicer's
principal office or any change in the location of the
Servicer's books and records;
(iv) the occurrence of any Default or Event of
Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or
against the Servicer under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator,
trustee or similar official shall have been, or may be,
appointed or requested for the Servicer or any of its or
their assets; or
(vi) the receipt of notice that (A) the Servicer is
being placed under regulatory supervision, as a result of a
material event, (B) any license, permit, charter,
registration or approval necessary for the conduct of the
Servicer's business is to be, or may be suspended or
revoked, or (C) the Servicer is to cease and desist any
practice, procedure or policy employed by the Servicer in
the conduct of its business, and such cessation is
reasonably likely to result in a Material Adverse Change
with respect to the Servicer.
(h) Further Assurances. The Servicer shall, upon the request
of the Insurer, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, within ten days
of such request, such amendments hereto and such further instruments
and take such further action as may be reasonably necessary to
effectuate the intention, performance and provisions of the
Transaction Documents to which it is a party. In addition, each of
the Servicer agrees to cooperate with S&P and Moody's in connection
with any review of the Transaction that may be undertaken by S&P and
Moody's after the date hereof and to provide all information
reasonably requested by S&P or Moody's.
(i) Maintenance of Licenses. The Servicer or any successors
thereof shall maintain or cause to be maintained all licenses,
permits, charters and registrations which are material to the conduct
of its business.
(j) Servicing of Home Loans. The Servicer shall perform such
actions with respect to the Home Loans as are required by or provided
for in the Sale and Servicing Agreement. The Servicer will provide
the Insurer with written notice of any change or amendment to any
Transaction Document as currently in effect.
(k) Reserved.
(l) Year 2000 Program. The Servicer has taken steps
necessary and appropriate to prevent any problems in its computer and
information systems arising from or in connection with the
information processing challenges associated with the Year 2000, and
will provide to the Insurer such information and reports as the
Insurer may reasonably request from time to time with respect to such
steps as have or will be taken with respect thereto.
(m) Transaction Documents. The Servicer will not at any time
in the future deny that the Transaction Documents constitute the
legal, valid and binding obligations of the Servicer, except that the
enforcement thereof may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other
similar laws affecting creditors' rights generally and by general
principles of equity.
Section 2.10. Negative Covenants of the Servicer. The Servicer hereby
agree that during the Term of the Insurance Agreement, unless the Insurer
shall otherwise expressly consent in writing:
(a) Impairment of Rights. The Servicer shall not take any
action, or fail to take any action, if such action or failure to take
action may result in a material adverse change as described in clause
(ii) of the definition of Material Adverse Change with respect to the
Servicer or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The
Servicer shall give the Insurer written notice of any such action or
failure to act on the earlier of: (i) the date upon which any
publicly available filing or release is made with respect to such
action or failure to act or (ii) promptly prior to the date of
consummation of such action or failure to act. The Servicer shall
furnish to the Insurer all information requested by it that is
reasonably necessary to determine compliance with this Section (a).
(b) Waiver, Amendments, Etc. The Servicer shall not waive,
modify or amend, or consent to any waiver, modification or amendment
of, any of the terms, provisions or conditions of any of the
Transaction Documents without the prior written consent of the
Insurer.
(c) Mortgage Loan Agreements; Charge-off Policy. Except as
otherwise permitted in the Sale and Servicing Agreement, the Servicer
shall not alter or amend any Home Loan, their respective collection
policies or their respective charge-off policies in a manner that
materially adversely affects the Insurer unless the Insurer shall
have previously given its consent, which consent shall not be
withheld unreasonably.
Article III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) Payment of Initial Premium and Expenses. The Insurer
shall have been paid, by the Seller, that portion of a nonrefundable
Premium payable on the Date of Issuance and the Seller shall agree to
reimburse or pay directly other fees and expenses identified in
Section 3.02 hereof as payable.
(b) Transaction Documents. The Insurer shall have received a
fully executed copy of the Commitment and a copy of each of the
Transaction Documents, in form and substance satisfactory to the
Insurer, duly authorized, executed and delivered by each party
thereto.
(c) Certified Documents and Resolutions. The Insurer shall
have received a copy of (i) the certificate or articles of
incorporation and bylaws of the Servicer, the Seller and the
Depositor and (ii) the resolutions of the Seller's and the
Depositor's Board of Directors authorizing the sale of the Home Loans
and (iii) the execution, delivery and performance by the Servicer,
the Seller and the Depositor of the Transaction Documents and the
Transaction contemplated thereby, certified by the Secretary or an
Assistant Secretary of the Servicer, the Seller and the Depositor
(which certificate shall state that such certificate or articles of
incorporation, bylaws and resolutions are in full force and effect
without modification on the Date of Issuance).
(d) Incumbency Certificate. The Insurer shall have received
a certificate of the Secretary or an Assistant Secretary of the
Servicer, the Seller and the Depositor certifying the names and
signatures of the officers of the Servicer, the Seller and the
Depositor authorized to execute and deliver the Transaction Documents
and that shareholder consent to the execution and delivery of such
documents is not necessary.
(e) Representations and Warranties; Certificate. The
representations and warranties of the Servicer, the Seller and the
Depositor set forth or incorporated by reference in this Insurance
Agreement shall be true and correct as of the Date of Issuance as if
made on the Date of Issuance and the Insurer shall have received a
certificate of appropriate officers of the Servicer, the Seller and
the Depositor to that effect.
(f) Opinions of Counsel.
(i) The law firm of Brown & Wood, LLP and the
in-house counsel for the Seller (as applicable) shall have
issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of the Seller and the
validity and enforceability of the Transaction Documents
against the Seller.
(ii) Counsel to the Servicer shall have issued its
favorable opinion, in form and substance acceptable to the
Insurer and its counsel, regarding the corporate existence
and authority of the Servicer and the validity and
enforceability of the Transaction Documents against the
Servicer.
(iii) The law firm of Brown & Wood, LLP shall have
issued its favorable opinion, in form and substance
acceptable to the Insurer and its counsel, regarding the
corporate existence and authority of the Depositor and the
validity and enforceability of the Transaction Documents
against such parties.
(iv) The law firm of Brown & Wood, LLP shall have
furnished its opinions, in form and substance acceptable to
the Insurer and its counsel, regarding the sale of the Home
Loans and the tax treatment on the Obligations under federal
and state tax laws.
(v) The Insurer shall have received such other
opinions of counsel, in form and substance acceptable to the
Insurer and its counsel, addressing such other matters as
the Insurer may reasonably request. Each opinion of counsel
delivered in connection with the Transaction shall be
addressed to and delivered to the Insurer.
(g) Approvals, Etc. The Insurer shall have received true and
correct copies of all approvals, licenses and consents, if any,
including, without limitation, any required approval of the
shareholders of the Servicer, the Seller and the Depositor, required
in connection with the Transaction.
(h) No Litigation, Etc. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto,
shall be pending or threatened before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with the Transaction Documents
or the consummation of the Transaction.
(i) Legality. No statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the
Transaction contemplated by any of the Transaction Documents illegal
or otherwise prevent the consummation thereof.
(j) Issuance of Ratings. The Insurer shall have received
confirmation that the risk secured by the Policy constitutes at least
a "A" by S&P and and "A2" risk Moody's, and that the Obligations,
when issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
(k) No Default. No Default or Event of Default shall have
occurred.
(l) Additional Items. The Insurer shall have received such
other documents, instruments, approvals or opinions requested by the
Insurer or its counsel as may be reasonably necessary to effect the
Transaction, including, but not limited to, evidence satisfactory to
the Insurer and its counsel that the conditions precedent, if any, in
the Transaction Documents have been satisfied.
(m) Conform to Documents. The Insurer and its counsel shall
have determined that all documents, certificates and opinions to be
delivered in connection with the Obligations conform to the terms of
the Transaction Documents.
(n) Compliance With Commitment. All other terms, conditions
and requirements of the Commitment shall have been satisfied.
(o) Satisfaction of Conditions of the Underwriting
Agreement. All conditions in the Underwriting Agreement relating to
the Underwriter's obligation to purchase the Obligations shall have
been satisfied.
(p) Underwriting Agreement. The Insurer shall have received
copies of each of the documents, and shall be entitled to rely on
each of the documents, required to be delivered to the Underwriter
pursuant to the Underwriting Agreement.
Section 3.02. Payment of Fees and Premium.
(a) Legal and Accounting Fees. The Seller shall pay or cause
to be paid, on the Date of Issuance, legal fees and disbursements
incurred by the Insurer in connection with the issuance of the Policy
and any fees of the Insurer's auditors in accordance with the terms
of the Commitment. Any fees of the Insurer's auditors payable in
respect of any amendment or supplement to the Offering Document or
any other Offering Document incurred after the Date of Issuance shall
be paid by the Seller on demand.
(b) Premium. In consideration of the issuance by the Insurer
of the Policy, the Insurer shall be entitled to receive the Premium
as and when due in accordance with the terms of the Commitment (i) in
the case of Premium due on or before the Date of Issuance, directly
from the Seller and (ii) in the case of Premium due after the Date of
Issuance, first, pursuant to the Sale and Servicing Agreement, and
second, to the extent the amounts in subclause first are not
sufficient, directly from the Seller. For purposes of the Sale and
Servicing Agreement, the term "Premium Percentage" shall have the
meaning set forth in paragraph 1(a) of the Commitment. The Premium
shall be calculated according to paragraph 1(a) of the Commitment for
the amount due on or before the Date of Issuance and paragraph 1(b)
of the Commitment for the amount due on each Distribution Date. The
Premium paid hereunder or under the Sale and Servicing Agreement
shall be nonrefundable without regard to whether the Insurer makes
any payment under the Policy or any other circumstances relating to
the Obligations or provision being made for payment of the
Obligations prior to maturity. The Seller shall make all payments of
Premium to be made by them by wire transfer to an account designated
from time to time by the Insurer by written notice to the Servicer,
the Seller, the Depositor and the Trust.
Section 3.03. Reimbursement and Additional Payment Obligation.
(a) In accordance with the priorities established in Section
6.05 of the Sale and Servicing Agreement, the Insurer shall be
entitled to reimbursement for any payment made by the Insurer under
the Policy, which reimbursement shall be due and payable on the date
that any amount is to be paid pursuant to a Notice (as defined in the
Policy), in an amount equal to the amount to be so paid and all
amounts previously paid that remain unreimbursed, together with
interest on any and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any unreimbursed amounts
representing interest) from the date such amounts became due until
paid in full (after as well as before judgment), at a rate of
interest equal to the Late Payment Rate.
(b) Notwithstanding anything in Section 3.03(a) to the
contrary, the Servicer and the Seller agrees to reimburse the Insurer
as follows: (i) from the Seller, for payments made under the Policy
arising as a result of the Seller's failure to repurchase any Home
Loan required to be repurchased pursuant to Section 1.05 of the Home
Loan Sale Agreement, together with interest on any and all amounts
remaining unreimbursed (to the extent permitted by law, if in respect
of any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate, and
(ii) from the Servicer, for payments made under the Policy, arising
as a result the Servicer's failure to deposit into the Collection
Account any amount required to be so deposited pursuant to the Sale
and Servicing Agreement together with interest on any and all amounts
remaining unreimbursed (to the extent permitted by law, if in respect
to any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(c) The Servicer and the Seller agree to pay to the Insurer
as follows: any and all charges, fees, costs and expenses that the
Insurer may reasonably pay or incur, including, but not limited to,
attorneys' and accountants' fees and expenses, in connection with (i)
any accounts established to facilitate payments under the Policy to
the extent the Insurer has not been immediately reimbursed on the
date that any amount is paid by the Insurer under the Policy, (ii)
the enforcement, defense or preservation of any rights in respect of
any of the Transaction Documents, including defending, monitoring or
participating in any litigation or proceeding (including any
insolvency or bankruptcy proceeding in respect of any Transaction
participant or any affiliate thereof) relating to any of the
Transaction Documents, any party to any of the Transaction Documents,
in its capacity as such a party, or the Transaction, (iii) any
amendment, transfer of servicing, consent, waiver or other action
with respect to, or related to, any Transaction Document, whether or
not executed or completed, or (iv) from the Seller only, for
preparation of bound volumes of the Transaction Documents; costs and
expenses shall include a reasonable allocation of compensation and
overhead attributable to the time of employees of the Insurer spent
in connection with the actions described in clause (ii) above, and
the Insurer reserves the right to charge a reasonable fee as a
condition to executing any waiver or consent proposed in respect of
any of the Transaction Documents. Provided that, the Servicer shall
be required to reimburse the Insurer as set forth in this Section
3.03(c) only to the extent that such charges, fees, costs and
expenses incurred by the Insurer resulted from an action of or
request of the Servicer.
(d) The Seller and the Depositor agree to pay to the Insurer
as follows: interest on any and all amounts described in subsections
(b), (c), (e) and (h) of this Section 3.03 from the date payable or
paid by such party until payment thereof in full, and interest on any
and all amounts described in Section 3.02 hereof from the date due
until payment thereof in full, in each case, payable to the Insurer
at the Late Payment Rate per annum.
(e) The Seller and the Depositor agree to pay to the Insurer
as follows: any payments made by the Insurer on behalf of, or
advanced to the Seller or the Depositor, respectively, including,
without limitation, any amounts payable by the Seller or the
Depositor pursuant to the Obligations or any other Transaction
Documents.
(f) The Servicer agrees to pay to the Insurer as follows:
interest on any and all amounts described in subsections (b)(ii),
(c), and (g) of this Section 3.03 from the date payable or paid by
such party until payment thereof in full, and interest on any and all
amounts described in Section 3.02 hereof from the date due until
payment thereof in full, in each case, payable to the Insurer at the
Late Payment Rate per annum.
(g) The Servicer agrees to pay to the Insurer as follows:
any payments made by the Insurer on behalf of, or advanced to, the
Servicer related to the transfer of servicing, including, without
limitation, any amounts payable by the Servicer pursuant to the
Obligations or any other Transaction Documents to which it is a
party.
(h) Following termination of the Indenture pursuant to
Section 4.01 thereof, the Seller agrees to reimburse the Insurer for
any Insured Payments required to be made pursuant to the Policy
subsequent to the date of such termination.
All such amounts are to be immediately due and payable without
demand.
Section 3.04. Indemnification; Limitation of Liability.
(a) In addition to any and all rights of indemnification or
any other rights of the Insurer pursuant hereto or under law or
equity, the Depositor, the Seller and any successors thereto agree to
pay, and to protect, indemnify and save harmless, the Insurer and its
officers, directors, shareholders, employees, agents, and each
person, if any, who controls the Insurer within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act from and against any and all claims, Losses, liabilities
(including penalties), actions, suits, judgments, demands, damages,
costs or reasonable expenses (including, without limitation,
reasonable fees and expenses of attorneys, consultants and auditors
and reasonable costs of investigations) or obligations whatsoever
paid by the Insurer (herein collectively referred to as
"Liabilities") of any nature arising out of or relating to the
Transaction contemplated by the Transaction Documents by reason of:
(i) any untrue statement or alleged untrue
statement of a material fact contained in the Offering
Document or in any amendment or supplement thereto or in any
preliminary offering document, or arising out of or based
upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar
as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based
upon information set forth in the Offering Document under
the caption "The MBIA Insurance Policy" or in the financial
statements of the Insurer, including any information in any
amendment or supplement to the Offering Document furnished
by the Insurer in writing expressly for use therein that
amends or supplements such information (all such information
being referred to herein as "Insurer Information");
(ii) to the extent not covered by clause (i) above,
any act or omission of the Seller or the Depositor, or the
allegation thereof, in connection with the offering,
issuance, sale or delivery of the Obligations other than by
reason of false or misleading information provided by the
Insurer in writing for inclusion in the Offering Document as
specified in clause (i) above;
(iii) the misfeasance or malfeasance of, or
negligence or theft committed by, any director, officer,
employee or agent of the Seller or the Depositor;
(iv) the violation by the Depositor or the Seller
of any federal or state securities, banking or antitrust
laws, rules or regulations in connection with the issuance,
offer and sale of the Obligations or the Transaction
contemplated by the Transaction Documents;
(v) the violation by the Depositor or the Seller of
any federal or state laws, rules or regulations relating to
the Transaction, including without limitation the maximum
amount of interest permitted to be received on account of
any loan of money or with respect to the Home Loans;
(vi) the breach by the Depositor or the Seller of
any of its obligations under this Insurance Agreement or any
of the other Transaction Documents; and
(vii) the breach by the Seller or the Depositor of
any representation or warranty on the part of the Seller or
the Depositor contained in the Transaction Documents or in
any certificate or report furnished or delivered to the
Insurer thereunder.
This indemnity provision shall survive the termination of
this Insurance Agreement and shall survive until the statute of
limitations has run on any causes of action which arise from one of
these reasons and until all suits filed as a result thereof have been
finally concluded.
(b) The Seller agrees to indemnify the Trust and the Insurer
for any and all Liabilities incurred by the Trust and the Insurer due
to any claim, counterclaim, rescission, setoff or defense asserted by
an Obligor under any Home Loan subject to the Federal Trade
Commission regulations provided in 16 C.F.R. Part 433 and under any
Mortgage Loan which is a "mortgage" as such term is defined in 15
U.S.C. ss. 1602(aa).
(c) In addition to any and all rights of indemnification or
any other rights of the Insurer pursuant hereto or under law or
equity, the Servicer and any successors thereto agree to pay, and to
protect, indemnify and save harmless, the Insurer and its officers,
directors, shareholders, employees, agents, and each person, if any,
who controls the Insurer within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act from
and against any and all claims, Losses, liabilities (including
penalties), actions, suits, judgments, demands, damages, costs or
reasonable expenses (including, without limitation, reasonable fees
and expenses of attorneys, consultants and auditors and reasonable
costs of investigations) or obligations whatsoever paid by the
Insurer (herein collectively referred to as "Liabilities") of any
nature arising out of or relating to the Transaction contemplated by
the Transaction Documents to which the Servicer is a party by reason
of:
(i) the misfeasance or malfeasance of, or
negligence or theft committed by, any director, officer,
employee or agent of the Servicer;
(ii) the violation by the Servicer of any federal
or state laws, rules or regulations relating to the
Transaction Documents to which it is a party, including
without limitation the maximum amount of interest permitted
to be received on account of any loan of money or with
respect to the Home Loans;
(iii) the breach by the Servicer of any of its
obligations under this Insurance Agreement or any of the
other Transaction Documents to which it is a party; and
(iv) the breach by the Servicer of any
representation or warranty on the part of the Servicer,
contained in the Transaction Documents to which it is a
party or in any certificate or report furnished or delivered
to the Insurer thereunder.
This indemnity provision shall survive the termination of this
Insurance Agreement and shall survive until the statute of limitations has run
on any causes of action which arise from one of these reasons and until all
suits filed as a result thereof have been finally concluded.
(d) Any party which proposes to assert the right to be
indemnified under this Section 3.04 will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against the Seller or
the Depositor under this Section 3.04, notify the Seller or the
Depositor of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. In case any action, suit or
proceeding shall be brought against any indemnified party and it
shall notify the Seller or the Depositor of the commencement thereof,
the Seller or the Depositor shall be entitled to participate in, and,
to the extent that it shall wish, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice from
the Seller or the Depositor to such indemnified party of its election
so to assume the defense thereof the Seller or the Depositor shall
not be liable to such indemnified party for any legal or other
expenses other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its
counsel in any such action the defense of which is assumed by the
Seller or the Depositor in accordance with the terms of this
subsection (c), but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless the employment of
counsel by such indemnified party has been authorized by the Seller
or the Depositor. The Seller or the Depositor shall not be liable for
any settlement of any action or claim effected without its consent.
(e) Any party which proposes to assert the right to be
indemnified under this Section 3.04 will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such
party in respect of which a claim is to be made against the Servicer
under this Section 3.04, notify the Servicer of the commencement of
such action, suit or proceeding, enclosing a copy of all papers
served. In case any action, suit or proceeding shall be brought
against any indemnified party and it shall notify the Servicer of the
commencement thereof, the Servicer shall be entitled to participate
in, and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and
after notice from the Servicer to such indemnified party of its
election so to assume the defense thereof, the Servicer shall not be
liable to such indemnified party for any legal or other expenses
other than reasonable costs of investigation subsequently incurred by
such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action the defense of which is assumed by the Servicer in
accordance with the terms of this subsection (c), but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless the employment of counsel by such indemnified party has
been authorized by the Servicer. The Servicer shall not be liable for
any settlement of any action or claim effected without its consent.
Section 3.05.Payment Procedure. In the event of any payment by the
Insurer, the Indenture Trustee, the Servicer, the Seller and the Depositor
agree to accept the voucher or other evidence of payment as prima facie
evidence of the propriety thereof and the liability therefor to the Insurer.
All payments to be made to the Insurer under this Insurance Agreement shall be
made to the Insurer in lawful currency of the United States of America in
immediately available funds at the notice address for the Insurer as specified
in Section 6.02 hereof on the date when due or as the Insurer shall otherwise
direct by written notice to the other parties hereto. In the event that the
date of any payment to the Insurer or the expiration of any time period
hereunder occurs on a day which is not a Business Day, then such payment or
expiration of time period shall be made or occur on the next succeeding
Business Day with the same force and effect as if such payment was made or
time period expired on the scheduled date of payment or expiration date.
Payments to be made to the Insurer under this Insurance Agreement shall bear
interest at the Late Payment Rate from the date when due to the date paid.
Article IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Servicer, the Indenture Trustee, the Seller or the Depositor or from any other
source under the Transaction Documents and all amounts payable under the
Obligations have been paid in full; provided, however, that the provisions of
Sections 3.02, 3.03, 3.04 and 4.06 hereof shall survive any termination of
this Insurance Agreement.
Section 4.02. Further Assurances and Corrective Instruments.
(a) Excepting at such times as a default in payment under
the Policy shall exist or shall have occurred, none of the Servicer,
the Seller, the Depositor, the Issuer or the Indenture Trustee shall
grant any waiver of rights under any of the Transaction Documents to
which any of them is a party without the prior written consent of the
Insurer, and any such waiver without the prior written consent of the
Insurer shall be null and void and of no force or effect.
(b) To the extent permitted by law, the Servicer, the
Indenture Trustee, the Seller, the Issuer and the Depositor agree
that they will, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as the Insurer may reasonably
request and as may be required in the Insurer's reasonable judgment
to effectuate the intention of or facilitate the performance of this
Insurance Agreement.
Section 4.03. Obligations Absolute.
(a) The obligations of the Servicer, the Seller, the Issuer
and the Depositor hereunder shall be absolute and unconditional and
shall be paid or performed strictly in accordance with this Insurance
Agreement under all circumstances irrespective of:
(i) any lack of validity or enforceability of, or
any amendment or other modifications of, or waiver, with
respect to any of the Transaction Documents, the Obligations
or the Policy;
(ii) any exchange or release of any other obligations
hereunder;
(iii) the existence of any claim, setoff, defense,
reduction, abatement or other right that the Servicer, the
Indenture Trustee, the Seller, the Issuer or the Depositor
may have at any time against the Insurer or any other
Person;
(iv) any document presented in connection with the
Policy proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(v) any payment by the Insurer under the Policy
against presentation of a certificate or other document that
does not strictly comply with terms of the Policy;
(vi) any failure of the Seller, the Issuer or the
Depositor to receive the proceeds from the sale of the
Obligations; or
(vii) any breach by the Servicer, the Indenture
Trustee, the Seller, the Issuer or the Depositor of any
representation, warranty or covenant contained in any of the
Transaction Documents.
(b) The Servicer, the Seller, the Depositor, the Issuer, and
any and all others who are now or may become liable for all or part
of the obligations of the Servicer, the Seller, the Issuer or the
Depositor under this Insurance Agreement agree to be bound by this
Insurance Agreement and (i) to the extent permitted by law, waive and
renounce any and all redemption and exemption rights and the benefit
of all valuation and appraisement privileges against the indebtedness
and obligations evidenced by any Transaction Document or by any
extension or renewal thereof; (ii) waive presentment and demand for
payment, notices of nonpayment and of dishonor, protest of dishonor
and notice of protest; (iii) waive all notices in connection with the
delivery and acceptance hereof and all other notices in connection
with the performance, default or enforcement of any payment
hereunder, except as required by the Transaction Documents; (iv)
waive all rights of abatement, diminution, postponement or deduction,
or any defense other than payment, or to any right of setoff or
recoupment arising out of any breach under any of the Transaction
Documents, by any party thereto or any beneficiary thereof, or out of
any obligation at any time owing to the Servicer, the Seller, the
Issuer or the Depositor; (v) agree that its liabilities hereunder
shall, except as otherwise expressly provided in this Section 4.03,
be unconditional and without regard to any setoff, counterclaim or
the liability of any other Person for the payment hereof; (vi) agree
that any consent, waiver or forbearance hereunder with respect to an
event shall operate only for such event and not for any subsequent
event; (vii) consent to any and all extensions of time that may be
granted by the Insurer with respect to any payment hereunder or other
provisions hereof and to the release of any security at any time
given for any payment hereunder, or any part thereof, with or without
substitution, and to the release of any Person or entity liable for
any such payment; and (viii) consent to the addition of any and all
other makers, endorsers, guarantors and other obligors for any
payment hereunder, and to the acceptance of any and all other
security for any payment hereunder, and agree that the addition of
any such obligors or security shall not affect the liability of the
parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the
Servicer, the Indenture Trustee, the Seller, the Issuer or the
Depositor from pursuing any rights or remedies it may have against
any other Person in a separate legal proceeding.
Section 4.04. Assignments; Reinsurance; Third-Party Rights.
(a) This Insurance Agreement shall be a continuing
obligation of the parties hereto and shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and permitted assigns. None of the Servicer, the Indenture Trustee,
the Seller, the Issuer nor the Depositor may assign its rights under
this Insurance Agreement, or delegate any of its duties hereunder,
without the prior written consent of the Insurer. Any assignment made
in violation of this Insurance Agreement shall be null and void.
(b) The Insurer shall have the right to give participations
in its rights under this Insurance Agreement and to enter into
contracts of reinsurance with respect to the Policy upon such terms
and conditions as the Insurer may in its discretion determine;
provided, however, that no such participation or reinsurance
agreement or arrangement shall relieve the Insurer of any of its
obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with
respect to the Transaction or the obligations of the Insurer in
connection therewith any rights of the Insurer under the Transaction
Documents or with respect to any real or personal property or other
interests pledged to the Insurer, or in which the Insurer has a
security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants
and reinsurers, nothing in this Insurance Agreement shall confer any
right, remedy or claim, express or implied, upon any Person,
including, particularly, any Owner, other than the Insurer against
the Servicer, the Indenture Trustee, the Seller, the Issuer or the
Depositor, and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive
benefit of the parties hereto and their successors and permitted
assigns. Neither the Indenture Trustee nor any Owner shall have any
right to payment from any Premiums paid or payable hereunder or under
the Sale and Servicing Agreement or from any other amounts paid by
the Servicer, the Indenture Trustee, the Seller or the Depositor
pursuant to Section 3.02, 3.03 or 3.04 hereof.
(e) The Servicer, the Seller, the Depositor, the Issuer and
the Indenture Trustee agree that the Insurer shall have all rights of
a third-party beneficiary in respect of the Indenture and each other
Transaction Document to which it is not a signing party and hereby
incorporate and restate their representations, warranties and
covenants as set forth therein for the benefit of the Insurer.
Section 4.05. Liability of the Insurer. Neither the Insurer nor any
of its officers, directors or employees shall be liable or responsible for:
(a) the use that may be made of the Policy by the Indenture Trustee or for any
acts or omissions of the Indenture Trustee in connection therewith; or (b) the
validity, sufficiency, accuracy or genuineness of documents delivered to the
Insurer (or its Fiscal Agent) in connection with any claim under the Policy,
or of any signatures thereon, even if such documents or signatures should in
fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged (unless the Insurer shall have actual knowledge thereof). In
furtherance and not in limitation of the foregoing, the Insurer (or its Fiscal
Agent) may accept documents that appear on their face to be in order, without
responsibility for further investigation.
Section 4.06. Parties Will Not Institute Insolvency Proceedings. So
long as this Agreement is in effect, and for one year following its
termination, none of the parties hereto will file any involuntary petition or
otherwise institute any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law against the Depositor or the Issuer.
Section 4.07. Indenture Trustee, Depositor, Seller and Servicer To
Join in Enforcement Action. To the extent necessary to enforce any right of
the Insurer in or remedy of the Insurer under any Home Loan, the Indenture
Trustee, the Depositor, the Seller, the Issuer and the Servicer agree to join
in any action initiated by the Trust or the Insurer for the protection of such
right or exercise of such remedy.
Section 4.08. Subrogation. To the extent of any payments under the
Policy, the Insurer shall be fully subrogated to any remedies against the
Depositor, the Seller or the Servicer or in respect of the Home Loans
available to the Indenture Trustee under the Indenture or Sale and Servicing
Agreement. The Indenture Trustee acknowledges such subrogation and, further,
agrees to execute such instruments prepared by the Insurer and to take such
reasonable actions as, in the sole judgment of the Insurer, are necessary to
evidence such subrogation and to perfect the rights of the Insurer to receive
any moneys paid or payable under the Indenture or Sale and Servicing
Agreement.
Article V
DEFAULTS; REMEDIES
Section 5.01. Defaults. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) Any representation, warranty or statement of the Seller,
the Indenture Trustee, the Servicer, the Issuer or the Depositor made
in this Insurance Agreement or in any other Transaction Document or
any certificate, report or other writing delivered pursuant hereto
shall prove to be incorrect in any material respect as of the time
when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect
on the Trust Estate or the interest of the Insurer and such
representation, warranty or statement shall not have been eliminated
or otherwise cured within 45 days of the earlier of (i) the date on
which the Indenture Trustee, the Issuer, the Servicer, the Seller or
the Depositor gives notice of such failure to the Indenture Trustee
or the Insurer and (ii) the date on which written notice thereof
shall have been given to the Indenture Trustee, the Issuer, the
Servicer, the Seller or the Depositor by the Trustee or the Insurer;
(b) (i) The Servicer, the Indenture Trustee, the Seller, the
Issuer or the Depositor shall fail to pay when due any amount payable
by the Servicer, the Indenture Trustee, the Seller or the Depositor
hereunder or (ii) a legislative body has enacted any law that
declares or a court of competent jurisdiction shall find or rule that
this Insurance Agreement or any of the Transaction Documents are not
valid and binding on the Servicer, the Indenture Trustee, the Seller,
the Issuer or the Depositor;
(c) The occurrence and continuance of an "Event of Default"
under the Indenture (as defined therein);
(d) Any failure on the part of the Servicer, the Indenture
Trustee, the Seller, the Issuer or the Depositor duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Servicer, the Indenture Trustee, the
Seller, the Issuer or the Depositor contained in this Insurance
Agreement or in any other Transaction Document which continues
unremedied for a period of 45 days with respect to this Insurance
Agreement, or, with respect to any other Transaction Document, beyond
any cure period provided for therein, after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer, the Seller, the Issuer, or the Depositor,
as applicable, by the Insurer (with a copy to the Indenture Trustee)
or by the Indenture Trustee (with a copy to the Insurer);
(e) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency
or similar law or the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer, the Seller, the Issuer
or the Depositor and such decree or order shall have remained in
force undischarged or unstayed for a period of 90 consecutive days;
(f) The Servicer, the Seller, the Issuer or the Depositor
shall consent to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer, the Seller, the Issuer or the
Depositor or of or relating to all or substantially all of the
property of either;
(g) The Servicer, the Seller, the Issuer or the Depositor
shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of or otherwise
voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
(h) The occurrence and continuance of an "Event of Default"
under the Sale and Servicing Agreement as defined therein;
(i) The failure of the Seller or the Depositor to comply
with, or maintain the accuracy of, the Opinion Facts and Assumptions.
Section 5.02. Remedies; No Remedy Exclusive.
(a) Upon the occurrence of an Event of Default, the Insurer
may exercise any one or more of the rights and remedies set forth
below:
(i) exercise any rights and remedies under the
Transaction Documents in accordance with the terms of the
Transaction Documents or direct the Indenture Trustee to
exercise such remedies in accordance with the terms of the
Transaction Documents; or
(ii) take whatever action at law or in equity as
may appear necessary or desirable in its judgment to collect
the amounts then due under the Transaction Documents or to
enforce performance and observance of any obligation,
agreement or covenant of the Servicer, the Indenture
Trustee, the Seller, the Issuer or the Depositor under the
Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other
available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Transaction Documents or
existing at law or in equity. No delay or omission to exercise any
right or power accruing under the Transaction Documents upon the
happening of any event set forth in Section 5.01 hereof shall impair
any such right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and
as often as may be deemed expedient. In order to entitle the Insurer
to exercise any remedy reserved to the Insurer in this Article, it
shall not be necessary to give any notice, other than such notice as
may be required in this Article V.
Section 5.03. Waivers.
(a) No failure by the Insurer to exercise, and no delay by
the Insurer in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by the Insurer of any right hereunder
shall not preclude the exercise of any other right, and the remedies
provided herein to the Insurer are declared in every case to be
cumulative and not exclusive of any remedies provided by law or
equity.
(b) The Insurer shall have the right, to be exercised in its
complete discretion, to waive any Event of Default hereunder, by a
writing setting forth the terms, conditions and extent of such waiver
signed by the Insurer and delivered to the Servicer, the Indenture
Trustee, the Seller, the Issuer and the Depositor. Unless such
writing expressly provides to the contrary, any waiver so granted
shall extend only to the specific event or occurrence which gave rise
to the Event of Default so waived and not to any other similar event
or occurrence which occurs subsequent to the date of such waiver.
Article VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. This Insurance Agreement may be
amended, modified or terminated only by written instrument or written
instruments signed by the parties hereto. The Servicer agrees to promptly
provide a copy of any amendment to this Insurance Agreement to the Indenture
Trustee, S&P and Moody's. No act or course of dealing shall be deemed to
constitute an amendment, modification or termination hereof.
Section 6.02. Notices. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally
delivered or telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-Structured
Finance (IPM-SF)
(ACE Securities Corp.,
Home Loan Trust 1999-A)
Telecopy No.: (914) 765-3810
Confirmation: (914) 765-3781
(in each case in which notice or other
communication to the Insurer refers to an Event of
Default, a claim on the Policy or with respect to
which failure on the part of the Insurer to respond
shall be deemed to constitute consent or
acceptance, then a copy of such notice or other
communication should also be sent to the attention
of each of the general counsel and the Insurer and
shall be marked to indicate "URGENT MATERIAL
ENCLOSED.")
(b) To the Seller:
German American Capital Corporation
c/o Deutsche Bank Securities Inc.
31 West 52nd Street
New York, NY 10019
Attention: [ ]
Telecopy No.: [( ) - ]
Confirmation: [( ) - ]
(c) To the Servicer:
GMAC Mortgage Corporation
500 Enterprise Road, Suite 500
Horsham PA 18944
Attention: Anthony N. Renzi, Managing Director
Telecopy No.: (215) 682-4617]
Confirmation: (215) 682-1999]
with a copy to:
GMAC Mortgage Corporation
100 Witmer Road
Horsham PA 18944
Attention: Peter Hender, Associate Counsel
Telecopy No.: (215) 682-1467
Confirmation: (215) 682-3367
(d) To the Indenture Trustee:
First Union National Bank
230 South Tryon Street
Charlotte, NC 28288-1179
Attention: Structured Finance Trust Group
Telecopy No.: (704) 383-7316
Confirmation: (704) 383-5272
(e) To the Depositor:
ACE Securities Corp.
6525 Morrison Blvd.
Charlotte, North Carolina 28211
Attention: Elizabeth Eldridge
Telecopy No.: (704) 365-1362
Confirmation: (704) 365-0569
(f) To the Issuer:
ACE Securities Corp. Home Loan Trust 1999-A
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attention: Corporate Trust Department
Telecopy No.: (302)651-8882
Confirmation: (302)651-1749
A party may specify an additional or different address or addresses
by writing mailed or delivered to the other parties as aforesaid. All such
notices and other communications shall be effective upon receipt.
Section 6.03. Severability. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other
remedy available to it.
Section 6.04. Governing Law. This Insurance Agreement shall be
governed by and construed in accordance with the laws of the State of New York
WITHOUT REGARD TO CHOICE OF LAW PROVISIONS.
Section 6.05. Consent to Jurisdiction.
(a) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York located
in the City and County of New York, and any appellate court from any
thereof, in any action, suit or proceeding brought against it and to
or in connection with any of the Transaction Documents or the
Transaction contemplated thereunder or for recognition or enforcement
of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action
or proceeding may be heard or determined in such New York state court
or, to the extent permitted by law, in such federal court. The
parties hereto agree that a final judgment in any such action, suit
or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. To the extent permitted by applicable law, the parties hereto
hereby waive and agree not to assert by way of motion, as a defense
or otherwise in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such courts, that
the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper or that
the related documents or the subject matter thereof may not be
litigated in or by such courts.
(b) To the extent permitted by applicable law, the parties
hereto shall not seek and hereby waive the right to any review of the
judgment of any such court by any court of any other nation or
jurisdiction which may be called upon to grant an enforcement of such
judgment.
(c) Except as provided in Section 4.06 herein, nothing
contained in this Insurance Agreement shall limit or affect the
Insurer's right to serve process in any other manner permitted by law
or to start legal proceedings relating to any of the Transaction
Documents against any party hereto or its or their property in the
courts of any jurisdiction.
Section 6.06. Consent of the Insurer. In the event that the consent
of the Insurer is required under any of the Transaction Documents, the
determination whether to grant or withhold such consent shall be made by the
Insurer in its sole discretion without any implied duty towards any other
Person.
Section 6.07. Counterparts. This Insurance Agreement may be executed
in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.
Section 6.08. Headings. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
Section 6.09. Trial by Jury Waived. Each party hereto hereby waives,
to the fullest extent permitted by law, any right to a trial by jury in
respect of any litigation arising directly or indirectly out of, under or in
connection with any of the Transaction Documents or any of the Transaction
contemplated thereunder. Each party hereto (A) certifies that no
representative, agent or attorney of any party hereto has represented,
expressly or otherwise, that it would not, in the event of litigation, seek to
enforce the foregoing waiver and (B) acknowledges that it has been induced to
enter into the Transaction Documents to which it is a party by, among other
things, this waiver.
Section 6.10. Limited Liability. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Obligations or the Policy, it being expressly
agreed and understood that each Transaction Document is solely a corporate
obligation of each party hereto, and that any and all personal liability,
either at common law or in equity, or by statute or constitution, of every
such officer, employee, director, affiliate or shareholder for breaches by any
party hereto of any obligations under any Transaction Document is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Insurance Agreement.
Section 6.11. Entire Agreement. The Transaction Documents and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of such subject matter.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By
---------------------------------
Title
------------------------------
GMAC MORTGAGE CORPORATION,
as Servicer
By
---------------------------------
Title
------------------------------
GERMAN AMERICAN CAPITAL
CORPORATION, as Seller
By
---------------------------------
Title
------------------------------
By
---------------------------------
Title
------------------------------
ACE SECURITIES CORP., as Depositor
By
---------------------------------
Title
------------------------------
FIRST UNION NATIONAL BANK,
as Indenture Trustee
By
---------------------------------
Title
------------------------------
ACE SECURITIES CORP. HOME LOAN
TRUST 1999-A, as Issuer
By: Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By
---------------------------------
Title
------------------------------
ACE SECURITIES CORP. HOME LOAN TRUST 1999-A,
as Issuer
ACE SECURITIES CORP.,
as Depositor
GMAC MORTGAGE CORPORATION,
as Servicer
and
FIRST UNION NATIONAL BANK,
as Indenture Trustee
SALE AND SERVICING AGREEMENT
Dated as of August 1, 1999
--------------
ACE Securities Corp. Home Loan Trust 1999-A
Asset Backed Securities
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions:..............................................1
Section 1.02. Provisions of General Application........................24
ARTICLE II
CONVEYANCE OF HOME LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Home Loans; Special Deposit; Priority
and Subordination of Ownership Interests.................25
Section 2.02. Possession of Mortgage Files; Access to
Mortgage Files ..........................................26
Section 2.03. Delivery of Home Loan Documents and Note
Insurance Policy ........................................27
Section 2.04. Acceptance by Indenture Trustee of the Home Loans;
Certain Substitutions; Certification.....................29
Section 2.05. Further Action Evidencing Assignment.....................31
Section 2.06. Conveyance of the Subsequent Home Loans..................31
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer..........................31
Section 3.02. Representations, Warranties and Covenants
of the Depositor.........................................32
Section 3.03. Purchase And Substitution................................34
ARTICLE IV
[RESERVED]
ARTICLE V
ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 5.01. Appointment of the Servicer..............................35
Section 5.02. Subservicers.............................................36
Section 5.03. Collection of Certain Home Loan Payments;
Collection Account ......................................37
Section 5.04. Permitted Withdrawals from the Collection Account........40
Section 5.05. [Reserved]...............................................41
Section 5.06. [Reserved]...............................................41
Section 5.07. [Reserved]...............................................41
Section 5.08. Fidelity Bond; Errors and Omissions Policy...............41
Section 5.09. [Reserved]...............................................41
Section 5.10. Periodic Filings With The Securities And
Exchange Commission; Additional Information..............41
Section 5.11. Assumption Agreements....................................42
Section 5.12. Realization Upon Defaulted Home Loans....................42
Section 5.13. Indenture Trustee to Cooperate; Release of
Mortgage Files ..........................................45
Section 5.14. Servicing Fee............................................46
Section 5.15. Reports to the Indenture Trustee and the
Depositor and the Note Insurer; Collection Account
Statements ..............................................46
Section 5.16. Annual Statement as to Compliance........................47
Section 5.17. Annual Independent Public Accountants' Servicing Report..47
Section 5.18. [Reserved]...............................................47
Section 5.19. Reports to be Provided by the Servicer...................48
Section 5.20. [Reserved]...............................................48
Section 5.21. Servicing Advances.......................................48
Section 5.22. Inspections by Note Insurer..............................49
Section 5.23. Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer..................49
Section 5.24. Assignment of Agreement by Servicer; Servicer
Not to Resign ...........................................49
Section 5.25. Information Reports to be Filed by the Servicer..........50
Section 5.26. MERS.....................................................50
Section 5.27. [Reserved]...............................................50
Section 5.28. [Reserved]...............................................50
Section 5.29. Notices of Material Events...............................50
Section 5.30. [Reserved]...............................................51
Section 5.31. Superior Liens...........................................51
Section 5.32. No Personal Solicitation.................................51
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01. Establishment of Trust Accounts and Certificate
Distribution Account; Deposits to the Trust Accounts
and Certificate Distribution Account ....................52
Section 6.02. Permitted Withdrawals from the Note Distribution
Account and the Certificate Distribution Account.........58
Section 6.03. Collection of Money......................................58
Section 6.04. The Note Insurance Policy................................58
Section 6.05. Distributions............................................60
Section 6.06. [Reserved]...............................................61
Section 6.07. Reports by Indenture Trustee.............................61
Section 6.08. Additional Reports by Indenture Trustee..................64
Section 6.09. [Reserved]...............................................64
Section 6.10. Effect of Payments by the Note Insurer; Subrogation......64
Section 6.11. Allocation of Realized Losses............................65
Section 6.12. Pre-Funding Account......................................65
Section 6.13. Capitalized Interest Account.............................65
Section 6.14. Determination of LIBOR...................................65
Section 6.15. The Reserve Fund.........................................65
ARTICLE VII
DEFAULT
Section 7.01. Events of Default........................................66
Section 7.02. Indenture Trustee to Act; Appointment of Successor.......68
Section 7.03. Waiver of Defaults.......................................70
Section 7.04. Home Loans, Trust Estate and Accounts Held
for Benefit of the Note Insurer .........................71
Section 7.05. Rights of the Note Insurer to Exercise
Rights of Securityholders ...............................71
Section 7.06. Indenture Trustee to Act Solely with Consent
of the Note Insurer .....................................71
ARTICLE VIII
TERMINATION
Section 8.01. Termination..............................................71
ARTICLE IX
[RESERVED]
ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Limitation on Liability of the Depositor
and the Servicer ........................................73
Section 11.02. Acts of Securityholders..................................74
Section 11.03. Amendment................................................75
Section 11.04. Recordation of Agreement.................................76
Section 11.05. Notices..................................................76
Section 11.06. Severability of Provisions...............................77
Section 11.07. Counterparts.............................................77
Section 11.08. Successors and Assigns...................................77
Section 11.09. Headings.................................................77
Section 11.10. Note Insurer Default.....................................77
Section 11.11. Third Party Beneficiary..................................77
Section 11.12. [Reserved.]..............................................77
Section 11.13. Notice to Rating Agencies and Note Insurer...............77
Section 11.14. Governing Law............................................78
Section 11.15. Appointment of Agent.....................................78
Section 11.16. Taxes....................................................78
EXHIBITS
Exhibit A Note Insurance Policy
Exhibit B Mortgage File
Exhibit C Home Loan Schedule
Exhibit D Acknowledgment of Receipt
Exhibit E Initial Certification
Exhibit F Final Certification
Exhibit G Request For Release of Documents
Exhibit H Form of Liquidation Report
Exhibit I Certificate Re Prepaid Loans
Exhibit J Subsequent Transfer Instrument
Exhibit K Forms of Lost Note Affidavit
SALE AND SERVICING AGREEMENT, dated as of August 1, 1999, by and
among ACE Securities Corp. Home Loan Trust 1999-A, a Delaware business trust,
in its capacity as issuer (the "Issuer"), ACE Securities Corp., a Delaware
corporation, in its capacity as depositor (the "Depositor"), GMAC Mortgage
Corporation, a Pennsylvania corporation, in its capacity as servicer (the
"Servicer"), and First Union National Bank, a national banking association, in
its capacity as indenture trustee (the "Indenture Trustee").
PRELIMINARY STATEMENT:
WHEREAS, the Issuer desires to purchase a pool of Home Loans that
were originated or purchased by German American Capital Corporation (the
"Seller") in the ordinary course of business of the Seller;
WHEREAS, the Depositor is willing to sell such Home Loans to the
Issuer; and
WHEREAS, the Servicer is willing to service such Home Loans in
accordance with the terms of this Agreement on behalf of the Custodian, the
Owner Trustee, the Indenture Trustee and the Note Insurer;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Issuer, the Depositor, the Servicer and the Indenture Trustee
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions: Whenever used herein, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings.
Accepted Servicing Practices: The Servicer's normal servicing
practices, which in all material respects will conform to its mortgage
servicing practices for mortgage loans of the same type as the Home Loans
which it services.
Account: Any Eligible Account established pursuant to Sections 5.03,
6.01 or 6.04 hereof.
Accrual Period: With respect to any Distribution Date and any Class
of LIBOR Securities, the one-month period beginning on the immediately
preceding Distribution Date (or on the Closing Date, in the case of the first
Accrual Period) and ending on the day immediately preceding the related
Distribution Date. With respect to any Distribution Date and any other Class
of Securities, the calendar month immediately preceding the month in which
such Distribution Date occurs.
Act: The Securities Act of 1933, as amended.
Addition Notice: Not applicable.
Administration Agreement: The Administration Agreement dated as of
August 1, 1999, between Bankers Trust Company, as administrator, and the
Issuer.
Administrator: Bankers Trust Company, in its capacity as
administrator under the Administration Agreement and in its capacity as agent
under the Agency Agreement.
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agency Agreement: The Agency Agreement dated as of August 1, 1999,
between Bankers Trust Company, as agent, and the Indenture Trustee.
Agreement: This Sale and Servicing Agreement, including the Exhibits
hereto, and all amendments hereof and supplements hereto.
Applied Loss Amount: Not applicable.
Assignment Of Mortgage: With respect to each Home Loan, an assignment
of the Mortgage, notice of transfer or equivalent instrument, in recordable
form, sufficient under the laws of the jurisdiction wherein the related
Mortgaged Property is located to reflect of record the sale of the Mortgage to
the Indenture Trustee for the benefit of the Securityholders and the Note
Insurer.
Available Collection Amount: With respect to any Distribution Date,
the sum of (a) all amounts received in respect of the Home Loans or paid by
the Servicer, the Seller or the Depositor (exclusive of amounts not required
to be deposited in the Collection Account) during the related Due Period (and,
in the case of amounts required to be paid by the Seller in connection with
the purchase or substitution of a Deleted Home Loan, deposited in the
Collection Account on or before the related Determination Date), as reduced by
any portion thereof that may not be withdrawn therefrom pursuant to an order
of a United States bankruptcy court of competent jurisdiction imposing a stay
pursuant to Section 362 of the United States Bankruptcy Code, (b) with respect
to the final Distribution Date, or an early redemption or termination of the
Securities pursuant to Section 8.01(b), the Termination Price, and (c) any
income or gain from investment of funds in the Collection Account.
Available Funds: With respect to any Distribution Date, the Available
Collection Amount for such date less the Servicing Fee and any Retained
Amounts for such date.
Base Specified Overcollateralization Amount: With respect to any
Distribution Date on which a Step-up Trigger Event has not occurred or is not
continuing, the product of 21.65% and the Cut-off Date Balance; with respect
to any Distribution Date on which a Step-up Trigger Event has occurred or is
continuing, the product of 27.00% and the Cut-off Date Balance.
Basic Documents: This Agreement, the Indenture, the Trust Agreement,
the Home Loan Sale Agreement, the Administration Agreement, the Agency
Agreement and the Custodial Agreement.
Basis Risk Shortfall: Not applicable.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
BPO: A broker's price opinion with respect to a Mortgaged Property.
Business Day: Any day other than (a) a Saturday or Sunday, (b) a day
on which the Note Insurer is closed or (c) a day on which banking institutions
in the State of New York, the State of California, the State of Pennsylvania
or (if other than New York) the city in which the Indenture Trustee's
corporate trust office is located are authorized or obligated by law or
executive order to be closed.
Calculated Loss Percentage: With respect to any Distribution Date,
the fraction, expressed as a percentage, the numerator of which is the Total
Expected Losses for such Distribution Date and the denominator of which is the
Cut-off Date Balance.
Capitalized Interest Account: Not applicable.
Capitalized Interest Amount: Not applicable.
Certificate(s): Any Residual Interest Certificate.
Certificate Distribution Account: The account established in
accordance with Section 6.01(a)(iii) hereof and maintained on behalf of the
Owner Trustee.
Certificateholder: The holder of a Residual Certificate.
Certificate Register: As defined in the Trust Agreement.
Class: All Securities having the same class designation.
Class Notional Amount: Not applicable.
Class Principal Amount: With respect to each Class of Securities
other than the Residual Interest Certificates and any Class of Notional
Securities, the aggregate of the Principal Amounts of all Securities of such
Class at the date of determination.
Closing Date: August 13, 1999.
Collection Account: The account established in accordance with
Sections 5.03(b) and 6.01(a)(i) hereof and maintained by the Servicer, on
behalf of the Indenture Trustee.
Combination Loan: A loan, the proceeds of which were used by the
Mortgagor in combination to finance property improvements and for debt
consolidation or other purposes.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements
constituting the Cooperative Property and which governs the Cooperative
Property, which Cooperative Corporation must qualify as a Cooperative Housing
Corporation under Section 216 of the Code.
Cooperative Loan: Any Home Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Loan Documents: With respect to any Cooperative Loan, (i)
the Cooperative Shares, together with a stock power in blank; (ii) the
original executed Security Agreement and the assignment of the Security
Agreement endorsed in blank; (iii) the original executed Proprietary Lease and
the assignment of the Proprietary Lease endorsed in blank; (iv) the original
executed Recognition Agreement and the assignment of the Recognition Agreement
(or a blanket assignment of all Recognition Agreements) endorsed in blank; (v)
the executed UCC-1 financing statement with evidence of recording thereon,
which has been filed in all places required to perfect the security interest
in the Cooperative Shares and the Proprietary Lease; and (vi) executed UCC-3
financing statements (or copies thereof) or other appropriate UCC financing
statements required by state law, evidencing a complete and unbroken line from
the mortgagee to the Indenture Trustee with evidence of recording thereon (or
in a form suitable for recordation).
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal office of the Indenture
Trustee, at which its corporate trust business shall be administered, which
office at the date of execution of this Agreement is located at 230 South
Tryon Street, 9th Floor, Charlotte, North Carolina 28288-1179, Attention:
Structured Finance Trust Group, or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders, the Note
Insurer and the Issuer, or the principal corporate trust office of any
successor Indenture Trustee at the address designated by such Indenture
Trustee by notice to the Noteholder, the Note Insurer and the Issuer.
Credit Score: With respect to any mortgagor, a numerical assessment
of default risk with respect to such mortgagor, determined generally on the
basis of a methodology developed by Fair, Isaac and Company.
Cumulative Realized Losses: With respect to any date of
determination, the aggregate of all Realized Losses from the Cut-off Date
through the immediately preceding Determination Date.
Curtailment: With respect to a Home Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Home Loan in full, nor is intended to cure a
delinquency.
Custodial Agreement: Any custodial agreement entered into by the
Indenture Trustee in accordance with this Agreement. Initially, the Custodial
Agreement dated as of August 1, 1999, among Norwest Bank Minnesota, National
Association, the Indenture Trustee, the Servicer and the Issuer, as such may
be amended or supplemented from time to time.
Custodian: As defined in Section 2.02(c). Initially, the Custodian
shall be Norwest Bank Minnesota, National Association.
Custodian Compensation: All amounts payable or reimbursable to the
Custodian pursuant to Sections 11, 12, 13, 14, 15 and 20 of the Custodial
Agreement; provided that any fees and expenses of attorneys payable pursuant
to Section 11 thereof shall not exceed $75,000 per calendar year (on an
average basis), so that any excess not paid pursuant to Section 605(b)(i)
eighth shall be paid in a subsequent year.
Cut-off Date: August 1, 1999.
Cut-off Date Balance: The Total Loan Balance as of the Cut-off Date.
DCR: Duff & Phelps Credit Rating Co., or its successor in interest.
Debt Consolidation Loan: A loan, the proceeds of which were primarily
used by the related Mortgagor for debt consolidation purposes or purposes
other than to finance property improvements.
Deferred Amount: Not applicable.
Deficiency Amount: With respect to any Distribution Date, the excess,
if any, of (a) the sum of (i) for any Distribution Date, the Noteholders'
Interest Distribution Amount and (ii) for any Distribution Date on which the
Overcollateralization Amount is zero, the amount by which the Class Principal
Amount of the Notes as of such Distribution Date (before giving effect to
distributions of principal on the Notes on such Distribution Date) exceeds the
Total Loan Balance for such Distribution Date over (b) the Available Funds
(net of the Premium Amount payable to MBIA, and if GMACM is no longer the
Servicer, the Owner Trustee Compensation and the Custodian Compensation) for
such Distribution Date.
Deleted Home Loan: A Home Loan replaced by or to be replaced by a
Qualified Substitute Home Loan.
Delinquency Loss Factor: With respect to any Distribution Date, the
aggregate of the Principal Balances of all Home Loans that are (a) 30 to 59
days Delinquent, multiplied by 50%, (b) 60 to 89 days Delinquent, multiplied
by 75%, and (c) 90 or more days Delinquent.
Delinquent: A Home Loan is "delinquent" if any payment due thereon is
not made by the close of business on the day such payment is scheduled to be
due. A Home Loan is "30 days delinquent" if such payment has not been received
by the close of business on the corresponding day of the month immediately
succeeding the month in which such payment was due, or, if there is no such
corresponding day (e.g., as when a 30-day month follows a 31- day month in
which a payment was due on the 31st day of such month) then on the last day of
such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
Depositor: ACE Securities Corp., a Delaware corporation, and any
successor thereto.
Designated Depository Institution: With respect to the Collection
Account, the trust department of a federal or state chartered depository
institution acceptable to the Note Insurer, acting in its fiduciary capacity,
having combined capital and surplus of at least $100,000,000; provided,
however, that if the Collection Account is not maintained with the Indenture
Trustee, (i) such institution shall have a long-term debt rating of at least
"A" or the equivalent by each Rating Agency and (ii) the Servicer shall
provide the Indenture Trustee and the Note Insurer with a statement
identifying the location and account information of the Collection Account
upon a change in the location of such account.
Determination Date: With respect to each Distribution Date, the last
day of the month immediately preceding the month in which such Distribution
Date occurs.
Distribution Date: The 20th day of any month, or if such 20th day is
not a Business Day, the first Business Day immediately following, commencing
in September 1999.
Drive-by Inspection: An inspection report made by an independent
third party acceptable to FNMA or FHLMC for the conduct of drive-by
inspections, which report shall include a photograph of the Mortgaged
Property.
Due Date: With respect to any Home Loan, the day of the month in
which the related Monthly Payment is due.
Due Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which such Distribution Date occurs.
Eligible Account: Either (A) a segregated account or accounts
maintained with an institution (which may include the Indenture Trustee,
provided such institution otherwise meets these requirements) whose deposits
are insured by the FDIC, the unsecured and uncollateralized debt obligations
of which institution shall be rated AA (or the equivalent) or better by each
Rating Agency and in the highest short term rating category by each Rating
Agency, and which is (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking
laws, (ii) an institution duly organized, validly existing and in good
standing under the applicable banking laws of any state, (iii) a national
banking association (including the Indenture Trustee) duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the Note
Insurer and each Rating Agency or (B) a segregated trust account or accounts
maintained with the corporate trust department of a federal or state chartered
depository institution acceptable to each Rating Agency and the Note Insurer
(the Indenture Trustee and the Custodian shall be deemed acceptable, provided
that the Indenture Trustee or the Custodian, as applicable, otherwise meets
these requirements), having capital and surplus of not less than $100,000,000,
acting in its fiduciary capacity.
Entitlement Holder: The meaning specified in Section 8-102(a)(7) of
the New York UCC.
Entitlement Order: The meaning specified in Section 8-102(a)(8) of
the New York UCC (i.e., generally, orders directing the transfer or redemption
of any Financial Asset).
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Event Of Default: One or more of the events described in Section 7.01
hereof.
Excess Spread: With respect to any Distribution Date, the amount, if
any, by which (a) the Available Funds for such Distribution Date exceed (b)
the sum of the Regular Principal Distribution Amount, the Noteholders'
Interest Distribution Amount, the Premium Amount and the Reimbursement Amount
and, if GMACM is no longer the Servicer, the Owner Trustee Compensation and
the Custodian Compensation.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
Fee Letter Agreement: The fee letter agreement between the Owner
Trustee and the Seller attached as Exhibit F to the Trust Agreement.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
Financial Asset: The meaning specified in Section 8-102(a)(9) of the
New York UCC.
Fitch: Fitch ICBA, Inc., or its successor in interest.
FNMA: The Federal National Mortgage Association and any successor
thereto.
Foreclosure Property: Any real property or personal property securing
a Home Loan that has been acquired by the Servicer through foreclosure, deed
in lieu of foreclosure or similar proceedings in respect of the related Home
Loan.
GMACM: GMAC Mortgage Corporation.
Home Improvement Loan: A loan, the net proceeds of which were or will
be used by the Mortgagor to finance property improvements.
Home Loan: An individual Home Improvement Loan, Debt Consolidation
Loan, Combination Loan, Purchase or Refinance Loan that is assigned and
transferred to the Indenture Trustee pursuant to this Agreement and identified
on Exhibit D hereto. As applicable, Home Loan shall be deemed to refer to the
related Mortgage, Mortgage Note and any related Foreclosure Property.
Home Loan Sale Agreement: The Home Loan Sale Agreement dated as of
August 1, 1999, between the Seller and the Depositor.
Home Loan Schedule: The list of the Home Loans transferred to the
Indenture Trustee or the Custodian on behalf of the Indenture Trustee on or
before the Closing Date or Subsequent Transfer Date and attached hereto as
Exhibit C and delivered in computer readable format, which list shall set
forth at a minimum the following information as to each Home Loan:
(i) the full name of the Mortgagor;
(ii) the Home Loan identifying number;
(iii) the current or original, as applicable, Monthly Payment
as of the Cut-off Date;
(iv) the scheduled first payment date;
(v) the scheduled maturity date;
(vi) the original Principal Balance;
(vii) the Principal Balance as of the Cut-off Date;
(viii) the current, or original, as applicable, Mortgage Rate
as of the Cut-off Date;
(ix) the complete address of the Mortgagor;
(x) the Credit Score; and
(xi) the combined loan-to-value ratio at origination.
Such schedule may consist of multiple reports that collectively set
forth all of the information required.
HUD: The United States Department of Housing and Urban Development.
Indenture: The Indenture dated as of August 1, 1999, between the
Issuer and the Indenture Trustee.
Indenture Trustee: First Union National Bank, a national banking
association, or its successor in interest, or any successor trustee appointed
as herein provided.
Indenture Trustee Fee: Not applicable.
Indenture Trustee Fee Rate: Not applicable.
Indenture Trustee Remittance Report: As defined in Section 6.07.
Initial Capitalized Interest Amount: Not applicable.
Initial LIBOR Rate: Not applicable.
Initial Home Loan: Not applicable.
Insurance Agreement: The Insurance Agreement dated as of August 1,
1999 among the Note Insurer, the Seller, the Depositor, the Servicer, the
Issuer and the Indenture Trustee, as such agreement may be amended or
supplemented in accordance with the provisions thereof.
Insurance Policy: Any standard hazard insurance policy, flood
insurance policy, earthquake insurance policy or title insurance policy
relating to a Home Loan or a Mortgaged Property.
Insurance Proceeds: With respect to each Distribution Date and any
Home Loan, an amount equal to the proceeds received by the Indenture Trustee
or the Servicer by any insurer pursuant to any insurance policy covering a
Home Loan, Mortgaged Property or Foreclosure Property or any other insurance
policy that related to a Home Loan, net of any expenses incurred by the
Indenture Trustee or the Servicer in connection with the collection of those
proceeds and not otherwise reimbursed, but excluding any proceeds that are to
be applied to the restoration or repair of the Mortgaged Property or released
to the related Mortgagor in accordance with Accepted Servicing Practices.
Insured Note: Any Note.
Insured Noteholder: Any holder of an Insured Note.
Insured Payment: As defined in the Note Insurance Policy.
Interest Rate: With respect to each Class of Securities, the per
annum rate of interest applicable to Securities of such Class, as specified
below:
Class Interest Rate
A 7.749%(1)
Residual (2)
(1) The Interest Rate applicable to the Class A Notes remaining outstanding
will be increased by 0.50% with respect to each Distribution Date
occurring after the date on which the Majority Residual Interestholders
are first permitted to exercise the option to redeem or terminate the
Securities pursuant to Section 8.01(b).
(2) The Residual Interest Certificates will be issued without a Class
Principal Amount and will not bear interest.
Junior Home Loan: Any Home Loan secured by a junior lien on the
related Mortgaged Property.
Late Payment Rate: As defined in the Insurance Agreement.
LIBOR: With respect to each Accrual Period, the per annum rate
determined pursuant to Section 6.14 on the basis of London interbank offered
rate quotations for one-month Eurodollar deposits, as such quotations may
appear on the display designated as page 3750 on the Dow Jones Telerate
Service (or such other page as may replace such page on that service for the
purpose of displaying London interbank offered quotations of major banks).
LIBOR Security: Not applicable.
LIBOR Determination Date: The second London Business Day preceding
the commencement of each Accrual Period.
Liquidated Home Loan: A defaulted Home Loan as to which the Servicer
has determined that all recoverable liquidation and insurance proceeds have
been received, which will be deemed to occur upon the earlier of (a) the
liquidation of the related Mortgaged Property acquired through foreclosure or
similar proceedings, (b) the Servicer's determination in accordance with
customary servicing practices that no further amounts are collectible from the
Home Loan and any related security, or (c) the 180th day that any portion of a
scheduled monthly payment of principal and interest is past due.
Liquidation Proceeds: With respect to a Liquidated Home Loan, any
cash amounts received in connection with the liquidation of such Liquidated
Home Loan, whether through trustee's sale, foreclosure sale or other
disposition, and any other amounts required to be deposited in the Collection
Account pursuant to Section 5.12, in each case other than Post-Liquidation
Proceeds, Insurance Proceeds and Released Mortgaged Property Proceeds.
Loan Purchase Price: With respect to any Home Loan purchased from the
Trust Estate pursuant to this Agreement or the Home Loan Sale Agreement, the
sum of (i) the outstanding principal balance of such Home Loan as of the date
of purchase, (ii) all interest accrued thereon and unpaid to the end of the
Due Period during which such purchase occurs and (iii) the amount of any
Servicing Advances remaining unreimbursed with respect to such Home Loan.
London Business Day: Any day on which banks are open for dealing in
foreign currency and exchange in London, England and New York City.
Loss Rate Servicer Default Trigger Event: A Loss Rate Trigger Event
shall be deemed to have occurred with respect to any Distribution Date if the
Rolling Loss Percentage for such date exceeds 8.00%.
Lost Note Affidavit: Any lost note affidavit provided by FirstPlus
Financial, Inc. or the Seller, substantially in the forms attached hereto as
Exhibit K.
Maintenance: With respect to any Cooperative Unit, the rent or fee
paid by the Mortgagor to the Cooperative Corporation pursuant to the
Proprietary Lease.
Majority Residual Interestholders: The Holder or Holders of Residual
Interest Certificates evidencing Percentage Interests in excess of 51% of such
Class.
Majority Securityholders: The Holder or Holders of Securities
evidencing Percentage Interests in excess of 51% of each Class outstanding.
MERS: Mortgage Electronic Registration Systems, Inc., a Delaware
Corporation, or any successor in interest thereto.
MERS Home Loan: Any Home Loan as to which the related Mortgage, or an
Assignment of Mortgage, has been or will be recorded in the name of MERS, as
agent for the holder from time to time of the Mortgage Note.
Monthly Payment: As to any Home Loan and any Due Date, the scheduled
payment of principal and interest due thereon for such Due Date.
Moody's: Moody's Investors Service, or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
lien on the Mortgaged Property.
Mortgage File: The mortgage documents listed in Exhibit B attached
hereto pertaining to a particular Home Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement; provided
that whenever the term "Mortgage File" is used to refer to documents actually
received by the Indenture Trustee or the Custodian on behalf of the Indenture
Trustee, such term shall not be deemed to include such additional documents
required to be added unless they are actually so added.
Mortgage Note: The original, executed note or other evidence of the
indebtedness of a Mortgagor under a Home Loan.
Mortgage Pool: The aggregate of the Home Loans identified on the Home
Loan Schedule.
Mortgage Rate: As to any Home Loan, the per annum rate at which
interest accrues under the related Mortgage Note.
Mortgaged Property: The underlying property securing a Home Loan,
consisting of a fee simple estate in a single parcel of land improved by a
Residential Dwelling.
Mortgagor: The obligor on a Mortgage Note.
Net Liquidation Proceeds: With respect to each Distribution Date, an
amount equal to any cash amounts received during the related Due Period from
Liquidated Home Loans, whether through trustee's sale, foreclosure sale,
disposition of Foreclosure Properties, whole loan sales or otherwise (other
than Insurance Proceeds and Released Mortgaged Property Proceeds), and any
other cash amounts received during the related Due Period in connection with
the management of the Mortgaged Properties from Deleted Home Loans, in each
case, net of any reimbursements to the Servicer made from such amounts for any
unreimbursed Servicing Advances made with respect to the related Liquidated
Home Loans or Mortgaged Properties and any other fees and expenses paid in
connection with the foreclosure, conservation and liquidation of the related
Liquidated Home Loans or Mortgaged Properties pursuant to Section 5.12 hereof.
Net Mortgage Rate: Not applicable.
Net Worth: As of any date of determination, (a) assets of the
Servicer and its subsidiaries minus (b) all indebtedness of the Servicer and
its subsidiaries, calculated in each case in accordance with generally
accepted accounting principles.
NOI: A notice of intent to foreclose delivered by the Servicer to the
applicable Mortgagor in compliance with applicable law.
Non-MERS Home Loan: Any Home Loan other than a MERS Home Loan. As of
the Closing Date, each Home Loan is a Non-MERS Home Loan.
Nonrecoverable Advances: With respect to any Home Loan, any Servicing
Advances previously made and not reimbursed from late collections or other
recoveries in respect of the related Home Loan.
Non-reduction Trigger Event: A Non-reduction Trigger Event will have
occurred with respect to any Distribution Date if (a) prior to the
Distribution Date in September 2002, the Three Month Annualized Loss Rate for
such Distribution Date exceeds 6.00% and (b) on and after the Distribution
Date in September 2002, the Three Month Annualized Loss Rate for such
Distribution Date exceeds 4.00%. Following the occurrence of any of a
Non-reduction Trigger Event, such event shall be deemed to be continuing on
succeeding Distribution Date until the following is true for each of six
consecutive Distribution Dates: the Three Month Annualized Loss Rate is less
than the applicable level specified in the first sentence above.
Note(s): One or more of the Class A Notes.
Note Distribution Account: The account established in accordance with
Section 6.01(a)(ii) hereof and maintained by or on behalf of the Indenture
Trustee.
Note Insurance Payment Account: The Note Insurance Payment Account
established in accordance with Section 6.04(c) hereof and maintained on behalf
of the Indenture Trustee.
Note Insurance Policy: The Note Guaranty Insurance Policy No. 29900,
dated the Closing Date, and any endorsements thereto, issued by the Note
Insurer for the benefit of Holders of the Insured Notes, a copy of which is
attached hereto as Exhibit A.
Note Insurer: MBIA Insurance Corporation, a stock insurance company
organized and created under the laws of the State of New York, and any
successors thereto.
Note Insurer Default: Any failure by the Note Insurer to make a
payment required under the Note Insurance Policy in accordance with its terms,
which failure continues unremedied for five Business Days.
Note Register: As defined in the Indenture.
Noteholder: Each holder of a Note.
Noteholders' Interest Carryforward Amount: With respect to any
Distribution Date, the excess, if any, of the Noteholders' Monthly Interest
Distributable Amount for the immediately preceding Distribution Date and any
Noteholders' Interest Carryforward Amount remaining outstanding with respect
to prior Distribution Dates, over the amount in respect of interest that was
paid on the Notes on such immediately preceding Distribution Date, and
interest on that amount for the related Accrual Period at the Interest Rate.
Noteholders' Interest Distribution Amount: With respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distribution
Amount for such Distribution Date and the Noteholders' Interest
Carryforward Amount for such Distribution Date.
Noteholders' Monthly Interest Distribution Amount: With respect to
any Distribution Date, the aggregate of interest accrued for the related
Accrual Period at the applicable Interest Rate on the Class Principal Amount
of the Notes immediately preceding such Distribution Date.
Notional Security: Not applicable.
Offering Document: The Prospectus.
Officer's Certificate: A certificate signed by the Chairman of the
Board, the President or a Vice President and the Treasurer, the Secretary, one
of the Assistant Treasurers or Assistant Secretaries or a Servicing Officer of
the Seller, the Servicer, or the Depositor, as required by this Agreement.
Opinion of Counsel: A written opinion of counsel, which opinion shall
be acceptable in form and substance to the Indenture Trustee and the Note
Insurer and delivered to the Indenture Trustee and the Note Insurer from
counsel reasonably acceptable to each addressee of such opinion and
experienced in matters relating to the subject of such opinion; except that
any opinion of counsel relating to federal income tax matters must be an
opinion of counsel who (i) is in fact independent of the Seller, the Servicer
and the Indenture Trustee, (ii) does not have any direct financial interest or
any material indirect financial interest in the Seller or the Servicer or the
Indenture Trustee or in an Affiliate thereof, (iii) is not connected with the
Seller or the Servicer or the Indenture Trustee as an officer, employee,
director or person performing similar functions and (iv) is reasonably
acceptable to the Note Insurer.
Optimal Principal Amount: With respect to any Distribution Date, an
amount equal to the Total Loan Balance as of the immediately preceding
Determination Date minus the Targeted Overcollateralization Amount for such
Distribution Date.
Original Pre-Funded Amount: Not applicable.
Outstanding Home Loan: As to any Due Date, a Home Loan which was not
the subject of a Principal Prepayment in Full prior to such Due Date, which
did not become a Liquidated Home Loan prior to such Due Date, and which was
not purchased by the Servicer or the Seller prior to such Due Date.
Overcollateralization Amount: With respect to any Distribution Date,
the amount, if any, by which (x) the Total Loan Balance for such Distribution
Date exceeds (y) the Class Principal Amount of the Notes after giving effect,
unless otherwise specified, to distributions in respect of the Notes on such
Distribution Date.
Overcollateralization Release Amount: With respect to any
Distribution Date, the lesser of (a) the Regular Principal Distribution Amount
and (b) the excess, if any, of the Overcollateralization Amount for such
Distribution Date over the Targeted Overcollateralization Amount for such
date.
Overcollateralization Shortfall: With respect to any Distribution
Date, the amount, if any, by which (x) the Targeted Overcollateralization
Amount for such Distribution Date exceeds (y) the Overcollateralization Amount
for such Distribution Date, calculated for this purpose before giving effect
to the reduction on such Distribution Date of the Class Principal Amount of
the Notes resulting from payments in respect of the Notes on such Distribution
Date.
Owner Trustee: Wilmington Trust Company, a Delaware banking
corporation, and any successor in interest, not in its individual capacity,
but solely as owner trustee under the Trust Agreement.
Owner Trustee Compensation: The Owner Trustee Fee and any other
amounts payable to the Owner Trustee under the fee agreement attached as
Exhibit F to the Trust Agreement.
Owner Trustee Fee: The annual fee of $4,000 payable to the Owner
Trustee pursuant to the Fee Letter Agreement.
Owner-Occupied Mortgaged Property: A Residential Dwelling as to which
the related Mortgagor represented an intent to occupy as such Mortgagor's
primary, secondary or vacation residence at the origination of the Home Loan.
Ownership Interest: As to any Security, any ownership or security
interest in such Security, including any interest in such Security as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
Payahead: With respect to any Home Loan and any Due Date therefor,
any Monthly Payment received by the Servicer during any Due Period in addition
to the Monthly Payment due on such Due Date, intended by the related Mortgagor
to be applied on a subsequent Due Date.
Percentage Interest: With respect to a Note and any date of
determination, the portion evidenced by such Note, expressed as a percentage
rounded to four decimal places, equal to a fraction the numerator of which is
the initial Principal Amount represented by such Note and the denominator of
which is the initial Class Principal Amount or Class Notional Amount of such
Class of Notes. With respect to a Residual Interest Certificate and any date
of determination, the portion evidenced thereby as stated on the face of such
Certificate.
Periodic Advance: Not applicable.
Permitted Investments: As used herein, Permitted Investments shall be
limited to the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States and
any obligation of, or guaranties by, FHLMC or FNMA (other than senior debt
obligations and mortgage pass-through certificates guaranteed by FHLMC or
FNMA) shall be a Permitted Investment; provided that at the time of such
investment, such investment is acceptable to the Note Insurer, but excluding
any of such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption;
(b) federal funds and certificates of deposit, time and demand
deposits and banker's acceptances (having original maturities of not more than
365 days) issued by any bank or trust company incorporated under the laws of
the United States or any state thereof and subject to supervision and
examination by federal or state banking authorities, provided that at the time
of such investment or contractual commitment providing for such investment the
short-term debt obligations of such bank or trust company at the date of
acquisition thereof have been rated in its highest rating by each Rating
Agency; provided that any such certificates of deposit must be secured at all
times by collateral described in clause (a) or (b) above, such collateral must
be held by a third party and the Indenture Trustee must have a perfected first
priority security interest in such collateral;
(c) commercial paper (having original maturities of not more than 180
days) rated in its highest rating by each Rating Agency;
(d) investments in money market funds rated in its highest rating by
each Rating Agency, which funds are registered under the Investment Company
Act of 1940 and whose shares are registered under the Act; and
(e) other investments approved by the Rating Agencies and the Note
Insurer in writing delivered to the Indenture Trustee;
provided that each such Permitted Investment shall be a "permitted investment"
within the meaning of Section 860G(a)(5) of the Code and that no instrument
described hereunder shall evidence either the right to receive (x) only
interest with respect to the obligations underlying such instrument or (y)
both principal and interest payments derived from obligations underlying such
instrument and the interest and principal payments with respect to such
instrument provided a yield to maturity at par greater than 120% of the yield
to maturity at par of the underlying obligations; and provided, further, that
no instrument described hereunder may be purchased at a price greater than
par.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency
or political subdivision thereof.
Pool Balance: Not applicable.
Pool Percentage: Not applicable.
Post-Liquidation Proceeds: As defined in Section 5.12(b).
Post-Stepdown Overcollateralization Amount: With respect to any
Distribution Date (a) on or after the Stepdown Date and (b) with respect to
which (i) no claim has been made for payment under the Note Insurance Policy
and (ii) a Step-up Trigger Event has not occurred or is not continuing, the
greater at (A) the product of 43.30% and the Total Loan Balance as of the
related Determination Date and (B) the product of 1.00% and the Cut-off Date
Balance; with respect to any Distribution Date (x) on or after the Stepdown
Date and (y) with respect to which (1) no claim has been made for payment
under the Note Insurance Policy and (2) a Step-up Trigger Event has occurred
or is continuing, the greater at (A) the product of 54.00% and the Total Loan
Balance as of the related Determination Date and (B) the product of 1.00% and
the Cut-off Date Balance.
Preference Amount: Any amount previously distributed to an Insured
Noteholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.) as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Preference Claim: As defined in Section 6.04(e).
Pre-Funded Amount: Not applicable.
Pre-Funding Account: Not applicable.
Pre-Funding Period: Not applicable.
Premium Amount: On each Distribution Date, the product of 1/12 of the
Premium Percentage and the aggregate Principal Amount of the Insured Notes
immediately prior to the related Distribution Date.
Premium Percentage: The rate per annum set forth as the premium
percentage in the Insurance Agreement.
Premium Rate: With respect to any Distribution Date, the fraction,
expressed as a percentage, the numerator of which is the product of (i) the
Premium Percentage and (ii) the aggregate Principal Amount of the Insured
Notes immediately prior to such date, and the denominator of which is the
Total Loan Balance for the immediately preceding Distribution Date.
Principal Amount: With respect to any Security other than any
Notional Security or Residual Interest Certificate, the initial Principal
Amount thereof, less the amount of all principal distributions previously made
with respect to such Security and any Applied Loss Amount previously allocated
to such Security. The Notional Securities and Residual Interest Certificates
are issued without Principal Amounts.
Principal Balance: With respect to any date of determination and any
Home Loan or related Foreclosure Property, an amount equal to the Cut-off Date
principal balance of such Home Loan minus all principal reductions credited
against the Principal Balance of such Home Loan since such Cut-off Date
through the end of the immediately preceding Due Period; provided, however,
that the Principal Balance of a Liquidated Home Loan shall be zero.
Principal Distribution Amount: Not applicable.
Principal Prepayment in Full: Any payment or other recovery of
principal on a Home Loan equal to the outstanding principal balance thereof,
received in advance of the final scheduled Due Date.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The prospectus supplement dated August 6, 1999, together
with the accompanying prospectus dated July 26, 1999, relating to the Notes.
Qualified Substitute Home Loan: A home loan substituted for a Deleted
Home Loan which, on the date of such substitution, (i) has an interest rate
not more than 0.50% lower than the Mortgage Rate for the Deleted Home Loan,
(ii) matures not more than one year later than and not more than one year
earlier than the Deleted Home Loan, (iii) has a principal balance (after
application of all payments received on or prior to the date of substitution)
equal to or less than the Principal Balance of the Deleted Home Loan as of
such date, (iv) has a lien priority no lower than the Deleted Home Loan, (v)
has a related mortgagor with a Credit Score equal to or greater than the
Credit Score of the Mortgagor with respect to the Deleted Home Loan, and (vi)
complies as of the date of substitution with each representation and warranty
set forth in Section 1.04(b) of the Home Loan Sale Agreement and is not more
than 30 days delinquent as of the date of substitution for such loan; and
(vii) has a related mortgagor with a Credit Score at origination of not less
than 620. For purposes of determining whether multiple home loans proposed to
be substituted for one or more Deleted Home Loans pursuant to Section 3.03 are
in fact "Qualified Substitute Home Loans" as provided above, the criteria
specified in clauses (i), (ii), (iii), (v) and (vii) above may be considered
on an aggregate or weighted average basis, rather than on a loan-by-loan basis
(e.g., so long as the weighted average Mortgage Rate of any loans proposed to
be substituted is not less than nor more than one percentage point different
from the Mortgage Rate for the designated Deleted Home Loan or Home Loans and
the weighted average Credit Score of any Qualified Substitute Home Loans
cumulatively substituted is equal to the weighted average Credit Score of the
Deleted Home Loans, the requirements of clauses (i) and (v) above would be
deemed satisfied), except that, with respect to any such substitution, the
lowest Credit Score of any home loan substituted shall not be lower than the
lowest Credit Score of the related Deleted Home Loans.
Rating Agency: Each of Moody's and S&P. If no such organization or
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person
designated by the Note Insurer notice by which designation shall be given to
the Issuer, the Indenture Trustee, the Owner Trustee and the Servicer.
Realized Loss: With respect to any Liquidated Home Loan, the amount,
if any, by which the sum of the unpaid principal balance thereof plus interest
accrued and unpaid thereon exceeds the Net Liquidation Proceeds with respect
thereto.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the related Cooperative Corporation and the originator of
such Home Loan to establish the rights of such originator in the related
Cooperative Property.
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month immediately preceding the month
of such Distribution Date.
Reference Banks: As defined in Section 6.14.
Regular Distribution Amount: With respect to any Distribution Date,
the lesser of (a) the Available Funds remaining after payment of (i) the
Premium Amount and (ii) if GMACM is no longer the Servicer, the Owner Trustee
Compensation and the Custodian Compensation, and (b) the sum of (i) the
Noteholders' Interest Distribution Amount and (ii) the Regular Principal
Distribution Amount.
Regular Principal Distribution Amount: With respect to each
Distribution Date, an amount equal to the lesser of:
(a) the sum of (i) each scheduled payment of principal collected by
the Servicer in the related Due Period, (ii) all partial and full principal
prepayments applied by the Servicer during such Due Period, (iii) the
principal portion of all Net Liquidation Proceeds, Insurance Proceeds and
Released Mortgaged Property Proceeds received by the Servicer during such Due
Period in respect of any Home Loan, to the extent received on or prior to the
date on which such Home Loan became a Liquidated Home Loan, (iv) that portion
of the Purchase Price of any repurchased Home Loan allocable to principal, (v)
the principal portion of any Substitution Adjustments required to be deposited
in the Collection Account as of the related Determination Date and (vi) the
principal portion of the Termination Price, if any; and
(b) the aggregate of the outstanding principal balances of the Notes
immediately prior to such Distribution Date.
Reimbursement Amount: As of any Distribution Date, the sum of (a)(i)
all Insured Payments (as defined in the Note Insurance Policy) previously paid
by the Note Insurer and in each case not previously repaid to the Note Insurer
pursuant to Section 6.05 hereof plus (ii) interest accrued on each such
Insured Payment not previously repaid calculated at the Late Payment Rate from
the date such Insured Payment was made and (b)(i) any amounts then due and
owing to the Note Insurer under the Insurance Agreement, as certified to the
Indenture Trustee by the Note Insurer plus (ii) interest on such amounts at
the Late Payment Rate (as defined in the Insurance Agreement). The Note
Insurer shall notify the Indenture Trustee and the Depositor of the amount of
any Reimbursement Amount.
Released Mortgaged Property Proceeds: With respect to each
Distribution Date and any Home Loan, an amount equal to the proceeds received
by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related
Mortgage, whether by partial condemnation, sale or otherwise; which are not
released to the Mortgagor in accordance with applicable law, Accepted
Servicing Practices and this Agreement.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Shortfall: With respect to any Distribution Date and each
Home Loan as to which there has been a reduction in the amount of interest
collected with respect to the related Due Period as a result of application of
the Relief Act, the amount by which (a) interest collectible on such Home Loan
during such Due Period is less than (b) one month's interest on the Principal
Balance of such Home Loan at the applicable Mortgage Rate before giving effect
to the Relief Act.
Request for Release: A request for release in substantially the form
attached as Exhibit G hereto.
Reserve Interest Rate: Not applicable.
Residential Dwelling: A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development, a townhouse or
a manufactured housing unit which is non-mobile.
Residual Interest Certificate: As defined in the Trust Agreement.
Residual Certificateholder: Any Holder of a Residual Interest
Certificate.
Responsible Officer: When used with respect to the Indenture Trustee,
any officer assigned to the Corporate Trust Office (or any successor thereto),
including any Vice President, Assistant Vice President, Senior Trust Officer,
Trust Officer, Assistant Trust Officer, Assistant Treasurer, any Assistant
Secretary, any trust officer or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by any of the
above designated officers who has direct responsibility for the administration
of this Agreement or to whom, with respect to a particular matter, such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Seller or the Servicer, the
President or any Vice President, Assistant Vice President, or any Secretary or
Assistant Secretary.
Retained Amounts: With respect to each Home Loan, all income derived
therefrom other than the Servicing Fee, including, without limitation, any
late charges, prepayment fees or penalties, assumption fees, subordination
fees, collateral substitution fees, optional insurance administrative fees and
all other incidental fees and charges relating to such Home Loan, provided,
that fees received by the Servicer with respect to checks or bank drafts
returned by the related bank for non-sufficient funds shall not constitute
Retained Amounts.
Rolling Delinquency Percentage: With respect to any Distribution
Date, the average of the percentage equivalents of the fractions determined
for each of the three immediately preceding Determination Dates (or such fewer
number of Determination Dates since the Cut-off Date, in the case of the first
two Distribution Dates), the numerator of which is equal to the aggregate
Principal Balance of all Home Loans, as of the relate Determination Date,
Delinquent, in foreclosure or Foreclosure Property (other than Liquidated Home
Loans), or as to which the related Mortgagor was the subject of a bankruptcy
proceeding or was paying a reduced Monthly Payment as a result of a bankruptcy
workout, or that was modified in excess of the 2.0% limitation provided in
Section 5.12(d) hereof, and the denominator of which is the Total Loan Balance
as of such Determination Date.
Rolling Loss Percentage: With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the aggregate
of Realized Losses incurred during the immediately preceding 12 Due Periods
and the denominator of which is the average Principal Balance of the Home
Loans as of the first day of the 12th preceding Due Period.
S&P: Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or its successor in interest.
Securities Intermediary: The Person acting as Securities Intermediary
under this Agreement ( which is the Indenture Trustee, or the Administrator on
behalf of the Indenture Trustee), its successor in interest, and any successor
Securities Intermediary appointed pursuant to Section 6.01(c).
Security: Any Note or Certificate.
Security Agreement: With respect to any Cooperative Loan, the
agreement between the owner of the related Cooperative Shares and the
originator of the related Mortgage Note that defines the terms of the security
interest in such Cooperative Shares and the related Proprietary Lease.
Security Entitlement: The meaning specified in Section 8-102(a)(17)
of the New York UCC.
Securityholder or Holder: The Person in whose name a Security is
registered in the Note Register or the Certificate Register, as applicable.
Seller: German American Capital Corporation, a Maryland corporation,
or its successor in interest.
Senior Enhancement Percentage: Not applicable.
Senior Mortgage Loan: With respect to any Junior Home Loan, a
mortgage loan on the related Mortgaged Property that is senior to the lien
provided by such Junior Home Loan.
Servicer: GMAC Mortgage Corporation, a Pennsylvania corporation, or
any successor appointed as herein provided.
Servicer Remittance Date: With respect to any Distribution Date, the
18th day of the month in which such Distribution Date occurs, or if such 18th
day is not a Business Day, the Business Day immediately preceding such 18th
day.
Servicer's Monthly Remittance Report: The report containing the
information described in Section 5.19 hereof.
Servicing Advances: Subject to Section 5.21, all reasonable,
customary and necessary "out of pocket" costs and expenses advanced or paid by
the Servicer with respect to the Home Loans in accordance with the performance
by the Servicer of its servicing obligations hereunder, including, but not
limited to, the costs and expenses for (i) the preservation, restoration and
protection of the Mortgaged Property, including without limitation advances in
respect of real estate taxes and assessments, (ii) any collection, enforcement
or judicial proceedings, including without limitation foreclosures,
collections and liquidations pursuant to Section 5.12, (iii) the conservation,
management and sale or other disposition of any Foreclosure Property pursuant
to Section 5.12, (iv) the preservation of the security for a Home Loan if any
lienholder under a Superior Lien has accelerated or intends to accelerate the
obligations secured by such Superior Lien pursuant to Section 5.31; provided
that such Servicing Advances are reimbursable to the Servicer as provided in
Section 5.04) to the extent not previously deducted or retained by the
Servicer in calculating Net Liquidation Proceeds hereunder.
Servicing Fee: The monthly fee payable to the Servicer. Such fee
shall be equal to the product the Servicing Fee Rate and the aggregate unpaid
principal balance of the Home Loans at the start of the related Due Period
provided, that no Servicing Fee will be payable with respect to any Liquidated
Home Loan unless the Servicer has determined, in its reasonable judgment, that
additional collection efforts with respect to such Home Loan are in the best
interests of the Noteholders and the Note Insurer; and provided, further, that
no Servicing Fee will be payable in any event with respect to any Home Loan
that is 18 months or more delinquent in payment. Such fee shall be computed on
the basis of the same principal amount and for the period respecting which any
related interest payment on a Home Loan is computed. The Servicing Fee
includes any servicing fees owed or payable to any Subservicer, any custodial
fees owed and payable to the Custodian, and any trustee fees owed and payable
to the Owner Trustee and the Indenture Trustee, which fees shall be paid from
the Servicing Fee.
Servicing Fee Rate: 0.75% per annum.
Servicing Officer: Any employee of the Servicer involved in, or
responsible for, the administration and servicing of the Home Loans whose name
and specimen signature appear on a list of servicing officers furnished to the
Indenture Trustee and the Note Insurer by the Servicer, as such list may from
time to time be amended.
Stepdown Date: The latest to occur of (a) the Distribution Date in
September 2002; (b) the first Distribution Date on which the
Overcollateralization Amount for such date equals or exceeds the product of
(i) 43.30% and (ii) the Total Loan Balance for such date, and (c) the first
Distribution Date on which the Class Principal Amount of the Notes after
giving effect to distributions on such date is equal to or less than $153,
201, 452; provided, in each case, that a Step-up Trigger Event has not
occurred with respect to the Distribution Date and no claim has been made for
payment under the Note Insurance Policy.
Step-up Trigger Event: A Step-up Trigger Event will have occurred
with respect to any Distribution Date if either (1) the Three Month
Delinquency Rate for such Distribution Date is equal to or greater than 3.00%;
(2) (i) prior to the Distribution Date in September 2002, the Three Month
Annualized Loss Rate for such Distribution Date exceeds 8.00% and (ii) on and
after the Distribution Date in September 2002, the Three Month Annualized Loss
Rate for such Distribution Date exceeds 6.00%; or (3) the Calculated Loss
Percentage for such Distribution Date exceed the applicable Total Expected
Loss Percentage. Following the occurrence of any of the events described in
subclauses (1) through (3) above, a Step-up Trigger Event shall be deemed to
be continuing on succeeding Distribution Dates until each of the following is
true for each of six consecutive Distribution Dates: (i) the Three Month
Delinquency Rate is less than 3.00%, (ii) the Three Month Annualized Loss Rate
is less than the applicable level specified in subclause (2) above, and (iii)
the Calculated Loss Percentage is less than the applicable Total Expected Loss
Percentage.
Subsequent Cut-off Date: Not applicable.
Subsequent Home Loan: Not applicable.
Subsequent Transfer Date: Not applicable.
Subsequent Transfer Instrument: Not applicable.
Subservicer: Any Person that satisfies the requirements of Section
5.02 with which the Servicer has entered into a Subservicing Agreement
pursuant to the terms of this Agreement.
Subservicing Agreement: The contract between the Servicer and any
Subservicer.
Substitution Adjustment: With respect to any date on which a
substitution occurs pursuant to Sections 2.04 or 3.03, the sum of (i) the
amount (if any) by which the aggregate unpaid principal balances of the
Qualified Substitute Home Loans (after application of principal payments
received on or before the date of substitution of any Qualified Substitute
Home Loans as of the date of substitution), are less than the aggregate of the
unpaid principal balances of the related Deleted Home Loans, (ii) interest
accrued and unpaid on the related Deleted Home Loans, (iii) the amount of any
Servicing Advances remaining unreimbursed with respect to such Deleted Home
Loans and (iv) the amount of any Servicing Advances reimbursed other than from
collections or other recoveries in respect of such Deleted Home Loans.
Superior Lien: With respect to any Home Loan which is secured by
other than a first priority lien, the mortgage(s) relating to the
corresponding Mortgaged Property having a superior priority lien.
Targeted Overcollateralization Amount: With respect to any
Distribution Date occurring prior to the Stepdown Date, and with respect to
any Distribution Date as to which a claim has been made for payment under the
Note Insurance Policy, an amount equal to the Base Specified
Overcollateralization Amount for such date. With respect to any other
Distribution Date, an amount equal to the Post-Stepdown Overcollateralization
Amount for such date. Notwithstanding the foregoing, the Targeted
Overcollateralization Amount for any Distribution Date with respect to which a
Non-reduction Trigger Event has occurred or is continuing shall not be less,
expressed as a dollar amount, than the Targeted Overcollateralization Amount
on the last Distribution Date prior to the initial occurrence of such
Non-reduction Trigger Event.
Termination Price: With respect to any date of determination, an
amount equal to the sum of (1) 100% of the total outstanding principal balance
of the Home Loans plus accrued interest thereon at the applicable Home Loan
Rate, and (2) the fair market value of all other property being purchased;
provided, that the Termination Price will not be less than the sum of the
following: (i) the Class Principal Amount of the Notes plus all accrued and
unpaid interest thereon at the Interest Rate, (ii) any Servicing Fees due and
unpaid, (iii) any unreimbursed Servicing Advances, including Servicing
Advances deemed to be nonrecoverable, (iv) any amounts owed to the Indenture
Trustee, the Owner Trustee and the Custodian, and (v) any amounts owed to the
Note Insurer under the Insurance Agreement, including reimbursement for
payments under the Insurance Policy.
Three Month Annualized Loss Rate: With respect to any Distribution
Date, the average of the percentage equivalents of the fractions determined
for each of the three immediately preceding Determination Dates (or such fewer
number of Determination Dates since the Cut-off Date, in the case of the first
two Distribution Dates), the numerator of which is equal to the aggregate of
all Realized Losses incurred during the calendar month ending on such
Determination Date multiplied by 12 and the denominator of which is the Total
Loan Balance as of each such Determination Date.
Three Month Delinquency Rate: With respect to any Distribution Date,
the average of the percentage equivalents of the fractions determined for each
of the three immediately preceding Determination Dates (or such fewer number
of Determination Dates since the Cut-off Date, in the case of the first two
Distribution Dates), the numerator of which is equal to the aggregate
Principal Balance of all Home Loans more than 60 days Delinquent as of each
such Determination Date and the denominator of which is the Total Loan Balance
as of each such Determination Date.
Total Expense Rate: Not applicable.
Total Expected Loss Percentage: With respect to any Distribution
Date, the percentage specified below for the period of time during which such
Distribution Date occurs:
Period Percentage
------ ----------
September 1999 - August 2000 3.50%
September 2000 - August 2001 7.00
September 2001 - August 2002 11.50
September 2002 - August 2003 14.50
September 2003 - August 2004 15.50
September 2004 and thereafter 16.50
Total Expected Losses: With respect to any Distribution Date, the sum
of (a) the aggregate of all Realized Losses from the Cut-off Date through the
related Determination Date and (b) the Delinquency Loss Factor for such
Distribution Date.
Total Loan Balance: The aggregate of the Principal Balances of all
Home Loans at the date of determination.
Transaction Document: As defined in the Insurance Agreement.
Trust: The Issuer.
Trust Account: As defined in Section 6.01(b).
Trust Account Property: The Trust Accounts, the Certificate
Distribution Account, all amounts and investments held from time to time in
the Trust Accounts and the Certificate Distribution Account (whether in the
form of deposit accounts, physical property, book-entry securities,
uncertificated securities, securities entitlements, investment property or
otherwise) and all proceeds of the foregoing.
Trust Agreement: The Amended and Restated Trust Agreement dated as of
August 1, 1999 between the Depositor and the Owner Trustee.
Trust Estate: The assets subject to this Agreement and the Indenture,
transferred by the Depositor to the Issuer and pledged by the Issuer to the
Indenture Trustee, consisting of all accounts, accounts receivable, contract
rights, general intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, notes, drafts, letters of
credit, advices of credit, investment property, uncertificated securities and
rights to payment of any and every kind consisting of, advising from or
relating to any of the following: (a) such Home Loans as from time to time are
subject to this Agreement, together with the Mortgage Files relating thereto
and all collections thereon and proceeds thereof received on and after the
Cut-off Date, other than Retained Amounts, (b) such assets as from time to
time are identified as deposited in the Certificate Distribution Account, (c)
such assets as from time to time are identified as Foreclosure Property and
collections thereon and proceeds thereof, (d) assets that are deposited in the
Trust Accounts, including amounts on deposit in the Trust Accounts and
invested in Permitted Investments, other than Retained Amounts, (e) the
Indenture Trustee's rights with respect to the Home Loans under all insurance
policies required to be maintained pursuant to this Agreement (including the
Note Insurance Policy) and any Insurance Proceeds (and any proceeds of the
Note Insurance Policy), (f) Liquidation Proceeds, (g) Released Mortgaged
Property Proceeds, (h) the rights (but not the obligations) of the Depositor
under the Home Loan Sale Agreement to the extent assigned to the Indenture
Trustee hereunder, (i) the Depositor's security interest in any collateral
pledged to secure the Home Loans, including the Mortgaged Properties, and (j)
any and all income, revenues, issues, products, revisions, substitutions,
replacements, profits, rents and all cash and non-cash proceeds of the
foregoing.
UCC: The Uniform Commercial Code in effect in the applicable
jurisdiction.
UCC Financing Statement: A financing statement executed and filed
pursuant to the UCC.
Unpaid Basis Risk Shortfall: Not applicable.
Section 1.02. Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined in this Article include the plural as well as
the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest (other than with respect to the Home
Loans, or as otherwise specifically set forth herein) provided for herein
shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All calculations of interest with respect to any Home Loan provided
for herein shall be made in accordance with the terms of the related Mortgage
Note and Mortgage.
(f) Any Home Loan payment is deemed to be received on the date such
payment is actually received by the Servicer, provided, however, that for
purposes of calculating distributions on the Securities, Prepayments in Full
and Curtailments with respect to any Home Loan are deemed to be received on
the date they are applied in accordance with customary servicing practices
consistent with the terms of the related Mortgage Note and Mortgage to reduce
the outstanding principal balance of such Home Loan on which interest accrues.
ARTICLE II
CONVEYANCE OF HOME LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Home Loans; Special Deposit; Priority and
Subordination of Ownership Interests. (a) The Depositor does hereby sell,
transfer, assign, set over and convey to the Issuer without recourse but
subject to the provisions of this Section 2.01 and the other terms and
provisions of this Agreement, all of the right, title and interest of the
Depositor in and to the Home Loans, including all payments and proceeds on or
with respect to the Home Loans received on and after the Cut-off Date, other
than Retained Amounts, and all other assets included or to be included in the
Trust Estate for the benefit of the Securityholders and the Note Insurer. In
connection with such transfer and assignment, the Depositor does hereby also
irrevocably transfer, assign, set over and otherwise convey to the Issuer all
of its rights (but not its obligations) under the Home Loan Sale Agreement.
The Issuer hereby accepts such assignment, and shall be entitled to exercise
all rights of the Depositor under the Home Loan Sale Agreement as if, for such
purpose, it were the Depositor.
(b) It is intended that the conveyance of the Home Loans and the
other assets to be included in the Trust Estate by the Depositor to the Issuer
as provided in this Section be, and be construed as, a sale of the Home Loans
and the other assets to be included in the Trust Estate by the Depositor to
the Issuer for the benefit of the Securityholders and the Note Insurer. It is,
further, not intended that such conveyance be deemed a pledge of the Home
Loans and such other assets by the Depositor to the Issuer to secure a debt or
other obligation of the Depositor. However, in the event that the Home Loans
and the other assets to be included in the Trust Estate are held to be
property of the Depositor, or if for any reason this Agreement is held or
deemed to create a security interest in the Home Loans and such other assets,
then it is intended that, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York UCC
and the UCC of any other applicable jurisdiction; (b) the conveyance provided
for in this Section shall be deemed to be (1) a grant by the Depositor to the
Issuer of a security interest in all of the Depositor's right (including the
power to convey title thereto), title and interest, whether now owned or
hereafter acquired, in and to (A) the Home Loans, including the Mortgage
Notes, the Mortgages, any related insurance policies and all other documents
in the related Mortgage Files, (B) all amounts payable to the holders of the
Home Loans in accordance with the terms thereof, (C) the Note Insurance
Policy, and (D) all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all Liquidation Proceeds, all Insurance Proceeds, all
Released Mortgaged Property Proceeds, all amounts from time to time held or
invested in the Certificate Distribution Account, the Note Distribution
Account, the Collection Account, whether in the form of cash, instruments,
securities or other property and (2) an assignment by the Depositor to the
Issuer of any security interest in any and all of the Seller's right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to the property described in the foregoing
clauses (1)(A) through (C) granted by the Seller to the Depositor pursuant to
the Home Loan Sale Agreement; (c) the possession by the Issuer or its agent of
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" or possession by a purchaser or a person designated by
such secured party, for purposes of perfecting the security interest pursuant
to the New York UCC and the UCC of any other applicable jurisdiction
(including, without limitation, Sections 9-305, 8-313 or 8-321 thereof); and
(d) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from,
financial intermediaries, bailees or agents (as applicable) of the Issuer for
the purpose of perfecting such security interest under applicable law. The
Depositor and, at the Depositor's direction, the Seller and the Issuer shall,
to the extent consistent with this Agreement, take such reasonable actions as
may be necessary to ensure that, if this Agreement were deemed to create a
security interest in the Home Loans and other property of the Trust Estate,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of the Agreement.
Section 2.02. Possession of Mortgage Files; Access to Mortgage Files.
(a) Upon the issuance of the Securities, the ownership of each Mortgage Note,
the Mortgage and the contents of the Mortgage File related to each Home Loan
is vested in the Issuer, subject to the lien created by the Indenture in favor
of the Indenture Trustee for the benefit of the Noteholders and the Note
Insurer.
(b) The Depositor has delivered or caused to be delivered the
Mortgage File related to each Home Loan to the Indenture Trustee or the
Custodian on behalf of the Indenture Trustee.
(c) The Indenture Trustee may, with the prior written consent of the
Note Insurer, enter into a Custodial Agreement pursuant to which the Indenture
Trustee will appoint a custodian (a "Custodian") to hold the Mortgage Files in
trust for the benefit of all present and future Securityholders and the Note
Insurer; provided, however, that the custodian so appointed shall in no event
be the Depositor or the Servicer or any Person known to a Responsible Officer
of the Indenture Trustee to be an Affiliate of the Depositor or the Servicer.
(d) The Indenture Trustee shall cause the Custodian to afford the
Depositor, the Note Insurer and the Servicer reasonable access to all records
and documentation regarding the Home Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable prior written
notice and during normal business hours at the offices of the Custodian.
Section 2.03. Delivery of Home Loan Documents and Note Insurance
Policy. In connection with each conveyance pursuant to Section 2.01 hereof,
the Depositor has delivered or does hereby agree to deliver or cause to be
delivered to the Indenture Trustee (or the Custodian or the Administrator, as
applicable, on behalf of the Indenture Trustee) on or before the Closing Date,
the Note Insurance Policy, the Home Loan Schedule and each of the following
documents for each Home Loan sold by the Seller to the Depositor and sold by
the Depositor to the Issuer:
(i) The Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of First Union National Bank, as
Indenture Trustee for ACE Securities Corp. Home Loan Trust 1999-A,
without recourse" or in blank, and signed manually or by facsimile
by an authorized officer; provided that with respect to not more
than 1.00% (by Principal Balance) of the Home Loans a Lost Note
Affidavit and a copy of the original Mortgage Note may be delivered;
(ii) The original Mortgage with evidence of recording thereon,
or a copy thereof;
(iii) The originals of all assumption, modification,
consolidation or extension agreements, if any, with evidence of
recording thereon, or copies thereof;
(iv) A copy of the original Assignment of Mortgage in blank for
each Home Loan, in form and substance acceptable for recording and
signed manually or by facsimile by an authorized officer; and
(v) The originals of all intervening assignments of mortgage
with evidence of recording thereon, or copies thereof.
With respect to each Non-MERS Home Loan, the Depositor shall cause,
promptly following the Closing Date, but in no event later than 60 days
following the Closing Date, Assignments of Mortgages to "First Union
National Bank, as Indenture Trustee of ACE Securities Corp. Home Loan Trust
1999-A" to be submitted for recording in the appropriate jurisdictions;
provided, that the Depositor shall not be required to record an Assignment
of Mortgage if the Depositor furnishes to the Indenture Trustee and the Note
Insurer, on or before the Closing Date, at the Depositor's expense, an
Opinion of Counsel with respect to the relevant jurisdiction that such
recording is not necessary to protect the Indenture Trustee's interest in
the related Home Loans (in form and substance satisfactory to the Indenture
Trustee, the Note Insurer and the Rating Agencies); provided further,
notwithstanding the delivery of any legal opinions, each Assignment of
Mortgage shall be recorded by the Indenture Trustee upon the earliest to
occur of: (i) reasonable direction by the Note Insurer, (ii) the occurrence
of an Event of Default, or (iii) the occurrence of a bankruptcy, insolvency
or foreclosure relating to the Seller.
The Depositor shall use its best efforts to deliver or cause to be
delivered the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments, to the
Indenture Trustee or its Custodian, within 90 days following the Closing Date,
but in any event within 12 months after the Closing Date.
In instances where the original recorded Mortgage or intervening
assignment cannot be delivered to the Indenture Trustee or its Custodian prior
to or concurrently with the execution and delivery of this Agreement due to a
delay in connection with recording, the Depositor may in lieu of delivering
such original recorded Mortgage or intervening assignment, deliver to the
Indenture Trustee or its Custodian a copy thereof, provided that the Seller
provides a copy of such document and certifies that the original Mortgage or
intervening assignment has been delivered to the appropriate party for
recordation. In all such instances, the Depositor will deliver or cause to be
delivered the original recorded Mortgage or intervening assignment to the
Indenture Trustee or its Custodian promptly upon receipt by the Seller of the
original recorded Mortgage (other than the Assignment of Mortgage) or
intervening assignment but in no event later than 12 months after the Closing
Date.
Notwithstanding anything to the contrary contained in this Section
2.03, in those instances where the public recording office retains the
original Mortgage, the Assignment of a Mortgage or the intervening assignments
of the Mortgage after it has been recorded, the Depositor shall be deemed to
have satisfied its obligations hereunder (and the Seller shall be deemed to
have satisfied its obligations under the Home Loan Sale Agreement) upon
delivery to the Indenture Trustee or its Custodian of a copy of such Mortgage,
such Assignment or intervening assignments of Mortgage certified by the public
recording office to be a true copy of the recorded original thereof.
Not later than 70 days following the Closing Date, the Depositor
shall cause to be delivered to the Indenture Trustee or its Custodian and the
Note Insurer a list of all Home Loans for which an Assignment of Mortgage has
not yet been submitted for recording, which shall state the reason why such
Assignment of Mortgage has not yet been submitted for recording. If no such
completed assignment with evidence of recording thereon is provided before the
end of such twelfth month, the related Home Loan shall be deemed to be in
breach of the representations and warranties contained in Section 1.04(b) of
the Home Loan Sale Agreement; provided, however, that if as of the end of such
twelfth month the Depositor demonstrates to the satisfaction of the Note
Insurer that it is exercising its best efforts to obtain such completed
assignment and, during each month thereafter until such completed assignment
is delivered to the Indenture Trustee or its Custodian, the Depositor
continues to demonstrate to the satisfaction of the Note Insurer that it is
exercising its best efforts to obtain such completed assignment, the related
Home Loan will not be deemed to be in breach of such representations and
warranties. The requirement to deliver a completed assignment with evidence of
recording thereon will be deemed satisfied upon delivery of a copy of the
completed assignment certified by the applicable public recording office.
With respect to each MERS Home Loan, the Indenture Trustee and the
Servicer, at the expense of the Depositor, shall cause to be taken such
actions as are necessary to cause the Indenture Trustee to be clearly
identified as the owner of each such Home Loan on the records of MERS for
purposes of the system of recording transfers of beneficial ownership of
mortgages maintained by MERS.
Within a period of 30 days from the Closing Date, the Indenture
Trustee shall, or shall cause the Custodian to, complete the endorsement of
each Mortgage Note and each Assignment of Mortgage in the name of the
Indenture Trustee.
(b) In the event that any such original document is required pursuant
to the terms of this Section 2.03 to be a part of a Mortgage File, such
document shall be delivered promptly by the Depositor to the Indenture Trustee
or its Custodian. If the Servicer receives any such original document, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the Home Loans or the Mortgage Files, and
shall transfer such original to the Indenture Trustee or the Custodian on
behalf of the Indenture Trustee.
Section 2.04. Acceptance by Indenture Trustee of the Home Loans;
Certain Substitutions; Certification. (a) The Indenture Trustee agrees to
execute and deliver, or cause to be executed and delivered, to the Depositor,
the Note Insurer, the Servicer and the Seller on or prior to the Closing Date
an acknowledgment of receipt of the Note Insurance Policy and, with respect to
each Home Loan, on or prior to the Closing Date, an acknowledgment of receipt
of the original Mortgage Note, or a copy of the original Mortgage Note with a
Lost Note Affidavit (with any exceptions noted), and, subject to the review
provided for in this Section, its receipt of the Mortgage Files in
substantially the form attached as Exhibit D hereto and declares that it will
hold such documents and any amendments, replacements or supplements thereto,
as well as any other assets included in the definition of Trust Estate and
delivered to the Indenture Trustee (or the Custodian on behalf of the
Indenture Trustee), as Indenture Trustee in trust upon and subject to the
conditions set forth herein for the benefit of the Securityholders and the
Note Insurer. The Indenture Trustee agrees, for the benefit of the
Securityholders and the Note Insurer, to review, or cause to be reviewed, each
Mortgage File and to deliver or cause to be delivered to the Seller, the
Servicer, the Depositor and the Note Insurer on the Closing Date a
certification of the Indenture Trustee or the Custodian on behalf of the
Indenture Trustee substantially in the form attached hereto as Exhibit E to
the effect that, as to each Home Loan listed in the related Home Loan Schedule
(other than any Home Loan paid in full or any Home Loan specifically
identified in such certification as not covered by such certification), (i)
all documents required to be delivered to it pursuant to Section 2.03 are in
its possession and that the Mortgage Notes have been endorsed as provided in
Section 2.03, (ii) each such document has been reviewed by it and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten
additions, changes or corrections shall not constitute physical alteration if
initialed by the Mortgagor), appears regular on its face and relates to such
Home Loan, and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Schedule of Home Loans accurately
reflects the information set forth in the Mortgage File with respect to the
loan number, scheduled maturity date, original principal balance, scheduled
first payment date (allowing for the customary servicing practice of modifying
first payment dates and maturity dates after the closing of the related loan),
Mortgage Rate as of the Cut-off Date or date of origination, and monthly
payment as of the Cut-off Date or date of origination. Any exceptions noted on
such certification shall be identified as either critical exceptions or
non-critical exceptions. Critical exceptions are (a) no original Mortgage Note
or such original Mortgage Note is not endorsed as provided in Section 2.03,
(b) no Assignment of Mortgage or copy thereof in recordable form. The
Indenture Trustee makes no representations as to and shall not be responsible
to verify (i) the validity, legality, enforceability, sufficiency, due
authorization, recordability or genuineness of any of the documents contained
in each Mortgage File or of any of the Home Loans or (ii) the collectability,
insurability, effectiveness or suitability of any such Home Loan.
Within 90 days after the Closing Date, the Indenture Trustee shall
deliver or cause to be delivered to the Servicer, the Seller, the Depositor
and the Note Insurer a final certification of the Indenture Trustee or the
Custodian substantially in the form attached hereto as Exhibit F to the effect
that, as to each Home Loan listed in the Home Loan Schedule (other than any
Home Loan paid in full or any Home Loan specifically identified in such
certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to Section 2.03 are in its possession
and that the Mortgage Notes have been endorsed as provided in Section 2.03,
(ii) each such document has been reviewed by it and has not been mutilated,
damaged, torn or otherwise physically altered (handwritten additions, changes
or corrections shall not constitute physical alteration if initialed by the
Mortgagor), appears regular on its face and relates to such Home Loan, and
(iii) based on its examination and only as to the foregoing documents, the
information set forth on the Home Loan Schedule accurately reflects the
information set forth in the Mortgage File with respect to the loan number,
maturity date, original principal balance, first payment date and original
term to maturity. Any exceptions noted on such certification shall be
identified as either critical exceptions or non-critical exceptions. Critical
exceptions are (a) no original Note or such original Note is not endorsed as
provided in Section 2.03, (b) no original mortgage with recording information
thereon or a certified copy of the mortgage with recording information thereon
in lieu of the original Mortgage and (c) no recorded Assignment of Mortgage.
After delivery of the Final Certification, the Indenture Trustee (or
its Custodian) and the Servicer shall provide to the Note Insurer no less
frequently than quarterly updated certifications indicating the then current
status of exceptions, until all such exceptions have been eliminated.
(b) If the Note Insurer or the Indenture Trustee (or its Custodian)
during the process of reviewing the Mortgage Files or otherwise finds any
document constituting a part of a Mortgage File which is not executed, has not
been received, is unrelated to the Home Loan identified in the related Home
Loan Schedule, or does not conform to the requirements of Section 2.03 or the
description thereof as set forth in the related Home Loan Schedule, the
Indenture Trustee (or its Custodian) or the Note Insurer, as applicable, shall
promptly so notify the Servicer, the Seller, the Depositor, the Note Insurer
and the Indenture Trustee. In performing any such review, the Indenture
Trustee (or its Custodian) may conclusively rely on the Seller as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Indenture Trustee's (or its Custodian's)
review of the Mortgage Files is limited solely to confirming that the
documents listed in Section 2.03 have been executed and received and relate to
the Mortgage Files identified in the related Home Loan Schedule and such
documents conform to the standard set forth in clauses (ii) and (iii) of the
paragraph directly above. The Indenture Trustee shall enforce its rights as to
any defective Home Loan document against the Seller under the Home Loan Sale
Agreement for the benefit of Securityholders and the Note Insurer. It is
understood and agreed that the Depositor has assigned to the Issuer, and the
Issuer has assigned to the Indenture Trustee under the Indenture, its rights
under the Home Loan Sale Agreement including the right to enforce any remedy
against the Seller thereunder. For purposes of calculating the amount the
Servicer is required to remit on the Servicer Remittance Date following such
repurchase or substitution, any Loan Purchase Price or Substitution Adjustment
that is paid and deposited in the related Collection Account as provided above
shall be deemed to have been deposited in the related Collection Account in
the Due Period preceding such Servicer Remittance Date.
(c) Upon receipt by the Indenture Trustee or its Custodian of a
certification of a Servicing Officer of such substitution or purchase (which
certification shall be in the form of Exhibit G hereto) and, in the case of a
substitution, upon receipt of the related Mortgage File, and the deposit of
the amounts described above in the Collection Account, the Indenture Trustee
shall, or shall cause the Custodian to, release to the Servicer for release to
the Seller the related Mortgage File and shall execute, without recourse, and
deliver such instruments of transfer furnished by the Seller as may be
necessary to transfer such Home Loan to the Seller. The Indenture Trustee
shall notify the Note Insurer if the Seller fails to repurchase or substitute
for a Home Loan in accordance with the foregoing.
Section 2.05. Further Action Evidencing Assignment. (a) The Depositor
agrees that, from time to time, at the Seller's expense, the Depositor shall
cause the Seller promptly to execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate,
or that the Servicer, the Note Insurer or the Indenture Trustee may reasonably
request, in order to perfect, protect or more fully evidence the transfer of
ownership of the Trust Estate or to enable the Indenture Trustee to exercise
or enforce any of its rights hereunder. Without limiting the generality of the
foregoing, the Depositor will, upon the request of the Servicer or of the
Indenture Trustee, execute and file (or cause to be executed and filed) such
real estate filings, financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may
be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the Indenture
Trustee, and this Agreement shall constitute, a power of attorney to execute
all documents on its behalf under this Agreement as may be necessary or
desirable to effectuate the foregoing.
Section 2.06. Conveyance of the Subsequent Home Loans. [Not
applicable.]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer. The Servicer hereby
represents and warrants to the Indenture Trustee, the Depositor and the Note
Insurer as of the Closing Date:
(a) Due Organization and Authority. The Servicer is a Pennsylvania
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation and has all licenses necessary to carry
on its business as now being conducted and is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Servicer; the Servicer has the full corporate power
and authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by the Servicer and the consummation of the transactions
contemplated hereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligation of the Servicer except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law), and all
requisite corporate action has been taken by the Servicer to make this
Agreement valid and binding upon the Servicer in accordance with its terms;
(b) No Conflicts. Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the Servicer
or the transactions contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement, will conflict with or result
in a breach of any of the terms, conditions or provisions of the Servicer's
charter or by-laws or any legal restriction or any agreement or instrument to
which the Servicer is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the violation of any law, rules, regulation, order, judgment or decree to
which the Servicer or its property is subject, or impair the ability of the
Servicer to service the Home Loans, or impair the value of the Home Loans;
(c) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the knowledge of the Servicer, threatened against
the Servicer which, either in any one instance or in the aggregate, could draw
into question the validity of this Agreement or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated herein,
or which would be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement;
(d) No Consent Required. No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer with
this Agreement, or if required, such approval has been obtained prior to the
Closing Date; and
(e) Ability to Service. The Servicer is an approved seller/servicer
of residential mortgage loans for FNMA or FHLMC. The Servicer is in good
standing to service mortgage loans for either FNMA or FHLMC, and no event has
occurred, including but not limited to a change in insurance coverage, which
would make the Servicer unable to comply with either FNMA or FHLMC eligibility
requirements or which would require notification to FNMA or FHLMC.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive the delivery of the respective
Mortgage Files to the Indenture Trustee or to a custodian, as the case may be,
and inure to the benefit of the Indenture Trustee and the Note Insurer.
Section 3.02. Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Servicer, the Securityholders and the Note Insurer that
as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Home Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Indenture Trustee, constitutes or will constitute the legal,
valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration
or filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust,
contract or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound;
(ii) results or will result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Depositor of any court or
governmental authority having jurisdiction over the Depositor or its
subsidiaries; or (iii) results in the creation or imposition of any lien,
charge or encumbrance which would have a material adverse effect upon the Home
Loans or any documents or instruments evidencing or securing the Home Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the Depositor's
reasonable judgment, might materially and adversely affect the validity or
enforceability of the Home Loans or the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement;
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that would materially and adversely affect
its performance hereunder;
(h) Immediately prior to the sale and assignment by the Depositor to
the Indenture Trustee on behalf of the Trust of each Home Loan, the Depositor
had good title to, and was the sole owner of, each Home Loan subject to no
prior lien, claim, participation interest, mortgage, security interest,
pledge, charge or other encumbrance or other interest of any nature;
(i) Upon execution and delivery of this Agreement the Depositor
transferred all right, title and interest in the Home Loans to the Issuer on
behalf of the Trust; and
(j) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Depositor hereunder are not subject to the bulk transfer
laws of any similar statutory provisions in effect in any applicable
jurisdiction.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Mortgage Files to the Indenture Trustee or to the Custodian, as the
case may be, and shall inure to the benefit of the Indenture Trustee, the
Servicer, the Securityholders and the Note Insurer.
Section 3.03. Purchase And Substitution. (a) Upon discovery by the
Seller, the Depositor, the Servicer, the Indenture Trustee or the Note Insurer
of a breach of any of representation or warranty set forth in Section 1.04 of
the Home Loan Sale Agreement which materially and adversely affects the value
of any Home Loan or the interests of Securityholders or the Note Insurer, the
party discovering such breach shall give prompt written notice to the others,
and the Indenture Trustee shall enforce its rights as to any Home Loan with
respect to which such a breach of representation or warranty has occurred
against the Seller under the Home Loan Sale Agreement for the benefit of
Securityholders and the Note Insurer.
(b) Any Loan Purchase Price paid in connection with the repurchase of
a Deleted Home Loan, and any Substitution Adjustment paid in connection with
the substitution of a Qualified Substitute Home Loan, shall be deposited into
the Collection Account.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans after
the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Home Loans on or before the date of substitution will be
retained by the Seller. The Trust will own all payments received on the
Deleted Home Loan on or before the date of substitution, and the Seller will
thereafter be entitled to retain all amounts subsequently received in respect
of such Deleted Home Loan. The Servicer shall give written notice to the
Indenture Trustee and the Note Insurer that such substitution has taken place
and shall amend the Home Loan Schedule to reflect the removal of such Deleted
Home Loan from the terms of this Agreement and the substitution of the
Qualified Substitute Home Loan. Upon such substitution, such Qualified
Substitute Home Loan or Loans shall be subject to the terms of this Agreement
in all respects.
(d) With respect to each Qualified Substitute Home Loan to be
delivered to the Indenture Trustee (or its Custodian) pursuant to the terms of
this Article III in exchange for a Deleted Home Loan: (i) the Seller shall
deliver to the Indenture Trustee (or its custodian) the Mortgage File for the
Qualified Substitute Home Loan containing the documents set forth in Section
2.03(a) along with a written certification certifying as to the delivery of
such Mortgage File and containing the granting language set forth in Section
2.01(a); and (ii) the Seller will be deemed to have made, with respect to such
Qualified Substitute Home Loan, each of the representations and warranties
made by it with respect to the related Deleted Home Loan. As soon as
practicable after the delivery of any Qualified Substitute Home Loan
hereunder, the Servicer, at the expense of the Depositor and with the
cooperation of the Servicer, shall (i) with respect to a Qualified Substitute
Home Loan that is a Non-MERS Home Loan, cause the Assignment of Mortgage to be
recorded if required pursuant to Section 2.03, or (ii) with respect to a
Qualified Substitute Home Loan that is a MERS Home Loan, cause to be taken
such actions as are necessary to cause the Indenture Trustee to be clearly
identified as the owner of each such Home Loan on the records of MERS if
required pursuant to Section 2.03.
(e) It is understood and agreed that the obligations of the Seller
set forth in Sections 1.04 and 1.05 of the Home Loan Sale Agreement to cure,
purchase or substitute for a defective Home Loan constitute the sole remedies
of the Indenture Trustee, the Note Insurer and the Securityholders respecting
a breach of the representations and warranties of the Seller set forth in
Sections 1.04 of the Home Loan Sale Agreement, except as provided in the
Insurance Agreement. In addition, it is understood and agreed that the
Depositor has assigned to the Issuer all of its rights under the Home Loan
Sale Agreement, including the right to enforce any remedy against the Seller
as provided in Section 1.06 thereof. The Indenture Trustee shall, or shall
cause the Custodian to, give prompt written notice to the Note Insurer and the
Rating Agencies of any repurchase or substitution made pursuant to this
Section 3.03 or Section 2.04(b).
ARTICLE IV
[RESERVED]
ARTICLE V
ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 5.01. Appointment of the Servicer. The Servicer, as an
independent contractor, shall service and administer the Home Loans on behalf
of the Issuer, the Indenture Trustee and the Note Insurer and shall have full
power and authority, acting alone, to do any and all things in connection with
such servicing and administration which the Servicer may deem necessary or
desirable and consistent with the terms of this Agreement. Notwithstanding
anything to the contrary contained herein, the Servicer, in servicing and
administering the Home Loans, shall employ or cause to be employed procedures
(including collection, foreclosure, liquidation and Foreclosure Property
management and liquidation procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering loans of the
same type as the Home Loans for its own account, all in accordance with
Accepted Servicing Practices.
Without limiting the generality of the foregoing, but subject to
Sections 5.12 and 5.13, the Servicer in its own name or in the name of a
Subservicer is hereby authorized and empowered to execute and deliver, on
behalf of itself, the Securityholders and the Indenture Trustee or any of
them, (i) 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 Home Loans and with respect to the Mortgaged Properties, (ii)
to institute foreclosure proceedings or obtain a deed in lieu of foreclosure
so as to effect ownership of any Mortgaged Property in the name of the
Servicer on behalf of the Indenture Trustee, and (iii) to hold title to any
Mortgaged Property upon such foreclosure or deed in lieu of foreclosure on
behalf of the Indenture Trustee; provided, however, that to the extent any
instrument described in clause (i) preceding would be delivered by the
Servicer outside of its usual procedures for Home Loans held in its own
portfolio the Servicer shall, prior to executing and delivering such
instrument, obtain the prior written consent of the Note Insurer. The
Indenture Trustee hereby grants to the Servicer, and this Agreement shall
constitute, a power of attorney to execute all documents on its behalf under
this Agreement as may be necessary or desirable to effectuate the provisions
of this paragraph; provided, however, that instruments of satisfaction,
cancellation, release or discharge shall only be executed with respect to Home
Loans paid in full or foreclosed (or with respect to which payment in full has
been escrowed). Revocation of the power of attorney created by the preceding
sentence shall take effect upon (i) the receipt by the Servicer of written
notice thereof from the Indenture Trustee, (ii) an Event of Default or (iii)
the termination of the Trust Fund. The Indenture Trustee shall execute any
documentation furnished to it by the Servicer for recordation by the Servicer
in the appropriate jurisdictions, as shall be necessary to effectuate the
foregoing. Subject to Sections 5.12 and 5.13, the Indenture Trustee shall, if
necessary, execute additional powers of attorney to the Servicer or any
Subservicer and furnish them with any other documents as the Servicer or such
Subservicer shall reasonably request to enable the Servicer and such
Subservicer to carry out their respective servicing and administrative duties
hereunder.
Upon the request of the Indenture Trustee, the Servicer shall send to
the Indenture Trustee and, if requested by the Note Insurer, the Note Insurer,
the details concerning the servicing of the Home Loans on computer generated
tape, diskette or other machine readable format that is mutually agreeable.
The Servicer shall give prompt written notice to the Indenture
Trustee and the Note Insurer of any action of which the Servicer has actual
knowledge to (i) assert a claim against the Trust or (ii) assert jurisdiction
over the Trust.
Section 5.02. Subservicers. (a) The Servicer may, with the prior
written consent of the Note Insurer, which consent shall not be unreasonably
withheld, enter into Subservicing Agreements for any servicing and
administration of Home Loans with any institution which is in compliance with
the laws of each state necessary to enable it to perform its obligations under
such Subservicing Agreement. The Servicer shall give prior written notice to
the Issuer, the Indenture Trustee and the Note Insurer of the appointment of
any Subservicer. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and to either directly service the related Home Loans or enter into
a Subservicing Agreement with a successor subservicer which qualifies
hereunder.
(b) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Issuer, the Indenture Trustee and the Note Insurer for the servicing and
administering of the Home Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from
the Subservicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Home Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Home Loans when the Subservicer has actually received such
payments and, unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by the Servicer in servicing the
Home Loans include actions taken or to be taken by a Subservicer on behalf of
the Servicer. The Servicer shall be entitled to enter into any agreement with
a Subservicer for indemnification of the Servicer by such Subservicer, and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
(c) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the successor Servicer,
on behalf of the Issuer, the Indenture Trustee, and the Note Insurer pursuant
to Section 7.02, shall thereupon assume all of the rights and obligations of
the Servicer under each Subservicing Agreement that the Servicer may have
entered into, unless the successor Servicer elects to terminate any
Subservicing Agreement in accordance with its terms. The successor Servicer
shall be deemed to have assumed all of the Servicer's interest therein and to
have replaced the Servicer as a party to each Subservicing Agreement to the
same extent as if the Subservicing Agreements had been assigned to the
assuming party, except that the Servicer shall not thereby be relieved of any
liability or obligations under the Subservicing Agreements to the extent
incurred prior to the replacement of the predecessor Servicer. The Servicer at
its expense and without right of reimbursement therefor, shall, upon request
of the successor Servicer, deliver to the assuming party all documents and
records relating to each Subservicing Agreement and the Home Loans then being
serviced and an accounting of amounts collected and held by it and otherwise
use its best efforts to effect the orderly and efficient transfer of the
Subservicing Agreements to the assuming party.
(d) As part of its servicing activities hereunder, the Servicer, for
the benefit of the Issuer, the Indenture Trustee and the Note Insurer, shall
enforce the obligations of each Subservicer under the related Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims 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 Home 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 Home Loan or
(ii) from a specific recovery of costs, expenses or attorneys' fees against
the party against whom such enforcement is directed.
(e) Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Home Loans involving a Subservicer in
its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone and none of the Issuer, the Indenture
Trustee or the Securityholders shall be deemed parties thereto or shall have
any claims, rights, obligations, duties or liabilities with respect to the
Subservicer in its capacity as such except as set forth in Section 5.02(c)
above.
Section 5.03. Collection of Certain Home Loan Payments; Collection
Account. (a) The Servicer shall proceed diligently to collect all payments due
under each of the Home Loans when the same shall become due and payable and
shall ascertain and estimate all charges that will become due and payable with
respect to the Home Loans and each related Mortgaged Property, to the end that
the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable.
Notwithstanding the generality of the preceding paragraph, the
Servicer shall take the following steps at the time intervals indicated below
to facilitate the collection of all payments due under the Home Loans:
(b) the Servicer shall take each of the following steps with respect
to each Mortgagor for which there is a delinquency until such time as such
Mortgagor is current with all payments due under the Home Loan.
(i) Five (5) Business Days following the Due Date: The Servicer
shall initiate a telephone call to each Mortgagor who is delinquent
with their Monthly Payment informing them of the delinquency. The
Servicer shall also mail each Mortgagor who is delinquent in their
Monthly Payment a notice reminding the Mortgagor of such
delinquency;
(ii) Ten (10) Business Days following the Due Date: The
Servicer shall make a second telephone call to each Mortgagor
regarding the delinquency;
(iii) On and after the expiration of the grace period (fifteen
(15) calendar days following the Due Date): The Servicer shall make
a telephone call to each Mortgagor regarding the delinquency every
two to three days;
(iv) Thirty (30) calendar days following the Due Date: The
Servicer shall, in addition to the regularly scheduled statement,
mail to each Mortgagor another past due notice;
(v) Forty-five (45) calendar days following the Due Date: the
Servicer shall cause a Drive-by Inspection to be conducted on each
Mortgaged Property in accordance with Accepted Servicing Practices;
(vi) Between thirty (30) and fifty (50) calendar days following
the Due Date: The Servicer shall contact the holder of the first
lien to determine the lien position of the Owner;
(vii) Between sixty (60) and ninety (90) calendar days
following the Due Date: The Servicer shall send to each Mortgagor by
certified mail a NOI.
(viii) Upon expiration of the NOI: The Servicer shall order a
BPO.
(ix) On or about the one hundred twentieth calendar day after
the Due Date: The Servicer shall choose to commence foreclosure
proceedings on the related Home Loan or change off the Home Loan and
explore other means of recovering the delinquent amount.
(c) The Servicer shall establish and maintain at one or more
Designated Depository Institutions in the name of the Indenture Trustee the
Collection Account, in trust for the benefit of the Securityholders and the
Note Insurer. The Collection Account shall be established and maintained as an
Eligible Account. If the institution at any time holding the Collection
Account ceases to be eligible as a Designated Depository Institution
hereunder, then the Servicer shall immediately be required to name a successor
institution meeting the requirements for a Designated Depository Institution
hereunder. If the Servicer fails to name such a successor institution, then
the Collection Account shall thenceforth be held as a trust account with a
qualifying Designated Depository Institution selected by the Indenture
Trustee. The Servicer shall notify the Indenture Trustee and the Note Insurer
if there is a change in the name, account number or institution holding the
Collection Account.
The Servicer shall deposit in the Collection Account (i) on the
Closing Date, any amounts representing Monthly Payments on the Home Loans due
or to be applied as of a date after the Cut-off Date and (ii) thereafter, on a
daily basis within two Business Days of receipt (except as otherwise permitted
herein), the following payments and collections received or made by it:
(i) all payments received on or after the Cut-off Date on
account of principal on the Home Loans;
(ii) all payments received on or after the Cut-off Date on
account of interest on the Home Loans;
(iii) all Net Liquidation Proceeds and Post-Liquidation
Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of
any Home Loan and the amount of any Substitution Adjustment pursuant
to Sections 2.04 and 3.03; and
(vii) any other amount expressly required to be deposited in
the Collection Account in accordance with certain provisions of this
Agreement; provided, however, that the Servicer shall be entitled,
at its election, either (a) to withhold and to pay to itself the
applicable Servicing Fee from any payment on account of interest or
other recovery as received and prior to deposit of such payments in
the Collection Account or (b) to withdraw the applicable Servicing
Fee from the Collection Account after the entire payment or recovery
has been deposited therein.
The Servicer shall invest the funds in the Collection Account only in
Permitted Investments, and any such investment shall mature no later than the
Business Day immediately preceding the next Servicer Remittance Date. No
Permitted Investment shall be sold or disposed of at a gain prior to maturity.
All income (other than any gain from a sale or disposition of the type
referred to in the preceding sentence) realized from any such Permitted
Investment shall be for the benefit of the Servicer as additional servicing
compensation. The amount of any net losses incurred in respect of any such
investments shall be deposited in the Collection Account by the Seller out of
its own funds immediately as realized.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of those described in the
first paragraph of Section 5.14 need not be deposited by the Servicer in the
Collection Account. If the Servicer deposits in the Collection Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Collection Account, any provision herein to the contrary
notwithstanding. All funds deposited by the Servicer in the Collection Account
shall be held in the Collection Account for the account of the Indenture
Trustee in trust for the Securityholders and the Note Insurer until disbursed
in accordance with Section 6.01 or withdrawn in accordance with Section 5.04.
(d) The Collection Account may, upon written notice by the Indenture
Trustee to the Note Insurer, be transferred to a different Designated
Depository Institution so long as such transfer is to an Eligible Account.
Section 5.04. Permitted Withdrawals from the Collection Account. The
Servicer may, from time to time, make withdrawals from the Collection Account
for the following purposes:
(a) to reimburse itself for any accrued unpaid Servicing Fees and
Servicing Advances; provided, however, that the Servicer's right to
reimbursement for unpaid Servicing Fees and Servicing Advances shall be
limited to late collections on the related Home Loan and to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the related Mortgagor
or otherwise relating to the Home Loan in respect of which such unreimbursed
amounts are owed limited as follows:
(b) [Reserved]
(c) [Reserved]
(d) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein;
(e) to pay itself the Servicing Fee owed pursuant to Section 5.14
hereof to the extent not retained or paid pursuant to Section 5.03 or 5.14;
(f) to pay to the Seller, with respect to each Home Loan or property
acquired in respect thereof that has been repurchased or replaced pursuant to
Section 2.04 or 3.03 all amounts received thereon and not required to be
distributed as of the date on which the related repurchase or purchase price
or Principal Balance, as the case may be, was determined;
(g) to pay to the Seller with respect to each Home Loan any Retained
Amount;
(h) to pay to itself any net interest or net investment income earned
with respect to funds in the Collection Account;
(i) to remit to the Indenture Trustee amounts to be deposited into
the Note Distribution Account and the Certificate Distribution Account in the
amounts and in the manner provided for herein; and
(j) to clear and terminate the Collection Account upon the
termination of this Agreement.
The Servicer shall keep and maintain a separate accounting for each
Home Loan for the purpose of accounting for withdrawals from the Collection
Account pursuant to subclause (a).
In addition, if (a) there has been a draw on the Note Insurance
Policy for which the Seller or the Servicer is required to reimburse the Note
Insurer pursuant to the Insurance Agreement; (b) the Seller or the Servicer
has reimbursed the Note Insurer for all such amounts required by the Insurance
Agreement; (c) the Note Insurer has paid the draw amount to the Indenture
Trustee for the benefit of the Insured Noteholders; and (d) the Servicer has
received late payments on the Home Loans in respect of which such draw was
made, then the Servicer may, upon notice to the Indenture Trustee and the Note
Insurer, reimburse itself or the Seller, as applicable, from such late
payments for the draw amount.
Section 5.05. [Reserved].
Section 5.06. [Reserved].
Section 5.07. [Reserved].
Section 5.08. Fidelity Bond; Errors and Omissions Policy. The
Servicer (including the Indenture Trustee if it shall become the Servicer
hereunder) agrees to maintain errors and omissions coverage and a fidelity
bond, each at least to the extent required by Section 305 of Part I of FNMA
Guide or any successor provision thereof; provided, however, that in any event
that the fidelity bond or the errors and omissions coverage is no longer in
effect, the Servicer shall notify the Indenture Trustee and the Indenture
Trustee shall promptly give such notice to the Note Insurer and the
Securityholders and shall secure replacement coverage in conformity with this
Section.
Section 5.09. [Reserved].
Section 5.10. Periodic Filings With The Securities And Exchange
Commission; Additional Information. The Depositor shall prepare or cause to be
prepared the initial current report on Form 8-K and thereafter the Indenture
Trustee shall prepare or cause to be prepared, on the basis of information
supplied by the Servicer, Form 10-Ks and Form 10-Qs (if necessary), or monthly
current reports on Form 8-K, on behalf of the Issuer, as may be required by
applicable law, for filing with the Securities and Exchange Commission (the
"SEC"). The Indenture Trustee shall sign each such report on behalf of the
Issuer. The Indenture Trustee (or the Administrator on behalf of the Indenture
Trustee) shall forward a copy of each such report to the Depositor promptly
after such report has been filed with the SEC. The Indenture Trustee agrees to
use its best efforts to seek to terminate such filing obligation promptly
after the period during which such filings are required under the Securities
Exchange Act of 1934. Promptly after filing a Form 15 or other applicable form
with the SEC in connection with such termination, the Indenture Trustee shall
deliver to the Depositor a copy of such form together with copies of
confirmations of receipt by the SEC of each report filed therewith on behalf
of the Issuer.
The Servicer and the Depositor each agree to promptly furnish to the
Indenture Trustee, from time to time upon request, such further information,
reports and financial statements within their control and customarily
generated related to this Agreement and the Home Loans as the Indenture
Trustee reasonably deems appropriate to prepare and file all necessary reports
with the Securities and Exchange Commission.
Section 5.11. Assumption Agreements. When a Mortgaged Property has
been or is about to be conveyed by the Mortgagor, the Servicer shall, to the
extent it has knowledge of such conveyance or prospective conveyance, exercise
its rights to accelerate the maturity of the related Home Loan under any
"due-on-sale" clause contained in the related Mortgage or Mortgage Note;
provided, however, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. In such event or in the event the related
Mortgage and Mortgage Note do not contain a "due-on-sale" clause, the Servicer
shall enter into an assumption and modification agreement with the person to
whom such property has been or is about to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, unless prohibited by
applicable law or the Home Loan documents, the Mortgagor remains liable
thereon. The Servicer is also authorized to enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as Mortgagor and
becomes liable under the Mortgage Note. The Servicer shall notify the
Custodian that any such substitution or assumption agreement has been
completed by forwarding to the Custodian the original of such substitution or
assumption agreement, which original shall be added by the Custodian to the
related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any assumption or substitution
agreement entered into pursuant to this Section 5.11, the Servicer shall not
change the Mortgage Rate or the Monthly Payment, defer or forgive the payment
of principal or interest, reduce the outstanding principal amount or extend
the final maturity date on such Home Loan.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption
of a Home Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 5.12. Realization Upon Defaulted Home Loans. (a) In the event
that any payment due under any Home Loan and not postponed pursuant to Section
5.12(d) is not paid when the same becomes due and payable, or in the event the
Mortgagor fails to perform any other covenant or obligation under the Home
Loan and such failure continues beyond any applicable grace period, the
Servicer shall, in accordance with Accepted Servicing Practices, take such
action as it shall deem to be in the best interest of the Securityholders to
collect or liquidate such Home Loan in default in a manner that in the
reasonable judgment of the Servicer will be likely to maximize the net
proceeds realizable therefrom under the circumstances (including, but without
limitation, the purchase or substitution of such Home Loan pursuant to Section
3.03, or, if no Superior Liens exist on the related Mortgaged Property,
foreclose or otherwise comparably effect ownership in such Mortgaged Property
in the name of the Indenture Trustee for the benefit of Securityholders and
the Note Insurer). In addition, the Servicer shall have the power and
authority, exercisable in its sole discretion at any time, to sell any
Liquidated Home Loan on behalf of the Indenture Trustee for the benefit of the
Securityholders and the Note Insurer to one or more third party purchasers in
a manner that, in the reasonable judgment of the Servicer, will be likely to
maximize the net proceeds realizable therefrom; provided, however, that the
Servicer shall obtain the prior written consent of the Note Insurer to any
sale of a Liquidated Home Loan to an Affiliate of the Servicer. The Servicer
shall have the power and authority, exercisable in its sole discretion at any
time, to reach a negotiated settlement with a Mortgagor. The purchase price
paid for any Liquidated Home Loan sold to an affiliate of the Servicer shall
not be less than the price that would have been paid for such Liquidated Home
Loan by an unaffiliated third party. The Servicer shall promptly deposit the
Net Liquidation Proceeds or Post-Liquidation Proceeds, as applicable, from the
sale of such Liquidated Home Loans into the Collection Account in accordance
with Section 5.03 of this Agreement. The Servicer shall give the Indenture
Trustee notice of the election of remedies made pursuant to this Section 5.12.
The Servicer shall not be required to satisfy the indebtedness secured by any
Superior Liens on the related Mortgaged Property or to advance funds to keep
the indebtedness secured by such Superior Liens current. In connection with
any collection or liquidation activities, the Servicer shall exercise
collection or liquidation procedures with the same degree of care and skill as
it would exercise or use under the circumstances in the conduct of its own
affairs.
(b) During any Due Period occurring after a Home Loan becomes a
Liquidated Home Loan, the Servicer shall deposit into the Collection Account
any proceeds received by it with respect to such Liquidated Home Loan or the
related Foreclosure Property ("Post-Liquidation Proceeds").
(c) After a Home Loan has become a Liquidated Home Loan, the Servicer
shall promptly prepare and forward to the Issuer, the Indenture Trustee, the
Note Insurer and, upon request of any Securityholder, to such Securityholder a
liquidation report detailing the following: (i) the Net Liquidation Proceeds,
Insurance Proceeds or Released Mortgaged Property Proceeds received in respect
of such Liquidated Home Loan; (ii) expenses incurred with respect thereto;
(iii) any Realized Losses incurred in connection therewith; and (iv) any
Post-Liquidation Proceeds.
(d) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any provision of any Home Loan or consent to the
postponement of strict compliance with any such provision or in any manner
grant indulgence to any Mortgagor if in the Servicer's reasonable
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Securityholders; provided, however,
unless the Mortgagor is in default with respect to the Home Loan, or such
default is, in the judgment of the Servicer, reasonably foreseeable, the
Servicer may not permit any modification with respect to any Home Loan that
would reduce the Mortgage Rate by more than two percentage points (or three
percentage points, with respect to not more than 0.5% of the Home Loans (by
Cut-off Date Balance), or otherwise with the written consent of the Note
Insurer), defer (subject to the following paragraph) or forgive the payment of
any principal or interest (unless in connection with the liquidation of the
related Home Loan) or extend the final maturity date on the Home Loan beyond
April 20, 2028. The Servicer may grant a waiver or enter into a subordination
agreement with respect to the refinancing of the indebtedness secured by a
Superior Lien on the related Mortgaged Property, provided that the Mortgagor
is in a comparable or better financial or cash flow position as a result of
such refinancing, which may include a reduction in the Mortgagor's scheduled
monthly payment on the indebtedness secured by such Superior Lien. The
Servicer shall notify the Issuer and the Indenture Trustee of any
modification, waiver or amendment of any provision of any Home Loan and the
date thereof, and shall deliver to the Custodian for deposit in the related
Mortgage File, an original counterpart of the agreement relating to such
modification, waiver or amendment promptly following the execution thereof.
Notwithstanding the preceding provisions of this subsection (d), the Servicer
may modify, vary or waive any defaulted Home Loan in a manner that in the
reasonable judgment of the Servicer will be likely to maximize the net
proceeds realizable from such defaulted Home Loan under the circumstances,
including, without limitation, the establishment of a forbearance plan with
the related Mortgagor and the deferment or forgiveness of any principal or
interest payments due or to become due thereon; provided, however, that no
such modification, waiver or variation of a Home Loan pursuant to this
subsection (c) shall involve the execution by the related Mortgagor of a new
Mortgage Note.
Notwithstanding the foregoing clause (d), after 2.0% of the Home
Loans (by Cut-off Date Balance) that are not in default have been modified,
the Servicer shall not modify any further Home Loans that are not in default
without the prior written consent of MBIA.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of each Home Loan and the related
Mortgage Note and Mortgage. Consistent with the foregoing, the Servicer may in
its discretion, in accordance with Accepted Servicing Practices, waive or
permit to be waived any late payment charge, prepayment charge or assumption
fee or any other fee or charge which the Servicer would be entitled to assess
and the Seller would be entitled to retain hereunder and extend the due date
for payments due on a Mortgage Note for a period. Any Home Loan as to which
the Servicer has extended the Due Date for payments thereunder shall be
treated as Delinquent for purposes of calculating the Delinquency Loss Factor.
The Servicer may, in a manner consistent with Accepted Servicing
Practices, permit a Mortgagor who is selling his principal residence and
purchasing a new residence to substitute the new Mortgaged Property as
collateral for the related Home Loan. In such circumstances, the Servicer
acknowledges that it intends to, consistent with its servicing practices,
generally require such Mortgagor to make a partial prepayment in reduction of
the principal balance of the Home Loan to the extent that such Mortgagor has
received proceeds from the sale of the prior residence that will not be
applied to the purchase of the new residence.
(e) The deed or certificate of sale in respect of each Foreclosure
Property shall be taken in the name of the Indenture Trustee.
The Servicer shall manage, conserve, protect and operate each
Foreclosure Property for the Indenture Trustee, the Note Insurer and the
Securityholders solely for the purpose of its prudent and prompt disposition
and sale. The Servicer shall, either itself or through an agent selected by
the Servicer, manage, conserve, protect and operate the Foreclosure Property
in the same manner that it manages, conserves, protects and operates other
Foreclosure Property for its own account, and in the same manner that similar
property in the same locality as the Foreclosure Property is managed. The
Servicer shall attempt to sell the same (and may temporarily lease the same)
on such terms and conditions as the Servicer deems to be in the best interest
of the Securityholders. The disposition of Foreclosure Property shall be
carried out by the Servicer at such price, and upon such terms and conditions,
as the Servicer deems to be in the best interest of the Indenture Trustee and
the Securityholders and, as soon as practicable thereafter, the expenses of
such sale shall be paid. The Net Liquidation Proceeds or Post-Liquidation
Proceeds, as applicable, from the conservation, disposition and sale of the
Foreclosure Property shall be promptly deposited by the Servicer in the
Collection Account in accordance with Section 5.03 of this Agreement and the
Indenture, which Net Liquidation Proceeds or Post-Liquidation Proceeds, as
applicable, shall equal all cash amounts received with respect thereto less
the amounts retained and withdrawn by the Servicer for any related
unreimbursed Servicing Advances and any other fees and expenses incurred in
connection with such Foreclosure Property.
Section 5.13. Indenture Trustee to Cooperate; Release of Mortgage
Files. Subject to the provisions of Section 5.12, the Servicer shall not grant
a satisfaction or release of a Mortgage without having obtained payment in
full of the indebtedness secured by the Mortgage or otherwise prejudice any
right the Indenture Trustee or the Note Insurer may have under the mortgage
instruments. The Servicer shall maintain the fidelity bond and errors and
omissions insurance as provided for in Section 5.08 insuring the Servicer
against any loss it may sustain with respect to any Home Loan not satisfied in
accordance with the procedures set forth herein.
Upon the payment in full of any Home Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the
Custodian by an Officers' Certificate (which certificate shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 5.03(b) have been or will be so
deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request and in
accordance with Section 2.09 of the Indenture, the Custodian shall promptly
release the related Mortgage File to the Servicer. Expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall
be payable only from and to the extent of Servicing Fee and shall not be
chargeable to the Collection Account, the Note Distribution Account, or the
Certificate Distribution Account. Upon receipt by the Custodian of the
certification of a Servicing Officer with respect to the release of the
Mortgage File for any Home Loan or any documents included therein, the
Custodian shall release to the Servicer such Mortgage File and shall deliver
such instruments of transfer presented to it by the Servicer as shall be
necessary or appropriate for the release of such Mortgage File in accordance
with such certification of the Servicing Officer. The release to the Servicer
of a Mortgage File pursuant to such certification shall not require or be
subject to the prior approval of the Indenture Trustee in the case of a
release in connection with the following: (1) the satisfaction or release of a
Mortgage upon the payment in full of the Home Loan or upon such Home Loan
becoming a Liquidated Home Loan; (2) a Home Loan in default for which the
Servicer is or will be pursuing foreclosure or another method of liquidation
pursuant to Section 5.12; or (3) the correction of documentation in the
Mortgage File for errors and ambiguities, provided that such corrections shall
be performed and returned to the Custodian in a prompt manner, and provided
further that no more than 500 Mortgage Files shall be released and held by the
Servicer at any one time. In the case of a release of the related Mortgage
File to the Servicer in connection with a substitution or repurchase of any
Home Loan pursuant to Section 3.03 or a release for other servicing reasons,
such release of the Mortgage File by the Custodian shall be subject to the
prior approval of the Indenture Trustee.
The Indenture Trustee shall execute and deliver to the Servicer any
court pleadings, requests for trustee's sale or other documents necessary to
the foreclosure or trustee's sale in respect of a Mortgaged Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Together with such documents or pleadings, the
Servicer shall deliver to the Indenture Trustee a certificate of a Servicing
Officer requesting that such pleadings or documents be executed by the
Indenture Trustee and certifying as to the reason such documents or pleadings
are required and that the execution and delivery thereof by the Indenture
Trustee will not invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure
or trustee's sale. The Indenture Trustee shall, upon receipt of a written
request from a Servicing Officer, execute any document provided to the
Indenture Trustee by the Servicer or take any other action requested in such
request that is, in the opinion of the Servicer as evidenced by such request,
required by any state or other jurisdiction to discharge the lien of a
Mortgage upon the satisfaction thereof and the Indenture Trustee will sign and
post, but will not guarantee receipt of, any such documents to the Servicer,
or such other party as the Servicer may direct, within five Business Days, or
more promptly if needed, of the Indenture Trustee's receipt of such
certificate or documents. Such certificate or documents shall establish to the
Indenture Trustee's satisfaction that the related Home Loan has been paid in
full by or on behalf of the Mortgagor and that such payment has been deposited
in the Collection Account.
Subject to any other applicable terms and conditions of this
Agreement, the Indenture Trustee and Servicer shall be entitled to approve an
assignment in lieu of satisfaction with respect to any Home Loan, provided the
obligee with respect to such Home Loan following such proposed assignment
provides the Indenture Trustee and Servicer with a "Certification for
Assignment of Home Loan" in form and substance satisfactory to the Indenture
Trustee and Servicer, providing the following: (i) that the Home Loan is
secured by Mortgaged Property located in a jurisdiction in which an assignment
in lieu of satisfaction is required to preserve lien priority, minimize or
avoid mortgage recording taxes or otherwise comply with or facilitate a
refinancing under the laws of such jurisdiction; (ii) that the substance of
the assignment is, and is intended to be, a refinancing of such Home Loan and
that the form of the transaction is solely to comply with or facilitate the
transaction under such local laws; (iii) that the Home Loan following the
proposed assignment will have a rate of interest not more than 0.25 percent
below or above the rate of interest on such Home Loan prior to such proposed
assignment; and (iv) that such assignment is at the request of the related
Mortgagor. Upon approval of an assignment in lieu of satisfaction with respect
to any Home Loan, the Servicer shall receive cash in an amount equal to the
unpaid principal balance of and accrued interest on such Home Loan and the
Servicer shall treat such amount as a Principal Prepayment in Full with
respect to such Home Loan for all purposes hereof.
Section 5.14. Servicing Fee. As compensation for its activities
hereunder, the Servicer shall be entitled to be paid (or to retain) the amount
of the related Servicing Fee with respect to each Home Loan, but only to the
extent of payments or recoveries allocable to interest thereon.
Section 5.15. Reports to the Indenture Trustee and the Depositor and
the Note Insurer; Collection Account Statements. Not later than 15 days after
each Distribution Date, the Servicer shall provide to the Indenture Trustee,
the Note Insurer and the Depositor a statement, certified by a Servicing
Officer, setting forth the status of the Collection Account as of the close of
business on the last day of the immediately preceding calendar month, showing,
for the period covered by such statement, the aggregate of deposits into and
withdrawals from the Collection Account for each category of deposit specified
in Section 5.03 and each category of withdrawal specified in Section 5.04 and
the aggregate of deposits into the Certificate Distribution Account and the
Note Distribution Account, as specified in Section 6.05. Such statement shall
also state the aggregate unpaid principal balance of all the Home Loans as of
the close of business on the last day of the month preceding the month in
which such Distribution Date occurs. Copies of such statement shall be
provided by the Indenture Trustee to any Securityholder upon request.
Section 5.16. Annual Statement as to Compliance. The Servicer, at its
own expense, will deliver to the Indenture Trustee, the Note Insurer, the
Depositor, and the Rating Agencies, on or before April 15 of each year,
commencing in 2000, an Officer's Certificate stating, as to each signer
thereof, that (i) a review of the activities of the Servicer during such
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a
default in the fulfillment of all such obligations, specifying each such
default known to such officers and the nature and status thereof including the
steps being taken by the Servicer to remedy such default.
The Servicer shall deliver to the Indenture Trustee, the Depositor,
the Note Insurer and the Rating Agencies, 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 would become an Event of Default.
Section 5.17. Annual Independent Public Accountants' Servicing
Report. On or before April 15 of each year, commencing in 2000, the Servicer,
at its own expense, shall cause to be delivered to the Indenture Trustee, the
Note Insurer, the Depositor, and the Rating Agencies a letter or letters of a
firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Note Insurer stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Servicer which includes an assertion that the Servicer has complied with
certain minimum residential mortgage loan servicing standards, identified in
the Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
residential mortgage loans during the most recently completed calendar year
and (ii) on the basis of an examination conducted by such firm in accordance
with standards established by the American Institute of Certified Public
Accountants, such representation is fairly stated in all material respects,
subject to such exceptions and other qualifications that may be appropriate.
In rendering its report such firm may rely, as to matters relating to the
direct servicing of residential mortgage loans by Subservicers, upon
comparable reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance with the same
standards (rendered within one year of such report) with respect to those
Subservicers. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Indenture Trustee, the Note Insurer and
each Rating Agency. Copies of such statement shall be provided by the
Indenture Trustee to any Securityholder upon request at the Servicer's
expense, provided that such statement is delivered by the Servicer to the
Indenture Trustee.
Section 5.18. [Reserved].
Section 5.19. Reports to be Provided by the Servicer. The Servicer
shall provide to the Indenture Trustee, the Depositor and the Note Insurer
access to the documentation regarding the Home Loans, such access being
afforded without charge but only upon reasonable prior notice and during
normal business hours at the offices of the Servicer designated by it.
Upon any change in the format of the computer tape or file maintained
by the Servicer in respect of the Home Loans, the Servicer shall deliver a
copy of such computer tape or file to the Indenture Trustee, and in addition
shall provide a copy of such computer tape or file to the Indenture Trustee
and the Note Insurer at such other times as the Indenture Trustee or the Note
Insurer may reasonably request.
The Servicer shall deliver to the Depositor, the Seller, the
Indenture Trustee and the Note Insurer monthly, not later than the close of
business on the 15th day of the month or, if such 15th day is not a Business
Day, the immediately preceding Business Day (the "Servicer Reporting Date"),
such information, in a format mutually agreeable to the Servicer and the
Indenture Trustee, as is necessary for the calculation of distributions and
preparation of the reports required to be delivered by the Indenture Trustee
under Section 6.07.
In addition, on the Servicer Reporting Date, the Servicer shall
deliver to the Indenture Trustee, the Depositor and the Note Insurer a monthly
servicing report with respect to the Mortgage Pool, containing (without
limitation) the following information: principal and interest collected in
respect of the Home Loans, scheduled principal and interest that was due on
the Home Loans, relevant information with respect to Liquidated Home Loans, if
any, summary and detailed delinquency reports, Liquidation Proceeds and other
similar information concerning the servicing of the Home Loans and any other
information requested by the Note Insurer (including, without limitation, a
liquidation report with respect to each Liquidated Home Loan). In addition,
the Servicer shall inform the Indenture Trustee and the Note Insurer on each
Servicer Reporting Date, with respect to the Mortgage Pool, of the amounts of
any Loan Purchase Prices or Substitution Amounts so remitted during the
related Due Period, and of the Principal Balance of the three Home Loans
having the largest Principal Balance for the related Distribution Date. The
Servicer shall report to the Indenture Trustee and the Note Insurer on each
Servicer Remittance Date, commencing in September 1999, all amounts netted
against collections during the preceding Due Period, including, without
limitation, the Servicing Fees retained and the expenses (including
unreimbursed Servicing Advances) retained from Liquidation Proceeds.
Section 5.20. [Reserved].
Section 5.21. Servicing Advances. In accordance with Accepted
Servicing Practices, the Servicer, or any Subservicer on behalf of the
Servicer, shall make all Servicing Advances in connection with the servicing
of each Home Loan hereunder. Notwithstanding any provision to the contrary
herein, neither the Servicer, nor any Subservicer on behalf of the Servicer,
shall have any obligation to advance its own funds for any delinquent
scheduled payments of principal and interest on any Home Loan or to satisfy or
keep current the indebtedness secured by any Superior Liens on the related
Mortgaged Property. No costs incurred by the Servicer or any Subservicer in
respect of Servicing Advances shall, for the purposes of payments or
distributions to Securityholders, be added to the amount owing under the
related Home Loan. Notwithstanding any obligation by the Servicer to make a
Servicing Advance hereunder with respect to a Home Loan, before making any
Servicing Advance that is material in relation to the outstanding principal
balance thereof, the Servicer shall assess the reasonable likelihood of (i)
recovering such Servicing Advance and any prior Servicing Advances for such
Home Loan, and (ii) recovering any amounts attributable to outstanding
interest and principal owing on such Home Loan for the benefit of the
Securityholders in excess of the costs, expenses and other deductions to
obtain such recovery, including without limitation any Servicing Advances
therefor and, if applicable, the outstanding indebtedness secured by all
Superior Liens. The Servicer shall only make a Servicing Advance with respect
to a Home Loan to the extent that the Servicer determines in its reasonable,
good faith judgment that such Servicing Advance would likely be recovered as
aforesaid.
Section 5.22. Inspections by Note Insurer. At any reasonable time and
from time to time upon reasonable notice, the Indenture Trustee, the Note
Insurer, any Holder of a Residual Interest Certificate, or any agents thereof
may inspect the Servicer's servicing operations and discuss the servicing
operations of the Servicer during the Servicer's normal business hours with
any of its officers or directors; provided, however, that the costs and
expenses incurred by the Servicer or its agents or representatives in
connection with any such examinations or discussions shall be paid by the
Servicer.
Section 5.23. Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer. (a) The Servicer will keep in full effect
its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Home Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at
all times under this Agreement.
(b) 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 all or substantially all of the
business or assets 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 provided that such corporation is
acceptable to the Note Insurer.
Section 5.24. Assignment of Agreement by Servicer; Servicer Not to
Resign. The Servicer shall not resign from its obligations and duties
hereunder except by consent of the Note Insurer and the Indenture Trustee, or
upon the determination that the Servicer's duties hereunder are no longer
permitted under applicable law and that such incapacity cannot be cured by the
Servicer without unreasonable expense. Any such determination that the
Servicer's duties hereunder are no longer permissible under applicable law
permitting the resignation of the Servicer shall be evidenced by a written
Opinion of Counsel to such effect delivered to the Seller, the Depositor and
the Note Insurer. No such resignation shall become effective until the
Indenture Trustee or a successor Servicer appointed in accordance with the
terms of this Agreement has assumed the Servicer's responsibilities and
obligations hereunder in accordance with Section 7.02.
Notwithstanding the foregoing, the Servicer may assign its rights and
delegate its obligations hereunder to a successor Servicer, which shall assume
the Servicer's responsibilities and obligations hereunder in accordance with
Section 7.02.
The Servicer shall provide the Indenture Trustee, the Rating Agencies
and the Note Insurer with 30 days prior written notice of its intention to
assign this Agreement or resign from its obligations and duties hereunder.
Section 5.25. Information Reports to be Filed by the Servicer. The
Servicer shall file information returns with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosures and
abandonments of any Mortgaged Property and cancellation of indebtedness income
with respect to any Mortgaged Property as required by Sections 6050H, 6050J
and 6050P of the Code, respectively.
Section 5.26. MERS. (a) The Servicer shall take such actions as are
necessary to cause the Indenture Trustee to be clearly identified as the owner
of each MERS Home Loan on the records of MERS for purposes of the system of
recording transfers of beneficial ownership of mortgages maintained by MERS.
(b) The Servicer shall maintain in good standing its membership in
MERS. In addition, the Servicer shall comply with all rules, policies and
procedures of MERS, including the Rules of Membership, as amended, and the
MERS Procedures Manual, as amended.
(c) With respect to all MERS Home Loans serviced hereunder, the
Servicer shall promptly notify MERS as to any transfer of beneficial ownership
or release of any security interest in such Home Loans.
(d) With respect to all MERS Home Loans serviced hereunder, the
Servicer shall notify MERS as to any transfer of servicing pursuant to Section
7.02 within 10 Business Days of such transfer of servicing. The Servicer shall
cooperate with the Indenture Trustee, the Servicer and any successor Servicer
to the extent necessary to ensure that such transfer of servicing is
appropriately reflected on the MERS system.
Section 5.27. [Reserved].
Section 5.28. [Reserved].
Section 5.29. Notices of Material Events. The Servicer shall give
prompt written notice to the Note Insurer, the Indenture Trustee and the
Rating Agencies of the occurrence of any of the following events:
(a) Any default or any fact or event of which with notice or the
passage of time, or both, would result in the occurrence of a default by the
Servicer under any Transaction Document or would constitute a material breach
of a representation, warranty or covenant under any Transaction Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Servicer to which the Servicer has knowledge in any federal, state or local
court or before any governmental body or agency or before any arbitration
board or any such proceedings threatened by any governmental agency, which, if
adversely determined, would have a material adverse effect upon the Servicer's
ability to perform its obligations under any Transaction Document;
(c) The commencement of any proceedings by or against the Servicer
under any applicable bankruptcy, reorganization, liquidation, insolvency or
other similar law now or hereafter in effect or of any proceeding in which a
receiver, liquidator, trustee or other similar official shall have been, or
may be, appointed or requested for the Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of the Servicer's business that the Servicer is to
cease or desist, or to undertake any practice, program, procedure or policy
employed by the Servicer in the conduct of the business of any of them, and
such cessation or undertaking will materially and adversely affect the conduct
of the Servicer' s business or its ability to perform under any Transaction
Document or materially and adversely affect the financial affairs of the
Servicer.
Section 5.30. [Reserved].
Section 5.31. Superior Liens.
(a) The Servicer shall file (or cause to be filed) of record a
request for notice of any action by a lienholder under a Lien for the
protection of the Indenture Trustee's interest, where permitted by local law
and whenever applicable state law does not require that a junior lienholder be
named as a party defendant in foreclosure proceedings in order to foreclose
such junior lienholder's equity of redemption.
(b) If the Servicer is notified that any lienholder under a Superior
Lien has accelerated or intends to accelerate the obligations secured by such
Superior Lien, or has declared or intends to declare a default under the
related mortgage or promissory note secured thereby, or has filed or intends
to file an election to have any Mortgaged Property sold or foreclosed, the
Servicer shall take, on behalf of the Issuer and the Indenture Trustee, all
reasonable actions that are necessary to protect the interests of the
Securityholders and the Note Insurer, and/or to preserve the security of the
related Home Loan, including making any Servicing Advances that are necessary
to cure the default or reinstate the Superior Lien. The Servicer shall
immediately notify the Issuer and the Indenture Trustee of any such action or
circumstances. Any Servicing Advances by the Servicer pursuant to its
obligations in this Section 5.31 shall comply with requirements set forth in
Section 5.21 hereof.
Section 5.32. No Personal Solicitation.
The Servicer hereby agrees that it will not take any action or permit
or cause any action to be taken by any of its agents or affiliates, or by any
independent contractors on the Servicer's behalf, to personally, by telephone
or mail, solicit the borrower or obligor under any Home Loan for any purpose
whatsoever, including to refinance a Home Loan, in whole or in part, without
the prior written consent of the Issuer. It is understood and agreed that all
rights and benefits relating to the solicitation of any Mortgagors and the
attendant rights, title and interest in and to the list of such Mortgagors and
data relating to their Mortgages (including insurance renewal dates) shall be
transferred to the Issuer pursuant hereto and the Servicer shall take no
action to undermine these rights and benefits. Notwithstanding the foregoing,
it is understood and agreed that offers to refinance a Home Loan or to make a
new loan to a Mortgagor made within 30 days following receipt by the Servicer
of a pay-off request from the Mortgagor and promotions undertaken by the
Servicer or any affiliate of the Servicer which are directed to the general
public at large, including, without limitation, mass mailing based on
commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this Section 5.32.
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.01. Establishment of Trust Accounts and Certificate
Distribution Account; Deposits to the Trust Accounts and Certificate
Distribution Account. (a) (i) The Servicer shall establish and maintain in the
name of the Securities Intermediary the Collection Account as provided in
Section 5.03, which account shall be pledged to the Indenture Trustee for the
benefit of Securityholders.
(ii) The Indenture Trustee, for the benefit of the Noteholders,
shall establish and maintain in the name of the Securities
Intermediary an Eligible Account (the "Note Distribution Account"),
which account shall be pledged to the Indenture Trustee and shall
bear a designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders.
(iii) The Indenture Trustee, for the benefit of the
Certificateholders, shall establish and maintain in the name of the
Owner Trustee an Eligible Account (the "Certificate Distribution
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the
Certificateholders.
(b) Funds on deposit in the Collection Account and the Note
Distribution Account (each, a "Trust Account"), and funds in the Certificate
Distribution Account, may be invested, and if invested shall be invested in
Permitted Investments at the direction of the Servicer, in the case of the
Collection Account, and otherwise at the direction of the Indenture Trustee
and such investments shall not be sold or disposed of prior to their maturity.
All such investments shall be made in the name of the Indenture Trustee in the
manner provided herein. Subject to paragraph (b)(ii) below, funds on deposit
in the Trust Accounts and the Certificate Distribution Account may be invested
and if invested shall be invested (1) in Permitted Investments selected (x) in
the case of the Collection Account, by the Servicer, and (y) in the case of
the Note Distribution Account and the Certificate Distribution Account, by the
Indenture Trustee or (2) by an investment manager in Permitted Investments
selected by such investment manager; provided that (A) such investment manager
shall be selected by the Servicer, in the case of the Collection Account, and
by the Indenture Trustee, in the case of the Note Distribution Account and the
Certificate Distribution Account, (B) such investment manager shall have
agreed to comply with the terms of this Agreement as it relates to investing
such funds, (C) any investment so selected by such investment manager shall be
made in the name of the Indenture Trustee and shall be settled by a delivery
to the Indenture Trustee that complies with the terms of this Agreement as it
relates to investing such funds, and (D) prior to the settlement of any
investment so selected by such investment manager, the Indenture Trustee, to
the extent practicable, shall affirm that such investment is a Permitted
Investment. It is understood and agreed that the Indenture Trustee shall not
be liable for any loss arising from an investment in Permitted Investments
made in accordance with this Section 6.01(b). All such Permitted Investments
shall be held by the Indenture Trustee for the benefit of the Noteholders and
the Certificateholders, as applicable; provided, that on the Servicer
Remittance Date immediately prior to each Distribution Date all interest and
other investment income (net of losses and investment expenses) on funds on
deposit in the Collection Account shall be payable to the Servicer. Other than
as permitted by each Rating Agency and except otherwise set forth herein,
funds on deposit in the Trust Accounts and the Certificate Distribution
Account shall be invested in Permitted Investments that will mature not later
than the Business Day immediately preceding the next Distribution Date (or on
such next Distribution Date if either (x) such investment is held in the trust
department of the institution with which the Collection Account, the Note
Distribution Account or the Certificate Distribution Account, as applicable,
is then maintained and is invested in a time deposit of the Indenture Trustee
rated at least P-1 (or the equivalent) by each Rating Agency (such account
being maintained within the trust department of the Indenture Trustee) or (y)
the Indenture Trustee (so long as the short-term unsecured debt obligations of
the Indenture Trustee are either (A) rated at least P-1 (or the equivalent) by
each Rating Agency on the date such investment is made or (B) guaranteed by an
entity whose short-term unsecured debt obligations are rated at least P-1 (or
the equivalent) by each Rating Agency on the date such investment is made) has
agreed to advance funds on such Distribution Date to the Note Distribution
Account or the Certificate Distribution Account, as applicable, in the amount
payable on such investment on such Distribution Date pending receipt thereof
to the extent necessary to make distributions on such Distribution Date). For
the purposes of the foregoing, unless the Indenture Trustee affirmatively
agrees in writing to make such advance with respect to such investment prior
to the time an investment is made, it shall not be deemed to have agreed to
make such advance. The Servicer shall deposit into the Collection Account an
amount equal to any loss realized on any investment of funds in the Collection
Account immediately as any such loss is realized. The Indenture Trustee shall
deposit in the Note Distribution Account or the Certificate Distribution
Account, as applicable, an amount equal to any loss realized on any investment
of funds in such account immediately as any such loss is realized. Funds on
deposit in the Collection Account shall be withdrawn therefrom by the Servicer
on the Servicer Remittance Date immediately preceding each Distribution Date
to make deposits and distributions on each such date in the manner and
priorities set forth in Section 6.05.
(c) The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. The Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders or the Noteholders and the
Certificateholders, as the case may be. If, at any time, any of the Trust
Accounts or the Certificate Distribution Account ceases to be an Eligible
Account, the Indenture Trustee (or the Servicer on its behalf) shall within 30
Business Days establish a new Trust Account or a new Certificate Distribution
Account, as applicable, as an Eligible Account and shall transfer any cash
and/or any investments to such new account.
The Depositor, the Issuer and the Indenture Trustee hereby appoint
the Indenture Trustee, or the Administrator on behalf of the Indenture
Trustee, as Securities Intermediary with respect to the Trust Accounts and the
Certificate Distribution Account, and the Issuer has, pursuant to the
Indenture, granted to the Indenture Trustee, for the benefit of the
Securityholders, a security interest to secure all amounts due Noteholders
hereunder in and to the Trust Accounts and the Security Entitlements to all
Financial Assets credited to the Trust Accounts, including without limitation
all amounts, securities, investments, Financial Assets, investment property
and other property from time to time deposited in or credited to the Trust
Accounts and all proceeds thereof, and the Depositor hereby grants to the
Issuer, as collateral agent for the benefit of Certificateholders, a security
interest to secure all amounts due Certificateholders hereunder in and to the
Certificate Distribution Account and the Security Entitlements and all
Financial Assets credited to the Certificate Distribution Account, including
without limitation all amounts, securities, investments, Financial Assets,
investment property and other property from time to time deposited in or
credited to such account and all proceeds thereof. Amounts held from time to
time in the Trust Accounts will continue to be held by the Securities
Intermediary for the benefit of the Indenture Trustee, as collateral agent,
for the benefit of the Securityholders, and amounts held from time to time in
the Certificate Distribution Account will continue to be held by the
Securities Intermediary for the benefit of the Issuer, as collateral agent,
for the benefit of the Certificateholders. Upon the termination of the Trust
or the discharge of the Indenture, the Indenture Trustee shall inform the
Securities Intermediary of such termination. By acceptance of their Securities
or interests therein, the Securityholders shall be deemed to have appointed
the Indenture Trustee, or the Administrator on behalf of the Indenture
Trustee, as Securities Intermediary. The Indenture Trustee hereby accepts such
appointment as Securities Intermediary.
(i) With respect to the Trust Account Property credited to the
Trust Accounts, or the Certificate Distribution Account, the
Securities Intermediary agrees that:
(A) with respect to any Trust Account Property that is
held in deposit accounts, each such deposit account shall be
subject to the exclusive custody and control of the Securities
Intermediary, and the Securities Intermediary shall have sole
signature authority with respect thereto;
(B) the sole assets permitted in the Trust Accounts and
the Certificate Distribution Account shall be those as the
Securities Intermediary agrees to treat as Financial Assets;
and
(C) any such Trust Account Property that is, or is treated
as, a Financial Asset shall be physically delivered
(accompanied by any required endorsements) to, or credited to
an account in the name of, the Securities Intermediary or other
eligible institution maintaining any Trust Account or the
Certificate Distribution Account in accordance with the
Securities Intermediary's customary procedures such that the
Securities Intermediary or such other institution establishes a
Security Entitlement in favor of the Indenture Trustee (or the
issuer, in the case of the Certificate Distribution Account)
with respect thereto over which the Securities Intermediary or
such other institution has Control;
(ii) The Securities Intermediary hereby confirms that (A) each
Trust Account and the Certificate Distribution Account is an account
to which Financial Assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement, treat
the Indenture Trustee, as collateral agent, as entitled to exercise
the rights that comprise any Financial Asset credited to any Trust
Account, and the Issuer, as collateral agent, as entitled to
exercise the rights that comprise any Financial Asset credited to
the Certificate Distribution Account, (B) all Trust Account Property
in respect of any Trust Account or the Certificate Distribution
Account will be promptly credited by the Securities Intermediary to
such account, and (C) all securities or other property underlying
any Financial Assets credited to any Trust Account or the
Certificate Distribution Account shall be registered in the name of
the Securities Intermediary, endorsed to the Securities Intermediary
or in blank or credited to another securities account maintained in
the name of the Securities Intermediary and in no case (x) will any
Financial Asset credited to any Trust Account be registered in the
name of the Seller or the Issuer, payable to the order of the Seller
or the Issuer or specially endorsed to the Seller or the Issuer, or
(y) will any Financial Asset credited to the Certificate
Distribution Account be registered in the name of the Seller,
payable to the order of the Seller or specially endorsed to the
Seller, except to the extent the foregoing have been specially
endorsed to the Securities Intermediary or in blank;
(iii) The Securities Intermediary hereby agrees that each item
of property (whether investment property, Financial Asset, security,
instrument or cash) credited to any Trust Account or the Certificate
Distribution Account shall be treated as a Financial Asset;
(iv) If at any time the Securities Intermediary shall receive
an Entitlement Order from the Indenture Trustee directing transfer
or redemption of any Financial Asset relating to any Trust Account,
the Securities Intermediary shall comply with such Entitlement Order
without further consent by the Seller, the Issuer or any other
Person. If at any time the Indenture Trustee notifies the Securities
Intermediary in writing that the Trust has been terminated or the
Indenture discharged in accordance herewith and with the Trust
Agreement or the Indenture, as applicable, and the security interest
granted pursuant to the Indenture has been released, then thereafter
if the Securities Intermediary shall receive any order from the
Seller or the Issuer directing transfer or redemption of any
Financial Asset relating to any Trust Account, the Securities
Intermediary shall comply with such Entitlement Order without
further consent by the Indenture Trustee or any other Person;
If at any time the Securities Intermediary shall receive an
Entitlement Order from the Issuer directing transfer or redemption of
any Financial Asset relating to the Certificate Distribution Account,
the Securities Intermediary shall comply with such Entitlement Order
without further consent by the Seller or any other Person. If at any
time the Issuer notifies the Securities Intermediary in writing that
the Trust has been terminated in accordance herewith and with the
Trust Agreement and the security interest granted above has been
released, then thereafter if the Securities Intermediary shall
receive any order from the Seller directing transfer or redemption of
any Financial Asset relating to the Certificate Distribution Account,
the Securities Intermediary shall comply with such entitlement order
without further consent by the Issuer or any other Person;
(v) In the event that the Securities Intermediary has or
subsequently obtains by agreement, operation of law or otherwise a
security interest in any Trust Account or the Certificate
Distribution Account or any Financial Asset credited thereto, the
Securities Intermediary hereby agrees that such security interest
shall be subordinate to the security interest of the Indenture
Trustee, in the case of the Trust Accounts, or of the Issuer, in the
case of the Certificate Distribution Account. The Financial Assets
credited to the Trust Accounts, or the Certificate Distribution
Account will not be subject to deduction, set-off, banker's lien, or
any other right in favor of any Person other than the Indenture
Trustee in the case of the Trust Accounts, or of the Issuer, in the
case of the Certificate Distribution Account (except that the
Securities Intermediary may set-off (i) all amounts due to it in
respect of its customary fees and expenses for the routine
maintenance and operation of the Trust Accounts, and the Certificate
Distribution Account, and (ii) the face amount of any checks which
have been credited to any Trust Account or the Certificate
Distribution Account but are subsequently returned unpaid because of
uncollected or insufficient funds);
(vi) There are no other agreements entered into between the
Securities Intermediary in such capacity and the Depositor or the
Issuer with respect to any Trust Account, or the Depositor with
respect to the Certificate Distribution Account. In the event of any
conflict between this Agreement (or any provision of this Agreement)
and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail;
(vii) The rights and powers granted under the Indenture and
herein to (x) the Indenture Trustee have been granted in order to
perfect its security interest in the Trust Accounts and the Security
Entitlements to the Financial Assets credited thereto, and (y) the
Issuer have been granted in order to perfect its security interest in
the Certificate Distribution Account and the Security Entitlements to
the Financial Assets credited thereto, and are powers coupled with an
interest and will neither be affected by the bankruptcy of the
Depositor or the Issuer nor by the lapse of time. The obligations of
the Securities Intermediary hereunder shall continue in effect until
the security interest of the Indenture Trustee in the Trust Accounts
or of the Issuer in the Certificate Distribution Account, and in such
Security Entitlements, has been terminated pursuant to the terms of
this Agreement and the Indenture Trustee or the Issuer, as
applicable, has notified the Securities Intermediary of such
termination in writing; and
(viii) Notwithstanding anything else contained herein, the
Depositor and the Issuer agree that the Trust Accounts and the
Certificate Distribution Account will be established only with the
Securities Intermediary or another institution meeting the
requirements of this Section, which by acceptance of its appointment
as Securities Intermediary agrees substantially as follows: (1) it
will comply with Entitlement Orders related to the Trust Accounts
issued by the Indenture Trustee, as collateral agent, without further
consent by the Depositor or the Issuer, and with Entitlement Orders
related to the Certificate Distribution Account issued by the Issuer,
as collateral agent, without further consent by the Depositor; (2)
until termination of the Trust or discharge of the Indenture, it will
not enter into any other agreement related to such accounts pursuant
to which it agrees to comply with Entitlement Orders of any Person
other than the Indenture Trustee, as collateral agent with respect to
the Trust Accounts or the Issuer, as collateral agent with respect to
the Certificate Distribution Account; and (3) all assets delivered or
credited to it in connection with such accounts and all investments
thereof will be promptly credited to the applicable account.
(d) Notwithstanding the foregoing, the Issuer shall have the power,
revocable by the Indenture Trustee or by the Owner Trustee with the consent of
the Indenture Trustee, to instruct the Indenture Trustee and the Servicer to
make withdrawals and distributions from the Trust Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its respective
duties hereunder or permitting the Indenture Trustee to carry out its duties
under the Indenture.
(e) Each of the Depositor and the Issuer agrees to take or cause to
be taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments
(including, without limitation, any financing statements under the UCC or this
Agreement) as may be necessary to perfect the interests created by this
Section in favor of the Issuer and the Indenture Trustee and otherwise fully
to effectuate the purposes, terms and conditions of this Section. The
Depositor shall:
(i) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments,
certificates and other documents with respect to such interests and
perform all such other acts as may be necessary in order to perfect
or to maintain the perfection of the Issuer's and the Indenture
Trustee's security interest in the Trust Account Property; and
(ii) make the necessary filings of financing statements or
amendments thereto within five days after the occurrence of any of
the following: (1) any change in its corporate name or any trade
name; (2) any change in the location of its chief executive office or
principal place of business; and (3) any merger or consolidation or
other change in its identity or corporate structure and promptly
notify the Issuer and the Indenture Trustee of any such filings.
None of the Securities Intermediary or any director, officer,
employee or agent of the Securities Intermediary shall be under any liability
to the Indenture Trustee or the Securityholders for any action taken, or not
taken, in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Securities
Intermediary against any liability to the Indenture Trustee or the
Securityholders which would otherwise be imposed by reason of the Securities
Intermediary's willful misconduct, bad faith or negligence in the performance
of its obligations or duties hereunder. The Securities Intermediary and any
director, officer, employee or agent of the Securities Intermediary may rely
in good faith on any document of any kind which, prima facie, is properly
executed and submitted by any Person respecting any matters arising hereunder.
The Securities Intermediary shall be under no duty to inquire into or
investigate the validity, accuracy or content of such document. The Issuer
shall indemnify the Securities Intermediary for and hold it harmless against
any loss, liability or expense arising out of or in connection with this
Agreement and carrying out its duties hereunder, including the costs and
expenses of defending itself against any claim of liability, except in those
cases where the Securities Intermediary has been guilty of bad faith,
negligence or willful misconduct. The foregoing indemnification shall survive
any termination of this Agreement or the resignation or removal of the
Administrative Agent.
Section 6.02. Permitted Withdrawals from the Note Distribution
Account and the Certificate Distribution Account. The Indenture Trustee shall
withdraw or cause to be withdrawn funds from each of the Note Distribution
Account and the Certificate Distribution Account for the following purposes:
(a) to effect the distributions described in Section 6.05;
(b) to pay itself any interest earned on or investment income earned
with respect to funds in the Note Distribution Account and the Certificate
Distribution Account;
(c) to return to the Collection Account any amount deposited in the
Note Distribution Account or the Certificate Distribution Account that was not
required to be deposited therein; and
(d) to clear and terminate the Note Distribution Account and the
Certificate Distribution Account upon termination of the Trust pursuant to
Article VIII.
The Indenture Trustee shall keep and maintain a separate accounting
for withdrawals from the Note Distribution Account and the Certificate
Distribution Account pursuant to each of subclauses (a) through (d) listed
above.
Section 6.03. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture Trustee
pursuant to this Agreement, including (a) all payments due on the Home Loans
in accordance with the respective terms and conditions of such Home Loans and
required to be paid over to the Indenture Trustee by the Servicer and (b)
Insured Payments. The Indenture Trustee shall hold all such money and property
received by it as part of the Trust Estate and shall apply it as provided in
this Agreement.
Section 6.04. The Note Insurance Policy. (a) If, on the third
Business Day before any Distribution Date, the Indenture Trustee determines
that a Deficiency Amount exists for such Distribution Date, the Indenture
Trustee shall determine the amount of any such Insured Payment and shall give
notice to the Note Insurer by completing a notice in the form of Exhibit A to
the Note Insurance Policy and submitting such notice by 12:00 noon New York
City time on such third Business Day as a claim for an Insured Payment. The
Indenture Trustee's responsibility for delivering a notice to the Note
Insurer, as provided in the preceding sentence, is limited to the
availability, timeliness and accuracy of the information provided by the
Servicer.
(b) In the event that the Indenture Trustee receives a certified copy
of an order of the appropriate court that any scheduled payment of principal
or interest on an Insured note has been voided in whole or in part as a
preference payment under applicable bankruptcy law, the Indenture Trustee
shall (i) promptly notify the Note Insurer, as appropriate, and the Fiscal
Agent, if any, and (ii) comply with the provisions of the Note Insurance
Policy to obtain payment by the Note Insurer of such voided payment. In
addition, the Indenture Trustee shall mail notice to all Insured Noteholders
so affected that, in the event that any such Securityholder's payment is so
recovered, such Securityholder will be entitled to payment pursuant to the
terms of the Note Insurance Policy, a copy of which shall be made available to
such Holders by the Indenture Trustee. The Indenture Trustee shall furnish to
the Note Insurer and the appropriate Fiscal Agent, if any, its records listing
the payments on the affected Insured Notes, if any, that have been made by the
Indenture Trustee and subsequently recovered from the affected
Securityholders, and the dates on which such payments were made by the
Indenture Trustee.
(c) The Indenture Trustee shall establish a separate Eligible Account
for the benefit of Insured Noteholders and the Note Insurer referred to herein
as the "Note Insurance Payment Account" over which the Indenture Trustee shall
have exclusive control and sole right of withdrawal. The Indenture Trustee
shall deposit upon receipt any amount paid under the Note Insurance Policy in
the Note Insurance Payment Account and distribute such amount only for
purposes of payment to Insured Noteholders of the Insured Payment and such
amount may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Indenture Trustee or the Trust Estate. Amounts paid under the
Note Insurance Policy, to the extent needed to pay the Insured Payment shall
be transferred by the Indenture Trustee from the Note Insurance Payment
Account to the Note Distribution Account on the related Distribution Date and
disbursed by the Indenture Trustee to Insured Noteholders in accordance with
Section 6.05. It shall not be necessary for payments made under the Note
Insurance Policy to be made by checks or wire transfers separate from other
amounts distributed pursuant to Section 6.05. However, the amount of any
payment of principal or of interest on the Notes to be paid from funds
transferred from the Note Insurance Payment Account shall be noted as provided
in paragraph (d) below. Funds held in the Note Insurance Payment Account shall
not be invested. Any funds remaining in the Note Insurance Payment Account on
the first Business Day following a Distribution Date shall be returned to the
Note Insurer pursuant to the written instructions of the Note Insurer by the
end of such Business Day.
(d) The Indenture Trustee Remittance Report shall indicate the amount
of interest and principal paid in respect of the Insured Notes from moneys
received under the Note Insurance Policy. The Indenture Trustee shall keep a
complete and accurate record of the amount of interest and principal paid in
respect of any Insured Note from moneys received under the Note Insurance
Policy. The Note Insurer shall have the right to inspect such records at
reasonable times during normal business hours upon one Business Day's prior
notice to the Indenture Trustee.
(e) The Indenture Trustee shall promptly notify the Note Insurer of
any proceeding or the institution of any action, of which a Responsible
Officer of the Indenture Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under applicable bankruptcy, insolvency,
receivership or similar law (a "Preference Claim") of any distribution made
with respect to the Insured Notes. Each Securityholder, by its acceptance of a
Security, the Servicer and the Indenture Trustee agree that, the Note Insurer
(so long as no Note Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all
matters relating to such Preference Claim, including, without limitation, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any
such appeal. In addition and without limitation of the foregoing, the Note
Insurer shall be subrogated to, and each Securityholder, the Servicer and the
Indenture Trustee hereby delegate and assign to the Note Insurer, to the
fullest extent permitted by law, the rights of the Servicer, the Indenture
Trustee and each Securityholder in the conduct of any such Preference Claim,
including, without limitation, all rights of any party to any adversary
proceeding or action with respect to any court order issued in connection with
any such Preference Claim.
(f) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Insured Notes which is made
with moneys received pursuant to the terms of the Note Insurance Policy shall
not be considered payment of such Securities from the Trust Estate and shall
not result in the payment of or the provision for the payment of the principal
of or interest on such Securities within the meaning of Section 6.05. The
Depositor, the Servicer and the Indenture Trustee acknowledge, and each Holder
by its acceptance of a Security agrees, that without the need for any further
action on the part of the Note Insurer, the Depositor, the Servicer and the
Indenture Trustee acknowledge, and each Holder by its acceptance of a Security
agrees, that without the need for any further action on the part of the Note
Insurer, the Depositor, the Servicer, the Indenture Trustee or the Note
Registrar (a) to the extent the Note Insurer makes payments, directly or
indirectly, on account of principal of or interest on any Insured Notes to the
Holders of such Insured Notes, the Note Insurer will be fully subrogated to
the rights of such Holders to receive such principal and interest from the
Trust Estate and (b) the Note Insurer shall be paid such principal and
interest but only from the sources and in the manner provided herein for the
payment of such principal and interest.
The Indenture Trustee, the Depositor and the Servicer shall cooperate
in all respects with any reasonable request by the Note Insurer for action to
preserve or enforce the Note Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the
Holders as otherwise set forth therein.
(g) The Indenture Trustee will hold the Note Insurance Policy in
trust as agent for the Holders of the Insured Notes for the purpose of making
claims thereon and distributing the proceeds thereof. Each Holder of Insured
Notes, by accepting its Insured Notes, appoints the Indenture Trustee as
attorney-in-fact for the purpose of making claims on the Note Insurance
Policy.
Section 6.05. Distributions. (a) Not later than the close of business
on each Servicer Remittance Date, the Servicer shall remit to the Indenture
Trustee for deposit into the Note Distribution Account from funds on deposit
in the Collection Account an amount equal to the Available Funds for the
related Distribution Date.
(b) With respect to funds deposited in the Note Distribution Account,
on each Distribution Date, the Indenture Trustee shall make the following
allocations, disbursements and transfers, and each such allocation, transfer
and disbursement shall be treated as having occurred only after all preceding
allocations, transfers and disbursements have occurred:
(i) On each Distribution Date, the Indenture Trustee shall
distribute the Available Funds for such date in the following order
of priority:
first, if GMACM is no longer the Servicer, to pay the
Owner Trustee Compensation and the Custodian Compensation;
second, to the Note Insurer, the Premium Amount for such
date;
third, for retention in the Note Distribution Account, the
Noteholders' Interest Distribution Amount for such date, to be
paid pro rata to the Noteholders;
fourth, for retention in the Note Distribution Account,
the amount necessary to reduce the Class Principal Amount of
the Notes to the Optimal Principal Amount for such date, to be
paid pro rata to the Noteholders until the Class Principal
Amount of the Class A Notes has been reduced to zero;
fifth, for retention in the Note Distribution Account, for
distribution to the Note Insurer, any previously unreimbursed
Reimbursement Amount;
sixth, to the Servicer, the amount of any Nonrecoverable
Advances not previously reimbursed;
seventh, to the Servicer, any amounts payable or
reimbursable thereto pursuant to Sections 7.02 and 11.01
hereof;
eighth, to the Custodian, any amount payable or
reimbursable thereto under the Custodial Agreement in excess of
the Custodian Compensation; and
ninth, to the Certificate Distribution Account, for
distribution to the Residual Certificateholders on a pro rata
basis.
(ii) On each Distribution Date, the Indenture Trustee shall
distribute any Insured Payment for such date to the Insured
Noteholders entitled thereto.
(c) All distributions made to each Class of Securities on each
Distribution Date will be made on a pro rata basis among the Securityholders
of such Class on the next preceding Record Date based on the Percentage
Interest represented by their respective Securities, and shall be made by wire
transfer of immediately available funds at the expense of such Securityholder
to the account of such Securityholder at a bank or other entity having
appropriate facilities therefor, if such Securityholder shall have provided
complete wiring instructions by the Record Date, and otherwise by check mailed
to the address of such Securityholder appearing in the Security Register.
Section 6.06. [Reserved].
Section 6.07. Reports by Indenture Trustee. (a) On each Distribution
Date the Indenture Trustee shall provide to each Holder, to the Servicer, to
the Note Insurer, to Deutsche Bank Securities Inc., to the Depositor and to
the Rating Agencies a report (the "Indenture Trustee Remittance Report"),
setting forth information including, without limitation, the following
information:
(i) the Available Collection Amount for the related
Distribution Date;
(ii) the Class Principal Amount or Class Notional Amount of
each Class of Notes as of such Distribution Date after giving effect
to any payment of principal on such Distribution Date;
(iii) the amount of principal and interest received on the Home
Loans during the related Due Period;
(iv) the Noteholders' Interest Distribution Amount;
(v) the amount, if any of the Overcollateralization Release
Amount and, if applicable, the Overcollateralization Reduction
Amount or any other amount to be distributed to the Securityholders
on such Distribution Date;
(vi) the Servicing Fee, the Indenture Trustee Fee, the Owner
Trustee Compensation, the Custodian Compensation and the Premium
Amount for such Distribution Date;
(vii) the Overcollateralization Amount on such Distribution
Date and the Targeted Overcollateralization Amount as of such
Distribution Date;
(viii) the weighted average maturity of the Home Loans and the
weighted average Mortgage Rate of the Home Loans;
(ix) the amount of any Insured Payment included in the amounts
distributed to the Insured Noteholders on such Distribution Date;
(x) the amount of any Reimbursement Amount to be distributed to
the Note Insurer on such Distribution date and the amount of any
Reimbursement Amount remaining unsatisfied following such
distribution;
(xi) the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the
related Due Period;
(xii) the number of Home Loans and the aggregate Principal
Balance of Home Loans purchased or substituted for pursuant to
Sections 3.03 and 2.04 for the related Distribution Date and, since
the Closing Date, the cumulative number and Principal Balance of
Home Loans purchased or substituted for pursuant to Sections 3.03
and 2.04; and
(xiii) such other information as may be reasonably requested by
the Indenture Trustee or Note Insurer.
In addition, by January 31 of each calendar year following any year
during which the Securities are outstanding, the Indenture Trustee shall
furnish a report to each Holder of record if so requested in writing at any
time during each calendar year as to the aggregate of amounts reported
pursuant to (iv) with respect to the Securities for such calendar year. Such
information shall be deemed to have been furnished if provided pursuant to the
requirements of the Code from time to time in force.
(b) [Reserved].
(c) In addition, on each Distribution Date the Indenture Trustee will
provide to each Holder, to the Note Insurer, to the Servicer, to the Depositor
and to the Rating Agencies, together with the information described in
subsection (a) preceding, the following information with respect to the Home
Loans as of the following dates, as applicable: (1) with respect to Monthly
Payments, the close of business on the last day of the related Due Period; (2)
with respect to Principal Prepayments in Full, Curtailments, Liquidation
Proceeds, Insurance Proceeds, Released Mortgaged Property Proceeds and any
other unscheduled payments or recoveries, the close of business on the last
day of the related Due Period; (3) with respect to Home Loans that are
Delinquent, the close of business on the last day of the immediately preceding
calendar month and (4) in all other cases, unless otherwise specified, the
close of business on the last day of the related Due Period.
(i) the total number of Home Loans and the aggregate Principal
Balances thereof for such Distribution Date, together with the
number and aggregate Principal Balances of such Home Loans and the
percentage (based on the aggregate Principal Balances of the Home
Loans) of all Home Loans (A) 30-59 days Delinquent, (B) 60-89 days
Delinquent and (C) 90 or more days Delinquent;
(ii) the number and aggregate Principal Balances of all Home
Loans and percentage (based on the aggregate Principal Balances of
the Home Loans) of the aggregate Principal Balances of such Home
Loans to the aggregate Principal Balance of all Home Loans in
foreclosure proceedings and the number and aggregate Principal
Balances of all Home Loans and percentage (based on the aggregate
Principal Balances of the Home Loans) of any such Home Loans which
are also included in any of the statistics described in the
foregoing clauses (i)(A), (i)(B) and (i)(C);
(iii) the number and aggregate Principal Balances of all Home
Loans and percentage (based on the aggregate Principal Balances of
the Home Loans) of the aggregate Principal Balances of such Home
Loans to the aggregate Principal Balance of all Home Loans relating
to Mortgagors in bankruptcy proceedings and the number and aggregate
Principal Balances of all Home Loans and percentage (based on the
aggregate Principal Balances of the Home Loans) of any such Home
Loans which are also included in any of the statistics described in
the foregoing clauses (i)(A), (i)(B) and (i)(C);
(iv) the number and aggregate Principal Balances of all Home
Loans and percentage (based on the aggregate Principal Balances of
the Home Loans) of the aggregate Principal Balances of such Home
Loans to the aggregate Principal Balance of all Home Loans relating
to Foreclosure Properties and the number and aggregate Principal
Balances of all Home Loans and percentage (based on the aggregate
Principal Balances of the Home Loans) of any such Home Loans which
are also included in any of the statistics described in the
foregoing clause (i)(A), (i)(B) and (i)(C);
(v) the weighted average Mortgage Rate as of the Due Date
occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of
all Home Loans;
(vii) the book value of any Foreclosure Property;
(viii) the Total Loan Balance for such Distribution Date;
(ix) the number of Foreclosure Properties and aggregate
Principal Balance of related Home Loans; and
(x) Liquidation Proceeds, Liquidation Expenses and Net
Liquidation Proceeds received by the Servicer during the related Due
Period.
(d) The obligation of the Indenture Trustee to provide the
information required under this Section shall be subject to the timely
availability and accuracy of the information provided by the Servicer under
Section 5.19.
Section 6.08. Additional Reports by Indenture Trustee. (a) The
Indenture Trustee shall report to the Depositor, the Servicer and the Note
Insurer with respect to the amount then held in each Account (including
investment earnings accrued or scheduled to accrue) held by the Indenture
Trustee and the identity of the investments included therein, as the
Depositor, the Servicer or the Note Insurer may from time to time request in
writing.
(b) From time to time, at the request of the Note Insurer, the
Indenture Trustee shall report to the Note Insurer with respect to its actual
knowledge of any breach of any of the representations or warranties relating
to individual Home Loans set forth in the Home Loan Sale Agreement or in
Section 3.01 or 3.02 hereof.
Section 6.09. [Reserved].
Section 6.10. Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Insured Notes that is made with moneys
received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of the Securities from the Trust Estate. The Depositor, the
Servicer and the Indenture Trustee acknowledge, and each Holder by its
acceptance of a Security agrees, that without the need for any further action
on the part of the Note Insurer, the Depositor, the Servicer, the Indenture
Trustee or the Note Registrar (a) to the extent the Note Insurer makes
payments, directly or indirectly, on account of principal of or interest on
the Insured Notes to the Holders of such Securities, the Note Insurer will be
fully subrogated to, and each Securityholder, the Servicer and the Indenture
Trustee hereby delegate and assign to the Note Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from the Trust Estate, including, without limitation, any amounts due
to the Securityholders in respect of securities law violations arising from
the offer and sale of the Insured Notes, and (b) the Note Insurer shall be
paid such amounts but only from the sources and in the manner provided herein
for the payment of such amounts. The Indenture Trustee and the Servicer shall
cooperate in all respects with any reasonable request by the Note Insurer for
action to preserve or enforce the Note Insurer's rights or interests under
this Agreement without limiting the rights or affecting the interests of the
Holders as otherwise set forth herein.
Section 6.11. Allocation of Realized Losses. [Not applicable].
Section 6.12. Pre-Funding Account. [Not applicable].
Section 6.13. Capitalized Interest Account. [Not applicable].
Section 6.14. Determination of LIBOR. If the outstanding Securities
include any LIBOR Securities, then on each LIBOR Determination Date the
Indenture Trustee shall determine LIBOR for the next succeeding Accrual Period
by reference to the display designated as page 3750 on the Dow Jones Telerate
Service (or such other page as may replace such page on that service for the
purpose of displaying London interbank offered quotations of major banks).
If such rate does not appear on Telerate Page 3750, the rate for such
day shall be determined on the basis of the rates at which deposits in United
States dollars are offered by the Reference Banks at approximately 11:00 a.m.,
London time, on such day to banks in the London interbank market for a term
equal to the relevant Accrual Period. The Indenture Trustee shall request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, LIBOR for the next
applicable Accrual Period shall be the arithmetic mean of those quotations.
As used herein, "Reference Banks" means leading banks selected by the
Indenture Trustee and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market.
If on any LIBOR Determination Date only one or none of the Reference
Banks provides the offered quotations, LIBOR for the next applicable Accrual
Period shall be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Indenture Trustee, at approximately 11:00 a.m., New
York City time, on such day for loans in United States dollars to leading
European banks for a term equal to the relevant Accrual Period. If on any
LIBOR Determination Date the Indenture Trustee is unable to determine LIBOR
for an Accrual Period, LIBOR for such Accrual Period shall be LIBOR as
determined on the previous LIBOR Determination Date.
Notwithstanding the foregoing, LIBOR for the next succeeding Accrual
Period shall not be based on LIBOR for the immediately preceding Accrual
Period for two consecutive LIBOR Determination Dates. If, under the procedures
described above, LIBOR for the next succeeding Accrual Period would be based
on LIBOR for the previous LIBOR Determination Date for the second consecutive
LIBOR Determination Date, the Indenture Trustee shall select an alternative
index (over which the Indenture Trustee has no control) used for determining
Eurodollar lending rates that is calculated and published (or otherwise made
available) by an independent third party.
The establishment of LIBOR by the Indenture Trustee and the Indenture
Trustee's subsequent calculation of the rate of interest applicable to the
LIBOR Securities for the relevant Accrual Period, in the absence of manifest
error, shall be final and binding.
Section 6.15. The Reserve Fund. [Not applicable].
ARTICLE VII
DEFAULT
Section 7.01. Events of Default. (a) "Event of Default", wherever
used herein, means any one of the following events:
(i) any failure by the Servicer to remit to the Indenture
Trustee any payment, excluding any Servicing Advance, required to be
made by the Servicer under the terms of this Agreement which
continues unremedied for one Business Day after delivery of notice
thereof to the Servicer;
(ii) any failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer by
the Indenture Trustee or to the Servicer and the Indenture Trustee
by any Securityholder or the Note Insurer;
(iii) any failure by the Servicer to deposit amounts received
with respect to the Home Loans in the Collection Account on a daily
basis within two Business Days of receipt in accordance with Section
5.03 hereof;
(iv) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or
material agreements on the part of the Servicer contained in this
Agreement, or the failure of any representation and warranty made
pursuant to Section 3.01 to be true and correct in all material
respects which continues unremedied for a period of 45 days after
the earlier of (A) the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer, as the case may be, by the Depositor or the Indenture
Trustee or to the Servicer and the Indenture Trustee by any
Securityholder or the Note Insurer and (B) actual knowledge of such
failure by a Servicing Officer or Responsible Officer of the
Servicer; provided, however, that if, prior to the occurrence of a
Note Insurer Default, the Servicer shall have given notice to the
Note Insurer of corrective action it proposes to take, which
corrective action is agreed in writing by the Note Insurer to be
satisfactory, such period may be extended by the Note Insurer.
(v) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar
law or for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling 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 or unstayed for a period of 60 days or shall have
resulted in the entry of an order for relief or any such
adjudication or appointment;
(vi) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Servicer or of or relating
to all or substantially all of the Servicer's property;
(vii) the Servicer shall admit in writing its inability to pay
its debts 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;
(viii) to the extent of any material adverse effect on the
interests of the Indenture Trustee, the Securityholders or the Note
Insurer, the Servicer no longer meets the qualifications of either a
FNMA or FHLMC seller/servicer;
(ix) to the extent of any material adverse effect on the
interests of the Indenture Trustee, the Securityholders or the Note
Insurer, any failure by the Servicer to maintain its license to do
business or service residential mortgage loans in any jurisdiction
where a Mortgaged Property is located;
(x) the Servicer attempts to assign any of its rights or
delegate any of its duties hereunder other than in compliance with
the terms of this Agreement, or to an assignee or designee that is
not acceptable to the Note Insurer;
(xi) any failure of the Servicer to provide any of the reports
and information to the Indenture Trustee as provided in Section 5.19
which results in a draw on and under the terms of the Note Insurance
Policy;
(xii) the Note Insurer notifies the Indenture Trustee of an
Event of Default with respect to the Servicer under the Insurance
Agreement;
(xiii) Cumulative Realized Losses since the Cut-off Date equal
or exceed the following percentages of the Cut-Off Date Balance:
Month of Determination Percentage
September 1999 - August 2000 3.00%
September 2000 - August 2001 7.50
September 2001 - August 2002 11.75
September 2002 - August 2003 15.75
September 2003 - August 2004 18.00
September 2004 and thereafter 19.00
(xiv) the Rolling Delinquency Percentage exceeds 4.00%;
(xv) the occurrence of a Loss Rate Servicer Default Trigger
Event; or
(xvi) any decline in the Net Worth of the Servicer below
$100,000,000.
(b) If an Event of Default described in this Section shall occur,
then, and in each and every such case, so long as such Event of Default shall
not have been remedied the Note Insurer may or the Indenture Trustee shall,
but only at the direction of the Note Insurer or the Majority Securityholders
and with the prior written consent of the Note Insurer, by notice in writing
to the Servicer and a Responsible Officer of the Indenture Trustee, terminate
all the rights and obligations of the Servicer under this Agreement and in and
to the Home Loans and the proceeds thereof, as servicer. Upon receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Home Loans or otherwise, shall,
subject to Section 7.02, pass to and be vested in the Indenture Trustee or its
designee approved by the Note Insurer (or another successor Servicer appointed
by the Note Insurer) and the Indenture Trustee (or such other successor
Servicer, as applicable) is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, at the
expense of the Servicer, any and all documents and other instruments and do or
cause to be done all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, including, but not limited to, the
transfer and endorsement or assignment of the Home Loans and related
documents. The Servicer agrees to cooperate (and pay any related costs and
expenses) with the Indenture Trustee or another successor Servicer, as
applicable, in effecting the termination of the Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer to the
Indenture Trustee or its designee or another successor Servicer, as
applicable, for administration by it of all amounts which shall at the time be
credited by the Servicer to the Collection Account or thereafter received with
respect to the Home Loans. The Indenture Trustee shall promptly notify the
Note Insurer and the Rating Agencies of the occurrence of an Event of Default.
The Note Insurer may appoint a successor Servicer other than the Indenture
Trustee. Until a successor Servicer has been appointed by the Note Insurer,
the Indenture Trustee shall be the successor Servicer in all respects without
further action, and all authority and power of the Servicer under this
agreement shall pass to and be vested in the Indenture Trustee on and after
the effective date of termination.
Section 7.02. Indenture Trustee to Act; Appointment of Successor. (a)
On and after the time that the Servicer receives a notice of termination
pursuant to Section 7.01, or the Indenture Trustee receives the resignation of
the Servicer evidenced by an Opinion of Counsel pursuant to Section 5.24, or
the Servicer is removed as Servicer pursuant to Section 7.01, in which event
the Indenture Trustee shall promptly notify the Rating Agencies, and except as
otherwise provided in Section 7.01, the Indenture Trustee or another successor
acceptable to the Note Insurer 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 be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof arising on or after the date of
succession; provided, however, that the Indenture Trustee shall not be liable
for any actions or the representations and warranties of any servicer prior to
it and including, without limitation, the obligations of the Servicer set
forth in Sections 2.04 and 3.03. The Indenture Trustee, as successor Servicer,
or any other successor Servicer shall be obligated to make advances pursuant
to Section 5.21 unless, and only to the extent the Indenture Trustee as
successor servicer determines reasonably and in good faith that such advances
would not be recoverable pursuant to Section 5.04, such determination to be
evidenced by a certification of a Responsible Officer of the Indenture
Trustee, as successor Servicer delivered to the Note Insurer.
(b) Notwithstanding the above, the Indenture Trustee may, if it shall
be unwilling to so act, or shall, if it is unable to so act or if the Majority
Securityholders with the consent of the Note Insurer or the Note Insurer so
requests in writing to the Indenture Trustee, appoint, or petition a court of
competent jurisdiction to appoint, any established mortgage loan servicing
institution acceptable to the Note Insurer 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. Notwithstanding the above, the
Indenture Trustee shall perform all obligations of the Servicer until the Note
Insurer or the Indenture Trustee with the prior written consent of the Note
Insurer appoints a successor Servicer acceptable to the Note Insurer.
The Note Insurer may appoint a successor Servicer other than the
Indenture Trustee. If the Note Insurer fails to appoint a successor Servicer,
the Indenture Trustee shall, if it is unable to obtain a qualifying bid and is
prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing an home finance institution,
bank or mortgage servicing institution which has been designated as an
approved seller-servicer by FNMA or FHLMC for first and second home equity
loans and having equity of not less than $5,000,000 (or such lower level as
may be acceptable to the Note Insurer), as determined in accordance with
generally accepted accounting principles and acceptable to the Note Insurer 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. The
compensation of any successor Servicer (other than the Indenture Trustee in
its capacity as successor Servicer) so appointed shall be the amount agreed to
between the successor Servicer, the Note Insurer and the Indenture Trustee (up
to a maximum of the Servicing Fee Rate on the outstanding Principal Balance of
each Home Loan), together with the other Servicing Fee in the form of
assumption fees, late payment charges or otherwise as provided in Sections
5.14; provided, however, that if the Indenture Trustee becomes the successor
Servicer it shall receive as its compensation the same compensation paid to
the Servicer immediately prior to the Servicer's removal or resignation. The
successor Servicer shall be entitled to set-up expenses, if any, in connection
with becoming Servicer pursuant to Section 6.05(b)(i) hereof.
(c) [Reserved]
(d) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession, including the notification by such successor of all Mortgagors of
the transfer of servicing to the extent that the predecessor Servicer fails to
do so. The predecessor Servicer agrees to cooperate with the Indenture Trustee
and any successor Servicer in effecting the termination of the predecessor
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Indenture Trustee or such successor Servicer, as applicable, at
the predecessor Servicer's cost and expense, all documents and records
reasonably requested by it to enable it to assume the Servicer's functions
hereunder and shall promptly also transfer to the Indenture Trustee or such
successor Servicer, as applicable, all amounts that then have been or should
have been deposited in the Collection Account by the Servicer or that are
thereafter received with respect to the Home Loans. Any collections received
by the predecessor Servicer after such removal or resignation shall be
endorsed by it to the Indenture Trustee and remitted directly to the Indenture
Trustee or, at the direction of the Indenture Trustee, to the successor
Servicer. Any amounts and documents which are property of the Trust Estate
held by the predecessor Servicer shall be held in trust on behalf of the
Indenture Trustee until transferred to the successor Servicer or Trustee.
Neither the Indenture Trustee nor any other successor Servicer shall be held
liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer hereunder. No appointment of a successor to the
Servicer hereunder shall be effective until the Note Insurer shall have
consented in writing thereto, and written notice of such proposed appointment
shall have been provided by the Indenture Trustee to the Note Insurer and to
each Securityholder. The Indenture Trustee shall not resign as Servicer until
a successor Servicer acceptable to the Note Insurer has been appointed.
(e) Pending appointment of a successor to the Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may
make such arrangements for the compensation of such successor out of payments
on Home Loans as it, the Note Insurer and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer pursuant to Section 5.14. The Servicer, the Indenture
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(f) [Reserved]
(g) The Indenture Trustee or any other successor Servicer, upon
assuming the duties of Servicer hereunder, shall, at the expense of the
Depositor, immediately record all Assignments of Mortgage not previously
recorded in the name of the Indenture Trustee pursuant to Section 2.03 as a
result of an Opinion of Counsel.
(h) The Servicer that is being removed or is resigning shall give
notice to the Mortgagors and to the Rating Agencies of the transfer of the
servicing to the successor.
(i) Upon appointment, the successor Servicer shall be the successor
in all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer
including, but not limited to, the maintenance of the fidelity bond and errors
and omissions policy pursuant to Section 5.08 and shall be entitled to the
Servicing Fee and all of the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement. The appointment of a successor
Servicer shall not affect any liability or right of the predecessor Servicer
which may have arisen or accrued under this Agreement prior to its termination
as Servicer (including, without limitation, any deductible under an insurance
policy), 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.
Section 7.03. Waiver of Defaults. The Note Insurer or Majority
Securityholders may, on behalf of all Securityholders, and subject to the
consent of the Note Insurer, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VII; provided, however, that the
Majority Securityholders may not waive a default in making a required
distribution on a Security without the consent of the holder of such Security.
Upon any waiver of a past default, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement unless otherwise specified in such waiver. No
such waiver shall extend to any subsequent or other default or impair any
right consequent thereto except to the extent expressly so waived. Notice of
any such waiver shall be given by the Indenture Trustee to the Rating
Agencies.
Section 7.04. Home Loans, Trust Estate and Accounts Held for Benefit
of the Note Insurer. (a) The Indenture Trustee shall hold the Trust Estate and
shall hold, directly or indirectly through its Custodian, the Mortgage Files
for the benefit of the Securityholders and the Note Insurer and all references
in this Agreement and in the Securities to the benefit of Holders of the
Securities shall be deemed to include the Note Insurer. The Indenture Trustee
shall cooperate in all reasonable respects with any reasonable request by the
Note Insurer for action to preserve or enforce the Note Insurer's rights or
interests under this Agreement and the Securities.
(b) The Servicer hereby acknowledges and agrees that it shall service
the Home Loans for the benefit of the Issuer, the Indenture Trustee and the
Note Insurer, and all references in this Agreement to the benefit of or
actions on behalf of the Securityholders shall be deemed to include the Note
Insurer.
Section 7.05. Rights of the Note Insurer to Exercise Rights of
Securityholders. By accepting its Security, each Securityholder agrees that
unless a Note Insurer Default exists, the Note Insurer shall be deemed to be
the Securityholders for all purposes (other than with respect to payment on
the Securities) and shall have the right to exercise all rights of the
Securityholders under this Agreement and under each Class of Securities
without any further consent of the Securityholders.
Section 7.06. Indenture Trustee to Act Solely with Consent of the
Note Insurer. Unless Note Insurer Default exists, the Indenture Trustee shall
not, without the Note Insurer's consent or unless directed by the Note
Insurer:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 7.01;
(b) agree to any amendment pursuant to Article XI, provided, however,
that such consent shall not be unreasonably withheld; or
(c) undertake any litigation.
The Note Insurer may, in writing and in its sole discretion renounce
all or any of its rights under section 7.04, 7.05 or 7.06 or any requirement
for the Note Insurer's consent for any period of time.
ARTICLE VIII
TERMINATION
Section 8.01. Termination. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Indenture Trustee of either: (i)
the disposition of all funds with respect to the last Home Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Note Insurer and the Indenture Trustee or (ii) mutual consent
of the Servicer, the Note Insurer and all Securityholders in writing;
provided, however, that in no event shall this Agreement terminate later than
twenty-one years after the death of the last surviving lineal descendant of
Joseph P. Kennedy, late Ambassador of the United States to the Court of St.
James's, alive as of the date hereof.
(b) In addition, subject to Section 8.02, the Majority Residual
Interestholders may, at their option and at their sole cost and expense, upon
20 days' prior written notice to the Indenture Trustee, terminate this
Agreement on any date on which the Total Loan Balance is less than 10% of the
Cut-off Date Balance by purchasing, during the Due Period relating to the next
succeeding Distribution Date, all of the outstanding Home Loans and
Foreclosure Properties, and other property of the Trust, for the Termination
Price. If the Majority Residual Interestholders do not exercise such purchase
option within three calendar months of the date in which they are first
entitled to do so, the Note Insurer shall have the option, at its sole cost
and expense, upon 20 days' prior notice to the Indenture Trustee, to purchase
all of the outstanding Home Loans and Foreclosure Properties and other
property of the Trust for the Termination Price.
Any such purchase shall be accomplished by deposit into the
Collection Account of the Termination Price. From the Termination Price so
deposited, the Indenture Trustee shall reimburse the Servicer for the amount
of any unpaid Servicing Fees and unreimbursed Servicing Advances made by the
Servicer with respect to the related Home Loans. No such termination is
permitted without the prior written consent of the Note Insurer if it would
result in a draw on the Note Insurance Policy.
(c) [Reserved]
(d) Notice of any termination, specifying the Distribution Date upon
which the Trust will terminate and that the Securityholders shall surrender
their Securities to the Indenture Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Indenture
Trustee by letter to the Securityholders mailed during the month of such final
distribution before the Servicer Remittance Date in such month, specifying (i)
the Distribution Date upon which final payment of the Securities will be made
upon presentation and surrender of the Securities at the office of the
Indenture Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Securities at the office of the Indenture
Trustee therein specified. The obligations of the Note Insurer hereunder shall
terminate upon the deposit with the Indenture Trustee of the Termination Price
and when the aggregate Principal Amount of the Securities has been reduced to
zero, whereupon the Indenture Trustee will return the Note Insurance Policy to
the Note Insurer for cancellation.
(e) In the event that not all Securityholders surrender their
Securities for cancellation within six months after the time specified in the
above-mentioned written notice, the Indenture Trustee shall give a second
written notice to the remaining Securityholders to surrender their Securities
for cancellation and receive the final distribution with respect thereto. If
within six months after the second notice, all of the Securities shall not
have been surrendered for cancellation, the Indenture Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Securityholders concerning surrender of their Securities
and the cost thereof shall be paid out of the funds and other assets which
remain subject hereto. If within nine months after the second notice all the
Securities shall not have been surrendered for cancellation, the
Certificateholders shall be entitled to all unclaimed funds and other assets
(other than amounts relating to Insured Payments, which shall be disbursed to
the Note Insurer) which remain subject hereto and the Indenture Trustee upon
transfer of such funds shall be discharged of any responsibility for such
funds and the Securityholders shall look only to such Certificateholders for
payment. Such funds shall remain uninvested.
ARTICLE IX
[RESERVED]
ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Limitation on Liability of the Depositor and the
Servicer. (a) Neither the Depositor, the Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Note Insurer, the Issuer or the Securityholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor or the Servicer against any
breach of warranties or representations made herein, or failure to perform its
obligations in compliance with any standard of care set forth in this
Agreement, or against any specific liability imposed on the Servicer or the
Depositor pursuant to any other Section hereof; and provided further that this
provision shall not protect the Depositor, the Servicer or any such person,
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties hereunder. The Depositor, the
Servicer and any director, officer, employee or agent of the Depositor or 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 Depositor, the Servicer and any director, officer, employee or
agent of the Depositor or the Servicer shall be indemnified and held harmless
by the Trust against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Securities, other than
any loss, liability or expense related to Servicer's failure to perform its
duties and service the Home Loans in compliance with the terms of this
Agreement, or any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder; provided,
however, that such indemnity shall be payable solely as provided in Section
6.05(b)(i). Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its respective duties under this Agreement and which in its
opinion may involve it in any expense or liability; provided, however, that
the Depositor or the Servicer may in its sole discretion undertake any such
action which it may deem necessary or desirable with respect to this Agreement
and the rights and duties of the parties hereto and the interests of the
Securityholders hereunder. In the event the Depositor or the Servicer take any
action as described in the preceding sentence, the legal expenses and costs of
such action, if previously approved in writing by the Note Insurer, which
approval shall not be unreasonably withheld, and any liability resulting
therefrom will be expenses, costs and liabilities of the Issuer, and the
Servicer or the Depositor, as the case may be, will be entitled to be
reimbursed therefor as provided in Section 6.05(b)(i).
(b) [Reserved]
(c) The Servicer agrees to indemnify and hold the Issuer, Indenture
Trustee, the Depositor, the Note Insurer and each Noteholder harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses actually
sustained by the Issuer, Indenture Trustee, the Depositor, the Note Insurer or
any Noteholder resulting from the failure of the Servicer to perform its
duties and service the Home Loans in compliance with the terms of this
Agreement. The Servicer shall immediately notify the Issuer, Indenture
Trustee, the Depositor, the Note Insurer and each Securityholder if a claim is
made by a third party arising out of or based upon the alleged actions of the
Servicer or alleged failure of the Servicer to perform its duties and service
the Home Loans in compliance with the terms of this Agreement, and the
Servicer shall assume (with the consent of the Indenture Trustee and the Note
Insurer) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Indenture Trustee, the Depositor, the Note Insurer and/or Securityholder in
respect of such claim. Notwithstanding the foregoing, the Servicer shall not
be obligated to indemnify any such party or assume the defense for any claim
by a third party that does not arise out of and is not based upon the alleged
actions of the Servicer or alleged failure of the Servicer to perform its
duties and service the Home Loans in compliance with the terms of this
Agreement.
(d) The Indenture Trustee shall, in accordance with instructions
received from the Servicer, reimburse the Servicer only from amounts otherwise
distributable on the Residual Interest Certificates for all amounts advanced
by it pursuant to the preceding sentence, except when a final nonappealable
adjudication determines that the claim relates directly to the failure of the
Servicer to perform its duties in compliance with this Agreement. The
provision of this Section 11.01 shall survive the termination of this
Agreement and the payment of the outstanding Securities.
Section 11.02. Acts of Securityholders. (a) Except as otherwise
specifically provided herein, whenever Securityholder action, consent or
approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding
upon, all Securityholders if the Majority Securityholders or the Note Insurer
agrees to take such action or give such consent or approval.
(b) The death or incapacity of any Securityholder shall not operate
to terminate this Agreement or the Trust, nor entitle such Securityholder's
legal representatives or heir to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Securityholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Estate, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Securities, be construed so as to constitute the Securityholders from
time to time as partners or members of an association; nor shall any
Securityholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision
hereof.
Section 11.03. Amendment. This Agreement may be amended from time to
time by the Depositor, the Servicer and the Indenture Trustee with the prior
written consent of the Note Insurer without the consent of any of the
Securityholders, (i) to cure any ambiguity or mistake, (ii) to correct, modify
or supplement any provisions herein which may be inconsistent with any other
provisions herein or in an Offering Document, (iii) to make any other
provisions with respect to matters or questions arising under this Agreement
that are not materially inconsistent with the provisions hereof amend this
Agreement in any respect subject to the provisions below, or (iv) if such
amendment, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Indenture Trustee and the Note
Insurer, is reasonably necessary to comply with any requirements imposed by
the Code or any successor or amendatory statute or any temporary or final
regulation, revenue ruling, revenue procedure or other written official
announcement or interpretation relating to federal income tax laws or any
proposed such action which, if made effective, would apply retroactively to
the Trust at least from the effective date of such amendment; provided that in
the case of clause (iii) such action shall not adversely affect in any
material respect the interests of any Securityholder (other than
Securityholders who shall consent to such amendment) or the Note Insurer, as
evidenced either by an Opinion of Counsel (provided by the Person requesting
such amendment) or written notification from each Rating Agency to the effect
that such amendment will not cause such Rating Agency to lower or withdraw the
then current ratings on the Securities (without regard to the Note Insurance
Policy), delivered to the Indenture Trustee and the Note Insurer.
This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Indenture Trustee with the consent of the Note
Insurer and the Majority Securityholders for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders of
Securities; provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on Home Loans
which are required to be distributed on any Security without the consent of
the Holder of such Security or (ii) reduce the aforesaid percentage of
Securities the Holders of which are required to consent to any such amendment,
without the consent of the Note Insurer and the Holders of all Securities then
outstanding. Notwithstanding any other provision of this Agreement, for
purposes of the giving or withholding of consents pursuant to this Section
11.03, Securities registered in the name of the Depositor or the Servicer or
any affiliate thereof shall be entitled to voting rights with respect to
matters described in clauses (i) and (ii) of this paragraph.
Notwithstanding any contrary provision of this Agreement, the
Indenture Trustee shall not consent to any amendment to this Agreement unless
it and the Note Insurer shall have first received an Opinion of Counsel
(provided by the Person requesting such amendment) to the effect that such
amendment will not result in the imposition of any tax on the Trust or cause
the Trust to fail to qualify as a grantor trust at any time that any of the
Securities are outstanding.
Promptly after the execution of any such amendment the Indenture
Trustee shall furnish a statement describing the amendment to each
Securityholder, the Note Insurer, and each Rating Agency.
It shall not be necessary for the consent of Securityholders under
this Section 11.03 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Securityholders shall be subject to
such reasonable regulations as the Indenture Trustee may prescribe.
The Indenture Trustee may, but shall not be obligated to enter into
any amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
Section 11.04. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices
for real property records in all of the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the
Securityholders' or the Note Insurer's expense on direction and at the expense
of Majority Securityholders or the Note Insurer's requesting such recordation,
but only when accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Securityholders or the Note Insurer, as applicable, or is necessary for the
administration or servicing of the Home Loans.
Section 11.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, GMAC Mortgage Corporation, 500
Enterprise Road, Horsham, Pennsylvania 18944, Attention: Anthony N. Renzi,
Managing Director, with a copy to GMAC Mortgage Corporation, 100 Witmer Road,
Horsham, Pennsylvania 18944, Attention: Peter Hender, Associate Counsel; (ii)
in the case of ACE Securities Corp., c/o Deutsche Bank Securities Inc., 31
West 52nd Street, New York, New York 10019, Attention: Asset-Backed Securities
Group, ACE 1999-A; (iii) in the case of the Indenture Trustee, First Union
National Bank, c/o Bankers Trust Company, 3 Park Plaza, 16th Floor, Irvine,
California 92614, Attention: ACE 1999-A; (iv) in the case of the
Securityholders, as set forth in the Security Register; (v) in the case of
Moody's, Moody's Investors Service, 99 Church Street, New York, New York
10007, Attention: Residential Mortgage Pass-through Monitoring; (vi) in the
case of S&P, Standard & Poor's Rating Services, 55 Water Street, New York, New
York 10041; and (vii) in the case of the Note Insurer, MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured
Portfolio Management -- Structured Finance (IMP-SF), ACE Securities Corp.
Series 1999-A. Any such notices shall be deemed to be effective with respect
to any party hereto upon the receipt of such notice by such party, except that
notices to the Securityholders shall be effective upon mailing or personal
delivery.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, 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 covenants, agreements, provisions or terms of
this Agreement or of the Securities or the rights of the Holders thereof.
Section 11.07. Counterparts. This Agreement 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
agreement.
Section 11.08. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Servicer, the Depositor, the Indenture
Trustee and the Securityholders and their respective successors and permitted
assigns.
Section 11.09. Headings. The headings of the various articles and
sections of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be part of this Agreement.
Section 11.10. Note Insurer Default. Any right conferred to the Note
Insurer, including, without limitation, the right to receive the Premium
Amount shall be suspended during any period in which a Note Insurer Default
exists. At such time as the Securities are no longer outstanding hereunder,
and no amounts owed to the Note Insurer hereunder or under the Insured Amount
remain unpaid, the Note Insurer's rights hereunder shall terminate.
Section 11.11. Third Party Beneficiary. The parties agree that each
of the Seller and the Note Insurer are intended to have and shall have all
rights of a third-party beneficiary of this Agreement.
Section 11.12. [Reserved.]
Section 11.13. Notice to Rating Agencies and Note Insurer.
The Indenture Trustee shall use its best efforts to promptly provide
notice to the Rating Agencies and the Note Insurer with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default;
3. The resignation or termination of the Servicer or the
Indenture Trustee; and
4. The final payment to Securityholders.
In addition, the Indenture Trustee shall promptly furnish to the
Rating Agencies copies of the following:
1. Each report to Securityholders described in Section 6.07;
and
2. Each annual independent public accountants' servicing report
described in Section 5.17.
Any such notice pursuant to this Section 11.13 shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid, or by express delivery service (except
in the case of notice to the Note Insurer which notice shall be given in
accordance with Section 11.05 hereof).
Section 11.14. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS
OPPOSED TO CONFLICT OF LAWS PROVISIONS) 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 11.15. Appointment of Agent. The Depositor hereby appoints
Deutsche Bank Securities Inc. as its agent (the "Administrative Agent") for
the purpose of performing the duties of the Depositor under this Agreement and
the other Basic Documents, other than the duties of the Depositor under
Article II and Section 3.02 hereof.
Section 11.16. Taxes.
(a) As provided in the Administration Agreement, the Administrator
will perform, or cause to be performed, such duties and take, or cause to be
taken, such actions, as are required to be performed or taken with respect to
the Trust under the Code, including the duties and actions of the Owner
Trustee under Section 5.05 of the Trust Agreement. The Administrator will
prepare for signature by the Owner Trustee and, upon obtaining such signature,
shall file or cause to be filed with the Internal Revenue Service federal tax
or information returns with respect to the Trust and the Securities containing
such information and at the times and in such manner as may be required by the
Code or applicable Treasury regulations, and shall furnish to Holders such
statements or information at the times and in such manner as may be required
thereby; provided, however, that the Administrator will not be required to
compute the Issuer's gross income; and provided, further, that the
Administrator will not be required to prepare and file partnership tax returns
on behalf of the Issuer unless it receives an opinion of counsel (which shall
not be at the Administrator's expense, but shall be at the expense of the
Seller or other party furnishing such opinion) as to the necessity of such
filings. The Owner Trustee shall sign all tax information returns filed
pursuant to this Section.
(b) As provided in the Administration Agreement, the Administrator
will timely file all reports required to be filed by the Trust with any
federal, state or local governmental authority having jurisdiction over the
Trust, including the Internal Revenue Service's Form 1041 prepared for a
grantor trust signed by the Owner Trustee, and including any other reports
that must be filed with the Securityholders. Furthermore, the Servicer shall
report to Holders, if required, with respect to the allocation of expenses
pursuant to Section 212 of the Code in accordance with the specific
instructions to the Administrator by the Seller with respect to such
allocation of expenses. Absent specific instructions, the Administrator will
allocate expenses to Holders based on the right of each Holder to gross stated
interest on the Home Loans. The Administrator will collect any forms or
reports from the Holders determined by the Seller to be required under
applicable federal, state and local tax laws.
(c) Unless required otherwise by provisions of the Internal Revenue
Code or interpretations thereof, the Administrator will treat the Trust as a
grantor trust and not as an association taxable as a corporation for federal
income tax purposes.
(d) The Depositor, the Indenture Trustee, the Servicer and the Issuer
covenant and agree to, within ten Business Days after the Closing Date,
provide to the Administrator any information necessary to enable the Issuer to
meet its obligations under subsection (b) above.
(e) The Indenture Trustee, the Issuer, the Depositor and the Servicer
each covenants and agrees for the benefit of the Holders to knowingly take no
action or fail to take any action, which would, if taken or not taken, as the
case may be, result in the failure of the Trust at any time to qualify as a
grantor trust under the Code, including, without limitation, for purposes of
this paragraph any alteration, modification, amendment, extension, waiver or
forbearance with respect to any Home Loan.
(f) Neither the Depositor, the Owner Trustee nor the Indenture
Trustee shall enter into any arrangement by which the Indenture Trustee or the
Owner Trustee will receive a fee or other compensation for services rendered
pursuant to this Agreement, which fee or other compensation is paid from the
Trust, other than as expressly contemplated by this Agreement; provided, that
the Indenture Trustee, the Owner Trustee and the Depositor may engage in any
of the transactions prohibited by such clauses, provided that the Indenture
Trustee and the Issuer shall have received an Opinion of Counsel experienced
in federal income tax matters to the effect that such transaction does not
result in a tax imposed on the Trust or cause the Trust to fail to qualify as
a grantor trust under the Code; provided, however, that such transaction is
otherwise permitted under this Agreement.
(g) Except as otherwise provided in this Agreement, neither the
Indenture Trustee nor the Issuer shall, without having obtained an Opinion of
Counsel experienced in federal income tax matters to the effect that such
transaction does not result in a tax imposed on the Trust or cause the Trust
to fail to qualify as a grantor trust under the Code, (i) sell any assets of
the Trust, (ii) accept any contribution of assets after the Closing Date or
(iii) agree to any modification of this Agreement.
IN WITNESS WHEREOF, the Servicer, the Indenture Trustee and the
Depositor have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
ACE SECURITIES CORP.,
as Depositor
By:
---------------------------------------
Name:
Title:
GMAC MORTGAGE CORPORATION,
as Servicer
By:
---------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
as Indenture Trustee
By:
---------------------------------------
Name:
Title:
ACE SECURITIES CORP. HOME LOAN TRUST 1999-A,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------------
Name:
Title:
EXHIBIT A
NOTE INSURANCE POLICY
EXHIBIT B
MORTGAGE FILE
With respect to each Home Loan, the Mortgage File shall include each
of the following items (copies to the extent the originals have been delivered
to the Indenture Trustee or the Custodian on behalf of the Indenture Trustee
pursuant to Section 2.03 of the Agreement), all of which shall be available
for inspection by the Securityholders and the Note Insurer, to the extent
required by applicable laws:
a. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of First Union National Bank, as Indenture Trustee
for ACE Securities Group Home Loan Trust 1999-A, without recourse" or in
blank, and signed manually or by facsimile by an authorized officer; provided
that with respect to not more than 1.00% (by Principal Balance) of the Home
Loans a Lost Note Affidavit and a copy of the original Mortgage Note may be
delivered.
b. The original Mortgage with evidence of recording thereon, or a
copy thereof.
c. The originals of all assumption, modification, consolidation or
extension agreements, if any, with evidence of recording thereon, or copies
thereof.
d. A copy of the original Assignment of Mortgage in blank for each
Home Loan, in form and substance acceptable for recording and signed manually
or by facsimile by an authorized officer.
e. The originals of all intervening assignments of mortgage with
evidence of recording thereon, or copies thereof.
EXHIBIT C
HOME LOAN SCHEDULE
EXHIBIT D
ACKNOWLEDGMENT OF RECEIPT
___________, 1999
ACE Securities Corp.
6525 Morrison Blvd., Suite 318
Charlotte, North Carolina 28211
[Servicer]
[Note Insurer]
Re: Sale and Servicing Agreement, dated as of ______________
among ACE Securities Corp., as Depositor,
_____________________, as Servicer, and
_______________________, as Indenture Trustee,
Securities, Series ___________
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Sale and
Servicing Agreement, the undersigned, as [Indenture Trustee] [Custodian],
hereby certifies: (1) except as noted on the attachment hereto, if any (the
"Loan Exception Report"), it has received the original Mortgage Note (item (i)
in Section 2.03(a)) with respect to each Home Loan listed in the Home Loan
Schedule and , subject to the review provided in Section 2.04 of the Sale and
Servicing Agreement, the other documents in the Mortgage File, and the
documents contained therein appear to bear original or facsimile signatures or
copies of originals if the originals have not yet been delivered, and (2) it
has received the Note Insurance Policy.
The [Indenture Trustee] [Custodian] has made no independent
examination of any such documents beyond the review specifically required in
the above-referenced Sale and Servicing Agreement. The [Indenture Trustee]
[Custodian] makes no representations as to: (i) the validity, legality,
sufficiency, enforceability or genuineness of any such documents or any of the
Home Loans identified on the Home Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Home Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
as [Indenture Trustee] [Custodian]
By:
---------------------------------------
Name:
Title:
EXHIBIT E
INITIAL CERTIFICATION
__________________, 1999
ACE Securities Corp.
6525 Morrison Blvd., Suite 318
Charlotte, North Carolina 28211
[Servicer]
[Seller]
[Note Insurer]
Re: Sale and Servicing Agreement, dated as of ______________
among ACE Securities Corp., as
Depositor, _____________________, as Servicer, and
_______________________, as Indenture Trustee, Securities,
Series ___________
Ladies and Gentlemen:
In accordance with the provisions of Section 2.04 of the above-
referenced Sale and Servicing Agreement, the undersigned, as [Custodian],
hereby certifies that, except as noted on the attached exception report, as to
each Home Loan listed in the Home Loan Schedule (other than any Home Loan paid
in full or any Home Loan listed on the attachment hereto), it has reviewed the
documents delivered to it pursuant to Section 2.03 of the Sale and Servicing
Agreement and has determined that (i) all documents required to be delivered
to it pursuant to the above-referenced Sale and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and appear regular on
their face and have not been mutilated, damaged, torn or otherwise physically
altered and relate to such Home Loan, (iii) based on its examination and only
as to the foregoing documents, the information set forth in the Home Loan
Schedule (described in items (i), (ii), (iii), (iv), (v), (vi), and (viii) of
the definition of Home Loan Schedule) respecting such Home Loan accurately
reflects the information set forth in the Mortgage File and (iv) each Mortgage
Note has been endorsed as provided in Section 2.03 of the Sale and Servicing
Agreement. The [Custodian] has made no independent examination of such
documents beyond the review specifically required in the above-referenced Sale
and Servicing Agreement. The [Custodian] makes no representations as to: (i)
the validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Home Loans identified on the Home Loan
Schedule, or (ii) the collectability, insurability, effectiveness or
suitability of any such Home Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
------------------------------------
as [Custodian]
By:
---------------------------------------
Name:
Title:
EXHIBIT F
FINAL CERTIFICATION
_____________, 19__
ACE Securities Corp.
6525 Morrison Blvd., Suite 318
Charlotte, North Carolina 28211
[Servicer]
[Note Insurer]
Re: Re: Sale and Servicing Agreement, dated as of
______________ among ACE Securities Corp., as Depositor,
_____________________, as Servicer, and _________________,
as Indenture Trustee, Securities, Series ___________
Ladies and Gentlemen:
In accordance with Section 2.04 of the above-captioned Sale and
Servicing Agreement, the undersigned, as [Custodian], hereby certifies that,
except as noted on the attachment hereto, as to each Home Loan listed in the
Home Loan Schedule (other than any Home Loan paid in full or listed on the
attachment hereto) it has reviewed the documents delivered to it pursuant to
Section 2.03 of the Sale and Servicing Agreement and has determined that (i)
all documents required to be delivered to it pursuant to the above-referenced
Sale and Servicing Agreement are in its possession, (ii) such documents have
been reviewed by it and appear regular on their face and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Home Loan, and (iii) based on its examination, and only as to the foregoing
documents, the information set forth in the Home Loan Schedule (described in
items (i), (ii), (iii), (iv), (v), (vi) and (viii) of the definition of Home
Loan Schedule) respecting such Home Loan accurately reflects the information
set forth in the Mortgage File. The [Custodian] has made no independent
examination of such documents beyond the review specifically required in the
above-referenced Sale and Servicing Agreement. The [Custodian] makes no
representations as to: (i) the validity, legality, enforceability or
genuineness of any such documents contained in each or any of the Home Loans
identified on the Home Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Home Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Sale and Servicing Agreement.
-----------------------------------
as [Custodian]
By:
---------------------------------------
Name:
Title:
EXHIBIT G
REQUEST FOR RELEASE OF DOCUMENTS
_____________, 19__
To: [Custodian]
Re: ACE Securities Corp., Securities, Series ___________
In connection with the administration of the pool of Home Loans held
by you as [Custodian], we request the release, and acknowledge receipt, of the
(Mortgage File/[specify document]) for the Home Loan described below, for the
reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
HOME LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
_____ 1. Home Loan Paid in Full (Servicer hereby certifies that all amounts
received in connection therewith have been credited to the Collection
Account.)
_____ 2. Home Loan Liquidated (Servicer hereby certifies that all proceeds of
foreclosure, insurance or other liquidation have been finally received and
credited to the Collection Account.)
_____ 3. Home Loan in foreclosure _____
_____ 4. Home Loan purchased pursuant to Section 5.18 of the Sale and
Servicing Agreement.
_____ 5. Home Loan purchased or substituted pursuant to Article II or III of
the Sale and Servicing Agreement (Servicer hereby certifies that the
repurchase price or Substitution Adjustment has been credited to the
Collection Account and that the substituted home loan is a Qualified
Substitute Home Loan.)
_____ 6. Other (explain)
If box 1, 4 or 5 above is checked, and if all or part of the Mortgage
File was previously released to us, please release to us our previous receipt
on file with you, as well as any additional documents in your possession
relating to the above specified Home Loan.
If item 2, 3 or 6 above is checked, upon our return of all of the
above documents to you as Indenture Trustee, please acknowledge your receipt
by signing in the space indicated below, and returning this form.
By:
---------------------------------------
Name:
Title:
Documents returned to [Custodian]:
Trustee
By:
-------------------------------
Date:
EXHIBIT H
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Loan Balance:
1. Type of Liquidation (Foreclosure disposition/charge-off/short pay-off)
Date last paid
Date of Foreclosure
Date of Foreclosure
Date of Foreclosure Disposition
Property Sale Price/Estimated Market Value at Disposition
2. Liquidation Proceeds
Any Principal Prepayment $____________
Proceeds from the Sale of the Property ____________
Net Insurance Proceeds ____________
Other (itemize) ____________
Total Proceeds $____________
3. Liquidation Expenses
Servicing Advances $____________
Periodic Advances ____________
Servicing Fees ____________
Total Advances $____________
4. Net Liquidation Proceeds
(Item 2 minus Item 3) $___________
5. Principal Balance of Home Loan $____________
6. Loss, if any (Item 5 minus Item 4) $____________
EXHIBIT I
CERTIFICATE RE: PREPAID LOANS
I, ______________, ________________ of ACE Securities Corp., as
Depositor, hereby certify that between the "Cut-Off Date" (as defined in the
Sale and Servicing Agreement dated as of ___________, 199__ among ACE
Securities Corp. Home Loan Trust 1999-A, as issuer, ACE Securities Corp., as
depositor, ___________________________, as servicer and
__________________________, as indenture trustee) and the "Closing Date " the
following schedule of "Home Loans" (each as defined in the Sale and Servicing
Agreement) have been prepaid in full.
Dated:
By:
EXHIBIT J
SUBSEQUENT TRANSFER INSTRUMENT
[RESERVED]
EXHIBIT K
LOST NOTE AFFIDAVIT
