SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
Reported) October 15, 1999
Bear Stearns Asset Backed Securities, Inc., (as depositor under the
Trust Agreement, dated as of September 23, 1999, relating to the
GMACM Loan Trust 1999 - HLTV1, Loan-Backed Term Notes, Series
1999-HLTV1).
BEAR STEARNS ASSET BACKED SECURITIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-83541-01 13-3836437
- ------------------------------- --------------------- --------------------
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation) Number) Identification No.)
245 Park Avenue
New York, New York 10167
- ----------------------- -------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 272-4095
- ------------------------------------------------------------------------------
Item 5. Other Events.
On September 23, 1999, GMACM Loan Trust 1999-HLTV1 (the "Trust"), a
Delaware business trust, for which Bear Stearns Asset Backed Securities, Inc.
(the "Company") acted as depositor, issued $175,000,000 Loan-Backed Term
Notes, Series 1999-HLTV1 (the "Notes").
In connection with the offering of the Notes, the Company entered
into an Agreement dated as of September 23, 1999 (the "Trust Agreement"),
between the Company, as depositor and Wilmington Trust Company, as owner
trustee. The Trust entered into an Indenture dated as of September 1, 1999
(the "Indenture") between the Trust, as issuer, and Norwest Bank Minnesota,
National Association, as indenture trustee.
In connection with the offering of the Notes, the Company is filing
herewith as Exhibits, the Trust Agreement, the Indenture and additional
material contracts in connection with such offering.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibit:
4.1 Indenture dated as of September 1, 1999.
10.1 Trust Agreement dated as of September 1, 1999.
10.2 Home Equity Loan Purchase Agreement made as of September 1, 1999.
10.3 Servicing Agreement dated as of September 1, 1999.
10.4 Financial Guaranty Insurance Policy dated September 23, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BEAR STEARNS ASSET BACKED SECURITIES, INC.
By: /s/ John Lieberman
Name: John Lieberman
Authorized Signatory
Dated: October 15, 1999
Exhibit Index
Exhibit
4.1 Indenture dated as of September 1, 1999.
10.1 Trust Agreement dated as of September 1, 1999.
10.2 Home Equity Loan Purchase Agreement made as of September 1, 1999.
10.3 Servicing Agreement dated as of September 1, 1999.
10.4 Financial Guaranty Insurance Policy dated September 23, 1999.
Exhibit 4.1
EXECUTION COPY
GMACM LOAN TRUST 1999-HLTV1,
Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Indenture Trustee
------------------------
INDENTURE
------------------------
Dated as of September 1, 1999
LOAN-BACKED TERM NOTES
Table of Contents
Page
ARTICLE I
Definitions
Section 1.01. Definitions......................................................2
Section 1.02. Incorporation by Reference of Trust Indenture Act................2
Section 1.03. Rules of Construction............................................2
ARTICLE II
Original Issuance of Notes
Section 2.01. Form.............................................................4
Section 2.02. Execution, Authentication and Delivery...........................4
ARTICLE III
Covenants
Section 3.01. Collection of Payments with Respect to the Home
Equity Loans.....................................................5
Section 3.02. Maintenance of Office or Agency..................................5
Section 3.03. Money for Payments to Be Held in Trust; Paying Agent.............5
Section 3.04. Existence........................................................6
Section 3.05. Priority of Distributions; Defaulted Interest....................7
Section 3.06. Protection of Trust Estate.......................................9
Section 3.07. Opinions as to Trust Estate......................................9
Section 3.08. Performance of Obligations; Servicing Agreement.................10
Section 3.09. Negative Covenants..............................................10
Section 3.10. Annual Statement as to Compliance...............................11
Section 3.11. Recordation of Assignments......................................11
Section 3.12. Representations and Warranties Concerning
the Home Equity Loans...........................................11
Section 3.13. Assignee of Record of the Home Equity Loans.....................11
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee...........12
Section 3.15. Investment Company Act..........................................12
Section 3.16. Issuer May Consolidate, etc.....................................12
Section 3.17. Successor or Transferee.........................................14
Section 3.18. No Other Business...............................................14
Section 3.19. No Borrowing....................................................14
Section 3.20. Guarantees, Loans, Advances and Other Liabilities...............14
Section 3.21. Capital Expenditures............................................14
Section 3.22. Owner Trustee Not Liable for Certificates or Related
Documents.......................................................14
Section 3.23. Restricted Payments.............................................15
Section 3.24. Notice of Events of Default.....................................15
Section 3.25. Further Instruments and Acts....................................15
Section 3.26. Statements to Noteholders.......................................15
Section 3.27. Determination of Note Rate......................................15
Section 3.28. Payments under the Policy, the Yield Supplement Agreement
and from the Reserve Account....................................15
Section 3.29. Replacement Enhancement.........................................16
Section 3.30. Payments under the Limited Reimbursement Agreement..............16
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01. The Notes.......................................................17
Section 4.02. Registration of and Limitations on Transfer and Exchange
of Notes; Appointment of Certificate Registrar..................17
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes......................18
Section 4.04. Persons Deemed Owners...........................................19
Section 4.05. Cancellation....................................................19
Section 4.06. Book-Entry Notes................................................19
Section 4.07. Notices to Depository...........................................20
Section 4.08. Definitive Notes................................................20
Section 4.09. Tax Treatment...................................................21
Section 4.10. Satisfaction and Discharge of Indenture.........................21
Section 4.11. Application of Trust Money......................................22
Section 4.12. Subrogation and Cooperation.....................................22
Section 4.13. Repayment of Monies Held by Paying Agent........................23
Section 4.14. Temporary Notes.................................................23
ARTICLE V
Default and Remedies
Section 5.01. Events of Default...............................................24
Section 5.02. Acceleration of Maturity; Rescission and Annulment..............24
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee............................................25
Section 5.04. Remedies; Priorities............................................27
Section 5.05. Optional Preservation of the Trust Estate.......................28
Section 5.06. Limitation of Suits.............................................28
Section 5.07. Unconditional Rights of Noteholders to Receive Principal
and Interest....................................................29
Section 5.08. Restoration of Rights and Remedies..............................29
Section 5.09. Rights and Remedies Cumulative..................................29
Section 5.10. Delay or Omission Not a Waiver..................................30
Section 5.11. Control by Credit Enhancer or Noteholders.......................30
Section 5.12. Waiver of Past Defaults.........................................30
Section 5.13. Undertaking for Costs...........................................31
Section 5.14. Waiver of Stay or Extension Laws................................31
Section 5.15. Sale of Trust Estate............................................31
Section 5.16. Action on Notes.................................................33
Section 5.17. Performance and Enforcement of Certain Obligations..............33
ARTICLE VI
The Indenture Trustee
Section 6.01.Duties of Indenture Trustee......................................35
Section 6.02.Rights of Indenture Trustee......................................36
Section 6.03.Individual Rights of Indenture Trustee...........................36
Section 6.04.Indenture Trustee's Disclaimer...................................37
Section 6.05.Notice of Event of Default.......................................37
Section 6.06.Reports by Indenture Trustee to Noteholders......................37
Section 6.07.Compensation and Indemnity.......................................37
Section 6.08.Replacement of Indenture Trustee.................................38
Section 6.09.Successor Indenture Trustee by Merger............................39
Section 6.10.Appointment of Co-Indenture Trustee or Separate
Indenture Trustee................................................39
Section 6.11.Eligibility; Disqualification....................................40
Section 6.12.Preferential Collection of Claims Against Issuer.................40
Section 6.13.Representations and Warranties...................................40
Section 6.14.Directions to Indenture Trustee..................................41
Section 6.15.Indenture Trustee May Own Securities.............................41
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders..................................................42
Section 7.02. Preservation of Information; Communications to
Noteholders.....................................................42
Section 7.03. Reports by Issuer...............................................42
Section 7.04. Reports by Indenture Trustee....................................43
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money.............................................44
Section 8.02. Trust Accounts..................................................44
Section 8.03. Officer's Certificate...........................................44
Section 8.04. Termination Upon Distribution to Noteholders....................45
Section 8.05. Release of Trust Estate.........................................45
Section 8.06. Surrender of Notes Upon Final Payment...........................45
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of Noteholders..........46
Section 9.02. Supplemental Indentures With Consent of Noteholders.............47
Section 9.03. Execution of Supplemental Indentures............................48
Section 9.04. Effect of Supplemental Indenture................................48
Section 9.05. Conformity with Trust Indenture Act.............................49
Section 9.06. Reference in Notes to Supplemental Indentures...................49
ARTICLE X
Miscellaneous
Section 10.01. Compliance Certificates and Opinions, etc......................50
Section 10.02. Form of Documents Delivered to Indenture Trustee...............51
Section 10.03. Acts of Noteholders............................................52
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit
Enhancer and Rating Agencies...................................53
Section 10.05. Notices to Noteholders; Waiver.................................53
Section 10.06. Alternate Payment and Notice Provisions........................54
Section 10.07. Conflict with Trust Indenture Act..............................54
Section 10.08. Effect of Headings.............................................54
Section 10.09. Successors and Assigns.........................................54
Section 10.10. Severability...................................................54
Section 10.11. Benefits of Indenture..........................................54
Section 10.12. Legal Holidays.................................................55
Section 10.13. GOVERNING LAW..................................................55
Section 10.14. Counterparts...................................................55
Section 10.15. Recording of Indenture.........................................55
Section 10.16. Issuer Obligation..............................................55
Section 10.17. No Petition....................................................55
Section 10.18. Inspection.....................................................56
Signatures and Seals..........................................................81
Acknowledgments ..............................................................82
EXHIBITS
Exhibit A - Form of Notes
Appendix A - Definitions
This Indenture, dated as of September 1, 1999, is between GMACM Loan Trust
1999-HLTV1, a Delaware business trust, as issuer (the "Issuer"), and Norwest
Bank Minnesota, National Association, a national banking association, as
indenture trustee (the "Indenture Trustee").
WITNESSETH:
Each party hereto agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Noteholders of the Issuer's Series
1999-HLTV1, Home Loan-Backed Term Notes (the "Notes").
GRANTING CLAUSE:
The Issuer hereby Grants to the Indenture Trustee on the Closing Date, as
trustee for the benefit of the Noteholders and the Credit Enhancer, all of the
Issuer's right, title and interest in and to whether now existing or hereafter
created (a) the Initial Home Equity Loans and any Subsequent Home Equity Loans;
(b) all funds on deposit from time to time in the Note Payment Account and in
all proceeds thereof; (c) all funds on deposit from time to time in the Reserve
Account; (d) all funds on deposit from time to time in the Capitalized Interest
Account (other than any income thereon) and the Pre-Funding Account;(e) the
Policy; (f) the Yield Supplement Agreement and (g) all present and future
claims, demands, causes and choses in action in respect of any or all of the
foregoing and all payments on or under, and all proceeds of every kind and
nature whatsoever in respect of, any or all of the foregoing and all payments
on or under, and all proceeds of every kind and nature whatsoever in the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, checks, deposit accounts, rights to payment of any and every kind,
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the "Trust Estate" or the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The foregoing Grant shall inure to the benefit of the Credit Enhancer in
respect of draws made on the Policy and amounts owing from time to time
pursuant to the Insurance Agreement (regardless of whether such amounts relate
to the Notes or the Certificates), and such Grant shall continue in full force
and effect for the benefit of the Credit Enhancer until all such amounts owing
to it have been repaid in full.
The Indenture Trustee, as trustee on behalf of the Noteholders,
acknowledges such Grant, accepts the trust under this Indenture in accordance
with the provisions hereof and agrees to perform its duties as Indenture
Trustee as required herein.
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Indenture, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the Definitions attached hereto as Appendix A, which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act (the "TIA"),
such provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
from time to time;
(c) "or" includes "and/or";
(d) "including" means "including without limitation";
(e) words in the singular include the plural and words in the plural
include the singular;
(f) the term "proceeds" has the meaning ascribed thereto in the UCC;
and
(g) any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to
a Person are also to its permitted successors and assigns.
ARTICLE II
Original Issuance of Notes
Section 2.01. Form. The Notes, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit A, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing the Notes, as evidenced by their execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of such Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officers executing such Notes, as
evidenced by their execution of such Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of
this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate and deliver
Notes for original issue in an aggregate initial principal amount of
$125,000,000 with respect to the Class A-1 Notes, and $50,000,000 with respect
to the Class A-2 Notes.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes, and the Notes shall be issuable in minimum
denominations of $25,000 and integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
ARTICLE III
Covenants
Section 3.01. Collection of Payments with Respect to the Home Equity
Loans. The Indenture Trustee shall establish and maintain with itself the Note
Payment Account in which the Indenture Trustee shall, subject to the terms of
this paragraph, deposit, on the same day as it is received from the Servicer,
each remittance received by the Indenture Trustee with respect to the Home
Equity Loans. The Indenture Trustee shall make all payments of principal of and
interest on the Notes, subject to Section 3.03 as provided in Section 3.05
herein from monies on deposit in the Note Payment Account.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain in
the City of Minneapolis, Minnesota, an office or agency where, subject to
satisfaction of conditions set forth herein, Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Indenture
Trustee as its agent to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to Be Held in Trust; Paying Agent. As
provided in Section 3.01, all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Note Payment
Account pursuant to Section 3.01 shall be made on behalf of the Issuer by the
Indenture Trustee or by the Paying Agent, and no amounts so withdrawn from the
Note Payment Account for payments of Notes shall be paid over to the Issuer
except as provided in this Section 3.03.
The Issuer hereby appoints the Indenture Trustee to act as initial Paying
Agent hereunder. The Issuer will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section 3.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and pay such sums to such Persons as herein provided;
(b) give the Indenture Trustee and the Credit Enhancer written notice
of any default by the Issuer of which it has actual knowledge in the making of
any payment required to be made with respect to the Notes;
(c) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(d) immediately resign as Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes, if at
any time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment;
(e) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith; and
(f) deliver to the Indenture Trustee a copy of the statement to
Noteholders prepared with respect to each Payment Date by the Servicer pursuant
to Section 4.01 of the Servicing Agreement.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Request
direct any Paying Agent to pay to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer on Issuer Request; and the Noteholder of such
Note shall thereafter, as an unsecured general creditor, look only to the
Issuer for payment thereof (but only to the extent of the amounts so paid to
the Issuer), and all liability of the Indenture Trustee or such Paying Agent
with respect to such trust money shall thereupon cease; provided, however, that
the Indenture Trustee or such Paying Agent, before being required to make any
such repayment, shall at the expense and direction of the Issuer cause to be
published once, in an Authorized Newspaper, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Issuer. The Indenture Trustee may
also adopt and employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Noteholders the Notes of which have
been called but have not been surrendered for redemption or whose right to or
interest in monies due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of
record for each such Noteholder).
Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other state or of the United States of
America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Home Equity Loans and each
other instrument or agreement included in the Trust Estate.
Section 3.05. Priority of Distributions; Defaulted Interest.
(a) On each Payment Date from amounts on deposit in the Note Payment
Account, including any Policy Draw Amount deposited therein pursuant to Section
3.28(a), any Yield Supplement Amount deposited therein pursuant to Section
3.28(c), any withdrawal from the Reserve Account deposited therein pursuant to
Section 3.28(d), and any payment under the Limited Reimbursement Agreement
deposited therein pursuant to Section 3.30, the Paying Agent shall pay to the
Noteholders, the Certificate Paying Agent, on behalf of the Certificateholders,
and to other Persons the amounts to which they are entitled, as set forth in
the statements delivered to the Indenture Trustee pursuant to Section 4.01 of
the Servicing Agreement, as set forth below in the following order of priority:
(i) to the Noteholders, interest for the related Interest Accrual
Period at the Note Rate on the Note Balance immediately prior to such Payment
Date;
(ii) to the Noteholders, as principal on the Notes, the Principal
Collection Distribution Amount for such Payment Date;
(iii) to the Noteholders, as principal on the Notes, the
Liquidation Loss Distribution Amount for such Payment Date;
(iv) to the Credit Enhancer, the Premium Amount for the Policy,
with interest thereon as provided in the Insurance Agreement, and to the
designee or designees of the Credit Enhancer pursuant to Section 3.30, the
amount of any payments for the Limited Reimbursement Agreement, on a pro rata
basis;
(v) to the Credit Enhancer, to reimburse it for prior draws made
on the Policy, with interest thereon as provided in the Insurance Agreement,
provided, that no such reimbursement shall be made in respect of amounts that
were paid to the Indenture Trustee under the Limited Reimbursement Agreement,
or for which the Credit Enhancer is entitled to reimbursement under the Limited
Reimbursement Agreement;
(vi) to the Noteholders, as principal on the Notes, the
Overcollateralization Increase Amount for such Payment Date;
(vii) to the Credit Enhancer, any other amounts owed to the
Credit Enhancer pursuant to the Insurance Agreement;
(viii) to the Reserve Account, but only from funds deposited into
the Note Payment Account from payments under the Yield Supplement Agreement, up
to the amount necessary to increase the funds on deposit in the Reserve Account
to the level agreed upon by the Credit Enhancer and the Seller;
(ix) to the Indenture Trustee, any amounts owing to the Indenture
Trustee pursuant to Section 6.07 to the extent remaining unpaid;
(x) any remaining amount, to the Certificate Distribution
Account, for distribution to the Certificateholders by the Certificate Paying
Agent;
provided, that in the event that on a Payment Date a Credit Enhancer Default
shall have occurred and be continuing, then the priorities of distributions
described above will be adjusted such that payments of any amounts to be paid
to the Credit Enhancer will not be paid until the full amount of interest and
principal in accordance with clauses (i) through (iii) above that are due and
required to be paid by the Credit Enhancer on the Notes on such Payment Date
have been paid and provided, further, that on the Final Maturity Date, the
amount to be paid pursuant to clause (ii) above shall be equal to the Note
Balance immediately prior to such Payment Date. For purposes of the foregoing,
required payments of principal on the Notes on each Payment Date will include
the portion allocable to the Notes of all Liquidation Loss Amounts for such
Payment Date and for all previous Collection Periods until paid or covered in
full, to the extent not otherwise covered by a Liquidation Loss Distribution
Amount or a draw on the Policy (up to the outstanding Note Balance).
On each Payment Date, the Paying Agent shall apply, from amounts on
deposit in the Note Payment Account, the amounts and in the order of priority
set forth above and the Certificate Paying Agent shall deposit in the
Certificate Distribution Account all amounts it received pursuant to this
Section 3.05 for the purpose of distributing such funds to the
Certificateholders.
Amounts paid to Noteholders shall be paid in respect of the Notes in
accordance with the applicable percentage as set forth in paragraph (b) below.
Interest on the Class A-1 Notes will be computed on the basis of the actual
number of days in each Interest Accrual Period and a 360-day year. Interest on
the Class A-2 Notes will be computed on the basis of a 360-day year consisting
of twelve 30-day months.
Any installment of interest or principal, if any, payable on any Note that
is punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to each Holder of record on the preceding Record Date, by
wire transfer to an account specified in writing by such Holder reasonably
satisfactory to the Indenture Trustee as of the preceding Record Date or if no
such instructions have been delivered to the Indenture Trustee, by check or
money order to such Noteholder mailed to such Holder's address as it appears in
the Note Register the amount required to be distributed to such Holder on such
Payment Date pursuant to such Holder's Securities; provided, however, that the
Indenture Trustee shall not pay to such Holders any amount required to be
withheld from a payment to such Holder by the Code.
(b) Any payments to the Notes pursuant to clauses 3.05(a)(ii), (iii)
and (vi) above shall be made to the Class A-1 Notes and Class A-2 Notes, pro
rata, based on the Notes Balances thereof, until the Note Balances have been
reduced to zero.
(c) The principal of each Note shall be due and payable in full on the
Final Maturity Date as provided in the related form of Note set forth in
Exhibit A. All principal payments on the Notes shall be made to the Noteholders
entitled thereto in accordance with the related Percentage Interests
represented thereby. Upon written notice to the Indenture Trustee by the
Issuer(or by the Servicer on behalf of the Issuer, pursuant to Section 8.08(c)
of the Servicing Agreement), the Indenture Trustee shall notify the Person in
the name of which a Note is registered at the close of business on the Record
Date preceding the Final Maturity Date or other final Payment Date, as
applicable. Such notice shall be mailed no later than five Business Days prior
to the Final Maturity Date or such other final Payment Date and shall specify:
(i) that the Record Date otherwise applicable to such Payment
Date is not applicable;
(ii) that payment of the principal amount and any interest due
with respect to such Note at the Final Maturity Date or such other final
Payment Date will be payable only upon presentation and surrender of such Note,
and shall specify the place where such Note may be presented and surrendered
for such final payment; and
(iii) the amount of any such final payment, if known.
(d) On each Payment Date, the Overcollateralization Amount available
to cover any Liquidation Loss Amounts on such Payment Date shall be deemed to
be reduced by an amount equal to such Liquidation Loss Amounts (except to the
extent that such Liquidation Loss Amounts were covered on such Payment Date by
a Liquidation Loss Distribution Amount).
Section 3.06. Protection of Trust Estate.
(a) The Issuer shall from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the purposes
hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) cause the Trust to enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the Indenture
Trustee shall not remove any portion of the Trust Estate that consists of money
or is evidenced by an instrument, certificate or other writing from the
jurisdiction in which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07 (or from the jurisdiction in which
it was held as described in the Opinion of Counsel delivered at the Closing
Date pursuant to Section 3.07(a), if no Opinion of Counsel has yet been
delivered pursuant to Section 3.07(b)) unless the Trustee shall have first
received an Opinion of Counsel to the effect that the lien and security
interest created by this Indenture with respect to such property will continue
to be maintained after giving effect to such action or actions.
The Issuer hereby designates the Indenture Trustee its agent and attorney-
in-fact to execute any financing statement, continuation statement or other
instrument required to be executed pursuant to this Section 3.06.
Section 3.07. Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee and the Owner Trustee an Opinion of Counsel at the expense of the
Issuer either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the
lien and security interest in the Home Equity Loans and reciting the details of
such action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective. (b) On or before
December 31st in each calendar year, beginning in 2000, the Issuer shall
furnish to the Indenture Trustee an Opinion of Counsel at the expense of the
Issuer either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the lien and
security interest in the Home Equity Loans and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest in the Home Equity Loans until December 31 in
the following calendar year.
Section 3.08. Performance of Obligations; Servicing Agreement.
(a) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer.
(c) The Issuer shall not take any action or permit any action to be
taken by others that would release any Person from any of such Person's
covenants or obligations under any of the documents relating to the Home Equity
Loans or under any instrument included in the Trust Estate, or that would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any of the documents relating
to the Home Equity Loans or any such instrument, except such actions as the
Servicer is expressly permitted to take pursuant to the Servicing Agreement.
(d) The Issuer may retain an administrator and may enter into
contracts with other Persons for the performance of the Issuer's obligations
hereunder, and performance of such obligations by such Persons shall be deemed
to be performance of such obligations by the Issuer.
Section 3.09. Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(a) except as expressly permitted by this Indenture, sell, transfer,
exchange or otherwise dispose of the Trust Estate, unless directed to do so by
the Indenture Trustee pursuant to the terms of Article VIII;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly withheld
from such payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or assessed upon
any part of the Trust Estate;
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (ii) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof or (iii) permit the lien of this Indenture not
to constitute a valid first priority security interest in the Trust Estate; or
(d) waive or fail to assert rights under the Home Equity Loans, impair
or cause to be impaired the Home Equity Loans or the Issuer's interest in the
Home Equity Loans, the Purchase Agreement or in any other Basic Document, if
any such action would materially and adversely affect the interests of the
Noteholders or the Credit Enhancer.
Section 3.10. Annual Statement as to Compliance. The Issuer shall deliver
to the Indenture Trustee, within 120 days after the end of each fiscal year of
the Issuer (commencing with the fiscal year ending on December 31, 2000), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(a) a review of the activities of the Issuer during such year and of
its performance under this Indenture and the Trust Agreement has been made
under such Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under this
Indenture and the provisions of the Trust Agreement throughout such year, or,
if there has been a default in its compliance with any such condition or
covenant, specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.11. Recordation of Assignments. The Issuer shall enforce the
obligation of the Seller under the Purchase Agreement to submit or cause to be
submitted for recordation all Assignments of Mortgages within 60 days of
receipt of recording information by the Servicer.
Section 3.12. Representations and Warranties Concerning the Home Equity
Loans. The Indenture Trustee, as pledgee of the Home Equity Loans, shall have
the benefit of the representations and warranties made by the Seller in Section
3.1(a) and Section 3.1(b) of the Purchase Agreement concerning the Home Equity
Loans and the right to enforce the remedies against the Seller provided in such
Section 3.1(a) or Section 3.1(b) to the same extent as though such
representations and warranties were made directly to the Indenture Trustee.
Section 3.13. Assignee of Record of the Home Equity Loans. As pledgee of
the Home Equity Loans, the Indenture Trustee shall hold record title to the Home
Equity Loans by being named as payee in the endorsements of the Mortgage Notes
and assignee in the Assignments of Mortgage to be recorded under Section 2.1 of
the Purchase Agreement. Except as expressly provided in the Purchase Agreement
or in the Servicing Agreement with respect to any specific Mortgage Loan, the
Indenture Trustee shall not execute any endorsement or assignment or otherwise
release or transfer such record title to any of the Home Equity Loans until
such time as the remaining Trust Estate may be released pursuant to Section
8.05(b). The Indenture Trustee's holding of such record title shall in all
respects be subject to its fiduciary obligations to the Noteholders hereunder.
Section 3.14. Servicer as Agent and Bailee of the Indenture Trustee. Solely
for purposes of perfection under Section 9-305 of the UCC or other similar
applicable law, rule or regulation of the state in which such property is held
by the Servicer, the Indenture Trustee hereby acknowledges that the Servicer is
acting as agent and bailee of the Indenture Trustee in holding amounts on
deposit in the Custodial Account pursuant to Section 3.02 of the Servicing
Agreement that are allocable to the Home Equity Loans, as well as the agent and
bailee of the Indenture Trustee in holding any Related Documents released to
the Servicer pursuant to Section 3.06(c) of the Servicing Agreement, and any
other items constituting a part of the Trust Estate which from time to time
come into the possession of the Servicer. It is intended that, by the
Servicer's acceptance of such agency pursuant to Section 3.02 of the Servicing
Agreement, the Indenture Trustee, as a pledgee of the Home Equity Loans, will
be deemed to have possession of such Related Documents, such monies and such
other items for purposes of Section 9-305 of the UCC of the state in which such
property is held by the Servicer.
Section 3.15. Investment Company Act. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section
3.15 if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.
Section 3.16. Issuer May Consolidate, etc.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any state or the District of Columbia
and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form reasonably satisfactory to the
Indenture Trustee, the due and punctual payment of the principal of and
interest on all Notes and to the Certificate Paying Agent, on behalf of the
Certificateholders and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing;
(iii) the Credit Enhancer shall have consented thereto and each
Rating Agency shall have notified the Issuer that such transaction will not
cause a Rating Event, without taking into account the Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee and the Credit
Enhancer) to the effect that such transaction will not have any material
adverse tax consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing required by the
Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted shall (A) be a United States citizen or a Person organized
and existing under the laws of the United States of America or any state, (B)
expressly assumes, by an indenture supplemental hereto, executed and delivered
to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the
due and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture on
the part of the Issuer to be performed or observed, all as provided herein, (C)
expressly agrees by means of such supplemental indenture that all right, title
and interest so conveyed or transferred shall be subject and subordinate to the
rights of Noteholders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify, defend and hold harmless
the Issuer against and from any loss, liability or expense arising under or
related to this Indenture and the Notes and (E) expressly agrees by means of
such supplemental indenture that such Person (or if a group of Persons, then
one specified Person) shall make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Credit Enhancer shall have consented thereto, and each
Rating Agency shall have notified the Issuer that such transaction will not
cause a Rating Event, if determined without regard to the Policy;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the effect
that such transaction will not have any material adverse tax consequence to the
Issuer or any Noteholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this Article
III and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
Section 3.17. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.16(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the
same effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.16(b), the Issuer shall be released from every
covenant and agreement of this Indenture to be observed or performed on the
part of the Issuer with respect to the Notes immediately upon the delivery of
written notice to the Indenture Trustee of such conveyance or transfer.
Section 3.18. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning and selling and managing the
Home Equity Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Basic Documents and all activities
incidental thereto.
Section 3.19. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
Section 3.20. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the other Basic Documents, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly
or by an instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or otherwise), endorse
or otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, or any other interest in, or make any capital contribution to,
any other Person.
Section 3.21. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.22. Owner Trustee Not Liable for Certificates or Related
Documents. The recitals contained herein shall be taken as the statements of
the Issuer, and the Owner Trustee and the Indenture Trustee assume no
responsibility for the correctness of the recitals contained herein. The Owner
Trustee and the Indenture Trustee make no representations as to the validity or
sufficiency of this Indenture or any other Basic Document, of the Certificates
(other than the signatures of the Owner Trustee and the Indenture Trustee on the
Certificates) or the Notes, or of any Related Documents. The Owner Trustee and
the Indenture Trustee shall at no time have any responsibility or liability with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under the Trust Agreement or
the Noteholders under this Indenture, including, the compliance by the Depositor
or the Seller with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation, or any action of the Certificate Paying Agent, the Certificate
Registrar or the Indenture Trustee taken in the name of the Owner Trustee.
Section 3.23. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii)
set aside or otherwise segregate any amounts for any such purpose; provided,
however, that the Issuer may make, or cause to be made, (x) distributions to
the Owner Trustee and the Certificateholders as contemplated by, and to the
extent funds are available for such purpose under, the Trust Agreement and (y)
payments to the Servicer pursuant to the terms of the Servicing Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions from
the Custodial Account except in accordance with this Indenture and the other
Basic Documents.
Section 3.24. Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Credit Enhancer and the Rating Agencies prompt written
notice of each Event of Default hereunder and under the Trust Agreement.
Section 3.25. Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
Section 3.26. Statements to Noteholders. On each Payment Date, each of the
Indenture Trustee and the Certificate Registrar shall forward by mail to the
Credit Enhancer, the Depositor, the Owner Trustee and each Rating Agency, and
shall make available to each Noteholder and each Certificateholder,
respectively, the Servicer's Certificate provided to the Indenture Trustee by
the Servicer relating to such Payment Date delivered pursuant to Section 4.01
of the Servicing Agreement.
The Indenture Trustee will make the reports to Securityholders (and,
at its option, any additional files containing the same information in an
alternative format) available each month to Securityholders and the Credit
Enhancer, and other parties to this Indenture via the Indenture Trustee's
internet website and its fax-on-demand service. The Indenture Trustee's
fax-on-demand service may be accessed by calling (301) 815-6610. The Indenture
Trustee's internet website shall initially be located at www.ctslink.com.
Assistance in using the website or the fax-on-demand service can be obtained by
calling the Indenture Trustee's customer service desk at (301) 815-6600.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Indenture Trustee shall have the right to
change the way the reports to Securityholders are distributed in order to make
such distribution more convenient and/or more accessible and the Indenture
Trustee shall provide timely and adequate notification to all above parties
regarding any such changes.
Section 3.27. Determination of Note Rate. On the second LIBOR Business Day
immediately preceding (i) the Closing Date in the case of the first Interest
Accrual Period and (ii) the first day of each succeeding Interest Accrual
Period, the Indenture Trustee shall determine LIBOR and the Note Rate for such
Interest Accrual Period and shall inform the Issuer, the Servicer and the
Depositor by means of the Indenture Trustee's online service.
Section 3.28. Payments under the Policy, the Yield Supplement Agreement and
from the Reserve Account.
(a) On any Payment Date, the Indenture Trustee shall make a draw on
the Policy in an amount, if any, equal to the Policy Draw Amount, as specified
by the Servicer in writing to the Indenture Trustee; provided, however, that if
the Indenture Trustee receives the amount of such draw from the ISDA
Counterparty pursuant to the Limited Reimbursement Agreement, the Indenture
Trustee shall not make a draw on the Policy. For purposes of the foregoing, the
amount on deposit in the Note Payment Account and available to be distributed
as interest on any Payment Date shall include all amounts on deposit in such
account with respect to such Payment Date, other than the Principal Collection
Distribution Amount and the Liquidation Loss Distribution Amount (if any) to be
distributed on such Payment Date. Upon receipt of such Policy Draw Amount, the
Indenture Trustee shall deposit or cause to be deposited such amount into the
Note Payment Account on such Payment Date. In addition, on the Final Maturity
Date, the Indenture Trustee shall make a draw on the Policy in the amount by
which the aggregate Note Balance exceeds the payments otherwise available to be
made to the Holders thereof on the Final Maturity Date. Notwithstanding the
foregoing, if and to the extent a court of competent jurisdiction orders the
repayment by the Indenture Trustee to the ISDA Counterparty on the Limited
Reimbursement Agreement of the amount paid by such counterparty to the
Indenture Trustee, the Indenture Trustee shall make a draw on the Policy
pursuant to the terms hereof as if such counterparty had not made any payment
to the Indenture Trustee.
(b) The Indenture Trustee shall submit, if a Policy Draw Amount is
specified in any statement to Securityholders prepared pursuant to Section 4.01
of the Servicing Agreement, the Notice of Nonpayment and Demand for Payment of
Insured Amounts (in the form attached as Exhibit A to the Policy) to the Credit
Enhancer no later than 12:00 noon, New York City time, on the second Business
Day prior to the applicable Payment Date.
(c) Any payment of a Yield Supplement Amount received by the Indenture
Trustee from the Yield Supplement Counterparty in accordance with the terms of
the Yield Supplement Agreement shall be deposited into the Note Payment Account
and applied in accordance with the priorities set forth in Section 3.05(a).
(d) With respect to any Payment Date, to the extent that any
Liquidation Loss Amounts or interest shortfalls for such Payment Date would
otherwise be paid as a Liquidation Loss Distribution Amount or interest
distribution, respectively, on such Payment Date, the Indenture Trustee shall
withdraw funds on deposit in the Reserve Account up to the amount of such
Liquidation Loss Amounts or interest shortfalls, and deposit such funds into
the Note Payment Account to be applied as a payment to Noteholders in respect
of such losses or shortfalls. To the extent that any Liquidation Loss Amounts
or interest shortfalls are paid by means of a withdrawal of funds from the
Reserve Account, the Liquidation Loss Distribution Amount and interest
distribution for such Payment Date shall be reduced accordingly. If the amount
on deposit in the Reserve Fund exceeds the amount required to be on deposit
therein by the Credit Enhancer, then the Indenture Trustee shall withdraw the
amount of such excess for deposit in the Certificate Distribution Account for
distribution to Certificateholders.
Section 3.29. Replacement Enhancement. The Issuer (or the Servicer on its
behalf) may, at its expense, in accordance with and upon satisfaction of the
conditions set forth herein, but shall not be required to, obtain a surety
bond, letter of credit, guaranty or reserve account as a Permitted Investment
for amounts on deposit in the Capitalized Interest Account, or may arrange for
any other form of additional credit enhancement; provided, that after prior
notice thereto, no Rating Agency shall have informed the Issuer that a Rating
Event would occur as a result thereof (without taking the Policy into account);
and provided further, that issuer of any such instrument or facility and the
timing and mechanism for drawing on such additional enhancement shall be
acceptable to the Indenture Trustee and the Credit Enhancer. It shall be a
condition to procurement of any such additional credit enhancement that there
be delivered to the Indenture Trustee and the Credit Enhancer (a) an Opinion of
Counsel, acceptable in form to the Indenture Trustee and the Credit Enhancer,
from counsel to the provider of such additional credit enhancement with respect
to the enforceability thereof and such other matters as the Indenture Trustee
or the Credit Enhancer may require and (b) an Opinion of Counsel to the effect
that the procurement of such additional enhancement would not (i) adversely
affect in any material respect the tax status of the Notes or the Certificates
or (ii) cause the Issuer to be taxable as an association (or a publicly traded
partnership) for federal income tax purposes or to be classified as a taxable
mortgage pool within the meaning of Section 7701(i) of the Code.
Section 3.30. Payments under the Limited Reimbursement Agreement. The
Indenture Trustee shall deposit any amounts received pursuant to the Limited
Reimbursement Agreement into the Note Payment Account. Any such amounts shall
be distributed on the immediately following Payment Date pursuant to Section
3.05(a). The Indenture Trustee shall make the payments to the designee or
designees of the Credit Enhancer under Section 3.05(a)(iv) pursuant to written
instructions from the Credit Enhancer to the Indenture Trustee.
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01. The Notes. The Notes shall be registered in the name of a
nominee designated by the Depository. Beneficial Owners will hold interests in
the Notes through the book-entry facilities of the Depository in minimum initial
Note Balances of $25,000 and integral multiples of $1,000 in excess thereof.
The Indenture Trustee may for all purposes (including the making of
payments due on the Notes) deal with the Depository as the authorized
representative of the Beneficial Owners with respect to the Notes for the
purposes of exercising the rights of Noteholders hereunder. Except as provided
in the next succeeding paragraph of this Section 4.01, the rights of Beneficial
Owners with respect to the Notes shall be limited to those established by law
and agreements between such Beneficial Owners and the Depository and Depository
Participants. Except as provided in Section 4.08, Beneficial Owners shall not
be entitled to definitive certificates for the Notes as to which they are the
Beneficial Owners. Requests and directions from, and votes of, the Depository
as Noteholder of the Notes shall not be deemed inconsistent if they are made
with respect to different Beneficial Owners. The Indenture Trustee may
establish a reasonable record date in connection with solicitations of consents
from or voting by Noteholders and give notice to the Depository of such record
date. Without the consent of the Issuer and the Indenture Trustee, no Note may
be transferred by the Depository except to a successor Depository that agrees
to hold such Note for the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is removed as
Depository, the Indenture Trustee with the approval of the Issuer may appoint a
successor Depository. If no successor Depository has been appointed within 30
days of the effective date of the Depository's resignation or removal, each
Beneficial Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of the Issuer by
the Owner Trustee, not in its individual capacity but solely as Owner Trustee,
authenticated by the Note Registrar and delivered by the Indenture Trustee to or
upon the order of the Issuer.
Section 4.02. Registration of and Limitations on Transfer and Exchange of
Notes; Appointment of Certificate Registrar. The Issuer shall cause to be kept
at the Indenture Trustee's Corporate Trust Office a Note Register in which,
subject to such reasonable regulations as it may prescribe, the Note Registrar
shall provide for the registration of Notes and of transfers and exchanges of
Notes as herein provided. The Issuer hereby appoints the Indenture Trustee as
the initial Note Registrar.
Subject to the restrictions and limitations set forth below, upon surrender
for registration of transfer of any Note at the Corporate Trust Office, the
Issuer shall execute, and the Note Registrar shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Notes in
authorized initial Note Balances evidencing the same aggregate Percentage
Interests.
Subject to the foregoing, at the option of the Noteholders, Notes may
be exchanged for other Notes of like tenor, in each case in authorized initial
Note Balances evidencing the same aggregate Percentage Interests, upon
surrender of the Notes to be exchanged at the Corporate Trust Office of the
Note Registrar. Whenever any Notes are so surrendered for exchange, the
Indenture Trustee shall execute and the Note Registrar shall authenticate and
deliver the Notes which the Noteholder making the exchange is entitled to
receive. Each Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Note Registrar) be duly endorsed by, or
be accompanied by a written instrument of transfer in form reasonably
satisfactory to the Note Registrar duly executed by, the Noteholder thereof or
his attorney duly authorized in writing with such signature guaranteed by a
commercial bank or trust company located or having a correspondent located in
The City of New York. Notes delivered upon any such transfer or exchange will
evidence the same obligations, and will be entitled to the same rights and
privileges, as the Notes surrendered.
No service charge shall be imposed for any registration of transfer or
exchange of Notes, but the Note Registrar shall require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
All Notes surrendered for registration of transfer and exchange shall
be cancelled by the Note Registrar and delivered to the Indenture Trustee for
subsequent destruction without liability on the part of either.
The Issuer hereby appoints the Indenture Trustee as Certificate
Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
to Section 3.09 of the Trust Agreement in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for
the registration of Certificates and of transfers and exchanges thereof
pursuant to Section 3.05 of the Trust Agreement. The Indenture Trustee hereby
accepts such appointment.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and provided that the requirements of Section 8-405 of the UCC are met, the
Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same class; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, instead
of issuing a replacement Note, the Issuer may pay such destroyed, lost or
stolen Note when so due or payable without surrender thereof. If, after the
delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser
of the original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section 4.03, the
Issuer may require the payment by the Noteholder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute
an original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 4.03 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 4.05. Cancellation. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to any Person other
than the Indenture Trustee, be delivered to the Indenture Trustee and shall be
promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver
to the Indenture Trustee for cancellation any Notes previously authenticated
and delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange
for any Notes cancelled as provided in this Section 4.05, except as expressly
permitted by this Indenture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Request that they be destroyed or returned to it; provided, however, that such
Issuer Request is timely and the Notes have not been previously disposed of by
the Indenture Trustee.
Section 4.06. Book-Entry Notes. Each Class of Notes, upon original
issuance, shall be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Depository, by, or on behalf of, the Issuer. Such Notes shall initially
beregistered on the Note Register in the name of Cede & Co., the nominee of the
initial Depository, and no Beneficial Owner shall receive a Definitive Note
representing such Beneficial Owner's interest in such Note, except as provided
in Section 4.08. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Beneficial Owners pursuant to Section
4.08:
(a) the provisions of this Section 4.06 shall be in full force and
effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 4.06 conflict
with any other provisions of this Indenture, the provisions of this Section
4.06 shall control;
(d) the rights of Beneficial Owners shall be exercised only through
the Depository and shall be limited to those established by law and agreements
between such Owners of Notes and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to Section
4.08, the initial Depository will make book-entry transfers among the
Depository Participants and receive and transmit payments of principal of and
interest on the Notes to such Depository Participants; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders of Notes evidencing a
specified percentage of the Note Balances of the Notes, the Depository shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from Beneficial Owners and/or Depository
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Notes and has delivered such instructions to the
Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or other
communication to the Noteholders of the Notes is required under this Indenture,
unless and until Definitive Notes shall have been issued to Beneficial Owners
pursuant to Section 4.08, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Noteholders of the Notes to the
Depository, and shall have no obligation to the Beneficial Owners.
Section 4.08. Definitive Notes. If (i) the Indenture Trustee determines
that the Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Notes and the Indenture Trustee is unable
to locate a qualified successor, (ii) the Indenture Trustee elects to terminate
the book-entry system through the Depository, (iii) the Indenture Trustee
receives actual knowledge of a proposed transfer of a Note to an "accredited
investor" in accordance with Section 4.02 hereof, or (iv) after the occurrence
of an Event of Default, Beneficial Owners of Notes representing beneficial
interests aggregating at least a majority of the aggregate Note Balance of the
Notes advise the Depository in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Beneficial Owners, then the Depository shall notify all Beneficial Owners and
the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Notes to Beneficial Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Notes representing the
Book-Entry Notes by the Depository (or Percentage Interest of the Book-Entry
Notes being transferred pursuant to clause (iii) above), accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Depository. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions, and each may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize
the Noteholders of the Definitive Notes as Noteholders.
Section 4.09. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of its Note (and each Beneficial Owner by its
acceptance of an interest in the applicable Book-Entry Note), agree to treat the
Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness.
Section 4.10. Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive
payments of principal thereof and interest thereon, (iv) Sections 3.03, 3.04,
3.06, 3.09, 3.16, 3.18 and 3.19, (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.07 and the obligations of the Indenture Trustee under Section
4.11) and (vi) the rights of Noteholders as beneficiaries hereof with respect
to the property so deposited with the Indenture Trustee payable to all or any
of them, and the Indenture Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 4.03 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been
delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. will become due and payable at the Final Maturity Date
within one year, or
c. have been declared immediately due and payable pursuant to
Section 5.02.
and the Issuer, in the case of a. or b. above, has irrevocably deposited or
caused to be irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes and Certificates then outstanding not
theretofore delivered to the Indenture Trustee for cancellation when due on
the Final Maturity Date;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder and under the Insurance Agreement by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee and the
Credit Enhancer an Officer's Certificate and an Opinion of Counsel, each
meeting the applicable requirements of Section 10.01 and each stating that
all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with and, if the Opinion
of Counsel relates to a deposit made in connection with Section
4.10(A)(2)b. above, such opinion shall further be to the effect that such
deposit will not have any material adverse tax consequences to the Issuer,
any Noteholders or any Certificateholders.
Section 4.11. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.10 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent or
Certificate Paying Agent, as the Indenture Trustee may determine, to the
Securityholders of Securities, of all sums due and to become due thereon for
principal and interest; but such monies need not be segregated from other funds
except to the extent required herein or required by law.
Section 4.12. Subrogation and Cooperation.
(a) The Issuer and the Indenture Trustee acknowledge that (i) to the
extent the Credit Enhancer makes payments under the Policy on account of
principal of or interest on the Home Equity Loans, the Credit Enhancer will be
fully subrogated to the rights the Noteholders to receive such principal of and
interest on the Home Equity Loans, and (ii) the Credit Enhancer shall be paid
such principal and interest only from the sources and in the manner provided
herein and in the Insurance Agreement for the payment of such principal and
interest.
The Indenture Trustee shall cooperate in all respects with any
reasonable request by the Credit Enhancer for action to preserve or enforce the
Credit Enhancer's rights or interest under this Indenture or the Insurance
Agreement, consistent with this Indenture and without limiting the rights of
the Noteholders as otherwise set forth in the Indenture, including upon the
occurrence and continuance of a default under the Insurance Agreement, a
request (which request shall be in writing) to take any one or more of the
following actions:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes or under this Indenture in respect to the Notes and all
amounts payable under the Insurance Agreement and to enforce any judgment
obtained and collect from the Issuer monies adjudged due;
(ii) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private Sales (as defined in Section
5.15 hereof) called and conducted in any manner permitted by law;
(iii) file or record all assignments that have not previously
been recorded;
(iv) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture; and
(v) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Credit Enhancer hereunder.
Following the payment in full of the Notes, the Credit Enhancer shall
continue to have all rights and privileges provided to it under this Section
and in all other provisions of this Indenture, until all amounts owing to the
Credit Enhancer have been paid in full.
Section 4.13. Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent (other than the Indenture Trustee) under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.05; and thereupon, such Paying Agent shall be released
from all further liability with respect to such monies.
Section 4.14. Temporary Notes. Pending the preparation of any Definitive
Notes, the Issuer may execute and upon its written direction, the Indenture
Trustee may authenticate and make available for delivery, temporary Notes that
are printed, lithographed, typewritten, photocopied or otherwise produced, in
any denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of the Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Indenture
Trustee, without charge to the Noteholder. Upon surrender for cancellation of
any one or more temporary Notes, the Issuer shall execute and the Indenture
Trustee shall authenticate and make available for delivery, in exchange
therefor, Definitive Notes of authorized denominations and of like tenor and
aggregate principal amount. Until so exchanged, such temporary Notes shall in
all respects be entitled to the same benefits under this Indenture as Definitive
Notes.
ARTICLE V
Default and Remedies
Section 5.01. Events of Default. The Issuer shall deliver to the Indenture
Trustee and the Credit Enhancer, within five days after learning of the
occurrence any event that with the giving of notice and the lapse of time would
become an Event of Default under clause (iii) of the definition of "Event of
Default" written notice in the form of an Officer's Certificate of its status
and what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default shall occur and be continuing, then and in every such case the
Indenture Trustee, the Credit Enhancer or the Noteholders of Notes representing
not less than a majority of the aggregate Note Balance of the Notes, with the
written consent of the Credit Enhancer, may declare the Notes to be immediately
due and payable by a notice in writing to the Issuer (and to the Indenture
Trustee if given by Noteholders); and upon any such declaration, the unpaid
principal amount of the Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree
for payment of the money due has been obtained by the Indenture Trustee as
hereinafter provided in this Article V, the Credit Enhancer or the Noteholders
of Notes representing a majority of the aggregate Note Balance of the Notes,
with the written consent of the Credit Enhancer, by written notice to the
Issuer and the Indenture Trustee, may in writing waive the related Event of
Default and rescind and annul such declaration and its consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of and interest on the Notes and
all other amounts that would then be due hereunder or upon the Notes if the
Event of Default giving rise to such acceleration had not occurred;
(ii) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and
(iii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if default in the payment of (i) any
interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) the principal of or any
installment of the principal of any Note when the same becomes due and payable,
the Issuer shall, upon demand of the Indenture Trustee, pay to it, for the
benefit of the Noteholders, the entire amount then due and payable on the Notes
for principal and interest, with interest on the overdue principal, and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, subject to the provisions of Section 10.17 hereof, may institute
a Proceeding for the collection of the sums so due and unpaid, and may
prosecute such Proceeding to judgment or final decree, and may enforce the same
against the Issuer or other obligor on the Notes and collect in the manner
provided by law out of the property of the Issuer or other obligor on the
Notes, wherever situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default shall occur and be continuing, the
Indenture Trustee, subject to the provisions of Section 10.17 hereof, may, as
more particularly provided in Section 5.04, in its discretion proceed to
protect and enforce its rights and the rights of the Noteholders by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) If there shall be pending, relative to the Issuer or any other
obligor on the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or if a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or if there shall be any other comparable judicial Proceedings relative to the
Issuer or other any other obligor on the Notes, or relative to the creditors or
property of the Issuer or such other obligor, then the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and
payable as therein expressed or by declaration or otherwise, and irrespective
of whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in
such Proceedings or otherwise:
(i) to file and prove a claim or claims for the entire amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence, willful misconduct or bad faith) and of the Noteholders allowed in
such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote
on behalf of the Noteholders in any election of a trustee, a standby trustee or
Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Noteholders allowed in any judicial proceedings relative to the
Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Noteholders.
(g) In any Proceedings to which the Indenture Trustee shall be a party
(including any Proceedings involving the interpretation of any provision of
this Indenture), the Indenture Trustee shall be held to represent all
Noteholders, and it shall not be necessary to make any Noteholder a party to
any such Proceedings.
Section 5.04. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing, then
the Indenture Trustee, subject to the provisions of Section 10.17 hereof, with
the written consent of the Credit Enhancer may, or, at the written direction of
the Credit Enhancer, shall, do one or more of the following, in each case
subject to Section 5.05:
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes or
under this Indenture with respect thereto, whether by declaration or otherwise,
and all amounts payable under the Insurance Agreement, enforce any judgment
obtained, and collect from the Issuer and any other obligor on the Notes monies
adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and conducted
in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the
Indenture Trustee obtains the consent of the Credit Enhancer, which consent
will not be unreasonably withheld, and the Noteholders of 100% of the aggregate
Note Balance of the Notes, (B) the proceeds of such sale or liquidation
distributable to Noteholders are sufficient to discharge in full all amounts
then due and unpaid upon the Notes for principal and interest and to reimburse
the Credit Enhancer for any amounts drawn under the Policy and any other
amounts due the Credit Enhancer under the Insurance Agreement or (C) the
Indenture Trustee determines that the Home Equity Loans will not continue to
provide sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of the Credit Enhancer,
which consent will not be unreasonably withheld, and the Noteholders of 66 2/3%
of the aggregate Note Balance of the Notes. In determining such sufficiency or
insufficiency with respect to clause (B) and (C) above, the Indenture Trustee
may, but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
Notwithstanding the foregoing, provided that a Servicing Default shall not have
occurred, any Sale of the Trust Estate shall be made subject to the continued
servicing of the Home Equity Loans by the Servicer as provided in the Servicing
Agreement.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out such money or property in the following
order:
FIRST: to the Indenture Trustee for amounts due under Section 6.07;
SECOND: to the Noteholders for amounts due and unpaid on the related
Notes for interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Notes for
interest from amounts available in the Trust Estate for such
Noteholders;
THIRD: to the Noteholders for amounts due and unpaid on the related
Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Notes for
principal, from amounts available in the Trust Estate for such
Noteholders, until the respective Note Balances of such Notes have been
reduced to zero;
FOURTH: to the payment of all amounts due and owing the Credit Enhancer
under the Insurance Agreement;
FIFTH: to the Certificate Paying Agent for amounts due under Article
VIII of the Trust Agreement; and
SIXTH: to the payment of the remainder, if any, to the Issuer or any
other person legally entitled thereto.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.04. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder a notice
that states the record date, the payment date and the amount to be paid.
Section 5.05. Optional Preservation of the Trust Estate. If the Notes have
been declared due and payable under Section 5.02 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may, but need not (but shall at the written direction of
the Credit Enhancer), elect to take and maintain possession of the Trust
Estate. It is the desire of the parties hereto and the Noteholders that there
be at all times sufficient funds for the payment of principal of and interest
on the Notes and other obligations of the Issuer including payment to the
Credit Enhancer, and the Indenture Trustee shall take such desire into account
when determining whether or not to take and maintain possession of the Trust
Estate. In determining whether to take and maintain possession of the Trust
Estate, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
Section 5.06. Limitation of Suits. No Noteholder shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless and subject to the provisions of Section 10.17 hereof:
(a) such Noteholder shall have previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Noteholders of not less than 25% of the aggregate Note Balance
of the Notes shall have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own name
as Indenture Trustee hereunder;
(c) such Noteholder or Noteholders shall have offered the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred by it in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to institute such
Proceedings; and
(e) no direction inconsistent with such written request shall have
been given to the Indenture Trustee during such 60-day period by the
Noteholders of a majority of the aggregate Note Balance of the Notes or by the
Credit Enhancer.
It is understood and intended that no Noteholder shall have any right in
any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Noteholders
or to obtain or to seek to obtain priority or preference over any other
Noteholders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders,
each representing less than a majority of the aggregate Note Balance of the
Notes, then the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the
Noteholder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
such Note on or after the respective due dates thereof expressed in such Note
or in this Indenture and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Noteholder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture Trustee
or any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Credit Enhancer or the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law, in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Credit Enhancer or any Noteholder to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
Section 5.11. Control by Credit Enhancer or Noteholders. The Credit
Enhancer (so long as no Credit Enhancer Default exists) or the Noteholders of a
majority of the aggregate Note Balance of Notes with the consent of the Credit
Enhancer, shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee
with respect to the Notes or exercising any trust or power conferred on the
Indenture Trustee, provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by the Credit
Enhancer (so long as no Credit Enhancer Default exists) or by the Noteholders
of Notes representing not less than 100% of the aggregate Note Balance of the
Notes with the consent of the Credit Enhancer;
(c) if the conditions set forth in Section 5.05 shall have been
satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant
to such Section, then any direction to the Indenture Trustee by Noteholders of
Notes representing less than 100% of the aggregate Note Balance of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
(in its sole discretion) might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
Section 5.12. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Credit Enhancer (so long as no Credit Enhancer Default exists) or the
Noteholders of not less than a majority of the aggregate Note Balance of the
Notes, with the consent of the Credit Enhancer, may waive any past Event of
Default and its consequences, except an Event of Default (a) with respect to
payment of principal of or interest on any of the Notes or (b) in respect of a
covenant or provision hereof that cannot be modified or amended without the
consent of the Noteholder of each Note. In the case of any such waiver, the
Issuer, the Indenture Trustee and the Noteholders shall be restored to their
respective former positions and rights hereunder; but no such waiver shall
extend to any subsequent or other Event of Default or impair any right
consequent thereto.
Upon any such waiver, any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture agree,
and each Noteholder by such Noteholder's acceptance of the related Note shall
be deemed to have agreed, that any court may in its discretion require, in any
Proceeding for the enforcement of any right or remedy under this Indenture, or
in any Proceeding against the Indenture Trustee for any action taken, suffered
or omitted by it as Indenture Trustee, the filing by any party litigant in such
Proceeding of an undertaking to pay the costs of such Proceeding, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such Proceeding, having due
regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.13 shall not apply to (a)
any Proceeding instituted by the Indenture Trustee, (b) any Proceeding
instituted by any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the aggregate Note Balance of the Notes or (c)
any Proceeding instituted by any Noteholder for the enforcement of the payment
of principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture.
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it shall not hinder, delay or impede the execution of any power herein granted
to the Indenture Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 5.15. Sale of Trust Estate.
(a) The power to effect any sale or other disposition (a "Sale") of
any portion of the Trust Estate pursuant to Section 5.04 is expressly subject
to the provisions of Section 5.05 and this Section 5.15. The power to effect
any such Sale shall not be exhausted by any one or more Sales as to any portion
of the Trust Estate remaining unsold, but shall continue unimpaired until the
entire Trust Estate shall have been sold or all amounts payable on the Notes
and under this Indenture and under the Insurance Agreement shall have been
paid. The Indenture Trustee may from time to time postpone any public Sale by
public announcement made at the time and place of such Sale. The Indenture
Trustee hereby expressly waives its right to any amount fixed by law as
compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale sell the Trust
Estate, or any portion thereof, unless:
(i) the Noteholders of all Notes and the Credit Enhancer direct
the Indenture Trustee to make, such Sale,
(ii) the proceeds of such Sale would be not less than the entire
amount that would be payable to the Noteholders under the Notes, the
Certificateholders under the Certificates and the Credit Enhancer in respect of
amounts drawn under the Policy and any other amounts due the Credit Enhancer
under the Insurance Agreement, in full payment thereof in accordance with
Section 5.02, on the Payment Date next succeeding the date of such Sale, or
(iii) the Indenture Trustee determines, in its sole discretion,
that the conditions for retention of the Trust Estate set forth in Section 5.05
cannot be satisfied (in making any such determination, the Indenture Trustee
may rely upon an opinion of an Independent investment banking firm obtained and
delivered as provided in Section 5.05), and the Credit Enhancer consents to
such Sale (which consent shall not be unreasonably withheld), and the
Noteholders of Notes representing at least 66 2/3% of the aggregate Note
Balance of the Notes consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of the Trust Estate
at a private Sale shall not be deemed a Sale or other disposition thereof for
purposes of this Section 5.15(b).
(c) Unless the Noteholders and the Credit Enhancer shall have
otherwise consented or directed the Indenture Trustee, at any public Sale of
all or any portion of the Trust Estate at which a minimum bid equal to or
greater than the amount described in paragraph (ii) of subsection (b) of this
Section 5.15 has not been established by the Indenture Trustee and no Person
bids an amount equal to or greater than such amount, then the Indenture Trustee
shall bid an amount at least $1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the Trust
Estate:
(i) any Noteholder may bid for and, with the consent of the
Credit Enhancer, purchase the property offered for sale, and upon compliance
with the terms of sale may hold, retain and possess and dispose of such
property, without further accountability, and may, in paying the purchase money
therefor, deliver any Notes or claims for interest thereon in lieu of cash up
to the amount which shall, upon distribution of the net proceeds of such sale,
be payable thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to the Noteholders
thereof after being appropriately stamped to show such partial payment;
(ii) the Indenture Trustee may bid for and acquire the property
offered for Sale in connection with any Sale thereof and, subject to any
requirements of, and to the extent permitted by, applicable law in connection
therewith, may purchase all or any portion of the Trust Estate in a private
sale. In lieu of paying cash therefor, the Indenture Trustee may make
settlement for the purchase price by crediting the gross Sale price against the
sum of (A) the amount that would be distributable to the Noteholders and the
Certificateholders and amounts owing to the Credit Enhancer as a result of such
Sale in accordance with Section 5.04(b) on the Payment Date next succeeding the
date of such Sale and (B) the expenses of the Sale and of any Proceedings in
connection therewith that are reimbursable to it, without being required to
produce the Notes in order to complete any such Sale or in order for the net
Sale price to be credited against such Notes, and any property so acquired by
the Indenture Trustee shall be held and dealt with by it in accordance with the
provisions of this Indenture;
(iii) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion
of the Trust Estate in connection with a Sale thereof;
(iv) the Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Trust Estate in connection with a Sale thereof, and to take
all action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound to
ascertain the Indenture Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any monies.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Trust Estate
or upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b).
Section 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a written request from the Credit Enhancer or
the Indenture Trustee (with the written consent of the Credit Enhancer) the
Issuer, in its capacity as owner of the Home Equity Loans, shall, with the
written consent of the Credit Enhancer, take all such lawful action as the
Indenture Trustee may request to cause the Issuer to compel or secure the
performance and observance by the Seller and the Servicer, as applicable, of
each of their obligations to the Issuer under or in connection with the
Purchase Agreement and the Servicing Agreement, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Purchase Agreement and the Servicing Agreement to the
extent and in the manner directed by the Indenture Trustee, as pledgee of the
Home Equity Loans, including the transmission of notices of default on the part
of the Seller or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Purchase
Agreement and the Servicing Agreement.
(b) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee, as pledgee of the Home Equity Loans, subject to the rights
of the Credit Enhancer under the Servicing Agreement, may, and at the direction
(which direction shall be in writing or by telephone (confirmed in writing
promptly thereafter)) of the Noteholders of 66 2/3% of the aggregate Note
Balance of the Notes, shall, exercise all rights, remedies, powers, privileges
and claims of the Issuer against the Seller or the Servicer under or in
connection with the Purchase Agreement and the Servicing Agreement, including
the right or power to take any action to compel or secure performance or
observance by the Seller or the Servicer, as the case may be, of each of their
obligations to the Issuer thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Purchase Agreement and the
Servicing Agreement, as the case may be, and any right of the Issuer to take
such action shall not be suspended. In connection therewith, as determined by
the Indenture Trustee, the Issuer shall take all actions necessary to effect
the transfer of the Home Equity Loans to the Indenture Trustee.
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates, reports 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, reports and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (a) of
this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved that
the Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11 or any direction from the
Credit Enhancer that the Credit Enhancer is entitled to give under any of the
Basic Documents.
(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms
of this Indenture or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(h) With respect to each Payment Date, on the Business Day following
the related Determination Date, the Indenture Trustee shall forward or cause to
be forwarded by mail, or other mutually agreed upon method, to the Credit
Enhancer and the Servicer, a statement setting forth, to the extent applicable,
during the Pre-Funding Period, the Pre-Funded Amount as of such Payment Date
and any transfers of funds in connection therewith.
Section 6.02. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Indenture Trustee need not investigate any fact or matter stated in any such
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on any such Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Indenture Trustee must comply with Sections 6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be (i) responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, (ii) accountable for the Issuer's use
of the proceeds from the Notes or (iii) responsible for any statement of the
Issuer in this Indenture or in any document issued in connection with the sale
of the Notes or in the Notes, other than the Indenture Trustee's certificate of
authentication thereon.
Section 6.05. Notice of Event of Default. If an Event of Default shall
occur and be continuing, and if such Event of Default is known to a Responsible
Officer of the Indenture Trustee, then the Indenture Trustee shall give notice
thereof to the Credit Enhancer. The Indenture Trustee shall mail to each
Noteholder notice of such Event of Default within 90 days after it occurs.
Except in the case of an Event of Default with respect to the payment of
principal of or interest on any Note, the Indenture Trustee may withhold such
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding such notice is in the interests of the Noteholders.
Section 6.06. Reports by Indenture Trustee to Noteholders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such Noteholder to prepare its federal and state income tax returns. In
addition, upon Issuer Request, the Indenture Trustee shall promptly furnish
such information reasonably requested by the Issuer that is reasonably
available to the Indenture Trustee to enable the Issuer to perform its federal
and state income tax reporting obligations.
Section 6.07. Compensation and Indemnity. The Indenture Trustee shall be
compensated and indemnified by the Servicer in accordance with Section 6.06 of
the Servicing Agreement. All amounts owing the Indenture Trustee hereunder in
excess of such amount, including any unreimbursed Transition Costs of the
Indenture Trustee, as well as any amount owed to the Indenture Trustee in
accordance with Section 6.06 of the Servicing Agreement, to the extent the
Servicer has failed to pay such amount, shall be paid solely as provided in
Section 3.05 hereof (subject to the priorities set forth therein). The
Indenture Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuer shall reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses and attorneys' fees
incurred or made by it, including Transition Costs and costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee's agents, counsel, accountants and experts. The Issuer shall indemnify
the Indenture Trustee against any and all loss, liability or expense (including
attorneys' fees) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Indenture Trustee shall
notify the Issuer promptly of any claim for which it may seek indemnity.
Failure by the Indenture Trustee to so notify the Issuer shall not relieve the
Issuer of its obligations hereunder. The Issuer shall defend any such claim,
and the Indenture Trustee may have separate counsel and the Issuer shall pay
the fees and expenses of such counsel. The Issuer is not obligated to reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Indenture Trustee through the Indenture Trustee's own willful misconduct,
negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section 6.07 shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of an Event of Default specified
in clause (iv) or (v) of the definition thereof with respect to the Issuer,
such expenses are intended to constitute expenses of administration under Title
11 of the United States Code or any other applicable federal or state
bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may
resign at any time by so notifying the Issuer and the Credit Enhancer. The
Credit Enhancer or the Noteholders of a majority of aggregate Note Balance of
the Notes may remove the Indenture Trustee by so notifying the Indenture
Trustee and the Credit Enhancer (if given by such Noteholders) and may appoint
a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee
if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of fulfilling
its duties under this Indenture.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of the Indenture Trustee for any reason (the Indenture Trustee in
such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee with the consent of
the Credit Enhancer, which consent shall not be unreasonably withheld. In
addition, the Indenture Trustee shall resign to avoid being directly or
indirectly controlled by the Issuer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to the Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, then the retiring
Indenture Trustee, the Issuer or the Noteholders of a majority of aggregate
Note Balance of the Notes may petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's obligations under Section 6.07 shall continue for the
benefit of the retiring Indenture Trustee.
Section 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, then the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall provide
the Rating Agencies with written notice of any such transaction occurring after
the Closing Date.
If at the time of any such succession by merger, conversion or
consolidation, any of the Notes shall have been authenticated but not
delivered, then any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated. If at such time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases, such certificates
shall have the full force that it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at such time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Issuer, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Trust Estate, or any part thereof, and, subject
to the other provisions of this Section, such powers, duties, obligations,
rights and trusts as the Indenture Trustee may consider necessary or desirable.
No co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 6.11, and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including the
holding of title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate trustee
or co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition and it or its
parent shall have a long-term debt rating of A or better by Moody's. The
Indenture Trustee shall comply with TIA 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 that has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
Section 6.13. Representations and Warranties. The Indenture Trustee hereby
represents and warrants that:
(a) The Indenture Trustee is duly organized, validly existing and in
good standing under the laws of the United States of America with power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted.
(b) The Indenture Trustee has the power and authority to execute and
deliver this Indenture and to carry out its terms; and the execution, delivery
and performance of this Indenture have been duly authorized by the Indenture
Trustee by all necessary corporate action.
(c) The consummation of the transactions contemplated by this
Indenture and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of organization
or bylaws of the Indenture Trustee or any agreement or other instrument to
which the Indenture Trustee is a party or by which it is bound.
(d) To the Indenture Trustee's best knowledge, there are no
Proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Indenture Trustee or its properties (A) asserting
the invalidity of this Indenture, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Indenture or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Indenture Trustee of its obligations under, or the validity
or enforceability of, this Indenture.
(e) The Indenture Trustee does not have notice of any adverse claim
(as such terms are used in Section 8-302 of the UCC in effect in the State of
Delaware) with respect to the Home Equity Loans.
Section 6.14. Directions to Indenture Trustee. The Indenture Trustee is
hereby directed:
(a) to accept the pledge of the Home Equity Loans and hold the assets
of the Trust in trust for the Noteholders and the Credit Enhancer;
(b) to authenticate and deliver the Notes substantially in the form
prescribed by Exhibit A in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be taken by the
terms of this Indenture.
Section 6.15. Indenture Trustee May Own Securities. The Indenture Trustee,
in its individual or any other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were not Indenture Trustee.
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer shall furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after each Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and
addresses of the Noteholders as of such Record Date, and (b) at such other
times as the Indenture Trustee and the Credit Enhancer may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that for so long as the Indenture
Trustee is the Note Registrar, no such list need be furnished.
Section 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.01 and the names and addresses of the Noteholders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy
any list furnished to it as provided in such Section 7.01 upon receipt of a new
list so furnished.
(b) Noteholders may communicate pursuant to TIA 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, within 15 days after the
Issuer is required to file the same with the Commission, copies of the annual
reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA 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 January 1, beginning with January 1, 2001,
the Indenture Trustee shall mail to each Noteholder as required by TIA Sectioin
313(c) and to the Credit Enhancer 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, if required, and each stock
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this
Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided in
Article V.
Section 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the
Indenture Trustee to establish and maintain, in the name of the Indenture
Trustee, for the benefit of the Noteholders and the Certificate Paying Agent,
on behalf of the Certificateholders, and the Credit Enhancer, the Note Payment
Account as provided in Section 3.01 of this Indenture and the Reserve Account.
(b) All monies deposited from time to time in the Note Payment Account
pursuant to the Servicing Agreement and all deposits therein pursuant to this
Indenture are for the benefit of the Noteholders, the Credit Enhancer and the
Certificate Paying Agent, on behalf of the Certificateholders, and all
investments made with such monies, including all income or other gain from such
investments, are for the benefit of the Servicer as provided in Section 5.01(a)
of the Servicing Agreement.
On each Payment Date, the Indenture Trustee shall distribute all amounts
on deposit in the Note Payment Account to the Noteholders in respect of the
Notes and, in its capacity as Certificate Paying Agent, to the
Certificateholders from the Certificate Distribution Account in the order of
priority set forth in Section 3.05 (except as otherwise provided in Section
5.04(b)).
All monies deposited from time to time in the Reserve Account pursuant to
this Indenture are for the benefit of the Class A-1 Noteholders, the Credit
Enhancer and the Certificate Paying Agent, on behalf of the Certificateholders,
and all investments made with such monies, including all income or other gain
from such investments, are for the benefit of the Servicer as provided in
Section 5.01(b) of the Servicing Agreement.
The Indenture Trustee, at the direction of the Servicer, may invest any
funds in the Note Payment Account and the Reserve Account in Permitted
Investments selected by the Servicer maturing no later than the Business Day
preceding the next succeeding Payment Date (except that (i) any investment in
the institution with which the Note Payment Account is maintained may mature on
such Payment Date and (ii) any other investment may mature on such Payment Date
if the Servicer shall advance funds on such Payment Date to the Note Payment
Account in the amount payable on such investment on such Payment Date, pending
receipt thereof to the extent necessary to make distributions on the Notes) and
shall not be sold or disposed of prior to the maturity.
Section 8.03. Officer's Certificate. The Indenture Trustee shall receive
at least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.05(a), accompanied by copies of any instruments to be
executed, and the Indenture Trustee shall also require, as a condition to such
action, an Officer's Certificate, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with.
Section 8.04. Termination Upon Distribution to Noteholders. This Indenture
and the respective obligations and responsibilities of the Issuer and the
Indenture Trustee created hereby shall terminate upon the distribution to the
Noteholders, the Certificate Paying Agent on behalf of the Certificateholders
and the Indenture Trustee of all amounts required to be distributed pursuant to
Article III; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the survivor of
the descendants of Joseph P. Kennedy, the late ambassador of the United States
to the Court of St. James's, living on the date hereof.
Section 8.05. Release of Trust Estate.
(a) Subject to the payment of its fees and expenses, the Indenture
Trustee may, and when required by the provisions of this Indenture, shall,
execute instruments to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No Person relying upon an instrument executed by the Indenture Trustee as
provided in Article VIII hereunder shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent,
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as (i) there are no
Notes Outstanding, (ii) all sums due the Indenture Trustee pursuant to this
Indenture have been paid and (iii) all sums due the Credit Enhancer have been
paid, release any remaining portion of the Trust Estate that secured the Notes
from the lien of this Indenture.
(c) The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.05 only upon receipt of an Issuer Request
accompanied by an Officers' Certificate and a letter from the Credit Enhancer
stating that the Credit Enhancer has no objection to such request from the
Issuer.
(d) The Indenture Trustee shall, at the request of the Issuer or the
Depositor, surrender the Policy to the Credit Enhancer for cancellation, upon
final payment of principal of and interest on the Notes.
Section 8.06. Surrender of Notes Upon Final Payment. By acceptance of any
Note, the Noteholder thereof agrees to surrender such Note to the Indenture
Trustee promptly, prior to such Noteholder's receipt of the final payment
thereon.
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Noteholders of any Notes but with prior
notice to the Rating Agencies and the Credit Enhancer, the Issuer and the
Indenture Trustee, when authorized by an Issuer Request, at any time and from
time to time, may enter into one or more indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act as in force at the
date of the execution thereof), in form satisfactory to the Indenture Trustee,
for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Noteholders or the Credit Enhancer, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any other
provision herein or in any supplemental indenture;
(vi) to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental indenture;
provided, that such action shall not materially and adversely affect the
interests of the Noteholders or the Credit Enhancer;
(vii) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be necessary
to facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(viii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be expressly
required by the TIA;
provided, however, that no such supplemental indenture shall be entered into
unless the Indenture Trustee shall have received an Opinion of Counsel to the
effect that the execution of such supplemental indenture will not give rise to
any material adverse tax consequence to the Noteholders.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Request, may, without the consent of any Noteholder but with prior notice to
the Rating Agencies and the Credit Enhancer, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Noteholders under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, (i) adversely affect in any material respect the interests
of any Noteholder or the Credit Enhancer or (ii) cause the Issuer to be subject
to an entity level tax.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Request, may,
with prior notice to the Rating Agencies and with the consent of the Credit
Enhancer and the Noteholders of not less than a majority of the Note Balances
of each Class of Notes affected thereby, by Act of such Noteholders delivered
to the Issuer and the Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Noteholder of each Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof or the Note Rate
thereon, change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of
this Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the Notes on or
after the respective due dates thereof;
(b) reduce the percentage of the related Note Balances of any Class of
Notes, the consent of the Noteholders of which is required for any such
supplemental indenture, or the consent of the Noteholders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding" or modify or alter the exception in the definition of
the term "Noteholder";
(d) reduce the percentage of the aggregate Note Balance of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
(e) modify any provision of this Section 9.02 except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture or the other Basic Documents cannot be modified or waived
without the consent of the Noteholder of each Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or principal
due on any Note on any Payment Date (including the calculation of any of the
individual components of such calculation); or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust Estate
or, except as otherwise permitted or contemplated herein, terminate the lien of
this Indenture on any property at any time subject hereto or deprive the
Noteholder of any Note of the security provided by the lien of this Indenture;
and provided further, that such action shall not, as evidenced by an Opinion of
Counsel, cause the Issuer to be subject to an entity level tax.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Noteholders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders (as defined in
Section 10.03) under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.02, the Indenture Trustee
shall mail to the Noteholders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive and,
subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects
the Indenture Trustee's own rights, duties, liabilities or immunities under
this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations
of rights, obligations, duties, liabilities and immunities under this Indenture
of the Indenture Trustee, the Issuer and the Noteholders shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
Section 9.05. Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as in effect at
the time of such amendment or supplement so long as this Indenture shall then
be qualified under the Trust Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee,
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Miscellaneous
Section 10.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee and to the Credit Enhancer (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and (ii) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, except that, in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not such
covenant or condition has been complied with;
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with; and
(v) if the signer of such certificate or opinion is required to
be Independent, the statement required by the definition of the term
"Independent".
(b) (i) Prior to the deposit of any Collateral or other property
or securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Indenture Trustee an Independent Certificate as to
the same matters, if the fair value to the Issuer of the securities to be so
deposited and of all other such securities made the basis of any such
withdrawal or release since the commencement of the then-current fiscal year of
the Issuer, as set forth in the certificates delivered pursuant to clause (i)
above and this clause (ii), is 10% or more of the aggregate Note Balance of the
Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set forth
in the related Officer's Certificate is less than $25,000 or less than one
percent of the aggregate Note Balance of the Notes.
(iii) Whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such release)
of the property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as to
the same matters if the fair value of the property or securities and of all
other property, other than property as contemplated by clause (v) below or
securities released from the lien of this Indenture since the commencement of
the then-current calendar year, as set forth in the certificates required by
clause (iii) above and this clause (iv), equals 10% or more of the aggregate
Note Balance of the Notes, but such certificate need not be furnished in the
case of any release of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than $25,000 or less than
one percent of the aggregate Note Balance of the Notes.
(v) Notwithstanding any provision of this Indenture, the Issuer
may, without compliance with the requirements of the other provisions of this
Section 10.01, (A) collect upon, sell or otherwise dispose of the Home Equity
Loans as and to the extent permitted or required by the Basic Documents or (B)
make cash payments out of the Note Payment Account as and to the extent
permitted or required by the Basic Documents, so long as the Issuer shall
deliver to the Indenture Trustee every six months, commencing December 31,
2001, an Officer's Certificate of the Issuer stating that all the dispositions
of Collateral described in clauses (A) or (B) above that occurred during the
preceding six calendar months (or such longer period, in the case of the first
such Officer's Certificate) were in the ordinary course of the Issuer's
business and that the proceeds thereof were applied in accordance with the
Basic Documents.
Section 10.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or officers
of the Seller or the Issuer, stating that the information with respect to such
factual matters is in the possession of the Seller or the Issuer, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of
the facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 10.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided
in this Section 10.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Registrar.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Noteholder of any Note shall bind the Noteholder
of every Note issued upon the registration thereof or in exchange therefor or
in lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 10.04. Notices, etc., to Indenture Trustee, Issuer, Credit
Enhancer and Rating Agencies. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is to
be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at Norwest Bank Minnesota, National
Association, 11000 Broken Land Parkway, Columbia, Maryland 21044, Attention:
GMACM 1999-HLTV1, with a copy to the Indenture Trustee's Corporate Trust
Office. The Indenture Trustee shall promptly transmit any notice received by it
from the Noteholders to the Issuer,
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: GMACM Loan Trust 1999-HLTV1, in
care of the Owner Trustee, or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Indenture
Trustee, or
(c) the Credit Enhancer by the Issuer, the Indenture Trustee or by any
Noteholders shall be sufficient for every purpose hereunder to in writing and
mailed, first-class postage pre-paid, or personally delivered or telecopied to:
Ambac Assurance Corporation, One State Street Plaza, 19th Floor, New York, New
York 10004, Attention: Structured Finance - Mortgage Backed Securities,
telecopier number (212) 363-1459. The Credit Enhancer shall promptly transmit
any notice received by it from the Issuer, the Indenture Trustee or the
Noteholders to the Issuer or Indenture Trustee, as the case may be.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to (i) in the
case of Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007 and (ii) in
the case of Standard & Poor's, at the following address: Standard & Poor's, 26
Broadway, 15th Floor, New York, New York 10004, Attention: Asset Backed
Surveillance Department; or, as to each of the foregoing Persons, at such other
address as shall be designated by written notice to the other foregoing
Persons.
Section 10.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Person's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Noteholders is given by
mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such notice
with respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given
regardless of whether such notice is in fact actually received.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be
a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute an Event of Default.
Section 10.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Noteholder providing for a method of
payment, or notice by the Indenture Trustee to such Noteholder, that is
different from the methods provided for in this Indenture for such payments or
notices. The Issuer shall furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee shall cause payments to be made and notices
to be given in accordance with such agreements.
Section 10.07. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required
to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA 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 10.08. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 10.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee
in this Indenture shall bind its successors, co-trustees and agents.
Section 10.10. Severability. In case any provision in this Indenture or in
the Notes shall be held invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions hereof shall not in
any way be affected or impaired thereby.
Section 10.11. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, the Credit
Enhancer, and any other party secured hereunder, and any other Person with an
ownership interest in any part of the Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 10.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date. Section 10.13.
GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.14. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 10.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which counsel may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
Section 10.16. Issuer Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate
or other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee
or of any successor or assign of the Indenture Trustee or the Owner Trustee in
its individual capacity, except as any such Person may have expressly agreed
(it being understood that the Indenture Trustee and the Owner Trustee have no
such obligations in their respective individual capacities), and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles VI, VII and
VIII of the Trust Agreement.
Section 10.17. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by its acceptance of a Note, hereby covenant
and agree that they will not at any time institute against the Depositor or the
Issuer, or join in any institution against the Depositor or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the other Basic Documents.
Section 10.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all
such information except to the extent disclosure may be required by law (and
all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Indenture Trustee may reasonably determine that
such disclosure is consistent with its obligations hereunder.
* * *
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
GMACM LOAN TRUST 1999-HLTV1,
as Issuer
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: ___________________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
By: ____________________________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
hereby accepts the appointment
as Paying Agent pursuant to Section
3.03 hereof and as Note Registrar
pursuant to Section 4.02 hereof.
By: _____________________________________
Name:
Title:
STATE OF _________________ )
) ss.:
COUNTY OF ________________ )
On this 23rd day of September 1999, before me personally appeared ________,
to me known, who being by me duly sworn, did depose and say, that [he][she]
resides at ____________, that [he][she] is the ___________ of Wilmington Trust
Company, the Owner Trustee, one of the corporations described in and which
executed the above instrument; that [he][she] knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that [he][she] signed [his][her] name thereto by like order.
_______________________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 23rd day of September 1999, before me personally appeared _______,
to me known, who being by me duly sworn, did depose and say, that [he][she]
resides at _________; that [he][she] is the _________ of Norwest Bank Minnesota,
National Association, as Indenture Trustee, one of the corporations described in
and which executed the above instrument; that [he][she] knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that [he][she] signed [his][her] name thereto by like order.
_______________________________________
Notary Public
NOTORIAL SEAL
EXHIBIT A
FORM OF NOTES
CLASS A-___ NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
THIS NOTE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER,
THE DEPOSITOR, THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE OR GMAC
MORTGAGE GROUP, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY
PROVIDED IN THE INDENTURE OR THE OTHER BASIC DOCUMENTS.
GMACM LOAN TRUST 1999-HLTV1
Home Loan-Backed Term Note
Registered Principal Amount: $125,000,000 [A-1]
$ 50,000,000 [A-2]
Class A-____
No. ___ Note Rate: Floating [A-1]
Fixed [A-2]
CUSIP NO. 36185 LAA2 [A-1] Percentage Interest: 100%
36185 LAB0 [A-2]
GMACM Loan Trust 1999-HLTV1, a business trust duly organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to Cede & Co. or its registered
assigns, the principal sum of [one hundred and twenty-five million dollars
($125,000,000)] [fifty million dollars ($50,000,000)], payable on each Payment
Date in an amount equal to the Percentage Interest specified above of the
aggregate amount, if any, payable from the Note Payment Account in respect of
principal of the Class A-___ Notes pursuant to Section 3.05 of the indenture
dated as of September 1, 1999 (the "Indenture"), between the Issuer and Norwest
Bank Minnesota, National Association, as indenture trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the Final Maturity Date in November 2025, to
the extent not previously paid on a prior Payment Date. Capitalized terms used
herein that are not otherwise defined shall have the meanings ascribed thereto
in Appendix A to the Indenture.
[Interest on the Class A-1 Notes will be paid monthly on each Payment Date
at the Note Rate for the related Interest Accrual Period. The Note Rate for
each Interest Accrual Period will be a floating rate equal to the least of (i)
LIBOR plus a margin of 0.39% per annum and (ii) 13.00% per annum; provided,
however, that the margin on the Class A-1 Notes will increase to 0.78%
commencing on the first Payment Date after the Step-Up Date. Except in the case
of the first Interest Accrual Period, LIBOR for each Interest Accrual Period
will be determined on the second LIBOR Business Day immediately preceding the
first day of each Interest Accrual Period by the Indenture Trustee as set forth
in the Indenture. All determinations of LIBOR by the Indenture Trustee shall,
in the absence of manifest error, be conclusive for all purposes, and each
holder of this Note, by accepting this Note, agrees to be bound by such
determination. Interest on this Note will accrue for each Payment Date from the
most recent Payment Date on which interest has been paid (in the case of the
first Payment Date, from September 10, 1999) to but excluding such Payment
Date. Interest will be computed on the basis of the actual number of days in
each Interest Accrual Period and a 360-day year. Principal of and interest on
this Note shall be paid in the manner specified on the reverse hereof.]
[Interest on the Class A-2 Notes will be paid monthly on each Payment Date
at the Note Rate. The Note Rate for the Class A-2 Notes will be 7.73% per
annum; provided, however, that the Note Rate on the Class A-2 Notes will
increase to 8.23% per annum commencing on the first Payment Date after the
Step-Up Date. Interest will be computed on the basis of a 30-day month and a
360-day year. Principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.]
Principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Home Loan-Backed Term Notes (herein called the "Notes"), all
issued under the Indenture, to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders
of the Notes. The Notes are subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
The Notes are subject to optional redemption in whole but not in part on
and after any Payment Date following the Step-Up Date.
This Note is entitled to the benefits of an irrevocable and unconditional
financial guaranty insurance policy issued by Ambac Assurance Corporation.
Principal of and interest on this Note will be payable on each Payment
Date, commencing on October 18, 1999, as described in the Indenture. "Payment
Date" means the eighteenth day of each month, or, if any such date is not a
Business Day, then the next succeeding Business Day.
The entire unpaid principal amount of this Note shall be due and payable
in full on the Payment Date in November 2025 pursuant to the Indenture, to the
extent not previously paid on a prior Payment Date. Notwithstanding the
foregoing, if an Event of Default shall have occurred and be continuing, then
the Indenture Trustee, the Credit Enhancer or the Noteholders of Notes
representing not less than a majority of the aggregate Note Balance of the
Notes, with the consent of the Credit Enhancer, may declare the Notes to be
immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Notes shall be made pro rata to the
Noteholders of Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by wire transfer or check mailed to the
Person whose name appears as the registered Holder of this Note (or one or more
predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Depository Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment; provided, however, that the Indenture
Trustee shall not pay to such Noteholder any amount required to be withheld
from a payment to such Noteholder by the Code. Any reduction in the principal
amount of this Note (or any one or more predecessor Notes) effected by any
payments made on any Payment Date shall be binding upon all future Noteholders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the registered Noteholder hereof as of the Record Date
preceding such Payment Date by notice mailed or transmitted by facsimile prior
to such Payment Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the address specified in such
notice of final payment.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the Corporate Trust
Office of the Indenture Trustee, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Noteholder hereof or such Noteholder's attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in the Securities Transfer Agent's
Medallion Program ("STAMP") or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Exchange Act, and thereupon one or more new
Notes in authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the Note Registrar shall require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any registration
of transfer or exchange of this Note.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a
Note, or, in the case of a Beneficial Owner of a Note, a beneficial interest in
a Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee,
the Seller, the Servicer, the Depositor or the Indenture Trustee on the Notes
or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall
be fully liable, to the extent provided by applicable law for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Beneficial Owner of a Note, by its acceptance of a Note
or, in the case of a Beneficial Owner of a Note, a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
Noteholder or Beneficial Owner will not at any time institute against the
Depositor, the Seller, the Servicer, GMAC Mortgage Group, Inc. or the Issuer,
or join in any institution against the Depositor, the Seller, the Servicer,
GMAC Mortgage Group, Inc. or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer.
Each Noteholder of a Note, by its acceptance of a Note (and each Beneficial
Owner of a Note by its acceptance of a beneficial interest in a Note), agrees
to treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in the name of which this Note is registered (as
of the day of determination or as of such other date as may be specified in the
Indenture) as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the Indenture Trustee and the rights of the Noteholders of the Notes
under the Indenture at any time by the Issuer and the Indenture Trustee with
the consent of the Credit Enhancer and the Noteholders of Notes representing a
majority of the aggregate Note Balance of the Notes then Outstanding and with
prior notice to the Rating Agencies. The Indenture also contains provisions
permitting the Noteholders of Notes representing specified percentages of the
Notes Balances of the Notes, on behalf of the Noteholders of all Notes, to
waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Noteholder of this Note (or any one of more
predecessor Notes) shall be conclusive and binding upon such Noteholder and
upon all future Noteholders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Issuer and the Indenture Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of
Noteholders of the Notes issued thereunder but with prior notice to the Rating
Agencies and the Credit Enhancer.
The term "Issuer" as used in this Note includes any successor or the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflicts of law provisions,
and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Wilmington Trust Company in its
individual capacity, Norwest Bank Minnesota, National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, or any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on
this Note or the performance of, or the failure to perform, any of the
covenants, obligations or indemnifications contained in the Indenture. The
Noteholder of this Note, by its acceptance hereof, agrees that, except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, such Noteholder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in
its individual capacity, has caused this Note to be duly executed.
GMACM LOAN TRUST 1999-HLTV1
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
Dated: September 23, 1999
By: _______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-___ Notes referred to in the within-mentioned
Indenture.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
Dated: September 23, 1999
By: ________________________________
Authorized Signatory
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee: ______
________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer
unto ___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ___________________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: __________________________ ______________________________________*/
Signature Guaranteed:
______________________________________*/
_______________
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
Exhibit 10.1
EXECUTION COPY
===============================================================================
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
as Depositor
and
WILMINGTON TRUST COMPANY
as Owner Trustee
-----------------------------------------
TRUST AGREEMENT
Dated as of September 23, 1999
------------------------------------------
GMACM Loan Trust 1999-HLTV1
Loan-Backed Certificates,
Series 1999-HLTV1
===============================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
Section 1.01. Definitions.............................................1
Section 1.02. Other Definitional Provisions...........................1
ARTICLE II
Organization
Section 2.01. Name....................................................3
Section 2.02. Office..................................................3
Section 2.03. Purposes and Powers.....................................3
Section 2.04. Appointment of Owner Trustee............................3
Section 2.05. Initial Capital Contribution of Trust Estate............4
Section 2.06. Declaration of Trust....................................4
Section 2.07. Title to Trust Property.................................4
Section 2.08. Situs of Trust..........................................4
Section 2.09. Representations and Warranties of the Depositor.........4
Section 2.10. Payment of Trust Fees...................................5
ARTICLE III
Conveyance of the Home Equity Loans; Certificates
Section 3.01. Conveyance of the Home Equity Loans.....................6
Section 3.02. Initial Ownership.......................................6
Section 3.03. Issuance of Certificates................................6
Section 3.04. Authentication of Certificates..........................7
Section 3.05. Registration of and Limitations on Transfer
and Exchange of Certificates.........................7
Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates......10
Section 3.07. Persons Deemed Certificateholders......................10
Section 3.08. Access to List of Certificateholders'
Names and Addresses....................................10
Section 3.09. Maintenance of Office or Agency........................10
Section 3.10. Certificate Paying Agent...............................11
Section 3.11. Cooperation............................................12
ARTICLE IV
Authority and Duties of Owner Trustee
Section 4.01. General Authority......................................13
Section 4.02. General Duties.........................................13
Section 4.03. Action upon Instruction................................13
Section 4.04. No Duties Except as Specified under Specified
Documents or in Instructions...........................14
Section 4.05. Restrictions...........................................14
Section 4.06. Prior Notice to Certificateholders and the
Credit Enhancer with Respect to Certain Matters........14
Section 4.07. Action by Certificateholders with Respect
to Certain Matters.....................................15
Section 4.08. Action by Certificateholders with Respect
to Bankruptcy..........................................15
Section 4.09. Restrictions on Certificateholders' Power..............15
Section 4.10. Majority Control.......................................15
Section 4.11. Doing Business in Other Jurisdictions..................16
ARTICLE V
Application of Trust Funds
Section 5.01. Distributions..........................................17
Section 5.02. Method of Payment......................................17
Section 5.03. Signature on Returns...................................17
Section 5.04. Statements to Certificateholders.......................17
Section 5.05. Tax Reporting; Tax Elections...........................18
ARTICLE VI
Concerning the Owner Trustee
Section 6.01. Acceptance of Trusts and Duties........................19
Section 6.02. Furnishing of Documents................................20
Section 6.03. Representations and Warranties.........................20
Section 6.04. Reliance; Advice of Counsel............................21
Section 6.05. Not Acting in Individual Capacity......................21
Section 6.06. Owner Trustee Not Liable for
Certificates or Related Documents......................21
Section 6.07. Owner Trustee May Own Certificates and Notes...........22
ARTICLE VII
Compensation of Owner Trustee
Section 7.01. Owner Trustee's Fees and Expenses......................23
Section 7.02. Indemnification........................................23
ARTICLE VIII
Termination of Trust Agreement
Section 8.01. Termination of Trust Agreement.........................25
ARTICLE IX
Successor Owner Trustees and Additional Owner Trustees
Section 9.01. Eligibility Requirements for Owner Trustee.............27
Section 9.02. Replacement of Owner Trustee...........................27
Section 9.03. Successor Owner Trustee................................28
Section 9.04. Merger or Consolidation of Owner Trustee...............28
Section 9.05. Appointment of Co-Trustee or Separate Trustee..........28
ARTICLE X
Miscellaneous
Section 10.01. Amendments.............................................30
Section 10.02. No Legal Title to Trust Estate.........................31
Section 10.03. Limitations on Rights of Others........................31
Section 10.04. Notices................................................32
Section 10.05. Severability...........................................32
Section 10.06. Separate Counterparts..................................32
Section 10.07. Successors and Assigns.................................32
Section 10.08. No Petition............................................32
Section 10.09. No Recourse............................................33
Section 10.10. Headings...............................................33
Section 10.11. GOVERNING LAW..........................................33
Section 10.12. Integration............................................33
Section 10.13. Rights of Credit Enhancer to Exercise
Rights of Certificateholders...........................33
Signatures...................................................................35
EXHIBITS
Exhibit A - Form of Certificate.............................................A-1
Exhibit B - Certificate of Trust............................................B-1
Exhibit C - Form of 144A Investment Representation..........................C-1
Exhibit D - Form of Investor Representation Letter..........................D-1
Exhibit E - Form of Transferor Representation Letter........................E-1
Exhibit F - Form of Certificate of Non-Foreign Status.......................F-1
Exhibit G - Form of ERISA Representation Letter.............................G-1
Exhibit H - Form of Representation Letter...................................H-1
This trust agreement, dated as of September 23, 1999 (as amended from
time to time, the "Trust Agreement"), is between Bear Stearns Asset Backed
Securities, Inc., a Delaware corporation, as depositor (the "Depositor"), and
Wilmington Trust Company, a Delaware banking corporation, as owner trustee
(the "Owner Trustee").
WITNESSETH:
WHEREAS, the Depositor and the Owner Trustee desire to form a
Delaware business trust;
NOW, THEREFORE, In consideration of the mutual agreements herein
contained, the Depositor and the Owner Trustee agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Trust Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in Appendix A to the indenture dated as of
September 1, 1999 (the "Indenture"), between GMACM Loan Trust 1999-HLTV1, as
Issuer, and Norwest Bank Minnesota, National Association, as Indenture
Trustee.
All other capitalized terms used herein shall have the meanings
specified herein.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Trust Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Trust Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Trust Agreement or in any such certificate or other document,
and accounting terms partly defined in this Trust Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Trust Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Trust Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Trust Agreement shall refer to this Trust Agreement
as a whole and not to any particular provision of this Trust Agreement;
Section and Exhibit references contained in this Trust Agreement are
references to Sections and Exhibits in or to this Trust Agreement unless
otherwise specified; the term "including" shall mean "including without
limitation"; "or" shall include "and/or"; and the term "proceeds" shall have
the meaning ascribed thereto in the UCC.
(d) The definitions contained in this Trust Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
Organization
Section 2.01. Name. The trust created hereby shall be known as "GMACM
Loan Trust 1999-HLTV1," in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the
Certificateholders and the Depositor.
Section 2.03. Purposes and Powers. The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Trust Agreement and to sell the Notes
and the Certificates;
(ii) to purchase the Home Equity Loans and to pay the
organizational, start-up and transactional expenses of the Trust;
(iii) to assign, grant, transfer, pledge and convey the Home
Equity Loans pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to Section 5.01 any
portion of the Home Equity Loans released from the Lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith,
including, without limitation, to accept additional contributions of
equity that are not subject to the Lien of the Indenture; and
(vi) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Trust Estate and the making of distributions to
the Securityholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Trust
Agreement or the other Basic Documents while any Note is outstanding without
the consent of the Certificateholders of Certificates evidencing a majority of
the aggregate Certificate Balance and the Indenture Trustee.
Section 2.04. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
Section 2.05. Initial Capital Contribution of Trust Estate. In
consideration of the delivery by the Owner Trustee, on behalf of the Trust, of
the Securities to the Depositor or its designee, upon the order of the
Depositor, the Depositor, as of the Closing Date and concurrently with the
execution and delivery hereof, does hereby transfer, assign, set over and
otherwise convey to the Trust, without recourse, but subject to the other
terms and provisions of this Agreement, all of the right, title and interest
of the Depositor in and to the Trust Estate. The foregoing transfer,
assignment, set over and conveyance does not, and is not intended to, result
in a creation or an assumption by the Trust of any obligation of the Depositor
or any other Person in connection with the Trust Estate or under any agreement
or instrument relating thereto, except as specifically set forth herein.
The Owner Trustee, on behalf of the Trust, acknowledges the
conveyance to the Trust by the Depositor, as of the Closing Date, of the Trust
Estate, including all right, title and interest of the Depositor in and to the
Trust Estate. Concurrently with such conveyance and in exchange therefor, the
Trust has pledged the Trust Estate to the Indenture Trustee and has executed
the Certificates and the Notes and caused them to be duly authenticated and
delivered.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares
that it shall hold the Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents. It is the
intention of the parties hereto that the Trust constitute a business trust
under the Business Trust Statute and that this Trust Agreement constitute the
governing instrument of such business trust. Effective as of the date hereof,
the Owner Trustee shall have all rights, powers and duties set forth herein
and in the Business Trust Statute with respect to accomplishing the purposes
of the Trust.
Section 2.07. Title to Trust Property. Legal title to the Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust Estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
Section 2.08. Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of Delaware
or the State of New York. The Trust shall not have any employees in any state
other than Delaware; provided, however, that nothing herein shall restrict or
prohibit the Owner Trustee from having employees within or without the State
of Delaware or taking actions outside the State of Delaware in order to comply
with Section 2.03. Payments will be received by the Trust only in Delaware or
Minnesota, and payments will be made by the Trust only from Delaware or
Minnesota. The only office of the Trust will be at the Corporate Trust Office
of the Owner Trustee in Delaware.
Section 2.09. Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is at present conducted.
(b) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its property
or the conduct of its business shall require such qualifications and in which
the failure to so qualify would have a material adverse effect on the
business, properties, assets or condition (financial or otherwise) of the
Depositor and the ability of the Depositor to perform under this Trust
Agreement.
(c) The Depositor has the power and authority to execute and deliver
this Trust Agreement and to carry out its terms; the Depositor has full power
and authority to sell and assign the property to be sold and assigned to and
deposited with the Trust as part of the Trust and the Depositor has duly
authorized such sale and assignment and deposit to the Trust by all necessary
corporate action; and the execution, delivery and performance of this Trust
Agreement have been duly authorized by the Depositor by all necessary
corporate action.
(d) The consummation of the transactions contemplated by this Trust
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Depositor, or any indenture, agreement or other
instrument to which the Depositor is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule or regulation applicable to
the Depositor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
Section 2.10. Payment of Trust Fees. The Owner Trustee shall pay the
Trust's fees and expenses incurred with respect to the performance of the
Trust's duties under the Indenture.
ARTICLE III
Conveyance of the Home Equity Loans; Certificates
Section 3.01. Conveyance of the Home Equity Loans. The Depositor,
concurrently with the execution and delivery hereof, does hereby transfer,
convey and assign to the Trust, on behalf of the Securityholders and the
Credit Enhancer, without recourse, all its right, title and interest in and to
the Initial Home Equity Loans, including but not limited to any rights of the
Depositor under the Purchase Agreement. The Depositor shall also provide the
Indenture Trustee with the Policy.
The parties hereto intend that, for non-tax purposes, the transaction
set forth herein be a sale by the Depositor to the Trust of all of its right,
title and interest in and to the Initial Home Equity Loans. In the event that,
for non-tax purposes, the transaction set forth herein is not deemed to be a
sale, the Depositor hereby grants to the Trust a security interest in all of
its right, title and interest in, to and under the Initial Home Equity Loans,
all distributions thereon and all proceeds thereof; and this Trust Agreement
shall constitute a security agreement under applicable law.
Section 3.02. Initial Ownership. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.05 and until the
conveyance of the Initial Home Equity Loans pursuant to Section 3.01 and the
issuance of the Certificates, the Seller shall be the sole Certificateholder.
Section 3.03. Issuance of Certificates. The Certificates shall be
issued in minimum denominations of a Percentage Interest of 10.0000% and
integral multiples of 0.0001% in excess thereof; provided, however, that
Certificates may be issued in minimum denominations of less than 10.0000% in
accordance with the provisions of Section 3.12.
The Certificates shall be executed on behalf of the Trust by manual
or facsimile signature of an authorized officer of the Owner Trustee and
authenticated in the manner provided in Section 3.04. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefit of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be
so authorized prior to the authentication and delivery of such Certificates or
did not hold such offices at the date of authentication and delivery of such
Certificates. A Person shall become a Certificateholder and shall be entitled
to the rights and subject to the obligations of a Certificateholder hereunder
upon such Person's acceptance of a Certificate duly registered in such
Person's name, pursuant to Section 3.05.
A transferee of a Certificate shall become a Certificateholder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to and upon satisfaction of
the conditions set forth in Section 3.05.
Section 3.04. Authentication of Certificates. Concurrently with the
acquisition of the Initial Home Equity Loans by the Trust, the Owner Trustee
or the Certificate Paying Agent shall cause the Certificates in an initial
Percentage Interest of 100.00% to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Seller, signed
by its chairman of the board, its president or any vice president, without
further corporate action by the Seller, in authorized denominations. No
Certificate shall entitle the Certificateholder thereof to any benefit under
this Trust Agreement or be valid for any purpose unless there shall appear on
such Certificate a certificate of authentication substantially in the form set
forth in Exhibit A hereto, executed by the Owner Trustee or the Certificate
Paying Agent, by manual signature, and such authentication shall constitute
conclusive evidence that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
Section 3.05. Registration of and Limitations on Transfer and
Exchange of Certificates. The Certificate Registrar shall keep or cause to be
kept, at the office or agency maintained pursuant to Section 3.09, a
Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein
provided. The Indenture Trustee shall be the initial Certificate Registrar. If
the Certificate Registrar resigns or is removed, the Owner Trustee shall
appoint a successor Certificate Registrar.
Subject to satisfaction of the conditions set forth below, upon
surrender for registration of transfer of any Certificate at the office or
agency maintained pursuant to Section 3.09, the Owner Trustee shall execute,
authenticate and deliver (or shall cause the Certificate Registrar as its
authenticating agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the option
of a Certificateholder, Certificates may be exchanged for other Certificates
of authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.09.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Certificate Registrar duly executed by the
Certificateholder or such Certificateholder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer or exchange
shall be cancelled and subsequently disposed of by the Certificate Registrar
in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
Except as described below, each Certificateholder shall establish its
non-foreign status by submitting to the Certificate Paying Agent an IRS Form
W-9 and the Certificate of Non-Foreign Status set forth in Exhibit F hereto.
A Certificate may be transferred to a Certificateholder unable to
establish its non-foreign status as described in the preceding paragraph only
if such Certificateholder provides an Opinion of Counsel to the Depositor and
the Certificate Registrar, which Opinion of Counsel shall not be an expense of
the Trust, the Owner Trustee, the Certificate Registrar or the Depositor,
satisfactory to the Depositor and the Credit Enhancer, that such transfer (1)
will not affect the tax status of the Owner Trust and (2) will not adversely
affect the interests of any Securityholder or the Credit Enhancer, including,
without limitation, as a result of the imposition of any United States federal
withholding taxes on the Trust (except to the extent that such withholding
taxes would be payable solely from amounts otherwise distributable to the
Certificate of the prospective transferee). If such transfer occurs and such
foreign Certificateholder becomes subject to such United States federal
withholding taxes, any such taxes will be withheld by the Indenture Trustee at
the direction of the Tax Matters Partner. Each Certificateholder unable to
establish its non-foreign status shall submit to the Certificate Paying Agent
a copy of its Form W-8 and shall resubmit such Form W-8 every three years.
No transfer, sale, pledge or other disposition of a Certificate shall
be made unless such transfer, sale, pledge or other disposition is exempt from
the registration requirements of the Securities Act and any applicable state
securities laws or is made in accordance with the Securities Act and such
state laws. In the event of any such transfer, the Certificate Registrar or
the Depositor shall prior to such transfer require the transferee to execute
(A) either (i) (a) an investment letter in substantially the form attached
hereto as Exhibit C (or in such form and substance reasonably satisfactory to
the Certificate Registrar and the Depositor) which investment letters shall
not be an expense of the Trust, the Owner Trustee, the Certificate Registrar,
the Servicer or the Depositor and which investment letter states that, among
other things, such transferee (a) is a "qualified institutional buyer" as
defined under Rule 144A, acting for its own account or the accounts of other
"qualified institutional buyers" as defined under Rule 144A, and (b) is aware
that the proposed transferor intends to rely on the exemption from
registration requirements under the Securities Act, provided by Rule 144A or
(ii) (a) a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Certificate Registrar and the Depositor that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the Securities Act and such state laws or is being
made pursuant to the Securities Act and such state laws, which Opinion of
Counsel shall not be an expense of the Trust, the Owner Trustee, the
Certificate Registrar, the Servicer or the Depositor and (b) the transferee
executes a representation letter, substantially in the form of Exhibit D
hereto, and the transferor executes a representation letter, substantially in
the form of Exhibit E hereto, each acceptable to and in form and substance
satisfactory to the Certificate Registrar and the Depositor certifying the
facts surrounding such transfer, which representation letters shall not be an
expense of the Trust, the Owner Trustee, the Certificate Registrar, the
Servicer or the Depositor and (B) the Certificate of Non-Foreign Status (in
substantially the form attached hereto as Exhibit F) acceptable to and in form
and substance reasonably satisfactory to the Certificate Registrar and the
Depositor, which certificate shall not be an expense of the Trust, the Owner
Trustee, the Certificate Registrar or the Depositor. If such Certificateholder
is unable to provide a Certificate of Non-Foreign Status, such
Certificateholder must provide an Opinion of Counsel as described in the
preceding paragraph. The Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trust, the Owner Trustee, the
Certificate Registrar, the Servicer and the Depositor against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
No transfer of Certificates or any interest therein shall be made to
any employee benefit plan or certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and bank
collective investment funds and insurance company general or separate accounts
in which such plans, accounts or arrangements are invested, that are subject
to ERISA or Section 4975 of the Code (collectively, a "Plan"), any Person
acting, directly or indirectly, on behalf of any such Plan or any Person
acquiring such Certificates with "plan assets" of a Plan within the meaning of
the Department of Labor regulation promulgated at 29 C.F.R. ss.2510.3-101
("Plan Assets") unless the Depositor, the Owner Trustee, the Certificate
Registrar and the Servicer are provided with an Opinion of Counsel that
establishes to the satisfaction of the Depositor, the Owner Trustee, the
Certificate Registrar and the Servicer that the purchase of Certificates is
permissible under applicable law, will not constitute or result in any
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the Depositor, the Owner Trustee, the Certificate Registrar or the
Servicer to any obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code) in addition to those undertaken in
this Agreement, which Opinion of Counsel shall not be an expense of the
Depositor, the Owner Trustee, the Certificate Registrar or the Servicer. In
lieu of such Opinion of Counsel, a Plan, any Person acting, directly or
indirectly, on behalf of any such Plan or any Person acquiring such
Certificates with Plan Assets of a Plan may provide a certification in the
form of Exhibit G to this Agreement, which the Depositor, the Owner Trustee,
the Certificate Registrar and the Servicer may rely upon without further
inquiry or investigation. Neither an Opinion of Counsel nor a certification
will be required in connection with the initial transfer of any such
Certificate by the Depositor to an Affiliate of the Depositor (in which case,
the Depositor or any such Affiliate shall be deemed to have represented that
such Affiliate is not a Plan or a Person investing Plan Assets of any Plan)
and the Owner Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Owner Trustee, shall be a
written representation) from the Depositor of the status of such transferee as
an Affiliate of the Depositor.
In addition, no transfer of a Certificate shall be permitted, and no
such transfer shall be registered by the Certificate Registrar or be effective
hereunder, unless evidenced by an Opinion of Counsel that establishes that
such transfer or the registration of such transfer would not cause the Trust
to be classified as a publicly traded partnership, by having more than 100
Certificateholders at any time during the taxable year of the Trust, an
association taxable as a corporation, a corporation or a taxable mortgage pool
for federal and relevant state income tax purposes, which Opinion of Counsel
shall not be an expense of the Certificate Registrar and shall be an expense
of the proposed transferee. No Opinion of Counsel will be required if such
transfer is made to a nominee of an existing beneficial holder of a
Certificate.
In addition, no transfer, sale, assignment, pledge or other
disposition of a Certificate shall be made unless the proposed transferee
executes a representation letter substantially in the form of Exhibit D
hereto, or substantially in the form of Exhibit H hereto, that (1) the
transferee is acquiring such Certificate for its own behalf and is not acting
as agent or custodian for any other Person or entity in connection with such
acquisition and (2) if the transferee is a partnership, grantor trust or S
corporation for federal income tax purposes, the Certificates acquired are not
more than 50% of the assets of the partnership, grantor trust or S
corporation.
Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee
such security or indemnity as may be required by them to save each of them and
the Issuer from harm, then in the absence of notice to the Certificate
Registrar or the Owner Trustee that such Certificate has been acquired by a
bona fide purchaser, the Owner Trustee shall execute on behalf of the Trust
and the Owner Trustee or the Certificate Paying Agent, as the Trust's
authenticating agent, shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and denomination. In connection with the issuance of
any new Certificate under this Section 3.06, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section 3.06 shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be
found at any time.
Section 3.07. Persons Deemed Certificateholders. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee,
the Certificate Registrar or any Certificate Paying Agent may treat the Person
in whose name any Certificate is registered in the Certificate Register as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 5.02 and for all other purposes whatsoever, and none of the Trust,
the Owner Trustee, the Certificate Registrar or any Paying Agent shall be
bound by any notice to the contrary.
Section 3.08. Access to List of Certificateholders' Names and
Addresses. The Certificate Registrar shall furnish or cause to be furnished to
the Depositor or the Owner Trustee, within 15 days after receipt by the
Certificate Registrar of a written request therefor from the Depositor or the
Owner Trustee, a list, in such form as the Depositor or the Owner Trustee, as
the case may be, may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. Each Certificateholder,
by receiving and holding a Certificate, shall be deemed to have agreed not to
hold any of the Trust, the Depositor, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
Section 3.09. Maintenance of Office or Agency. The Owner Trustee, on
behalf of the Trust, shall maintain in The City of New York an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Certificates and the Basic Documents may
be served. The Owner Trustee initially designates the Corporate Trust Office
of the Indenture Trustee (or such other office as the Indenture Trustee may
specify to the Owner Trustee) as its office for such purposes. The Owner
Trustee shall give prompt written notice to the Depositor and the
Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
Section 3.10. Certificate Paying Agent.
(a) The Certificate Paying Agent shall make distributions to
Certificateholders from the Certificate Distribution Account on behalf of the
Trust in accordance with the provisions of the Certificates and Section 5.01
hereof from payments remitted to the Certificate Paying Agent by the Indenture
Trustee pursuant to Section 3.05 of the Indenture. The Trust hereby appoints
the Indenture Trustee as Certificate Paying Agent, and the Indenture Trustee
hereby accepts such appointment and further agrees that it will be bound by
the provisions of this Trust Agreement relating to the Certificate Paying
Agent, and shall:
(i) hold all sums held by it for the payment of amounts due
with respect to the Certificates 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;
(ii) give the Owner Trustee notice of any default by the
Trust of which it has actual knowledge in the making of any payment
required to be made with respect to the Certificates;
(iii) at any time during the continuance of any such
default, upon the written request of the Owner Trustee, forthwith pay
to the Owner Trustee on behalf of the Trust all sums so held in Trust
by such Certificate Paying Agent;
(iv) immediately resign as Certificate Paying Agent and
forthwith pay to the Owner Trustee on behalf of the Trust all sums
held by it in trust for the payment of Certificates if at any time it
ceases to meet the standards required to be met by the Certificate
Paying Agent at the time of its appointment;
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Certificates of
any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith; and
(vi) deliver to the Owner Trustee a copy of the report to
Certificateholders prepared with respect to each Payment Date by the
Servicer pursuant to Section 4.01 of the Servicing Agreement.
(b) The Trust may revoke such power and remove the Certificate Paying
Agent if the Owner Trustee determines in its sole discretion that the
Certificate Paying Agent shall have failed to perform its obligations under
this Trust Agreement in any material respect. The Indenture Trustee shall be
permitted to resign as Certificate Paying Agent upon 30 days' written notice
to the Owner Trustee; provided the Indenture Trustee is also resigning as
Paying Agent under the Indenture at such time. In the event that the Indenture
Trustee shall no longer be the Certificate Paying Agent under this Trust
Agreement and Paying Agent under the Indenture, the Owner Trustee shall
appoint a successor to act as Certificate Paying Agent (which shall be a bank
or trust company) and which shall also be the successor Paying Agent under the
Indenture. The Owner Trustee shall cause such successor Certificate Paying
Agent or any additional Certificate Paying Agent appointed by the Owner
Trustee to execute and deliver to the Owner Trustee an instrument to the
effect set forth in this Section 3.10 as it relates to the Certificate Paying
Agent. The Certificate Paying Agent shall return all unclaimed funds to the
Trust and upon removal of a Certificate Paying Agent such Certificate Paying
Agent shall also return all funds in its possession to the Trust. The
provisions of Sections 6.01, 6.03, 6.04 and 7.01 shall apply to the
Certificate Paying Agent to the extent applicable. Any reference in this
Agreement to the Certificate Paying Agent shall include any co-paying agent
unless the context requires otherwise.
(c) The Certificate Paying Agent shall establish and maintain with
itself the Certificate Distribution Account in which the Certificate Paying
Agent shall deposit, on the same day as it is received from the Indenture
Trustee, each remittance received by the Certificate Paying Agent with respect
to payments made pursuant to the Indenture. The Certificate Paying Agent shall
make all distributions on the Certificates as provided in Section 3.05 of the
Indenture from moneys on deposit in the Certificate Distribution Account.
Section 3.11. Cooperation. The Owner Trustee shall cooperate in all
respects with any reasonable request by the Credit Enhancer for action to
preserve or enforce the Credit Enhancer's rights or interest under this Trust
Agreement or the Insurance Agreement, consistent with this Trust Agreement and
without limiting the rights of the Certificateholders as otherwise expressly
set forth in this Trust Agreement.
ARTICLE IV
Authority and Duties of Owner Trustee
Section 4.01. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to
be a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party and
any amendment or other agreement or instrument described herein, in each case,
in such form as the Owner Trustee shall approve, as evidenced conclusively by
the Owner Trustee's execution thereof. In addition to the foregoing, the Owner
Trustee is obligated to take all actions required of the Trust pursuant to the
Basic Documents.
Section 4.02. General Duties. The Owner Trustee shall be responsible
to administer the Trust pursuant to the terms of this Trust Agreement and the
other Basic Documents to which the Trust is a party and in the interest of the
Certificateholders, subject to the Basic Documents and in accordance with the
provisions of this Trust Agreement.
Section 4.03. Action upon Instruction.
(a) Subject to this Article IV and in accordance with the terms of
the Basic Documents, the Certificateholders may by written instruction direct
the Owner Trustee in the management of the Trust. Such direction may be
exercised at any time by written instruction of the Certificateholders
pursuant to this Article IV.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be
required to take any action hereunder or under any Basic Document if the Owner
Trustee shall have reasonably determined, or shall have been advised by
counsel, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any other Basic
Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this Trust
Agreement or under any other Basic Document, or in the event that the Owner
Trustee is unsure as to the application of any provision of this Trust
Agreement or any other Basic Document or any such provision is ambiguous as to
its application, or is, or appears to be, in conflict with any other
applicable provision, or in the event that this Trust Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the
Certificateholders (with a copy to the Credit Enhancer) requesting instruction
as to the course of action to be adopted, and to the extent the Owner Trustee
acts in good faith in accordance with any written instructions received from
Certificateholders of Certificates representing a majority of the aggregate
Certificate Balance, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agreement or the other
Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and the Owner Trustee shall have no liability to any
Person for such action or inaction.
Section 4.04. No Duties Except as Specified under Specified Documents
or in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated
hereby to which the Owner Trustee is a party, except as expressly provided (i)
in accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Trust Agreement, (ii) in accordance with the
Basic Documents and (iii) in accordance with any document or instruction
delivered to the Owner Trustee pursuant to Section 4.03; and no implied duties
or obligations shall be read into this Trust Agreement or any other Basic
Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any
public office at any time or to otherwise perfect or maintain the perfection
of any security interest or lien granted to it hereunder or to prepare or file
any filing with the Commission for the Trust or to record this Trust Agreement
or any other Basic Document. The Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Trust Estate that result
from actions by, or claims against, the Owner Trustee that are not related to
the ownership or the administration of the Trust Estate.
Section 4.05. Restrictions.
(a) The Owner Trustee shall not take any action (i) that is
inconsistent with the purposes of the Trust set forth in Section 2.03 or (ii)
that, to the actual knowledge of the Owner Trustee, would cause the Trust to
be treated as an association (or a publicly-traded partnership) taxable as a
corporation or a taxable mortgage pool for federal income tax purposes. The
Certificateholders shall not direct the Owner Trustee to take action that
would violate the provisions of this Section 4.05.
(b) The Owner Trustee shall not convey or transfer any of the Trust's
properties or assets, including those included in the Trust Estate, to any
person unless (i) it shall have received an Opinion of Counsel to the effect
that such transaction will not have any material adverse tax consequence to
the Trust or any Certificateholder and (ii) such conveyance or transfer shall
not violate the provisions of Section 3.16(b) of the Indenture.
Section 4.06. Prior Notice to Certificateholders and the Credit
Enhancer with Respect to Certain Matters. With respect to the following
matters, the Owner Trustee shall not take action unless, at least 30 days
before the taking of such action, the Owner Trustee shall have notified the
Certificateholders and the Credit Enhancer in writing of the proposed action
and the Credit Enhancer and the Certificateholders of Certificates
representing a majority of the aggregate Certificate Balance shall not have
notified the Owner Trustee in writing prior to the 30th day after such notice
is given that such Certificateholders have withheld consent or provided
alternative direction:
(a) the initiation of any Proceeding by the Trust (except Proceedings
brought in connection with the collection of cash distributions due and owing
under the Home Equity Loans) and the compromise of any Proceeding brought by
or against the Trust (except with respect to the aforementioned Proceedings
for collection of cash distributions due and owing under the Home Equity
Loans);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business
Trust Statute);
(c) the amendment of any of the Basic Documents in circumstances
where the consent of any Noteholder is required;
(d) the amendment of any of the Basic Documents in circumstances
where the consent of any Noteholder is not required and such amendment
materially and adversely affects the interest of the Certificateholders or the
Credit Enhancer;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Trust
Agreement of a successor Certificate Registrar or Certificate Paying Agent or
the consent to the assignment by the Note Registrar, Paying Agent, Indenture
Trustee, Certificate Registrar or Certificate Paying Agent of its obligations
under the Indenture or this Trust Agreement, as applicable.
Section 4.07. Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the written
direction of Certificateholders of Certificates evidencing not less than a
majority of the aggregate Certificate Balance, and with the consent of the
Credit Enhancer, to (a) remove the Servicer under the Servicing Agreement
pursuant to Section 7.01 thereof or (b) except as expressly provided in the
Basic Documents, sell the Home Equity Loans after the termination of the
Indenture. The Owner Trustee shall take the actions referred to in the
preceding sentence only upon written instructions signed by Certificateholders
evidencing not less than a majority of the aggregate Certificate Balance and
with the consent of the Credit Enhancer.
Section 4.08. Action by Certificateholders with Respect to
Bankruptcy. The Owner Trustee shall not have the power to commence a voluntary
Proceeding in bankruptcy relating to the Trust without the unanimous prior
approval of all Certificateholders, and with the consent of the Credit
Enhancer, and the delivery to the Owner Trustee by each such Certificateholder
of a certificate certifying that such Certificateholder reasonably believes
that the Trust is insolvent.
Section 4.09. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or to refrain
from taking any action if such action or inaction would be contrary to any
obligation of the Trust or the Owner Trustee under this Trust Agreement or any
of the other Basic Documents or would be contrary to Section 2.03, nor shall
the Owner Trustee be obligated to follow any such direction, if given.
Section 4.10. Majority Control. Except as expressly provided herein,
any action that may be taken by the Certificateholders under this Trust
Agreement may be taken by the Certificateholders of Certificates evidencing
not less than a majority of the aggregate Certificate Balance. Except as
expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Trust Agreement shall be effective if signed by the
Certificateholders of Certificates evidencing not less than a majority of the
aggregate Certificate Balance at the time of the delivery of such notice.
Section 4.11. Doing Business in Other Jurisdictions. Notwithstanding
anything contained herein to the contrary, neither Wilmington Trust Company
nor the Owner Trustee shall be required to take any action in any jurisdiction
other than in the State of Delaware if the taking of such action will, even
after the appointment of a co-trustee or separate trustee in accordance with
Section 9.05 hereof, (i) require the consent or approval or authorization or
order of or the giving of notice to, or the registration with or the taking of
any other action in respect of, any state or other governmental authority or
agency of any jurisdiction other than the State of Delaware; (ii) result in
any fee, tax or other governmental charge under the laws of the State of
Delaware becoming payable by Wilmington Trust Company, or (iii) subject
Wilmington Trust Company to personal jurisdiction in any jurisdiction other
than the State of Delaware for causes of action arising from acts unrelated to
the consummation of the transactions by Wilmington Trust Company or the Owner
Trustee, as the case may be, contemplated hereby.
ARTICLE V
Application of Trust Funds
Section 5.01. Distributions.
(a) On each Payment Date, the Certificate Paying Agent shall
distribute to the Certificateholders all funds on deposit in the Certificate
Distribution Account and available therefor as provided in Section 3.05 of the
Indenture. All distributions made pursuant to this Section shall be
distributed to the Certificateholders pro rata based on the Percentage
Interests thereof.
(b) In the event that any withholding tax is imposed on the
distributions (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to such Certificateholder in
accordance with this Section 5.01. The Certificate Paying Agent is hereby
authorized and directed to retain or cause to be retained from amounts
otherwise distributable to the Certificateholders sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from contesting any such tax in
appropriate Proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such Proceedings). The amount of any withholding
tax imposed with respect to a Certificateholder shall be treated as cash
distributed to such Certificateholder at the time it is withheld by the
Certificate Paying Agent and remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Certificateholder), the
Certificate Paying Agent may in its sole discretion withhold such amounts in
accordance with this paragraph (b).
(c) Distributions to Certificateholders shall be subordinated to the
creditors of the Trust, including the Noteholders.
Section 5.02. Method of Payment. Subject to Section 8.01(c),
distributions required to be made to Certificateholders on any Payment Date as
provided in Section 5.01 shall be made to each Certificateholder of record on
the preceding Record Date by wire transfer, in immediately available funds, to
the account of each Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
to the Certificate Registrar appropriate written instructions at least five
Business Days prior to such Payment Date or, if not, by check or money order
mailed to such Certificateholder at the address of such Certificateholder
appearing in the Certificate Register.
Section 5.03. Signature on Returns. The Servicer, as the Tax Matters
Partner, shall sign on behalf of the Trust the tax returns of the Trust.
Section 5.04. Statements to Certificateholders. On each Payment Date,
the Certificate Paying Agent shall make available or, upon request, send to
each Certificateholder the statement or statements provided to the Owner
Trustee and the Certificate Paying Agent by the Servicer pursuant to Section
4.01 of the Servicing Agreement with respect to such Payment Date.
Section 5.05. Tax Reporting; Tax Elections. The Servicer hereby
undertakes to (i) prepare and deliver to each member of the Trust, within
ninety (90) days after the expiration of each Fiscal Year, all information
returns required by the Code and information with respect to the Trust
necessary for the preparation of the members' federal income tax returns (ii)
prepare all income tax returns of the Trust in all jurisdictions where in its
judgment such filings are required or where it is directed by the Trust to
file such income tax returns and (iii) deliver such returns to the Owner
Trustee not less than one week prior to their due date in order for such
returns to be timely filed. Pursuant to Treasury Regulation ss.
301.7701-2(c)(2), the Servicer does not intend to file any income tax returns
of the Trust as long as the Trust has a single owner of the Certificates.
The Servicer shall (i) act on behalf of the Trust in relation to any
tax matter or controversy involving the Trust and (ii) represent the Trust in
any Proceeding relating to tax examination or audit by any governmental taxing
authority with respect thereto. The legal expenses, including without
limitation attorneys' and accountants' fees, and costs of any such proceeding
and any liability resulting therefrom shall be expenses of the Trust and the
Servicer shall be entitled to reimbursement therefor out of amounts
attributable to the Home Equity Loans on deposit in the Custodial Account as
provided by Section 3.03 of the Servicing Agreement unless such legal expenses
and costs are incurred by reason of the Servicer's willful misfeasance, bad
faith or gross negligence.
ARTICLE VI
Concerning the Owner Trustee
Section 6.01. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts, but only upon the terms of this Trust Agreement.
The Owner Trustee and the Certificate Paying Agent also agree to disburse all
moneys actually received by it constituting part of the Trust Estate upon the
terms of this Trust Agreement and the other Basic Documents. The Owner Trustee
shall not be answerable or accountable hereunder or under any Basic Document
under any circumstances, except (i) for its own willful misconduct, gross
negligence or bad faith or negligent failure to act or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 6.03
expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) no provision of this Trust Agreement or any other Basic Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights, duties or powers
hereunder or under any other Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(b) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(c) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Trust Agreement or for the due execution
hereof by the Depositor for the form, character, genuineness, sufficiency,
value or validity of any of the Trust Estate, or for or in respect of the
validity or sufficiency of the Basic Documents, the Notes, the Certificates,
other than the certificate of authentication on the Certificates, if executed
by the Owner Trustee and the Owner Trustee shall in no event assume or incur
any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein or in the other
Basic Documents;
(d) the execution, delivery, authentication and performance by the
Owner Trustee of this Trust Agreement will not require the authorization,
consent or approval of, the giving of notice to, the filing or registration
with, or the taking of any other action with respect to, any governmental
authority or agency;
(e) the Owner Trustee shall not be liable for the default or
misconduct of the Depositor, Indenture Trustee or the Servicer under any of
the Basic Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under this
Trust Agreement or the other Basic Documents that are required to be performed
by the Indenture Trustee under the Indenture or the Seller under the Purchase
Agreement; and
(f) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it or duties imposed by this Trust Agreement,
or to institute, conduct or defend any litigation under this Trust Agreement
or otherwise or in relation to this Trust Agreement or any other Basic
Document, at the request, order or direction of any of the Certificateholders,
unless such Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the
Owner Trustee to perform any discretionary act enumerated in this Trust
Agreement or in any other Basic Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its gross negligence,
bad faith or willful misconduct in the performance of any such act.
Section 6.02. Furnishing of Documents. The Owner Trustee shall
furnish to the Securityholders promptly upon receipt of a written reasonable
request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments
furnished to the Trust under the Basic Documents.
Section 6.03. Representations and Warranties. The Owner Trustee
hereby represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Trust Agreement;
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Trust Agreement, and this Trust Agreement
will be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Trust Agreement on its behalf;
(c) Neither the execution nor the delivery by it of this Trust
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will
contravene any federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any judgment or
order binding on it, or constitute any default under its charter documents or
bylaws or any indenture, mortgage, contract, agreement or instrument to which
it is a party or by which any of its properties may be bound;
(d) This Trust Agreement, assuming due authorization, execution and
delivery by the Owner Trustee and the Depositor, constitutes a valid, legal
and binding obligation of the Owner Trustee, enforceable against it in
accordance with the terms hereof subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally and to general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at law;
(e) The Owner Trustee 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, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Owner Trustee or its properties or might have consequences
that would materially adversely affect its performance hereunder; and
(f) No litigation is pending or, to the best of the Owner Trustee's
knowledge, threatened against the Owner Trustee which would prohibit its
entering into this Trust Agreement or performing its obligations under this
Trust Agreement.
Section 6.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it
to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of
determination of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized
officers of the relevant party, as to such fact or matter and such certificate
shall constitute full protection to the Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the Trust hereunder and in
the performance of its duties and obligations under this Trust Agreement or
the other Basic Documents, the Owner Trustee (i) may act directly or through
its agents, attorneys, custodians or nominees (including persons acting under
a power of attorney) pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be liable for the conduct or misconduct of such
agents, attorneys, custodians or nominees (including persons acting under a
power of attorney) if such persons have been selected by the Owner Trustee
with reasonable care, and (ii) may consult with counsel, accountants and other
skilled persons to be selected with reasonable care and employed by it at the
expense of the Trust. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such Persons and not
contrary to this Trust Agreement or any other Basic Document.
Section 6.05. Not Acting in Individual Capacity. Except as provided
in this Article VI, in accepting the trusts hereby created Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Trust Agreement or any other Basic
Document shall look only to the Trust Estate for payment or satisfaction
thereof.
Section 6.06. Owner Trustee Not Liable for Certificates or Related
Documents. The recitals contained herein and in the Certificates (other than
the signatures of the Owner Trustee on the Certificates) shall be taken as the
statements of the Depositor, and the Owner Trustee assumes no responsibility
for the correctness thereof. The Owner Trustee makes no representations as to
the validity or sufficiency of this Trust Agreement, of any other Basic
Document or of the Certificates (other than the signatures of the Owner
Trustee on the Certificates) or the Notes, or of any Related Documents. The
Owner Trustee shall at no time have any responsibility or liability with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under this Trust Agreement or
the Noteholders under the Indenture, including, the compliance by the
Depositor or the Seller with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation, or any action of the Certificate Paying Agent, the
Certificate Registrar or the Indenture Trustee taken in the name of the Owner
Trustee.
Section 6.07. Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates or Notes and may deal with the Depositor, the Seller,
the Certificate Paying Agent, the Certificate Registrar and the Indenture
Trustee in transactions with the same rights as it would have if it were not
Owner Trustee.
ARTICLE VII
Compensation of Owner Trustee
Section 7.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have
been separately agreed upon before the date hereof in accordance with Section
6.06 of the Servicing Agreement, and the Owner Trustee shall be reimbursed for
its reasonable expenses hereunder and under the other Basic Documents,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner Trustee may
reasonably employ in connection with the exercise and performance of its
rights and its duties hereunder and under the other Basic Documents which
shall be payable by the Servicer pursuant to Section 3.09 of the Servicing
Agreement.
Section 7.02. Indemnification. The Certificateholder of the majority
of the Percentage Interest of the Certificates shall indemnify, defend and
hold harmless the Owner Trustee and its successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and
suits, and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by,
or asserted against the Owner Trustee or any Indemnified Party in any way
relating to or arising out of this Trust Agreement, the other Basic Documents,
the Trust Estate, the administration of the Trust Estate or the action or
inaction of the Owner Trustee hereunder; provided, that:
(a) the Certificateholder of the majority of the Percentage Interest
of the Certificates shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from the
Owner Trustee's willful misconduct, negligence or bad faith or as a result of
any inaccuracy of a representation or warranty contained in Section 6.03
expressly made by the Owner Trustee;
(b) with respect to any such claim, the Indemnified Party shall have
given the Certificateholder of the majority of the Percentage Interest of the
Certificates written notice thereof promptly after the Indemnified Party shall
have actual knowledge thereof;
(c) while maintaining control over its own defense, the
Certificateholder of the majority of the Percentage Interest of the
Certificates shall consult with the Indemnified Party in preparing such
defense; and
(d) notwithstanding anything in this Agreement to the contrary, the
Certificateholder of the majority of the Percentage Interest of the
Certificates shall not be liable for settlement of any claim by an Indemnified
Party entered into without the prior consent of the Certificateholder of the
majority of the Percentage Interest of the Certificates, which consent shall
not be unreasonably withheld.
The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Trust Agreement. In the event of any Proceeding for which indemnity may be
sought pursuant to this Section 7.02, the Owner Trustee's choice of legal
counsel, if other than the legal counsel retained by the Owner Trustee in
connection with the execution and delivery of this Trust Agreement, shall be
subject to the approval of the Certificateholder of the majority of the
Percentage Interest of the Certificates, which approval shall not be
unreasonably withheld. In addition, upon written notice to the Owner Trustee
and with the consent of the Owner Trustee, which consent shall not be
unreasonably withheld, the Certificateholder of the majority of the Percentage
Interest of the Certificates shall have the right to assume the defense of any
Proceeding against the Owner Trustee.
ARTICLE VIII
Termination of Trust Agreement
Section 8.01. Termination of Trust Agreement.
(a) This Trust Agreement (other than this Article VIII) and the Trust
shall terminate and be of no further force or effect upon the earliest of (i)
the final distribution of all moneys or other property or proceeds of the
Trust Estate in accordance with the terms of the Indenture and this Agreement,
(ii) the first anniversary of the Final Maturity Date, or (iii) the purchase
by the Servicer of all Home Equity Loans pursuant to Section 8.08(a) of the
Servicing Agreement. The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder shall not (i) operate to terminate this
Trust Agreement or the Trust, (ii) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any Proceeding in
any court for a partition or winding up of all or any part of the Trust or the
Trust Estate or (iii) otherwise affect the rights, obligations and liabilities
of the parties hereto.
(b) Except as provided in Section 8.01(a), neither the Depositor nor
any Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment
Date on which Certificateholders shall surrender their Certificates to the
Certificate Paying Agent for payment of the final distribution thereon and
cancellation thereof, shall be given by the Certificate Paying Agent by letter
to the Certificateholders and the Credit Enhancer mailed within five Business
Days of receipt of notice of such termination from the Owner Trustee, stating
(i) the Payment Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Certificate Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Payment Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the
Certificate Paying Agent therein specified. The Certificate Paying Agent shall
give such notice to the Owner Trustee and the Certificate Registrar at the
time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates, the Certificate Paying Agent shall cause to be
distributed to Certificateholders amounts distributable on such Payment Date
pursuant to Section 5.01.
In the event that all of the Certificateholders shall not have
surrendered their Certificates for cancellation within six months after the
date specified in the above mentioned written notice, the Certificate Paying
Agent shall give a second written notice to the remaining Certificateholders
to surrender their Certificates for cancellation and receive the final
distribution with respect thereto. Subject to applicable laws with respect to
escheat of funds, if within one year following the Payment Date on which final
payment of the Certificates was to have been made pursuant to Section 3.10,
all the Certificates shall not have been surrendered for cancellation, the
Certificate Paying Agent may take appropriate steps, or may appoint an agent
to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets that shall remain subject to this Trust
Agreement. Any funds remaining in the Certificate Distribution Account after
exhaustion of such remedies shall be distributed by the Certificate Paying
Agent to the Certificateholder of the majority of the Percentage Interest of
the Certificates.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810(c) of the Business Trust Statute.
ARTICLE IX
Successor Owner Trustees and Additional Owner Trustees
Section 9.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities; and having (or having a parent that has) long-term debt
obligations with a rating of at least A by Moody's or Standard & Poor's. If
such corporation shall publish reports of condition at least annually pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of this Section 9.01, the Owner Trustee shall resign
immediately in the manner and with the effect specified in Section 9.02.
Section 9.02. Replacement of Owner Trustee. The Owner Trustee may at
any time resign and be discharged from the trusts hereby created by giving 30
days' prior written notice thereof to the Credit Enhancer and the Depositor.
Upon receiving such notice of resignation, the Indenture Trustee shall
promptly appoint a successor Owner Trustee with the consent of the Credit
Enhancer, which consent shall not be unreasonably withheld, by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Owner Trustee and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of competent jurisdiction for
the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 9.01 and shall fail to resign after
written request therefor by the Indenture Trustee, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Indenture Trustee may, and, at the
direction of the Credit Enhancer, shall, remove the Owner Trustee. If the
Indenture Trustee shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Indenture Trustee shall promptly appoint a
successor Owner Trustee acceptable to the Credit Enhancer by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the outgoing Owner Trustee so removed and one copy to the successor Owner
Trustee, and shall pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 9.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee.
Section 9.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 9.02 shall execute, acknowledge and deliver to
the Indenture Trustee and to its predecessor Owner Trustee an instrument
accepting such appointment under this Trust Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective, and such successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Trust Agreement, with like effect as
if originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Trust Agreement; and
the predecessor Owner Trustee shall execute and deliver such instruments and
do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Owner Trustee all such rights, powers,
duties and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section 9.03 unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 9.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section 9.03, the Indenture Trustee shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Indenture Trustee shall fail to mail such notice within 10
days after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Indenture Trustee.
Section 9.04. Merger or Consolidation of Owner Trustee. Any Person
into which the Owner Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such Person shall be eligible pursuant to Section 9.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
Section 9.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Trust Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate may at the time be located, the Owner Trustee shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons to act as co-trustee, jointly with the Owner Trustee, or as
separate trustee or trustees, of all or any part of the Trust Estate, and to
vest in such Person, in such capacity, such title to the Trust or any part
thereof and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Owner Trustee may consider
necessary or desirable. No co-trustee or separate trustee under this Trust
Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 9.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 9.03.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(a) All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by
the Owner 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 Owner 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 Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Estate or
any portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;
(b) No trustee under this Trust Agreement shall be personally liable
by reason of any act or omission of any other trustee under this Trust
Agreement; and
(c) The Owner Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner 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 Trust
Agreement and the conditions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Trust Agreement, specifically including
every provision of this Trust Agreement relating to the conduct of, affecting
the liability of, or affording protection to, the Owner Trustee. Each such
instrument shall be filed with the Owner Trustee.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as 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
Trust 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 Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
ARTICLE X
Miscellaneous
Section 10.01. Amendments.
(a) This Trust Agreement may be amended from time to time by the
parties hereto as specified in this Section 10.01, provided that any such
amendment, except as provided in paragraph (e) below, shall be accompanied by
an Opinion of Counsel addressed to the Owner Trustee to the effect that such
amendment (i) complies with the provisions of this Section and (ii) will not
cause the Trust to be subject to an entity level tax.
(b) If the purpose of any such amendment (as detailed therein) is to
correct any mistake, eliminate any inconsistency, cure any ambiguity or deal
with any matter not covered in this Trust Agreement (i.e., to give effect to
the intent of the parties), it shall not be necessary to obtain the consent of
any Certificateholders, but the Owner Trustee shall be furnished with (i) a
letter from each Rating Agency that the amendment will not result in a Rating
Event, determined without regard to the Policy and (ii) an Opinion of Counsel
to the effect that such action will not adversely affect in any material
respect the interests of any Certificateholder, and the consent of the Credit
Enhancer shall be obtained.
(c) If the purpose of the amendment is to prevent the imposition of
any federal or state taxes at any time that any Security is outstanding (i.e.,
technical in nature), it shall not be necessary to obtain the consent of any
Certificateholder, but the Owner Trustee shall be furnished with an Opinion of
Counsel that such amendment is necessary or helpful to prevent the imposition
of such taxes and is not materially adverse to any Certificateholder and the
consent of the Credit Enhancer shall be obtained.
(d) If the purpose of the amendment is to add or eliminate or change
any provision of the Trust Agreement other than as contemplated in (b) and (c)
above, the amendment shall require (i) the consent of the Credit Enhancer and
an Opinion of Counsel to the effect that such action will not adversely affect
in any material respect the interests of any Certificateholder and (ii) either
(A) a letter from each Rating Agency that such amendment will not cause a
Rating Event, if determined without regard to the Policy or (B) the consent of
Certificateholders of Certificates evidencing a majority of the aggregate
Certificate Balance and the Indenture Trustee; provided, however, that no such
amendment shall reduce in any manner the amount of, or delay the timing of,
payments received that are required to be distributed on any Certificate
without the consent of each Certificateholder affected thereby and the Credit
Enhancer, or reduce the aforesaid percentage of Certificates the
Certificateholders of which are required to consent to any such amendment,
without the consent of the Certificateholders of all such Certificates then
outstanding.
(e) If the purpose of any such amendment is to provide for the
holding of any of the Certificates in book-entry form, the consent of
Certificateholders of all such Certificates then outstanding shall be
required; provided, that the Opinion of Counsel specified in subparagraph (a)
above shall not be required.
(f) If the purpose of any such amendment is to provide for the
issuance of additional Certificates representing an interest in the Trust, it
shall not be necessary to obtain the consent of any Certificateholder, but the
Owner Trustee shall be furnished with (i) an Opinion of Counsel to the effect
that such action will not adversely affect in any material respect the
interests of any Certifiateholders and (B) a letter from each Rating Agency to
the effect that such amendment will not cause a Rating Event, if determined
without regard to the Policy, and the consent of the Credit Enhancer shall be
obtained.
(g) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, the
Credit Enhancer and each of the Rating Agencies. It shall not be necessary for
the consent of Certificateholders or the Indenture Trustee pursuant to this
Section 10.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Trust Agreement or in any
other Basic Document) and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable requirements
as the Owner Trustee may prescribe.
(h) In connection with the execution of any amendment to any
agreement to which the Trust is a party, other than this Trust Agreement, the
Owner Trustee shall be entitled to receive and conclusively rely upon an
Opinion of Counsel to the effect that such amendment is authorized or
permitted by the documents subject to such amendment and that all conditions
precedent in the Basic Documents for the execution and delivery thereof by the
Trust or the Owner Trustee, as the case may be, have been satisfied.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Section 10.02. No Legal Title to Trust Estate. The Certificateholders
shall not have legal title to any part of the Trust Estate. The
Certificateholders shall be entitled to receive distributions with respect to
their undivided beneficial interest therein only in accordance with Articles V
and VIII. No transfer, by operation of law or otherwise, of any right, title
or interest of the Certificateholders to and in their ownership interest in
the Trust Estate shall operate to terminate this Trust Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it
of legal title to any part of the Trust Estate.
Section 10.03. Limitations on Rights of Others. Except for Section
2.07, the provisions of this Trust Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Certificateholders, the Credit Enhancer and,
to the extent expressly provided herein, the Indenture Trustee and the
Noteholders, and nothing in this Trust Agreement (other than Section 2.07),
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Trust Estate or under or in
respect of this Trust Agreement or any covenants, conditions or provisions
contained herein.
Section 10.04. Notices.
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all notices shall be in writing and shall be deemed given upon
receipt: if to the Owner Trustee, addressed to its Corporate Trust Office; if
to the Certificate Paying Agent, addressed to Norwest Bank Minnesota, National
Association, 11000 Broken Land Parkway, Columbia, Maryland 21044, with a copy
to the Indenture Trustee's Corporate Trust Office; if to the Depositor,
addressed to Bear Stearns Asset Backed Securities, Inc., 245 Park Avenue, 4th
Floor, New York, New York 10167, Attention: Jonathan Lieberman; if to the
Credit Enhancer, addressed to Ambac Assurance Corporation, One State Street
Plaza, 19th Floor, New York, New York 10004: Attention: Structured Finance -
Mortgage Backed Securities; if to the Rating Agencies, addressed to Moody's
Investors Service, Inc., 99 Church Street, 4th Floor, New York, New York 10001
and Standard & Poor's, a division of The McGraw-Hill Companies, Inc., 26
Broadway, 15th Floor, New York, New York 10004, Attention: Structured Finance
Department - MBS; or, as to each of the foregoing Persons, at such other
address as shall be designated by such Person in a written notice to each of
the other foregoing Persons.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Trust Agreement to a
Certificateholder shall be conclusively presumed to have been duly given,
whether or not such Certificateholder receives such notice.
(c) A copy of any notice delivered to the Owner Trustee or the Trust
shall also be delivered to the Depositor.
Section 10.05. Severability. Any provision of this Trust Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 10.06. Separate Counterparts. This Trust Agreement may be
executed by the parties hereto in any number of counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 10.07. Successors and Assigns. All representations,
warranties, covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the Credit Enhancer, the Depositor, the
Owner Trustee and its successors and each Certificateholder and its successors
and permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a Certificateholder shall
bind the successors and assigns of such Certificateholder.
Section 10.08. No Petition. The Owner Trustee, by entering into this
Trust Agreement, and each Certificateholder, by accepting a Certificate,
hereby covenant and agree that they will not at any time institute against the
Depositor or the Trust, or join in any institution against the Depositor or
the Trust of, any bankruptcy Proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations to the
Certificates, the Notes, this Trust Agreement or any of the other Basic
Documents.
Section 10.09. No Recourse. Each Certificateholder, by accepting a
Certificate, acknowledges that such Certificateholder's Certificate represents
a beneficial interest in the Trust only and does not represent an interest in
or obligation of the Depositor, the Seller, the Owner Trustee, the Indenture
Trustee or any Affiliate thereof, and that no recourse may be had against such
Persons or their assets, except as may be expressly set forth or contemplated
in the Certificates, this Trust Agreement or the other Basic Documents.
Section 10.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 10.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, 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 10.12. Integration. This Trust Agreement constitutes the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understanding pertaining
thereto.
Section 10.13. Rights of Credit Enhancer to Exercise Rights of
Certificateholders. By accepting its Certificate, each Certificateholder
agrees that unless a Credit Enhancer Default exists, the Credit Enhancer shall
have the right to exercise all rights of the Certificateholders under this
Agreement without any further consent of the Certificateholders. Nothing in
this Section, however, shall alter or modify in any way, the fiduciary
obligations of the Owner Trustee to the Certificateholders pursuant to this
Agreement, or create any fiduciary obligation of the Owner Trustee to the
Credit Enhancer.
IN WITNESS WHEREOF, the Depositor and the Owner Trustee have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
as Depositor
By: _______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as Owner
Trustee, except with respect
to the representations and
warranties contained in
Section 6.03 hereof
By: _______________________________________
Name:
Title:
Acknowledged and Agreed:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee, Certificate Registrar
and Certificate Paying Agent
By: ___________________________________________
Name:
Title:
EXHIBIT A
FORM OF CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES AS
DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
THIS CERTIFICATE IS ISSUED IN THE PERCENTAGE INTEREST SET FORTH
BELOW; HOWEVER, THE PERCENTAGE INTEREST OF THIS CERTIFICATE MAY CHANGE IN
ACCORDANCE WITH SECTION 3.12 OF THE AGREEMENT. THE CERTIFICATEHOLDER OF THIS
CERTIFICATE HEREBY CONSENTS TO ANY CHANGE IN ITS PERCENTAGE INTEREST IN
ACCORDANCE WITH SUCH SECTION.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT
AND STATE LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND SUCH STATE LAWS AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.05 OF THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE
TRANSFEREE OF THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE PROHIBITED TRANSACTION RESTRICTIONS AND
THE FIDUCIARY RESPONSIBILITY REQUIREMENTS OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ANY PERSON ACTING, DIRECTLY OR
INDIRECTLY, ON BEHALF OF ANY SUCH PLAN OR ANY PERSON USING "PLAN ASSETS,"
WITHIN THE MEANING OF THE DEPARTMENT OF LABOR REGULATION AT 29 C.F.R.
ss.2510.3-101, TO ACQUIRE THIS CERTIFICATE (EACH, A "PLAN INVESTOR"), OR (ii)
IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN
INVESTOR, AN OPINION OF COUNSEL, OR A CERTIFICATION IN THE FORM OF EXHIBIT G
TO THE AGREEMENT IN LIEU OF SUCH OPINION OF COUNSEL, TO THE EFFECT THAT THE
PURCHASE OR HOLDING OF THIS CERTIFICATE IS PERMISSIBLE UNDER APPLICABLE LAW,
WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT
ENACTMENTS) AND WILL NOT SUBJECT THE DEPOSITOR, THE OWNER TRUSTEE, THE
SERVICER OR THE CERTIFICATE REGISTRAR TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THE TRANSFEREE OF THIS CERTIFICATE SHALL BE SUBJECT TO UNITED STATES
FEDERAL WITHHOLDING TAX UNLESS THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED A
CERTIFICATE OF NON-FOREIGN STATUS CERTIFYING AS TO THE TRANSFEREE'S STATUS AS
A U.S. PERSON OR CORPORATION OR PARTNERSHIP UNDER U.S. LAW.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
THE SELLER, THE DEPOSITOR, THE SERVICER, THE INDENTURE TRUSTEE, THE OWNER
TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN
THE AGREEMENT OR THE OTHER BASIC DOCUMENTS.
Certificate No. C-1
Cut-Off Date:
September 1, 1999
Date of Trust Agreement:
September 23, 1999
First Payment Date: Percentage Interest: 100%
October 18, 1999
Final Maturity Date:
November 18, 2025
LOAN-BACKED CERTIFICATE, SERIES 1999-HLTV1
evidencing a fractional undivided interest in GMACM Loan Trust
1999-HLTV1 (the "Issuer"), the property of which consists primarily of the
Home Equity Loans.
This Certificate is payable solely from the assets of the Trust
Estate, and does not represent an obligation of or interest in the Depositor,
the Seller, the Servicer, the Indenture Trustee or the Owner Trustee or any of
their Affiliates. This Certificate is not guaranteed or insured by any
governmental agency or instrumentality or by the Depositor, the Seller, the
Servicer, the Indenture Trustee or the Owner Trustee or any of their
affiliates. None of the Depositor, the Seller, the Servicer, the Indenture
Trustee or the Owner Trustee or any of their Affiliates will have any
obligation with respect to any certificate or other obligation secured by or
payable from payments on the Certificates.
This certifies that GMAC MORTGAGE CORPORATION is the registered owner
of the Certificate Balance evidenced by this Certificate (as set forth on the
face hereof) in certain distributions with respect to the Trust Estate,
consisting primarily of the Home Equity Loans, created by Bear Stearns Asset
Backed Securities, Inc (the "Depositor"). The Trust (as defined herein) was
created pursuant to a trust agreement dated as of September 23, 1999 (as
amended and supplemented from time to time, the "Agreement"), between the
Depositor and Wilmington Trust Company, as owner trustee (the "Owner Trustee,"
which term includes any successor entity under the Agreement), a summary of
certain of the pertinent provisions of which is set forth hereafter.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the indenture dated as of September
1, 1999, between the Trust and the Indenture Trustee. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Certificateholder of this Certificate by
virtue of the acceptance hereof assents and by which such Certificateholder is
bound.
Pursuant to the terms of the Agreement, a distribution will be made
on the 18th day of each month or, if such 18th day is not a Business Day, the
Business Day immediately following (the "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last day (or if such
last day is not a Business Day, the Business Day immediately preceding such
last day) of the month immediately preceding the month of such distribution
(the "Record Date"), in an amount equal to the pro rata portion evidenced by
this Certificate (based on the Percentage Interest stated on the face hereon)
of the amount, if any, required to be distributed to Certificateholders of
Certificates on such Payment Date. Distributions on this Certificate will be
made as provided in the Agreement by the Certificate Paying Agent by wire
transfer or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the
making of any notation hereon.
Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Certificate Paying Agent of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained by the Certificate Registrar for that purpose in the City
and State of New York. The initial Certificate Balance of this Certificate is
set forth above. The Certificate Balance hereof will be reduced to the extent
of the distributions allocable to principal.
No transfer of this Certificate will be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and any applicable state securities laws or is
made in accordance the Securities Act and such state laws. In the event that
such a transfer is to be made, (i) the Certificate Registrar or the Depositor
may require an opinion of counsel acceptable to and in form and substance
satisfactory to the Certificate Registrar and the Depositor that such transfer
is exempt (describing the applicable exemption and the basis therefor) from or
is being made pursuant to the registration requirements of the Securities Act,
and of any applicable statute of any state and (ii) the transferee shall
execute an investment letter in the form described in the Agreement and (iii)
the Certificate Registrar shall require the transferee to execute an
investment letter and a Certificate of Non-Foreign Status in the form
described by the Agreement (or if a Certificate of Non-Foreign Status is not
provided, an Opinion of Counsel as described in the Agreement), which
investment letter and certificate or Opinion of Counsel shall not be at the
expense of the Trust, the Owner Trustee, the Certificate Registrar or the
Depositor. The Certificateholder hereof desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trust, the Owner Trustee, the
Depositor, the Servicer and the Certificate Registrar against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws. In connection with any such transfer, the
Certificate Registrar (unless otherwise directed by the Depositor) will also
require either (i) a representation letter, in the form as described by the
Agreement, stating that the transferee is not an employee benefit or other
plan subject to the prohibited transaction restrictions or the fiduciary
responsibility requirements of ERISA or Section 4975 of the Code (a "Plan"),
any person acting, directly or indirectly, on behalf of any such Plan or any
Person using the "plan assets," within the meaning of the Department of Labor
regulations at 29 C.F.R. ss.2510.3-101, to effect such acquisition
(collectively, a "Plan Investor") or (ii) if such transferee is a Plan
Investor, an opinion of counsel acceptable to and in form and substance
satisfactory to the Depositor, the Owner Trustee, the Servicer and the
Certificate Registrar, or a certification in the form of Exhibit G to the
Agreement, to the effect that the purchase or holding of such Certificate is
permissible under applicable law, will not constitute or result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
(or comparable provisions of any subsequent enactments) and will not subject
the Depositor, the Owner Trustee, the Servicer or the Certificate Registrar to
any obligation or liability in addition to those undertaken in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Loan-Backed Certificates of the Series specified hereon (the
"Certificates").
The Certificateholder of this Certificate, by its acceptance hereof,
agrees that it will look solely to the funds on deposit in the Certificate
Distribution Account that have been released from the Lien of the Indenture
for payment hereunder and that neither the Owner Trustee in its individual
capacity nor the Depositor is personally liable to the Certificateholders for
any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
The Certificateholder of this Certificate acknowledges and agrees
that its rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as described in the Indenture.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Depositor, or join in any institution against the Depositor or the Trust
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
Certificates, the Notes, the Agreement or any of the other Basic Documents.
The Agreement permits the amendment thereof as specified below,
provided that any amendment be accompanied by the consent of the Credit
Enhancer and an Opinion of Counsel to the Owner Trustee to the effect that
such amendment complies with the provisions of the Agreement and will not
cause the Trust to be subject to an entity level tax. If the purpose of any
such amendment is to correct any mistake, eliminate any inconsistency, cure
any ambiguity or deal with any matter not covered, it shall not be necessary
to obtain the consent of any Certificateholder, but the Owner Trustee shall be
furnished with a letter from each Rating Agency to the effect that such
amendment will not cause a Rating Event, determined without regard to the
Policy, and the counsel of the Credit Enhancer shall be obtained. If the
purpose of any such amendment is to prevent the imposition of any federal or
state taxes at any time that any Security is Outstanding, it shall not be
necessary to obtain the consent of the any Certificateholder, but the Owner
Trustee shall be furnished with an Opinion of Counsel that such amendment is
necessary or helpful to prevent the imposition of such taxes and is not
materially adverse to any Certificateholder and the consent of the Credit
Enhancer shall be obtained. If the purpose of the amendment is to add or
eliminate or change any provision of the Agreement, other than as specified in
the preceding two sentences, the amendment shall require either (a) a letter
from each Rating Agency to the effect that such amendment will not cause a
Rating Event, determined without regard to the Policy or (b) the consent of
Certificateholders of a majority of the Percentage Interests of the
Certificates and the Indenture Trustee; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the time of,
payments received that are required to be distributed on any Certificate
without the consent of all Certificateholders affected thereby and the Credit
Enhancer, or (ii) reduce the aforesaid percentage of Certificates the
Certificateholders of which are required to consent to any such amendment
without the consent of the Certificateholders of all such Certificates then
outstanding.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained in
the City and State of New York, accompanied by a written instrument of
transfer in form satisfactory to the Certificate Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of
authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee. The initial Certificate
Registrar appointed under the Agreement is the Owner Trustee.
Except as provided in the Agreement, the Certificates are issuable
only in minimum denominations of a 10.0000% Percentage Interest and in
integral multiples of a 0.0001% Percentage Interest in excess thereof. As
provided in the Agreement and subject to certain limitations therein set
forth, the Certificates are exchangeable for new Certificates of authorized
denominations, as requested by the Certificateholder surrendering the same.
This Certificate is issued in the Percentage Interest above; however, the
Percentage Interest of this Certificate may change in accordance with Section
3.12 of the Agreement. The Certificateholder of this Certificate hereby
consents to any change in its Percentage Interest in accordance with such
Section.
No service charge will be made for any such registration of transfer
or exchange, but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Owner Trustee, the Certificate Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee, the Certificate Paying Agent, or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and none of the Owner
Trustee, the Certificate Paying Agent, the Certificate Registrar or any such
agent shall be affected by any notice to the contrary.
This Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware.
The obligations created by the Agreement in respect of this
Certificate and the Trust created thereby shall terminate upon the final
distribution of all moneys or other property or proceeds of the Trust Estate
in accordance with the terms of the Indenture and the Agreement..
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, or an authenticating
agent by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
GMACM LOAN TRUST 1999-HLTV1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
Dated: September 23, 1999 By:_____________________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within mentioned Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:_______________________________________
Authorized Signatory
or _______________________________________,
as Authenticating Agent of the Trust
By:_______________________________________
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
________________________________________*/
Signature Guaranteed:
________________________________________*/
- -----------------
*/ NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial
bank or trust company.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Paying Agent:
Distribution shall be made by wire transfer in immediately available
funds to ______________________________________________ for the account of
_____________________________, account number ______________, or, if mailed by
check, to ______________.
Applicable statements should be mailed to __________________.
______________________________
Signature of assignee or agent
(for authorization of wire
transfer only)
EXHIBIT B
CERTIFICATE OF TRUST
OF
GMACM LOAN TRUST 1999-HLTV1
THE UNDERSIGNED, Wilmington Trust Company, as owner trustee (the
"Trustee"), for the purpose of forming a business trust does hereby certify as
follows:
1. The name of the business trust is:
GMACM LOAN TRUST 1999-HLTV1
2. The name and business address of the Trustee of the business trust
in the State Delaware is Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890.
3. The business trust reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Trust in the manner now
or hereafter prescribed by law.
4. This Certificate of Trust shall be effective upon filing.
THE UNDERSIGNED, being the Trustee hereinbefore named, for the
purpose of forming a business trust pursuant to the provisions of the Delaware
Business Trust Act, does make this certificate of trust, hereby declaring and
further certifying that this is its act and deed and that to the best of the
undersigned's knowledge and belief the facts herein stated are true.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as owner trustee under the
trust agreement to be dated as of
September 23, 1999
By:______________________________________
Name:
Title:
Dated: September 23, 1999
EXHIBIT C
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________________
_______________________________________________________
_______________________________________________________
The undersigned seller, as registered holder (the "Seller"), intends
to transfer the Rule 144A Securities described above to the undersigned buyer
(the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of
the Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, that would
constitute a distribution of the Rule 144A Securities under the Securities Act
of 1933, as amended (the "1933 Act"), or that would render the disposition of
the Rule 144A Securities a violation of Section 5 of the 1933 Act or require
registration pursuant thereto, and that the Seller has not offered the Rule
144A Securities to any person other than the Buyer or another "qualified
institutional buyer" as defined in Rule 144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Owner Trustee and the Depositor, pursuant to Section 3.05 of the trust
agreement dated as of September 23, 1999 (the "Agreement"), between Bear
Stearns Asset Backed Securities, Inc., as depositor (the "Depositor"), and
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee"), as follows:
a. The Buyer understands that the Rule 144A Securities have
not been registered under the 1933 Act or the securities laws of any
state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Seller, the Indenture Trustee, the Owner Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule
144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities,
any interest in the Rule 144A Securities or any other similar
security from, or otherwise approached or negotiated with respect to
the Rule 144A Securities, any interest in the Rule 144A Securities or
any other similar security with, any person in any manner, or made
any general solicitation by means of general advertising or in any
other manner, or taken any other action, that would constitute a
distribution of the Rule 144A Securities under the 1933 Act or that
would render the disposition of the Rule 144A Securities a violation
of Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Rule 144A
Securities.
e. The Buyer is a "qualified institutional buyer" as that
term is defined in Rule 144A under the 1933 Act and has completed
either of the forms of certification to that effect attached hereto
as Annex 1 or Annex 2. The Buyer is aware that the sale to it is
being made in reliance on Rule 144A. The Buyer is acquiring the Rule
144A Securities for its own account or the accounts of other
qualified institutional buyers, understands that such Rule 144A
Securities may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that
purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge
or transfer is being made in reliance on Rule 144A, or (ii) pursuant
to another exemption from registration under the 1933 Act.
3. The Buyer represents that:
(i) either (a) or (b) is satisfied, as marked below:
____ a. The Buyer is not any employee benefit plan subject
to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Internal Revenue Code of 1986, as amended (the
"Code"), a Person acting, directly or indirectly, on behalf of any
such plan or any Person acquiring such Certificates with "plan
assets" of a Plan within the meaning of the Department of Labor
regulation promulgated at 29 C.F.R. ss.2510.3-101; or
____ b. The Buyer will provide the Depositor, the Owner
Trustee, the Certificate Registrar and the Servicer with either: (x)
an opinion of counsel, satisfactory to the Depositor, the Owner
Trustee, the Certificate Registrar and the Servicer, to the effect
that the purchase and holding of a Certificate by or on behalf of the
Buyer is permissible under applicable law, will not constitute or
result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code (or comparable provisions of any subsequent
enactments) and will not subject the Depositor, the Owner Trustee,
the Certificate Registrar or the Servicer to any obligation or
liability (including liabilities under ERISA or Section 4975 of the
Code) in addition to those undertaken in the Trust Agreement, which
opinion of counsel shall not be an expense of the Depositor, the
Owner Trustee, the Certificate Registrar or the Servicer; or (y) in
lieu of such opinion of counsel, a certification in the form of
Exhibit G to the Trust Agreement; and
(ii) the Buyer is familiar with the prohibited transaction
restrictions and fiduciary responsibility requirements of Sections
406 and 407 of ERISA and Section 4975 of the Code and understands
that each of the parties to which this certification is made is
relying and will continue to rely on the statements made in this
paragraph 3.
This document may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together,
shall constitute one and the same document.
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in Appendix A to the indenture dated as of
September 1, 1999, between the Trust and the Indenture Trustee.
IN WITNESS WHEREOF, each of the parties has executed this document as
of the date set forth below.
____________________________ _______________________________
Print Name of Seller Print Name of Buyer
By:_________________________ By:____________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No._________________________ No.____________________________
Date:____________________________ Date:__________________________
ANNEX 1 TO EXHIBIT C
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $________________1 in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of
the Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any state, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
state or territorial banking commission or similar official
or is a foreign bank or equivalent institution, and (b) has
an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which
is attached hereto.
__________________
1 Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least $10,000,000
in securities.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which is
supervised and examined by a state or federal authority
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as
amended.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by
the insurance commissioner or a similar official or agency
of a state or territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a state, its political subdivisions, or any
agency or instrumentality of the state or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended.
___ Investment Adviser. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940. as
amended.
___ SBIC. The Buyer is a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act
of 1958, as amended.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940, as amended.
___ Trust Fund. The Buyer is a trust fund whose trustee is a
bank or trust company and whose participants are exclusively
(a) plans established and maintained by a state, its
political subdivisions, or any agency or instrumentality of
the state or its political subdivisions, for the benefit of
its employees, or (b) employee benefit plans within the
meaning of Title I of the Employee Retirement Income
Security Act of 1974, as amended, but is not a trust fund
that includes as participants individual retirement accounts
or H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject
to a repurchase agreement and (vii) currency, interest rate and commodity
swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used
the cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph. Further, in determining
such aggregate amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are consolidated with
the Buyer in its financial statements prepared in accordance with generally
accepted accounting principles and if the investments of such subsidiaries are
managed under the Buyer's direction. However, such securities were not
included if the Buyer is a majority-owned, consolidated subsidiary of another
enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Rule 144A
Securities are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for
a third party unless the Buyer has obtained a current representation letter
from such third party or taken other appropriate steps contemplated by Rule
144A to conclude that such third party independently meets the definition of
"qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Buyer's purchase of Rule 144A
Securities will constitute a reaffirmation of this certification as of the
date of such purchase.
_________________________________
Print Name of Buyer
By:______________________________
Name:
Title:
Date:____________________________
ANNEX 2 TO EXHIBIT C
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and
(ii) as marked below, the Buyer alone, or the Buyer's Family of Investment
Companies, owned at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal
year. For purposes of determining the amount of securities owned by the Buyer
or the Buyer's Family of Investment Companies, the cost of such securities was
used.
____ The Buyer owned $___________________ in securities (other
than the excluded securities referred to below) as of the
end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other
than the excluded securities referred to below) as of the
end of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement and
(vi) currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that each of
the parties to which this certification is made are relying and will continue
to rely on the statements made herein because one or more sales to the Buyer
will be in reliance on Rule 144A. In addition, the Buyer will only purchase
for the Buyer's own account.
6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
_________________________________
Print Name of Buyer
By:______________________________
Name:
Title:
Date:____________________________
IF AN ADVISER:
_________________________________
Print Name of Buyer
Date:____________________________
EXHIBIT D
FORM OF INVESTOR REPRESENTATION LETTER
______________, ______
Bear Stearns Asset Backed Securities, Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Attention: Corporate Trust Administration
Re: Bear Stearns Asset Backed Securities, Inc.,
Loan-Backed Certificates, Series 1999-HLTV1
Ladies and Gentlemen:
_____________________ (the "Purchaser") intends to purchase from
______________ (the "Seller") $ [Certificate Balance of Certificates] of
Series 1999-HLTV1 (the "Certificates"), issued pursuant to the trust agreement
dated as of September 23, 1999 (the "Trust Agreement"), between Bear Stearns
Asset Backed Securities, Inc. as depositor (the "Depositor") and Wilmington
Trust Company, as owner trustee (the "Owner Trustee"), as acknowledged and
agreed by Norwest Bank Minnesota, National Association, as Certificate
Registrar. Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in Appendix A to the indenture dated as of
September 1, 1999, between the Trust and the Indenture Trustee. The Purchaser
hereby certifies, represents and warrants to, and covenants with, the
Depositor and the Certificate Registrar that:
1. The Purchaser understands that (a) the Certificates have
not been and will not be registered or qualified under the Securities
Act of 1933, as amended (the "Act"), or any state securities law, (b)
the Company is not required to so register or qualify the
Certificates, (c) the Certificates may be resold only if registered
and qualified pursuant to the provisions of the Act or any state
securities law, or if an exemption from such registration and
qualification is available, (d) the Trust Agreement contains
restrictions regarding the transfer of the Certificates and (e) the
Certificates will bear a legend to the foregoing effect.
2. The Purchaser is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would
violate the Act or any applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such matters
related to securities similar to the Certificates, such that it is
capable of evaluating the merits and risks of investment in the
Certificates, (b) able to bear the economic risks of such an
investment and (c) an "accredited investor" within the meaning of
Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review a copy of the Trust Agreement and such other
information concerning the Certificates, the Home Equity Loans and
the Depositor as has been requested by the Purchaser from the
Depositor or the Seller and is relevant to the Purchaser's decision
to purchase the Certificates. The Purchaser has had any questions
arising from such review answered by the Depositor or the Seller to
the satisfaction of the Purchaser.
5. The Purchaser has not and will not nor has it authorized
or will it authorize any person to (a) offer, pledge, sell, dispose
of or otherwise transfer any Certificate, any interest in any
Certificate or any other similar security to any person in any
manner, (b) solicit any offer to buy or to accept a pledge,
disposition of other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any
manner, (c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general
solicitation by means of general advertising or in any other manner
or (e) take any other action, that (as to any of (a) through (d)
above) would constitute a distribution of any Certificate under the
Act, that would render the disposition of any Certificate a violation
of Section 5 of the Act or any state securities law, or that would
require registration or qualification pursuant thereto. The Purchaser
will not sell or otherwise transfer any of the Certificates, except
in compliance with the provisions of the Trust Agreement.
6. The Purchaser represents:
(i) that either (a) or (b) is satisfied, as marked below:
____ a. The Purchaser is not any employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the Internal Revenue Code of 1986, as amended
(the "Code"), a Person acting, directly or indirectly, on behalf of
any such plan or any Person acquiring such Certificates with "plan
assets" of a Plan within the meaning of the Department of Labor
regulation promulgated at 29 C.F.R. ss.2510.3-101; or
____ b. The Purchaser will provide the Depositor, the Owner
Trustee, the Certificate Registrar and the Servicer with either: (x)
an opinion of counsel, satisfactory to the Depositor, the Owner
Trustee, the Certificate Registrar and the Servicer, to the effect
that the purchase and holding of a Certificate by or on behalf of the
Purchaser is permissible under applicable law, will not constitute or
result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code (or comparable provisions of any subsequent
enactments) and will not subject the Depositor, the Owner Trustee,
the Certificate Registrar or the Servicer to any obligation or
liability (including liabilities under ERISA or Section 4975 of the
Code) in addition to those undertaken in the Trust Agreement, which
opinion of counsel shall not be an expense of the Depositor, the
Owner Trustee, the Certificate Registrar or the Servicer; or (y) in
lieu of such opinion of counsel, a certification in the form of
Exhibit G to the Trust Agreement; and
(ii) the Purchaser is familiar with the prohibited transaction
restrictions and fiduciary responsibility requirements of Sections
406 and 407 of ERISA and Section 4975 of the Code and understands
that each of the parties to which this certification is made is
relying and will continue to rely on the statements made in this
paragraph 6.
7. The Purchaser is acquiring the Certificate for its own behalf and
is not acting as agent or custodian for any other person or entity in
connection with such acquisition.
8. The Purchaser is not a non-United States person.
Very truly yours,
By:____________________________
Name:
Title:
EXHIBIT E
FORM OF TRANSFEROR REPRESENTATION LETTER
___________, ____
Bear Stearns Asset Backed Securities, Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Re: Bear Stearns Asset Backed Securities, Inc.
Loan-Backed Certificates, Series 1999-HLTV1
Ladies and Gentlemen:
_____________ (the "Purchaser") intends to purchase from ___________
(the "Seller") a _____% Percentage Interest of Certificates of Series
1999-HLTV1 (the "Certificates"), issued pursuant to the trust agreement dated
as of September 23, 1999 (the "Trust Agreement"), between Bear Stearns Asset
Backed Securities, Inc., as depositor (the "Depositor"), and Wilmington Trust
Company, as owner trustee (the "Owner Trustee"), as acknowledged and agreed by
Norwest Bank Minnesota, National Association, as Certificate Registrar.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in Appendix A to the indenture dated as of September
1, 1999, between the Trust and the Indenture Trustee. The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and
the Certificate Registrar that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition
or other transfer of any Certificate, any interest in any Certificate or any
other similar security from any person in any manner, (c) has otherwise
approached or negotiated with respect to any Certificate, any interest in any
Certificate or any other similar security with any person in any manner, (d)
has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a)
through (e) above) would constitute a distribution of the Certificates under
the Securities Act of 1933 (the "Act"), that would render the disposition of
any Certificate a violation of Section 5 of the Act or any state securities
law, or that would require registration or qualification pursuant thereto. The
Seller will not act, in any manner set forth in the foregoing sentence with
respect to any Certificate. The Seller has not and will not sell or otherwise
transfer any of the Certificates, except in compliance with the provisions of
the Trust Agreement.
Very truly yours,
__________________________________
(Seller)
By: ______________________________
Name:
Title:0
EXHIBIT F
CERTIFICATE OF NON-FOREIGN STATUS
This Certificate of Non-Foreign Status is delivered pursuant to
Section 3.05 of the trust agreement dated as of September 23, 1999 (the "Trust
Agreement"), between Bear Stearns Asset Backed Securities, Inc., as depositor
(the "Depositor"), and Wilmington Trust Company, as owner trustee, in
connection with the acquisition of, transfer to or possession by the
undersigned, whether as beneficial owner (the "Beneficial Owner"), or nominee
on behalf of the Beneficial Owner of Loan-Backed Certificates, Series
1999-HLTV1 (the "Certificates"). Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in Appendix A to
the indenture dated as of September 1, 1999, between the Trust and the
Indenture Trustee.
Each holder must complete Part I, Part II (if the holder is a nominee), and in
all cases sign and otherwise complete Part III.
In addition, each holder shall submit with the Certificate an IRS Form W-9
relating to such holder.
To confirm to the Trust that the provisions of Sections 871, 881 or 1446 of
the Internal Revenue Code (relating to withholding tax on foreign partners) do
not apply in respect of the Certificates held by the undersigned, the
undersigned hereby certifies:
Part I - Complete Either A or B
A. Individual as Beneficial Owner
1. I am (the Beneficial Owner is ) not a non-resident
alien for purposes of U.S. income taxation;
2. My (the Beneficial Owner's) name and home address
are:
______________________________________________
______________________________________________
______________________________________________; and
3. My (the Beneficial Owner's) U.S. taxpayer
identification number (Social Security Number) is
________________________.
B. Corporate, Partnership or Other Entity as Beneficial
Owner
1. ______________ (Name of the Beneficial Owner) is
not a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are
defined in the Code and Treasury Regulations;
2. The Beneficial Owner's office address and place of
incorporation (if applicable) is ; and
3. The Beneficial Owner's U.S. employer identification
number is _________________.
Part II - Nominees
If the undersigned is the nominee for the Beneficial Owner, the
undersigned certifies that this Certificate has been made in reliance upon
information contained in:
_____ an IRS Form W-9
_____ a form such as this or substantially similar
provided to the undersigned by an appropriate person and (i) the undersigned
agrees to notify the Trust at least thirty (30) days prior to the date that
the form relied upon becomes obsolete, and (ii) in connection with change in
Beneficial Owners, the undersigned agrees to submit a new Certificate of
Non-Foreign Status to the Trust promptly after such change.
Part III - Declaration
The undersigned, as the Beneficial Owner or a nominee thereof, agrees
to notify the Trust within sixty (60) days of the date that the Beneficial
Owner becomes a foreign person. The undersigned understands that this
certificate may be disclosed to the Internal Revenue Service by the Trust and
any false statement contained therein could be punishable by fines,
imprisonment or both.
Under penalties of perjury, I declare that I have examined this
certificate and to the best of my knowledge and belief it is true, correct and
complete and will further declare that I will inform the Trust of any change
in the information provided above, and, if applicable, I further declare that
I have the authority* to sign this document.
________________________
Name
________________________
Title (if applicable)
________________________
Signature and Date
*NOTE: If signed pursuant to a power of attorney, the power of attorney must
accompany this certificate.
EXHIBIT G
FORM OF ERISA REPRESENTATION LETTER
_________________, ____
Bear Stearns Asset Backed Securities, Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
GMAC Mortgage Corporation
100 Witmer Road
Horsham, Pennsylvania 19044
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Re: Bear Stearns Asset Backed Securities, Inc.
Loan-Backed Certificates, Series 1999-HLTV1
Dear Sirs:
________________________ (the "Transferee") intends to acquire from
__________________ (the "Transferor") a ____% Percentage Interest of
Loan-Backed Certificates, Series 1999-HLTV1 (the "Certificates"), issued
pursuant to a trust agreement dated as of September 23, 1999, between Bear
Stearns Asset Backed Securities, Inc., as depositor (the "Depositor"), and
Wilmington Trust Company, as owner trustee (the "Owner Trustee"). Capitalized
terms used herein that are not otherwise defined shall have the meanings
ascribed thereto in Appendix A to the indenture dated as of September 1, 1999,
between the Trust and the Indenture Trustee.
The Transferee hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Owner Trustee, the Certificate Registrar
and the Servicer that either:
(1) The Certificates (i) are not being acquired by, and will
not be transferred to, any employee benefit plan within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and bank
collective investment funds and insurance company general or separate
accounts in which such plans, accounts or arrangements are invested,
that is subject to Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") (any of the
foregoing, a "Plan"), (ii) are not being acquired with "plan assets"
of a Plan within the meaning of the Department of Labor ("DOL")
regulation, 29 C.F.R. ss. 2510.3-101, and (iii) will not be
transferred to any entity that is deemed to be investing in plan
assets within the meaning of the DOL regulation, 29 C.F.R. ss.
2510.3-101; or
(2) The purchase of the Certificates is permissible under
applicable law, will not constitute or result in any prohibited
transaction under ERISA or Section 4975 of the Code, will not subject
the Depositor or the Owner Trustee to any obligation in addition to
those undertaken in the Trust Agreement and, with respect to each
source of funds being used by the Transferee to acquire the
Certificates (each being referred to as a "Source") and the following
statements in either (a) or (b):
(a) the Transferee is an insurance company and (i)
the Source is assets of its "general account," (ii) the
conditions set forth in PTCE 95-60 issued by the DOL have
been satisfied and the purchase and holding of Certificates
by or on behalf of the Transferee are exempt under PTCE
95-60 and (iii) the amount of reserves and liabilities for
such general account contracts held by or on behalf of any
Plan do not exceed 10% of the total reserves and liabilities
of such general account plus surplus as of the date hereof
(for purposes of this clause, all Plans maintained by the
same employer (or affiliate thereof) or employee
organization are deemed to be a single Plan) in connection
with its purchase and holding of such Certificates; or
(b) the Transferee is an insurance company and (i)
the Source is assets of its "general account," (ii) the
requirements of Section 401(c) of ERISA and the DOL
regulations to be promulgated thereunder ("401(c)
Regulations") have been satisfied and will continue to be
satisfied and (iii) the Transferee represents that it
understands that the operation of the general account after
December 31, 1998 may affect its ability to continue to hold
the Certificates after the date which is 18 months after the
401(c) Regulations become final and unless a class exemption
issued by the DOL or an exception under Section 401(c) of
ERISA is then available for the continued holding of
Certificates, if the assets of the general account
constitute Plan Assets, it will dispose of the Certificates
prior to the date which is 18 months after the 401(c)
Regulations become final.
(3) The Transferee is familiar with the prohibited
transaction restrictions and fiduciary responsibility requirements of
Sections 406 and 407 of ERISA and Section 4975 of the Code and
understands that each of the parties to which this certification is
made is relying and will continue to rely on the statements made
herein.
Very truly yours,
By:_______________________________
Name:
Title:
EXHIBIT H
FORM OF REPRESENTATION LETTER
_________________, ____
Bear Stearns Asset Backed Securities, Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
GMAC Mortgage Corporation
100 Witmer Road
Horsham, Pennsylvania 19044
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044
Re: Bear Stearns Asset Backed Securities, Inc.
Loan-Backed Certificates, Series 1999-HLTV1
Dear Sirs:
______________________ (the "Transferee") intends to acquire from
_____________________ (the "Transferor") a ___% Percentage Interest of
Loan-Backed Certificates, Series 1999-HLTV1 (the "Certificates"), issued
pursuant to a trust agreement dated as of September 23, 1999 (the "Trust
Agreement"), between Bear Stearns Asset Backed Securities, Inc., as depositor
(the "Depositor"), and Wilmington Trust Company, as owner trustee (the "Owner
Trustee"). Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in Appendix A to the indenture dated as of
September 1, 1999, between the Trust and the Indenture Trustee.
The Transferee hereby certifies, represents and warrants to, and
covenants with, the Depositor, the Owner Trustee, the Certificate Registrar
and the Servicer that:
(1) the Transferee is acquiring the Certificate for its own
behalf and is not acting as agent or custodian for any other person
or entity in connection with such acquisition; and
(2) the Transferee is not a partnership, grantor trust or S
corporation for federal income tax purposes, or, if the Transferee is
a partnership, grantor trust or S corporation for federal income tax
purposes, the Certificates are not more than 50% of the assets of the
partnership, grantor trust or S corporation.
Very truly yours,
_______________________________
By:____________________________
Name:
Title:
Exhibit 10.2
EXECUTION COPY
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
as Purchaser,
GMAC MORTGAGE CORPORATION,
as Seller,
GMACM LOAN TRUST 1999-HLTV1,
as Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
--------------------------------------------
HOME EQUITY LOAN PURCHASE AGREEMENT
--------------------------------------------
Dated as of September 1, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.1 Definitions......................................................1
Section 1.2 Other Definitional Provisions....................................2
ARTICLE II
SALE OF HOME EQUITY LOANS AND RELATED PROVISIONS
Section 2.1 Sale of Initial Home Equity Loans................................2
Section 2.2 Sale of Subsequent Home Equity Loans.............................6
Section 2.3 Payment of Purchase Price........................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.1 Seller Representations and Warranties............................9
ARTICLE IV
SELLER'S COVENANTS
Section 4.1 Covenants of the Seller.........................................16
ARTICLE V
SERVICING
Section 5.1 Servicing.......................................................16
ARTICLE VI
INDEMNIFICATION BY THE SELLER WITH RESPECT TO THE HOME EQUITY LOANS
Section 6.1 Indemnification with Respect to the Home Equity Loans...........16
Section 6.2 Limitation on Liability of the Seller...........................17
ARTICLE VII
TERMINATION
Section 7.1 Termination.....................................................17
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Amendment.......................................................17
Section 8.2 Governing Law...................................................17
Section 8.3 Notices.........................................................17
Section 8.4 Severability of Provisions......................................18
Section 8.5 Relationship of Parties.........................................18
Section 8.6 Counterparts....................................................19
Section 8.7 Further Agreements..............................................19
Section 8.8 Intention of the Parties........................................19
Section 8.9 Successors and Assigns; Assignment of This Agreement............19
Section 8.10 Survival.......................................................20
Section 8.11 Third Party Beneficiary........................................20
Exhibits
Exhibit 1 Home Equity Loan Schedule
Exhibit 2 Form of Subsequent Transfer Agreement
Exhibit 3 Form of Addition Notice
This Home Equity Loan Purchase Agreement (the "Agreement"), dated as
of September 1, 1999, is made among GMAC Mortgage Corporation, as seller (the
"Seller"), Bear Stearns Asset Backed Securities, Inc., as purchaser (the
"Purchaser"), GMACM Loan Trust 1999-HLTV1, as issuer (the "Issuer"), and
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee").
WITNESSETH:
WHEREAS, the Seller owns the Cut-Off Date Principal Balances and the
Related Documents for the home equity loans indicated on the Home Equity Loan
Schedule attached as Exhibit 1 hereto (the "Initial Home Equity Loans"),
including rights to (a) any property acquired by foreclosure or deed in lieu
of foreclosure or otherwise, and (b) the proceeds of any insurance policies
covering the Initial Home Equity Loans;
WHEREAS, the parties hereto desire that the Seller (i) sell the
Cut-Off Date Principal Balances of the Initial Home Equity Loans to the
Purchaser on the Closing Date pursuant to the terms of this Agreement together
with the Related Documents, (ii) may sell Subsequent Home Equity Loans to the
Issuer on one or more Subsequent Transfer Dates pursuant to the terms of the
related Subsequent Transfer Agreement, and (iii) make certain representations
and warranties on the Closing Date and on each Subsequent Transfer Date;
WHEREAS, pursuant to the Trust Agreement, the Purchaser will sell the
Initial Home Equity Loans and transfer all of its rights under this Home
Equity Loan Purchase Agreement to the Issuer on the Closing Date;
WHEREAS, pursuant to the terms of the Servicing Agreement, the
Servicer will service the Home Equity Loans;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will issue the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will
issue the Notes, secured by the Trust Estate;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Definitions contained in Appendix A to
the indenture dated as of September 1, 1999 (the "Indenture"), between the
Issuer and the Indenture Trustee, which is incorporated by reference herein.
All other capitalized terms used herein shall have the meanings specified
herein.
Section 1.2 Other Definitional Provisions. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document, to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; the term "including" shall mean
"including without limitation"; "or" shall include "and/or"; and the term
"proceeds" shall have the meaning ascribed thereto in the UCC.
The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as the feminine and neuter genders of such terms.
Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
SALE OF HOME EQUITY LOANS AND RELATED PROVISIONS
Section 2.1 Sale of Initial Home Equity Loans.
(a) The Seller, by the execution and delivery of this Agreement, does
hereby sell, assign, set over, and otherwise convey to the Purchaser, without
recourse, all of its right, title and interest in, to and under the following,
and wherever located: (i) the Initial Home Equity Loans (including the Cut-Off
Date Principal Balances), all interest accruing thereon and all collections in
respect thereof received on or after the Cut-Off Date; (ii) the interest of
the Seller in any insurance policies in respect of the Initial Home Equity
Loans; and (iii) all proceeds of the foregoing. Such conveyance shall be
deemed to be made: with respect to the Cut-Off Date Principal Balances, as of
the Closing Date, subject to the receipt by the Seller of consideration
therefor as provided herein under clause (a) of Section 2.3.
In addition, the Seller shall deposit with the Indenture Trustee from
proceeds of the issuance of the Securities on the Closing Date (i) the
Original Pre-Funded Amount for deposit in the Pre-Funding Account and (ii) the
Interest Coverage Amount for deposit in the Capitalized Interest Account.
(b) In connection with the conveyance by the Seller of the Initial
Home Equity Loans and any Subsequent Home Equity Loans, the Seller further
agrees, at its own expense, on or prior to the Closing Date with respect to
the Principal Balances of the Initial Home Equity Loans and on or prior to the
related Subsequent Cut-off Date in the case of any Subsequent Home Equity
Loans, to indicate in its books and records that the Initial Home Equity Loans
have been sold to the Purchaser pursuant to this Agreement, and, in the case
of the Subsequent Home Equity Loans, to the Issuer pursuant to the related
Subsequent Transfer Agreement, and to deliver to the Purchaser true and
complete lists of all of the Home Equity Loans specifying for each Home Equity
Loan (i) its account number and (ii) its Cut-Off Date Principal Balance or
Subsequent Cut-off Date Principal Balance. Such lists, which form part of the
Home Equity Loan Schedule, shall be marked as Exhibit 1 to this Agreement and
are hereby incorporated into and made a part of this Agreement.
(c) In connection with the conveyance by the Seller of the Initial
Home Equity Loans and any Subsequent Home Equity Loans, the Seller shall on
behalf of the Purchaser deliver to, and deposit with the Custodian, at least
five (5) Business Days before the Closing Date in the case of an Initial Home
Equity Loan, and, on behalf of the Issuer, three (3) Business Days prior to
the related Subsequent Transfer Date in the case of a Subsequent Home Equity
Loan, with respect to (i) below, or within 90 days of the Closing Date or the
Subsequent Transfer Date, as the case may be, with respect to (ii) through (v)
below, the following documents or instruments with respect to each related
Home Equity Loan:
(i) the original Mortgage Note endorsed without recourse in
blank (which endorsement shall contain either an original signature
or a facsimile signature of an authorized officer of the Seller) or,
with respect to any Home Equity Loan as to which the original
Mortgage Note has been permanently lost or destroyed and has not been
replaced, a Lost Note Affidavit;
(ii) the original Mortgage with evidence of recording
thereon, or, if the original Mortgage has not yet been returned from
the public recording office, a copy of the original Mortgage
certified by the Seller that such Mortgage has been sent for
recording, or a county certified copy of such Mortgage in the event
the recording office keeps the original or if the original is lost;
(iii) assignments (which may be included in one or more
blanket assignments if permitted by applicable law) of the Mortgage
in recordable form as follows: (A) from the related originator to the
Seller, and (B) from the Seller to "Norwest Bank Minnesota, National
Association, as Indenture Trustee under that certain Indenture dated
as of September 1, 1999, for GMACM Loan Trust 1999-HLTV1, Loan-Backed
Term Notes, Series 1999-HLTV1" c/o the Seller at an address specified
by the Seller;
(iv) originals of any intervening assignments of the
Mortgage, with evidence of recording thereon, or, if the original of
any such intervening assignment has not yet been returned from the
public recording office, a copy of such original intervening
assignment certified by the Seller that such original intervening
assignment has been sent for recording; and
(v) a true and correct copy of each assumption,
modification, consolidation or substitution agreement, if any,
relating to such Home Equity Loan.
Within the time period for the review of each Mortgage File set forth
in Section 2.2 of the Custodial Agreement, if a material defect in any
Mortgage File is discovered which may materially and adversely affect the
value of the related Home Equity Loan, or the interests of the Indenture
Trustee (as pledgee of the Home Equity Loans), the Noteholders, the
Certificateholders or the Credit Enhancer in such Home Equity Loan, including
the Seller's failure to deliver any document required to be delivered to the
Custodian on behalf of the Indenture Trustee (provided, that a Mortgage File
will not be deemed to contain a defect for an unrecorded assignment under
clause (iii) above if the Seller has submitted such assignment for recording
pursuant to the terms of the following paragraph), the Seller shall cure such
defect, repurchase the related Home Equity Loan at the Repurchase Price or
substitute an Eligible Substitute Loan therefor upon the same terms and
conditions set forth in Section 3.1 hereof for breaches of representations and
warranties as to the Home Equity Loans.
In instances where an original Mortgage or any original intervening
assignment of Mortgage was not, in accordance with clauses (ii) or (iv) above,
delivered by the Seller to the Custodian in accordance with the execution and
delivery of this Agreement, the Seller will deliver or cause to be delivered
the originals or certified copies of such documents to the Custodian promptly
upon receipt thereof.
Upon sale of the Initial Home Equity Loans, the ownership of each
Mortgage Note, each related Mortgage and the contents of the related Mortgage
File shall be vested in the Purchaser and the ownership of all records and
documents with respect to the Initial Home Equity Loans that are prepared by
or that come into the possession of the Seller as seller of the Initial Home
Equity Loans hereunder or in its capacity as Servicer under the Servicing
Agreement shall immediately vest in the Purchaser, and shall be retained and
maintained in trust by the Seller or the Servicer at the will of the
Purchaser, in such custodial capacity only. In the event that any original
document held by the Seller hereunder in its capacity as Servicer is required
pursuant to the terms of this Section to be part of a Mortgage File, such
document shall be delivered promptly to the Custodian. The Seller's records
will accurately reflect the sale of each Initial Home Equity Loan to the
Purchaser.
The Purchaser hereby acknowledges its acceptance of all right, title
and interest to the property conveyed to it pursuant to this Section 2.1.
(d) The parties hereto intend that the transactions set forth herein
constitute a sale by the Seller to the Purchaser of all the Seller's right,
title and interest in and to the Initial Home Equity Loans and other property
as and to the extent described above. In the event the transactions set forth
herein are deemed not to be a sale, the Seller hereby grants to the Purchaser
a security interest in all of the Seller's right, title and interest in, to
and under the Initial Home Equity Loans and such other property, to secure all
of the Seller's obligations hereunder, and this Agreement shall constitute a
security agreement under applicable law. The Seller agrees to take or cause to
be taken such actions and to execute such documents, including without
limitation the filing of any continuation statements with respect to the UCC-1
financing statements filed with respect to the Initial Home Equity Loans by
the Purchaser on the Closing Date, and any amendments thereto required to
reflect a change in the name or corporate structure of the Seller or the
filing of any additional UCC-1 financing statements due to the change in the
principal office of the Seller, as are necessary to perfect and protect the
Purchaser's interests in each Initial Home Equity Loan and the proceeds
thereof.
Section 2.2 Sale of Subsequent Home Equity Loans.
(a) Subject to the conditions set forth in paragraphs (b) and (c)
below (the satisfaction of which (other than the conditions specified in
paragraphs (b)(i), (b)(ii), (b)(iii), (b)(vi), (b)(vii) and (c)(iii)(B)) shall
be evidenced by an Officer's Certificate of the Seller dated the date of the
related Subsequent Transfer Date), in consideration of the Issuer's delivery
on one or more Subsequent Transfer Dates of all or a portion of the balance of
funds in the Pre-Funding Account, the Seller may, on the related Subsequent
Transfer Date, sell, transfer, assign, set over and convey without recourse to
the Issuer but subject to the other terms and provisions of this Agreement all
of the right, title and interest of the Seller in and to (i) Subsequent Home
Equity Loans identified on the related Home Equity Loan Schedule attached to
the related Subsequent Transfer Agreement delivered by the Seller on such
Subsequent Transfer Date, (ii) principal due and interest accruing on such
Subsequent Home Equity Loans after the related Subsequent Cut-off Date and
(iii) all items with respect to such Subsequent Home Equity Loans to be
delivered pursuant to Section 2.1 above and the other items in the related
Mortgage Files; provided, however, that the Seller reserves and retains all
right, title and interest in and to principal received and interest accruing
on any Subsequent Home Equity Loan prior to the related Subsequent Cut-off
Date. Any transfer to the Issuer by the Seller of Subsequent Home Equity Loans
shall be absolute, and is intended by the Issuer and the Seller to constitute
and to be treated as a sale of such Subsequent Home Equity Loans by the Seller
to the Issuer. In the event that any such transaction is deemed not to be a
sale, the Seller hereby grants to the Issuer as of each Subsequent Transfer
Date a security interest in all of the Seller's right, title and interest in,
to and under the related Subsequent Home Equity Loans and such other property,
to secure all of the Seller's obligations hereunder, and this Agreement shall
constitute a security agreement under applicable law. The Seller agrees to
take or cause to be taken such actions and to execute such documents,
including the filing of all necessary UCC-1 financing statements filed in the
State of Delaware and the Commonwealth of Pennsylvania (which shall be
submitted for filing as of the related Subsequent Transfer Date), any
continuation statements with respect thereto and any amendments thereto
required to reflect a change in the name or corporate structure of the Seller
or the filing of any additional UCC-1 financing statements due to the change
in the principal office of the Seller, as are necessary to perfect and protect
the interests of the Issuer and its assignees in each Subsequent Home Equity
Loan and the proceeds thereof.
The Issuer on each Subsequent Transfer Date shall acknowledge its
acceptance of all right, title and interest to the related Subsequent Home
Equity Loans and other property, existing on the Subsequent Transfer Date and
thereafter created, conveyed to it pursuant to this Section 2.2.
The Indenture Trustee, as assignee of the Issuer, shall be entitled
to all scheduled principal payments due after each Subsequent Cut-off Date,
all other payments of principal due and collected after each Subsequent
Cut-off Date, and all payments of interest on any related Subsequent Home
Equity Loans, minus that portion of any such interest payment that is
allocable to the period prior to the related Subsequent Cut-off Date. No
scheduled payments of principal due on Subsequent Home Equity Loans on or
before the related Subsequent Cut-off Date and collected after such Subsequent
Cut-off Date shall belong to the Issuer pursuant to the terms of this
Agreement.
(b) The Seller may transfer to the Issuer Subsequent Home Equity
Loans and the other property and rights related thereto described in Section
3(a) above during the Pre-Funding Period, and the Issuer shall cause to be
released funds from the Pre-Funding Account, only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent
Transfer Date:
(i) the Seller shall have provided the Indenture Trustee,
the Rating Agencies and the Credit Enhancer with a timely Addition
Notice substantially in the form of Exhibit 3, which notice shall be
given no later than seven Business Days prior to the related
Subsequent Transfer Date, and shall designate the Subsequent Home
Equity Loans to be sold to the Issuer and the aggregate Principal
Balances of such Subsequent Home Equity Loans as of the related
Subsequent Cut-off Date and any other information reasonably
requested by the Indenture Trustee or the Credit Enhancer with
respect to such Subsequent Home Equity Loans.
(ii) the Seller shall have delivered to the Indenture
Trustee a duly executed Subsequent Transfer Agreement substantially
in the form of Exhibit 2, (A) confirming the satisfaction of each
condition precedent and representations specified in this Section
2.2(b) and in Section 2.2(c) and in the related Subsequent Transfer
Agreement and (B) including a Home Equity Loan Schedule listing the
Subsequent Home Equity Loans;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery to the Indenture Trustee of the Subsequent Transfer
Agreement in the form of Exhibit 2, the Seller shall not be
insolvent, made insolvent by such transfer or aware of any pending
insolvency;
(iv) such sale and transfer shall not result in a material
adverse tax consequence to the Issuer or, due to any action or
inaction on the part of the Seller, to the Securityholders;
(v) [Reserved];
(vi) the Credit Enhancer shall have approved the sale of the
Subsequent Home Equity Loans (which approval shall not be
unreasonably withheld) within five (5) Business Days of receipt of
the Home Equity Loan Schedule reflecting the Subsequent Home Equity
Loans; provided, that if the Credit Enhancer shall not have notified
the Seller within five (5) Business Days that the Credit Enhancer
does not so approve, such sale of Subsequent Home Equity Loans shall
be deemed approved by the Credit Enhancer; and
(vii) the Seller shall have delivered to the Issuer, the
Indenture Trustee and the Credit Enhancer an Opinion of Counsel on or
prior to the first such transfer of Subsequent Home Equity Loans with
respect to transfers of Subsequent Home Equity Loans made in
compliance with the Basic Documents and the form of Subsequent
Transfer Agreement attached hereto as Exhibit 2, which Opinion of
Counsel shall be substantially in the form of the Opinions of Counsel
delivered to the Credit Enhancer, the Rating Agencies and the
Indenture Trustee on the Closing Date regarding certain bankruptcy,
corporate and tax matters; provided, that an Opinion of Counsel shall
be delivered within 30 days after the end of the Pre-Funding Period,
and shall specifically relate to all Subsequent Home Equity Loans
transferred to the Trust during the Pre-Funding Period and purchased
by the Trust from funds on deposit in the Pre-Funding Account.
(c) The obligation of the Issuer to purchase a Subsequent Home Equity
Loan on any Subsequent Transfer Date is subject to the following conditions:
(i) each such Subsequent Home Equity Loan must satisfy the representations and
warranties specified in the related Subsequent Transfer Agreement and this
Agreement; (ii) the Seller will select such Subsequent Home Equity Loans only
in a manner that it reasonably believes is not adverse to the interests of the
Noteholders or the Credit Enhancer; (iii) the Seller will deliver to the
Credit Enhancer and the Indenture Trustee certain Opinions of Counsel
acceptable to the Credit Enhancer and the Indenture Trustee with respect to
the validity of the conveyance of such Subsequent Home Equity Loans; and (iv)
as of the related Subsequent Cut-off Date each Subsequent Home Equity Loan
will satisfy the following criteria: (A) such Subsequent Home Equity Loan may
not be 30 or more days contractually delinquent as of the related Subsequent
Cut-off Date; (B) the original stated term to maturity of such Subsequent Home
Equity Loan will not exceed 300 months; (C) such Subsequent Home Equity Loan
must have an outstanding Principal Balance of at least $1,000 and not more
than $511,000 as of the related Subsequent Cut-off Date; (D) such Subsequent
Home Equity Loan will be underwritten substantially in accordance with the
criteria set forth under "Description of the Home Equity Loans -- Underwriting
Standards" in the Prospectus Supplement; (E) such Subsequent Home Equity Loan
must have a CLTV at origination of no more than 125.00%; (F) the stated
maturity of such Subsequent Home Equity Loan must be no later than 300 months;
(G) the remaining term to stated maturity of such Subsequent Home Equity Loan
may not extend beyond February 1, 2025; and (H) following the purchase of such
Subsequent Home Equity Loans by the Issuer, the Home Equity Loans included in
the Trust Estate must have a weighted average interest rate, a weighted
average remaining term to maturity and a weighted average CLTV at origination,
as of each Subsequent Cut-off Date, that does not vary materially from the
Initial Home Equity Loans included initially in the Trust Estate, and the
percentage of Home Equity Loans, (by aggregate principal balance) that are
secured by second liens on the related Mortgaged Properties shall be no
greater than the percentage of Initial Home Equity Loans. Subsequent Home
Equity Loans with characteristics materially varying from those set forth
above may be purchased by the Issuer and included in the Trust Estate if they
are acceptable to the Credit Enhancer, in its reasonable discretion; provided,
however, that the addition of such Subsequent Home Equity Loans will not
materially affect the aggregate characteristics of the Home Equity Loans in
the Trust Estate.
(d) Within five Business Days after each Subsequent Transfer Date,
the Seller shall deliver to the Rating Agencies, the Indenture Trustee and the
Credit Enhancer a copy of the updated Home Equity Loan Schedule reflecting the
Subsequent Home Equity Loans in electronic format (to be confirmed via hard
copy).
(e) In the event that a home equity loan is not acceptable to the
Credit Enhancer as a Subsequent Home Equity Loan pursuant to Section
2.2(b)(vi) hereof, the Credit Enhancer and the Seller may mutually agree to
the transfer of such home equity loan to the Issuer as a Subsequent Home
Equity Loan, subject to any increase in the Overcollateralization Amount that
may be agreed to by the Seller and the Credit Enhancer pursuant to the
Indenture, in which event the Seller shall deliver to the Issuer and the
Indenture Trustee, with a copy to the Credit Enhancer, an Officer's
Certificate confirming the agreement to the transfer of such Subsequent Home
Equity Loan and specifying the amount of such increase in the
Overcollateralization Amount.
Section 2.3 Payment of Purchase Price.
(a) The sale of the Initial Home Equity Loans shall take place on the
Closing Date, subject to and simultaneously with the deposit of the Initial
Home Equity Loans into the Trust Estate, the deposit of the Original
Pre-Funded Amount and the Interest Coverage Amount into the Pre-Funding
Account and the Capitalized Interest Account, respectively, and the issuance
of the Securities. The purchase price (the "Purchase Price") for the Initial
Home Equity Loans to be paid by the Purchaser to the Seller on the Closing
Date shall be an amount equal to $122,617,218.45 in immediately available
funds, together with the Certificates, in respect of the Cut-Off Date
Principal Balances thereof. The Purchase Price paid for any Subsequent Home
Equity Loan by the Indenture Trustee, at the direction of the Issuer, shall be
one-hundred percent (100%) of the aggregate Principal Balances thereof (as
identified on the Home Equity Loan Schedule attached to the related Subsequent
Transfer Agreement provided by the Seller).
(b) In consideration of the sale of the Initial Home Equity Loans by
the Seller to the Purchaser on the Closing Date, the Purchaser shall pay to
the Seller on the Closing Date by wire transfer of immediately available funds
to a bank account designated by the Seller, the amount specified above in
paragraph (a) for each Initial Home Equity Loan; provided, that such payment
may be on a net funding basis if agreed by the Seller and the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1 Seller Representations and Warranties. The Seller
represents and warrants to the Purchaser, as of the Closing Date and as of
each Subsequent Transfer Date (or if otherwise specified below, as of the date
so specified):
(a) As to the Seller:
(i) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
governing its creation and existence and is or will be in compliance
with the laws of each state in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each
Home Equity Loan in accordance with the terms of this Agreement;
(ii) The Seller has the power and authority to make,
execute, deliver and perform its obligations under this Agreement and
each Subsequent Transfer Agreement and all of the transactions
contemplated under this Agreement and each Subsequent Transfer
Agreement, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement and each
Subsequent Transfer Agreement;
(iii) The Seller is not required to obtain the consent of
any other Person or any consents, licenses, approvals or
authorizations from, or registrations or declarations with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement or any Subsequent Transfer Agreement, except for such
consents, licenses, approvals or authorizations, or registrations or
declarations, as shall have been obtained or filed, as the case may
be;
(iv) The execution and delivery of this Agreement by the
Seller and its performance and compliance with the terms of this
Agreement will not violate the Seller's Certificate of Incorporation
or Bylaws or constitute a material default (or an event which, with
notice or lapse of time, or both, would constitute a material
default) under, or result in the material breach of, any material
contract, agreement or other instrument to which the Seller is a
party or which may be applicable to the Seller or any of its assets;
(v) No litigation before any court, tribunal or governmental
body is currently pending, or to the knowledge of the Seller
threatened, against the Seller or with respect to this Agreement or
any Subsequent Transfer Agreement that in the commercially reasonable
opinion of the Seller has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this
Agreement or any Subsequent Transfer Agreement;
(vi) [Reserved];
(vii) This Agreement and each Subsequent Transfer Agreement
constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity) or by public policy with respect to indemnification under
applicable securities laws;
(viii) This Agreement constitutes a valid transfer and
assignment to the Purchaser of all right, title and interest of the
Seller in and to the Cut-Off Date Principal Balances with respect to
the Initial Home Equity Loans, all monies due or to become due with
respect thereto, and all proceeds of such Cut-Off Date Principal
Balances with respect to the Initial Home Equity Loans; and this
Agreement and the related Subsequent Transfer Agreement constitute a
valid transfer and assignment to the Issuer of all right, title and
interest of the Seller in and to the Subsequent Cut-off Date
Principal Balances of the Subsequent Home Equity Loans, all monies
due or to become due with respect thereto, and all proceeds of such
Subsequent Cut-off Date Principal Balances; and such funds as are
from time to time deposited in the Custodial Account (excluding any
investment earnings thereon) as assets of the Trust and all other
property specified in the definition of "Trust" as being part of the
corpus of the Trust conveyed to the Purchaser by the Seller; and
(ix) The Seller 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, which default might
have consequences that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its
properties or might have consequences that would materially adversely
affect its performance hereunder;
(b) As to each Initial Home Equity Loan as of the Closing Date and
with respect to each Subsequent Home Equity Loan as of the related Subsequent
Transfer Date (except as otherwise specified below):
(i) The information set forth in the Home Equity Loan
Schedule with respect to each Home Equity Loan or the Home Equity
Loans is true and correct in all material respects as of the date or
dates respecting which such information is furnished;
(ii) The Cut-Off Date Principal Balances or Subsequent
Cut-off Date Principal Balances have not been assigned or pledged,
the Seller has good title thereto and the Seller is the sole owner
and holder of such Cut-Off Date Principal Balances and Subsequent
Cut-off Date Principal Balances free and clear of any and all liens,
encumbrances, pledges, security interests (other than, with respect
to any Home Equity Loan in a second lien position, the lien of the
related first mortgage) of any nature and has full right and
authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable Home Equity Loans
to sell and assign the same pursuant to this Agreement;
(iii) (A) The related Mortgage Note and the Mortgage have
not been assigned or pledged, (B) immediately prior to the assignment
of the Home Equity Loans to the Trustee the Seller has good title
thereto and (C) the Seller is the sole owner and holder of the Home
Equity Loan free and clear of any and all liens, encumbrances,
pledges, or security interests (other than, with respect to any Home
Equity Loan in a second lien position, the lien of the related first
mortgage) of any nature and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the
ownership of the applicable Home Equity Loans to sell and assign the
same pursuant to this Agreement or the related Subsequent Transfer
Agreement, as applicable;
(iv) To the best of the Seller's knowledge, there is no
valid offset, defense or counterclaim of any obligor under any
Mortgage Note or Mortgage;
(v) To the best of the Seller's knowledge, there is no
delinquent recording or other tax or fee or assessment lien against
any related Mortgaged Property;
(vi) To the best of the Seller's knowledge, there is no
proceeding pending or threatened for the total or partial
condemnation of the related Mortgaged Property;
(vii) To the best of the Seller's knowledge, there are no
mechanics' or similar liens or claims which have been filed for work,
labor or material affecting the related Mortgaged Property which are,
or may be liens prior or equal to, or subordinate with, the lien of
the related Mortgage, except liens which are fully insured against by
the title insurance policy referred to in clause (xi);
(viii) As of the Cut-Off Date or related Subsequent Cut-off
Date, no Home Equity Loan was 30 days or more delinquent in payment
of principal or interest;
(ix) For each Home Equity Loan, the related Mortgage File
contains or will contain, in accordance with Section 2.1(c)(ii), each
of the documents and instruments specified to be included therein;
(x) To the best of the Seller's knowledge, the related
Mortgage Note and the related Mortgage at the time it was made
complied in all material respects with applicable local, state and
federal laws;
(xi) A title search or other assurance of title customary in
the relevant jurisdiction was obtained with respect to each Home
Equity Loan;
(xii) None of the Mortgaged Properties is a mobile home or a
manufactured housing unit that is not permanently attached to its
foundation;
(xiii) As of the Cut-Off Date, no more than approximately
37.06% of the Initial Home Equity Loans, by Cut-Off Date Principal
Balance, are secured by Mortgaged Properties located in California;
(xiv) As of the Cut-Off Date or Subsequent Cut-off Date, the
Combined Loan-to-Value Ratio for each Home Equity Loan was not in
excess of 125%;
(xv) [Reserved];
(xvi) The Seller has not transferred the Initial Home Equity
Loans to the Purchaser or any Subsequent Home Equity Loans to the
Issuer with any intent to hinder, delay or defraud any of its
creditors;
(xvii) The Seller will submit for filing or cause to be
submitted for filing UCC-1 financing statements in accordance with
the terms of this Agreement;
(xviii) Within a loan type, and except as required by
applicable law, each Mortgage Note and each Mortgage is an
enforceable obligation of the related Mortgagor;
(xix) To the best knowledge of the Seller, the physical
property subject to each Mortgage is free of material damage and is
in acceptable repair;
(xx) The Seller has not received a notice of default of any
senior mortgage loan related to a Mortgaged Property which has not
been cured by a party other than the Servicer;
(xxi) [Reserved];
(xxii) None of the Home Equity Loans is a reverse mortgage
loan;
(xxiii) No Home Equity Loan has an original term to maturity
in excess of 300 months;
(xxiv) All of the Home Equity Loans are fixed rate and are
fully amortizing,. As of the Cut-off Date, the Loan Rates on the Home
Equity Loans range between 8.250% per annum and 18.990% per annum and
the weighted average Loan Rate is approximately 13.498% per annum.
The weighted average remaining term to stated maturity of the Home
Equity Loans as of the Cut-off Date is approximately 264 months;
(xxv) (A) Each Mortgaged Property consists of a single
parcel of real property with a single family or an individual
condominium unit; (B) With respect to the Initial Home Equity Loans
(1) approximately 4.55% (by Cut-Off Date Principal Balance) are
secured by real property improved by individual condominium, and (2)
approximately 95.45% (by Cut-Off Date Principal Balance) are secured
by real property with a single family residence erected thereon;
(xxvi) As of the Cut-Off Date, no Initial Home Equity Loan
had a principal balance in excess of $150,000;
(xxvii) No more than approximately 99.84 % of the Initial
Home Equity Loans, by aggregate Principal Balance as of the Cut-Off
Date, are secured by second liens;
(xxviii) [Reserved];
(xxix) A policy of hazard insurance and flood insurance, if
applicable, has been required from the Mortgagor for the Home Equity
Loan when the Home Equity Loan was originated;
(xxx) Other than with respect to a payment default, there is
no material default, breach, violation or event of acceleration
existing under the terms of any Mortgage Note or Mortgage and, to the
best of the Seller's knowledge, no event which, with notice and
expiration of any grace or cure period, would constitute a material
default, breach, violation or event of acceleration under the terms
of any Mortgage Note or Mortgage, and no such material default,
breach, violation or event of acceleration has been waived by the
Seller involved in originating or servicing the related Home Equity
Loan;
(xxxi) No instrument of release or waiver has been executed
in connection with the Home Equity Loans, and no Mortgagor has been
released, in whole or in part from its obligations in connection
therewith;
(xxxii) With respect to each Home Equity Loan secured by a
second lien, either (a) no consent for such Home Equity Loan was
required by the holder or holders of the related prior lien, (b) such
consent has been obtained and is contained in the related Mortgage
File or (c) no consent for such Home Equity Loan was required by
relevant law; and
(xxxiii) With respect to each Home Equity Loan, to the
extent permitted by applicable law, the Mortgage contains a customary
provision for the acceleration of the payment of the unpaid principal
balance of the Home Equity Loan in the event the related Mortgaged
Property is sold without the prior consent of the mortgagee
thereunder.
Upon discovery by the Seller or upon notice from the Purchaser, the
Credit Enhancer, the Issuer, the Owner Trustee, the Indenture Trustee or the
Custodian, as applicable, of a breach of any representation or warranty in
paragraph (a) above that materially and adversely affects the interests of the
Securityholders or the Credit Enhancer, as applicable, in any Home Equity
Loan, the Seller shall, within 90 days of its discovery or its receipt of
notice of such breach, either (i) cure such breach in all material respects or
(ii) to the extent that such breach is with respect to a Home Equity Loan or a
Related Document, either (A) repurchase such Home Equity Loan from the Issuer
at the Repurchase Price, or (B) substitute one or more Eligible Substitute
Loans for such Home Equity Loan, in each case in the manner and subject to the
conditions and limitations set forth below.
Upon discovery by the Seller or upon notice from the Purchaser, the
Credit Enhancer, the Issuer, the Owner Trustee, the Indenture Trustee or the
Custodian, as applicable, of a breach of any representation or warranty in
this paragraph (b) above with respect to any Home Equity Loan, or upon the
occurrence of a Repurchase Event, that materially and adversely affects the
interests of the Securityholders, the Credit Enhancer or the Purchaser in such
Home Equity Loan (notice of which shall be given to the Purchaser by the
Seller, if it discovers the same), notwithstanding the Seller's lack of
knowledge with respect to the substance of such representation and warranty,
the Seller shall, within 90 days after the earlier of its discovery or receipt
of notice thereof, either cure such breach or Repurchase Event in all material
respects or either (i) repurchase such Home Equity Loan from the Issuer at the
Repurchase Price, or (ii) substitute one or more Eligible Substitute Loans for
such Home Equity Loan, in each case in the manner and subject to the
conditions set forth below. The Repurchase Price for any such Home Equity Loan
repurchased by the Seller shall be deposited or caused to be deposited by the
Servicer into the Custodial Account.
In the event that the Seller elects to substitute an Eligible
Substitute Loan or Loans for a Deleted Loan pursuant to this Section 3.1, the
Seller shall deliver to the Custodian on behalf of the Issuer, with respect to
such Eligible Substitute Loan or Loans, the original Mortgage Note and all
other documents and agreements as are required by Section 2.1(c), with the
Mortgage Note endorsed as required by Section 2.1(c). No substitution will be
made in any calendar month after the Determination Date for such month.
Monthly Payments due with respect to Eligible Substitute Loans in the month of
substitution shall not be part of the Trust Estate and will be retained by the
Servicer and remitted by the Servicer to the Seller on the next succeeding
Payment Date, provided that a payment at least equal to the applicable Minimum
Monthly Payment for such month in respect of the Deleted Loan has been
received by the Issuer. For the month of substitution, distributions to the
Distribution Account pursuant to the Servicing Agreement will include the
Monthly Payment due on a Deleted Loan for such month and thereafter the Seller
shall be entitled to retain all amounts received in respect of such Deleted
Loan. The Servicer shall amend or cause to be amended the Home Equity Loan
Schedule to reflect the removal of such Deleted Loan and the substitution of
the Eligible Substitute Loan or Loans and the Servicer shall deliver the
amended Home Equity Loan Schedule to the Owner Trustee. Upon such
substitution, the Eligible Substitute Loan or Loans shall be subject to the
terms of this Agreement and the Servicing Agreement in all respects, the
Seller shall be deemed to have made the representations and warranties with
respect to the Eligible Substitute Loan contained herein set forth in Section
3.1(b) (other than clauses (viii), (xiii), (xiv) and (xxv)(B) thereof) as of
the date of substitution, and the Seller shall be obligated to repurchase or
substitute for any Eligible Substitute Loan as to which a Repurchase Event has
occurred as provided herein. In connection with the substitution of one or
more Eligible Substitute Loans for one or more Deleted Loans, the Servicer
shall determine the amount (such amount, a "Substitution Adjustment Amount"),
if any, by which the aggregate principal balance of all such Eligible
Substitute Loans as of the date of substitution is less than the aggregate
principal balance of all such Deleted Loans (after application of the
principal portion of the Monthly Payments due in the month of substitution
that are to be distributed to the Note Payment Account in the month of
substitution). The Seller shall deposit the amount of such shortfall into the
Custodial Account on the date of substitution, without any reimbursement
therefor.
Upon receipt by the Indenture Trustee on behalf of the Issuer and the
Custodian of written notification, signed by a Servicing Officer, of the
deposit of such Repurchase Price or of such substitution of an Eligible
Substitute Loan (together with the complete related Mortgage File) and deposit
of any applicable Substitution Adjustment Amount as provided above, the
Custodian, on behalf of the Indenture Trustee, shall release to the Seller the
related Mortgage File for the Home Equity Loan being repurchased or
substituted for and the Indenture Trustee on behalf of the Issuer shall
execute and deliver such instruments of transfer or assignment prepared by the
Servicer, in each case without recourse, as shall be necessary to vest in the
Seller or its designee such Home Equity Loan released pursuant hereto and
thereafter such Home Equity Loan shall not be an asset of the Issuer.
It is understood and agreed that the obligation of the Seller to cure
any breach, or to repurchase or substitute for any Home Equity Loan as to
which such a breach has occurred and is continuing, shall, except to the
extent provided in Section 6.1 of this Agreement, constitute the sole remedy
respecting such breach available to the Purchaser, the Issuer, the
Certificateholders (or the Owner Trustee on behalf of the Certificateholders)
and the Noteholders (or the Indenture Trustee on behalf of the Noteholders)
against the Seller.
It is understood and agreed that the representations and warranties
set forth in this Section 3.1 shall survive delivery of the respective
Mortgage Files to the Issuer or the Custodian.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1 Covenants of the Seller. The Seller hereby covenants
that, except for the transfer hereunder and as of any Subsequent Transfer Date
that, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur or assume any Lien on any Home Equity Loan, or
any interest therein. The Seller shall notify the Issuer (in the case of the
Initial Home Equity Loans, as assignee of the Purchaser), of the existence of
any Lien (other than as provided above) on any Home Equity Loan immediately
upon discovery thereof; and the Seller shall defend the right, title and
interest of the Issuer (in the case of the Initial Home Equity Loans, as
assignee of the Purchaser) in, to and under the Home Equity Loans against all
claims of third parties claiming through or under the Seller; provided,
however, that nothing in this Section 4.1 shall be deemed to apply to any
Liens for municipal or other local taxes and other governmental charges if
such taxes or governmental charges shall not at the time be due and payable or
if the Seller shall currently be contesting the validity thereof in good faith
by appropriate Proceedings.
ARTICLE V
SERVICING
Section 5.1 Servicing. The Seller shall service the Home Equity Loans
pursuant to the terms and conditions of the Servicing Agreement and the
Program Guide and shall service the Home Equity Loans directly or through one
or more sub-servicers in accordance therewith.
ARTICLE VI
INDEMNIFICATION BY THE SELLER
WITH RESPECT TO THE HOME EQUITY LOANS
Section 6.1 Indemnification with Respect to the Home Equity Loans.
The Seller shall indemnify and hold harmless the Purchaser, the Issuer (with
respect to the Initial Home Equity Loans, as assignee of the Purchaser) from
and against any loss, liability or expense arising from any breach by the
Seller of its representations and warranties in Section 3.1 of this Agreement
that materially and adversely affects the Purchaser's interest in any Initial
Home Equity Loan or the Issuer's interest in any Home Equity Loan or from the
failure by the Seller to perform its obligations under this Agreement or any
Subsequent Transfer Agreement in any material respect; provided, that the
Seller shall have no obligation to indemnify the Purchaser in respect of any
loss, liability or expense that arises as a result of the Purchaser's willful
malfeasance, bad faith or negligence or as a result of the breach by the
Purchaser of its obligations hereunder; nor shall the Seller shall have any
obligation to indemnify the Issuer in respect of any loss, liability or
expense that arises as a result of the Issuer's willful malfeasance, bad faith
or negligence.
Section 6.2 Limitation on Liability of the Seller. None of the
directors, officers, employees or agents of the Seller shall be under any
liability to the Purchaser or the Issuer, it being expressly understood that
all such liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement and any Subsequent Transfer
Agreement. Except as and to the extent expressly provided in the Servicing
Agreement, the Seller shall not be under any liability to the Issuer, the
Owner Trustee, the Indenture Trustee or the Securityholders. The Seller and
any director, officer, employee or agent of the Seller 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.
ARTICLE VII
TERMINATION
Section 7.1 Termination. The obligations and responsibilities of the
parties hereto shall terminate, except for the Seller's indemnity obligations
as provided herein, upon the termination of the Trust Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Amendment. This Agreement may be amended from time to
time by the parties hereto by written agreement with the prior written consent
of the Credit Enhancer (which consent shall not be unreasonably withheld).
Section 8.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
Section 8.3 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid,
addressed as follows:
(i) if to the Seller:
GMAC Mortgage Corporation
100 Witmer Road
Horsham, Pennsylvania 10944
Attention: Barry Bier, Senior Vice President
Re: GMACM Loan Trust 1999-HLTV1;
(ii) if to the Purchaser:
Bear Stearns Asset Backed Securities, Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Attention: Jonathan Lieberman
Re: GMACM Loan Trust 1999-HLTV1;
(iii) if to the Indenture Trustee:
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, MD 21044
Attention: GMACM Loan Trust 1999-HLTV1;
With a copy to the Indenture Trustee's Corporate Trust Office;
(iv) if to the Issuer:
c/o Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Re: GMACM Loan Trust 1999-HLTV1; or
(v) if to the Credit Enhancer:
Ambac Assurance Corporation
One State Street Plaza, 19th Floor
New York, NY 10004
Attention: Structured Finance - Mortgage Backed Securities
Re: GMACM Loan Trust 1999-HLTV1;
or, with respect to any of the foregoing Persons, at such other address as may
hereafter be furnished to the other foregoing Persons in writing.
Section 8.4 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
of enforceability of the other provisions of this Agreement.
Section 8.5 Relationship of Parties. Nothing herein contained shall
be deemed or construed to create a partnership or joint venture among the
parties hereto, and the services of the Seller shall be rendered as an
independent contractor and not as agent for the Purchaser.
Section 8.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed, shall be deemed to be
an original and such counterparts, together, shall constitute one and the same
agreement.
Section 8.7 Further Agreements. The parties hereto each agree to
execute and deliver to the other such additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
Section 8.8 Intention of the Parties. It is the intention of the
parties hereto that the Purchaser will be purchasing on the Closing Date, and
the Seller will be selling on the Closing Date, the Initial Home Equity Loans,
rather than the Purchaser providing a loan to the Seller secured by the
Initial Home Equity Loans on the Closing Date; and that the Issuer will be
purchasing on each Subsequent Transfer Date, and the Seller will be selling on
each Subsequent Transfer Date, the related Subsequent Home Equity Loans,
rather than the Issuer providing a loan to the Seller secured by the related
Subsequent Home Equity Loans on each Subsequent Transfer Date. Accordingly,
the parties hereto each intend to treat this transaction for federal income
tax purposes as (i) a sale by the Seller, and a purchase by the Purchaser, of
the Initial Home Equity Loans on the Closing Date and (ii) a sale by the
Seller, and a purchase by the Issuer, of the related Subsequent Home Equity
Loans on each Subsequent Transfer Date. The Purchaser and the Issuer shall
each have the right to review the Home Equity Loans and the Related Documents
to determine the characteristics of the Home Equity Loans which will affect
the federal income tax consequences of owning the Home Equity Loans, and the
Seller shall cooperate with all reasonable requests made by the Purchaser or
the Issuer in the course of such review.
Section 8.9 Successors and Assigns; Assignment of This Agreement.
(a) This Agreement shall bind and inure to the benefit of and be
enforceable by the parties hereto and their respective permitted successors
and assigns. The obligations of the Seller under this Agreement cannot be
assigned or delegated to a third party without the consent of the Credit
Enhancer and the Purchaser (and the Issuer with respect to the transfer of any
Subsequent Home Equity Loans), which consent shall be at the Purchaser's sole
discretion (and the Issuer's sole discretion with respect to the transfer of
any Subsequent Home Equity Loans); provided, that the Seller may assign its
obligations hereunder to any Affiliate of the Seller, to any Person succeeding
to the business of the Seller, to any Person into which the Seller is merged
and to any Person resulting from any merger, conversion or consolidation to
which the Seller is a party. The parties hereto acknowledge that (i) the
Purchaser is acquiring the Initial Home Equity Loans for the purpose of
contributing them to the GMACM Loan Trust 1999-HLTV1 and (ii) the Issuer is
acquiring the Subsequent Home Equity Loans for the purpose of pledging the
Subsequent Home Equity Loans to the Indenture Trustee for the benefit of the
Noteholders and the Credit Enhancer.
(b) As an inducement to the Purchaser and the Issuer to purchase the
Initial Home Equity Loans and to the Issuer to purchase any Subsequent Home
Equity Loans, the Seller acknowledges and consents to (i) the assignment by
the Purchaser to the Issuer of all of the Purchaser's rights against the
Seller pursuant to this Agreement insofar as such rights relate to the Initial
Home Equity Loans transferred to the Issuer and to the enforcement or exercise
of any right or remedy against the Seller pursuant to this Agreement by the
Issuer, (ii) the enforcement or exercise of any right or remedy against the
Seller pursuant to this Agreement by or on behalf of the Issuer and (iii) the
Issuer's pledge of its interest in this Agreement to the Indenture Trustee and
the enforcement by the Indenture Trustee of any such right or remedy against
the Seller following an Event of Default under the Indenture. Such enforcement
of a right or remedy by the Issuer, the Owner Trustee, the Credit Enhancer or
the Indenture Trustee, as applicable, shall have the same force and effect as
if the right or remedy had been enforced or exercised by the Purchaser or the
Issuer directly.
Section 8.10 Survival. The representations and warranties made herein
by the Seller and the provisions of Article VI hereof shall survive the
purchase of the Initial Home Equity Loans hereunder and any transfer of
Subsequent Home Equity Loans pursuant to this Agreement and the related
Subsequent Transfer Agreement.
Section 8.11 Third Party Beneficiary. The Credit Enhancer shall be a
third party beneficiary hereof and shall be entitled to enforce the provisions
of this Agreement as if a party hereto.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed to this Home Equity Loan Purchase Agreement by their respective
officers thereunto duly authorized as of the day and year first above written.
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
as Purchaser
By: ___________________________________
Name:
Title:
GMAC MORTGAGE CORPORATION,
as Seller
By: ___________________________________
Name:
Title:
GMACM LOAN TRUST 1999-HLTV1,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By: ___________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
By: ___________________________________
Name:
Title:
EXHIBIT 1
HOME EQUITY LOAN SCHEDULE
[TO BE PROVIDED UPON REQUEST]
EXHIBIT 2
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Pursuant to this Subsequent Transfer Agreement (the "Agreement"),
dated as of __________, _____, between GMAC Mortgage Corporation, as seller
(the "Seller"), and GMACM Loan Trust 1999-HLTV1, as issuer (the "Issuer"), and
pursuant to the home equity loan purchase agreement dated as of September 1,
1999 (the "Home Equity Loan Purchase Agreement"), among the Seller, Bear
Stearns Asset Backed Securities, Inc., as purchaser (the "Purchaser"), the
Issuer and Norwest Bank Minnesota, National Association, as indenture trustee,
the Seller and the Issuer agree to the sale by the Seller and the purchase by
the Issuer of the home equity loans listed on the attached Home Equity Loan
Schedule (the "Subsequent Home Equity Loans").
Capitalized terms used and not defined herein have their respective
meanings as set forth in Appendix A to the Indenture dated as of September 1,
1999, between the Issuer and Norwest Bank Minnesota, National Association, as
Indenture Trustee, which meanings are incorporated by reference herein. All
other capitalized terms used herein shall have the meanings specified herein.
Section 1. Sale of Subsequent Home Equity Loans.
(a) The Seller does hereby sell, transfer, assign, set over and
convey to the Issuer, without recourse, all of its right, title and interest
in and to the Subsequent Home Equity Loans, and including all principal
received and interest accruing on the Subsequent Home Equity Loans on and
after the Subsequent Cut-off Date, and all items with respect to the
Subsequent Home Equity Loans to be delivered pursuant to Section 2.2 of the
Home Equity Loan Purchase Agreement; provided, however, that the Seller
reserves and retains all right, title and interest in and to principal
received and interest accruing on the Subsequent Home Equity Loans prior to
the Subsequent Cut-off Date. The Seller, contemporaneously with the delivery
of this Agreement, has delivered or caused to be delivered to the Indenture
Trustee each item set forth in Section 2.2 of the Home Equity Loan Purchase
Agreement.
The transfer to the Issuer by the Seller of the Subsequent Home
Equity Loans identified on the Home Equity Loan Schedule shall be absolute and
is intended by the parties hereto to constitute a sale by the Seller to the
Issuer on the Subsequent Transfer Date of all the Seller's right, title and
interest in and to the Subsequent Home Equity Loans, and other property as and
to the extent described above. In the event the transactions set forth herein
shall be deemed not to be a sale, the Seller hereby grants to the Issuer as of
the Subsequent Transfer Date a security interest in all of the Seller's right,
title and interest in, to and under the Subsequent Home Equity Loans, and such
other property, to secure all of the Issuer's obligations hereunder, and this
Agreement shall constitute a security agreement under applicable law. The
Seller agrees to take or cause to be taken such actions and to execute such
documents, including without limitation the filing of all necessary UCC-1
financing statements filed in the State of Delaware and the Commonwealth of
Pennsylvania (which shall be submitted for filing as of the Subsequent
Transfer Date), any continuation statements with respect thereto and any
amendments thereto required to reflect a change in the name or corporate
structure of the Seller or the filing of any additional UCC-1 financing
statements due to the change in the principal office of the Seller, as are
necessary to perfect and protect the Issuer's interests in each Subsequent
Home Equity Loan and the proceeds thereof.
(b) The expenses and costs relating to the delivery of the Subsequent
Home Equity Loans, this Agreement and the Home Equity Loan Purchase Agreement
shall be borne by the Seller.
(c) Additional terms of the sale are set forth on Attachment A
hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties set
forth in Section 3.1 of the Home Equity Loan Purchase Agreement that relate to
the Seller or the Subsequent Home Equity Loans as of the date hereof. The
Seller hereby confirms that each of the conditions set forth in Section 2.2(b)
of the Home Equity Loan Purchase Agreement are satisfied as of the date hereof
and further represents and warrants that each Subsequent Home Equity Loan
complies with the requirements of this Agreement and Section 2.2(c) of the
Home Equity Loan Purchase Agreement.
(b) The Seller is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Instrument or by the performance of its obligations hereunder nor is it
aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Seller prior to the
date hereof.
(c) All terms and conditions of the Home Equity Loan Purchase
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict the provisions of this Agreement shall control over the
conflicting provisions of the Home Equity Loan Purchase Agreement.
Section 3. Recordation of Instrument. To the extent permitted by
applicable law or a memorandum thereof if permitted under applicable law, this
Agreement 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 related Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Servicer at the Noteholders' expense on
direction of the Majority Noteholders or the Credit Enhancer, but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Noteholders or the
Credit Enhancer or is necessary for the administration or servicing of the
Subsequent Home Equity Loans.
Section 4. GOVERNING LAW. THIS INSTRUMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 5. Counterparts. This Instrument may be executed in
counterparts, each of which, when so executed, shall be deemed to be an
original and together shall constitute one and the same instrument.
Section 6. Successors and Assigns. This Instrument shall inure to the
benefit of and be binding upon the Seller and the Issuer and their respective
successors and assigns.
GMAC MORTGAGE CORPORATION,
as Seller
By: _________________________________
Name:
Title:
GMACM LOAN TRUST 1999-HLTV1,
as Issuer
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
in its capacity as Owner Trustee
By: __________________________________
Name:
Title:
Attachments
A. Additional terms of sale.
B. Schedule of Subsequent Home Equity Loans.
C. Opinions of Seller's counsel (bankruptcy, corporate).
D. Seller's Officer's Certificate.
E. Seller's Officer's Certificate (confirmation of Credit Enhancer
approval).
GMACM LOAN TRUST 1999-HLTV1
ATTACHMENT A TO FORM OF SUBSEQUENT TRANSFER AGREEMENT
____________, ____
A.
1. Subsequent Cut-off Date:
2. Pricing Date:
3. Subsequent Transfer Date:
4. Aggregate Principal Balance of the Subsequent Home Equity
Loans as of the Subsequent Cut-off Date:
5. Purchase Price: 100.00%
B.
As to all Subsequent Home Equity Loans:
1. Longest stated term to maturity: _____ months
2. Minimum Mortgage Rate: _____ %
3. Maximum Mortgage Rate: _____ %
4. WAC of all Subsequent Home Equity Loans: _____ %
5. WAM of all Subsequent Home Equity Loans: _____ %
6. Largest Principal Balance: $________
7. Non-owner occupied Mortgaged Properties: _____ %
8. California zip code concentrations: __% and __ %
9. Condominiums: _____ %
10. Single-family: _____ %
11. Weighted average term since origination: _____%
12. Principal balance of Subsequent Home Equity Loans
with respect to which the Mortgagor is an employee of
GMACM or an affiliate of GMACM: $______
13. Number of Subsequent Home Equity Loans with respect to which
the Mortgagor is an employee of
GMACM or an affiliate of GMACM: _____
EXHIBIT 3
FORM OF ADDITION NOTICE
DATE:
Norwest Bank Minnesota, Moody's Investors Service, Inc.
National Association 99 Church Street
11000 Broken Land Parkway New York, New York 10007
Columbia, Maryland 21044
Ambac Assurance Corporation Wilmington Trust Company
One State Street Plaza, 17th Floor 1100 North Market Street
New York, New York 10004 Wilmington, Delaware 19890
Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.
26 Broadway
New York, New York 10004-1064
Re: GMACM Loan Trust 1999-HLTV1
Ladies and Gentlemen:
Pursuant to Section 2.2 of the home equity loan purchase agreement
dated as of September 1, 1999 (the "Purchase Agreement"), among GMAC Mortgage
Corporation, as Seller, Bear Stearns Asset Backed Securities, Inc., as
Purchaser, GMACM Loan Trust 1999-HLTV1, as issuer, and the Seller has
designated the Subsequent Home Equity Loans identified on the Home Equity Loan
Schedule attached hereto to be sold to the Issuer on ________, ____, with an
aggregate Principal Balance of $__________. Capitalized terms not otherwise
defined herein have the meaning set forth in the Appendix A to the Indenture
dated as of September 1, 1999, between the Issuer and the Indenture Trustee.
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention
of the undersigned.
Very truly yours,
GMAC MORTGAGE CORPORATION,
as Seller
By:_________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:_______________________________
Name:
Title:
Exhibi5 10.3
GMAC MORTGAGE CORPORATION
as Servicer,
GMACM LOAN TRUST 1999-HLTV1,
as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
-------------------------
SERVICING AGREEMENT
Dated as of September 1, 1999
-------------------------
Table of Contents
Page
ARTICLE I
Definitions
Section 1.01 Definitions............................................................................2
Section 1.02 Other Definitional Provisions..........................................................2
Section 1.03 Interest Calculations..................................................................3
ARTICLE II
Representations and Warranties
Section 2.01 Representations and Warranties Regarding the Servicer..................................4
Section 2.02 Representations and Warranties of the Issuer...........................................5
Section 2.03 Enforcement of Representations and Warranties..........................................5
ARTICLE III
Administration and Servicing of Home Equity Loans
Section 3.01 The Servicer...........................................................................7
Section 3.02 Collection of Certain Home Equity Loan Payments........................................9
Section 3.03 Withdrawals from the Custodial Account................................................11
Section 3.04 Maintenance of Hazard Insurance; Property Protection Expenses.........................13
Section 3.05 Modification Agreements; Release or Substitution of Lien..............................14
Section 3.06 Trust Estate; Related Documents.......................................................14
Section 3.07 Realization Upon Defaulted Home Equity Loans; Loss Mitigation.........................15
Section 3.08 Issuer and Indenture Trustee to Cooperate.............................................17
Section 3.09 Servicing Compensation; Payment of Certain Expenses by
Servicer..............................................................................18
Section 3.10 Annual Statement as to Compliance.....................................................18
Section 3.11 Annual Servicing Report...............................................................18
Section 3.12 Access to Certain Documentation and Information Regarding the Home Equity Loans.......19
Section 3.13 Maintenance of Certain Servicing Insurance Policies...................................19
Section 3.14 Information Required by the Internal Revenue Service and Reports of
Foreclosures and Abandonments of Mortgaged Property.................................19
Section 3.15 Optional Repurchase of Defaulted Home Equity Loans.20
Section 3.16 Recording of Assignments..............................................................20
Section 3.17 Pre-Funding Account...................................................................20
Section 3.18 Capitalized Interest Account..........................................................22
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders.........................................................24
ARTICLE V
Note Payment Account and Reserve Account
Section 5.01 Note Payment Account and Reserve Account..............................................27
ARTICLE VI
The Servicer
Section 6.01 Liability of the Servicer.............................................................28
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the Servicer.........28
Section 6.03 Limitation on Liability of the Servicer and Others....................................28
Section 6.04 Servicer Not to Resign................................................................29
Section 6.05 Delegation of Duties..................................................................29
Section 6.06 Payment of Indenture Trustee's and Owner Trustee's Fees and Expenses; Indemnification.30
ARTICLE VII
Default
Section 7.01 Servicing Default.....................................................................32
Section 7.02 Indenture Trustee to Act; Appointment of Successor....................................34
Section 7.03 Notification to Securityholders.......................................................35
ARTICLE VIII
Miscellaneous Provisions
Section 8.01 Amendment.............................................................................36
Section 8.02 GOVERNING LAW.........................................................................36
Section 8.03 Notices...............................................................................36
Section 8.04 Severability of Provisions............................................................36
Section 8.05 Third-Party Beneficiaries.............................................................37
Section 8.06 Counterparts..........................................................................37
Section 8.07 Effect of Headings and Table of Contents..............................................37
Section 8.08 Termination Upon Purchase by the Servicer or Liquidation of All Home Equity
Loans; Partial Redemption..........................................................37
Section 8.09 Certain Matters Affecting the Indenture Trustee.......................................38
Section 8.10 Owner Trustee and Indenture Trustee Not Liable for Related Documents..................38
EXHIBIT A - HOME EQUITY LOAN SCHEDULE.................................................................A-1
EXHIBIT B - POWER OF ATTORNEY.........................................................................B-1
EXHIBIT C - FORM OF REQUEST FOR RELEASE...............................................................C-1
This Servicing Agreement, dated as of September 1, 1999 (the
"Agreement"), is among GMAC Mortgage Corporation, as servicer (the
"Servicer"), the GMACM Loan Trust 1999-HLTV1, as issuer (the "Issuer"), and
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee").
WITNESSETH:
WHEREAS, pursuant to the terms of the Purchase Agreement (as defined
herein), GMAC Mortgage Corporation, as seller (in such capacity, the
"Seller"), will sell to Bear Stearns Asset Backed Securities, Inc. ("BSABS"),
as purchaser (in such capacity, the "Purchaser"), the Initial Home Equity
Loans on the Closing Date, and may sell Subsequent Home Equity Loans on one or
more Subsequent Transfer Dates, in each case together with the Related
Documents;
WHEREAS, BSABS, as depositor (in such capacity, the "Depositor"),
will sell the Initial Home Equity Loans and assign all of its rights under the
Purchase Agreement to the Issuer, together with the Related Documents on the
Closing Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will issue the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will
issue the Notes; and
WHEREAS, pursuant to the terms of this Agreement, the Servicer will
service the Home Equity Loans directly or through one or more Subservicers.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Definitions contained in Appendix A to
the indenture dated as of September 1, 1999 (the "Indenture"), between the
Issuer and the Indenture Trustee, which is incorporated by reference herein.
All other capitalized terms used herein shall have the meanings specified
herein.
Section 1.02 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document, to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To the
extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control. (c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; the term "including" shall
mean "including without limitation"; "or" shall include "and/or"; and the term
"proceeds" shall have the meaning ascribed thereto in the UCC. (d) The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as the feminine
and neuter genders of such terms. (e) Any agreement, instrument or statute
defined or referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as from time
to time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to its
permitted successors and assigns. Section 1Interest Calculations. All
calculations of interest hereunder that are made in respect of the Principal
Balance of a Home Equity Loan shall be made under an actuarial interest
method. All calculations of interest on the Class A-1 Notes shall be made on
the basis of the actual number of days in an Interest Accrual Period and a
year assumed to consist of 360 days. All calculations of interest on the Class
A-2 Notes shall be made on the basis of a 30-day month and a year assumed to
consist of 360 days. The calculation of the Servicing Fee shall be made on the
basis of a 360-day year consisting of twelve 30-day months. All dollar amounts
calculated hereunder shall be rounded to the nearest penny with one-half of
one penny being rounded up.
ARTICLE II
Representations and Warranties
Section 2.01 Representations and Warranties Regarding the Servicer.
The Servicer represents and warrants to the Issuer and for the benefit of the
Indenture Trustee, as pledgee of the Home Equity Loans, as of the Closing
Date:
(a) the Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania and
has the corporate power to own its assets and to transact the business in
which it is currently engaged. The Servicer is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the character of the business transacted by it or properties owned or leased
by it requires such qualification and in which the failure to so qualify would
have a material adverse effect (not in the ordinary course of business) on the
business, properties, assets, or condition (financial or other) of the
Servicer;
(b) the Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. When
executed and delivered, this Servicing Agreement will constitute the legal,
valid and binding obligation of the Servicer enforceable in accordance with
its terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies; (c) the Servicer is
not required to obtain the consent of any other Person or any consent,
license, approval or authorization from, or registration or declaration with,
any governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except
for such consent, license, approval or authorization, or registration or
declaration, as shall have been obtained or filed, as the case may be; (d) the
execution and delivery of this Agreement and the performance of the
transactions contemplated hereby by the Servicer will not violate any material
provision of any existing law or regulation or any order or decree of any
court applicable to the Servicer or any provision of the Articles of
Incorporation or Bylaws of the Servicer, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Servicer is
a party or by which the Servicer may be bound; and (e) no litigation or
administrative proceeding of or before any court, tribunal or governmental
body is currently pending, or to the knowledge of the Servicer threatened,
against the Servicer or any of its properties or with respect to this
Agreement or the Securities which in the opinion of the Servicer has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement.
The foregoing representations and warranties shall survive any
termination of the Servicer hereunder.
Section 2.02 Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to the Servicer and for the benefit of the
Indenture Trustee, as pledgee of the Home Equity Loans, as of the Closing
Date:
(a) the Issuer is a business trust duly formed and in good standing
under the laws of the State of Delaware and has full power, authority and
legal right to execute and deliver this Agreement and to perform its
obligations under this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement; and
(b) the execution and delivery by the Issuer of this Agreement and
the performance by the Issuer of its obligations under this Agreement will not
violate any provision of any law or regulation governing the Issuer or any
order, writ, judgment or decree of any court, arbitrator or governmental
authority or agency applicable to the Issuer or any of its assets. Such
execution, delivery, authentication and performance will not require the
authorization, consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency regulating the activities of limited
liability companies. Such execution, delivery, authentication and performance
will not conflict with, or result in a breach or violation of, any mortgage,
deed of trust, lease or other agreement or instrument to which the Issuer is
bound.
Section 2.03 Enforcement of Representations and Warranties. The
Servicer, on behalf of and subject to the direction of the Indenture Trustee,
as pledgee of the Home Equity Loans, or the Issuer, shall enforce the
representations and warranties of the Seller pursuant to the Purchase
Agreement. Upon the discovery by the Seller, the Depositor, the Servicer, the
Indenture Trustee, the Credit Enhancer, the Issuer, or the Custodian of a
breach of any of the representations and warranties made in the Purchase
Agreement, in respect of any Home Equity Loan which materially and adversely
affects the interests of the Securityholders or the Credit Enhancer, the party
discovering such breach shall give prompt written notice to the other parties
(the Custodian being so obligated under the Custodial Agreement). The Servicer
shall promptly notify the Seller of such breach and request that, pursuant to
the terms of the Purchase Agreement, the Seller either (i) cure such breach in
all material respects within 90 days from the date the Seller was notified of
such breach or (ii) purchase such Home Equity Loan from the Issuer at the
price and in the manner set forth in Section 3.1(b) of the Purchase Agreement;
provided, that the Seller shall, subject to the conditions set forth in the
Purchase Agreement, have the option to substitute an Eligible Substitute Loan
or Loans for such Home Equity Loan. In the event that the Seller elects to
substitute one or more Eligible Substitute Loans pursuant to Section 3.1(b) of
the Purchase Agreement, the Seller shall deliver to the Issuer with respect to
such Eligible Substitute Loans, the original Mortgage Note, the Mortgage, and
such other documents and agreements as are required by the Purchase Agreement.
Payments due with respect to Eligible Substitute Loans in the month of
substitution shall not be transferred to the Issuer and will be retained by
the Servicer and remitted by the Servicer to the Seller on the next succeeding
Payment Date provided a payment at least equal to the applicable Monthly
Payment has been received by the Issuer for such month in respect of the Home
Equity Loan to be removed. The Servicer shall amend or cause to be amended the
Home Equity Loan Schedule to reflect the removal of such Home Equity Loan and
the substitution of the Eligible Substitute Loans and the Servicer shall
promptly deliver the amended Home Equity Loan Schedule to the Owner Trustee
and Indenture Trustee.
It is understood and agreed that the obligation of the Seller to cure
such breach or purchase or substitute for such Home Equity Loan as to which
such a breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to the Issuer and the Indenture Trustee, as
pledgee of the Home Equity Loans, against the Seller. In connection with the
purchase of or substitution for any such Home Equity Loan by the Seller, the
Issuer shall assign to the Seller all of its right, title and interest in
respect of the Purchase Agreement applicable to such Home Equity Loan. Upon
receipt of the Repurchase Price, or upon completion of such substitution, the
Servicer shall notify the Custodian, and the Custodian shall deliver the
Mortgage Files to the Servicer, together with all relevant endorsements and
assignments prepared by the Servicer that the Indenture Trustee shall execute.
ARTICLE III
Administration and Servicing of Home Equity Loans
Section 3.01 The Servicer.
(a) The Servicer shall service and administer the Home Equity Loans
in a manner generally consistent with the terms of the Program Guide and in a
manner consistent with the terms of this Agreement and that shall be normal
and usual in its general mortgage servicing activities. The Servicer shall
have full power and authority, acting alone or through a Subservicer, to do
any and all things in connection with such servicing and administration which
it may deem necessary or desirable, it being understood, however, that the
Servicer shall at all times remain responsible to the Issuer and the Indenture
Trustee, as pledgee of the Home Equity Loans, for the performance of its
duties and obligations hereunder in accordance with the terms hereof and the
Program Guide. Without limiting the generality of the foregoing, the Servicer
shall continue, and is hereby authorized and empowered by the Issuer and the
Indenture Trustee, as pledgee of the Home Equity Loans, to execute and
deliver, on behalf of itself, the Issuer, the Indenture Trustee or any of
them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge and all other comparable instruments with respect
to the Home Equity Loans and the Mortgaged Properties. The Issuer, the
Indenture Trustee and the Custodian, as applicable, shall furnish the Servicer
with any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder. In addition, the Servicer may, at its own discretion and on behalf
of the Indenture Trustee, obtain credit information in the form of a "credit
score" from a credit repository. On the Closing Date, the Indenture Trustee
shall deliver to the Servicer a limited power of attorney substantially in the
form of Exhibit B hereto.
If the Mortgage did not have a Lien senior to the related Home Equity
Loan on the related Mortgaged Property as of the related Cut-Off Date, then
the Servicer, in such capacity, may not consent to the placing of a Lien
senior to that of the Mortgage on the related Mortgaged Property. If the
Mortgage had a Lien senior to the related Home Equity Loan on the related
Mortgaged Property as of the related Cut-Off Date, then the Servicer, in such
capacity, may consent to the refinancing of such prior senior Lien, provided
that the following requirements are met:
(i) (A) the Mortgagor's debt-to-income ratio resulting from
such refinancing is less than the original debt-to-income ratio as
set forth on the Home Equity Loan Schedule and, in the event that the
resulting CLTV of such Home Equity Loan increases by more than 10%
above the CLTV prior to such refinancing, the Servicer shall obtain
the prior consent of the Credit Enhancer, which consent shall not be
unreasonably withheld; provided, however, that in no instance shall
the resulting CLTV of such Home Equity Loan be higher than that
permitted by the Program Guide; or
(B) the resulting CLTV of such Home Equity
Loan is no higher than the greater of the CLTV prior to such
refinancing and 70% (or 80% for borrowers with a FICO "credit score"
of 690 or higher); provided, however, if such refinanced mortgage
loan is a "rate and term" mortgage loan (meaning, the Mortgagor does
not receive any cash from the refinancing), the CLTV may increase to
the extent of either (a) the reasonable closing costs of such
refinancing or (b) any decrease in the value of the related Mortgaged
Property, if the Mortgagor is in good standing as defined by the
Program Guide;
(ii) the interest rate, or, in the case of an adjustable
rate existing senior Lien, the maximum interest rate, for the loan
evidencing the refinanced senior Lien is no higher than the interest
rate or the maximum interest rate, as the case may be, on the loan
evidencing the existing senior Lien immediately prior to the date of
such refinancing; provided, however (a) if the loan evidencing the
existing senior Lien prior to the date of refinancing has an
adjustable rate and the loan evidencing the refinanced senior Lien
has a fixed rate, then the current interest rate on the loan
evidencing the refinanced senior Lien may be up to 2.0% higher than
the then-current loan rate of the loan evidencing the existing senior
Lien and (b) if the loan evidencing the existing senior Lien prior to
the date of refinancing has a fixed rate and the loan evidencing the
refinanced senior Lien has an adjustable rate, then the maximum
interest rate on the loan evidencing the refinanced senior Lien shall
be less than or equal to (x) the interest rate on the loan evidencing
the existing senior Lien prior to the date of refinancing plus (y)
2.0%; and
(iii) the loan evidencing the refinanced senior Lien is not
subject to negative amortization.
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Issuer under this Agreement
is intended by the parties to be that of an independent contractor and not
that of a joint venturer, partner or agent.
(b) The Servicer may enter into Subservicing Agreements with
Subservicers for the servicing and administration of certain of the Home
Equity Loans. References in this Agreement to actions taken or to be taken by
the Servicer in servicing the Home Equity Loans include actions taken or to be
taken by a Subservicer on behalf of the Servicer and any amount actually
received by such Subservicer in respect of a Home Equity Loan shall be deemed
to have been received by the Servicer whether or not actually received by the
Servicer. Each Subservicing Agreement will be upon such terms and conditions
as are not inconsistent with this Agreement and as the Servicer and the
Subservicer have agreed. With the approval of the Servicer, a Subservicer may
delegate its servicing obligations to third-party servicers, but such
Subservicers will remain obligated under the related Subservicing Agreements.
The Servicer and the Subservicer may enter into amendments to the related
Subservicing Agreements; provided, however, that any such amendments shall not
cause the Home Equity Loans to be serviced in a manner that would be
materially inconsistent with the standards set forth in this Agreement. The
Servicer shall be entitled to terminate any Subservicing Agreement in
accordance with the terms and conditions thereof and without any limitation by
virtue of this Agreement; provided, however, that in the event of termination
of any Subservicing Agreement by the Servicer or the Subservicer, the Servicer
shall either act as servicer of the related Home Equity Loan or enter into a
Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related Subservicing Agreement. The Servicer shall be entitled to
enter into any agreement with a Subservicer for indemnification of the
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
In the event that the rights, duties and obligations of the Servicer
are terminated hereunder, any successor to the Servicer in its sole discretion
may, to the extent permitted by applicable law, terminate the existing
Subservicing Agreement with any Subservicer in accordance with the terms of
the applicable Subservicing Agreement or assume the terminated Servicer's
rights and obligations under such subservicing arrangements which termination
or assumption will not violate the terms of such arrangements.
As part of its servicing activities hereunder, the Servicer, for the
benefit of the Indenture Trustee, the Credit Enhancer and the Securityholders,
shall use reasonable efforts to enforce the obligations of each Subservicer
under the related Subservicing Agreement, to the extent that the
non-performance of any such obligation would have a material adverse effect on
a Home Equity Loan. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Subservicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such
an extent and at such time as the Servicer, in its good faith business
judgment, would require were it the owner of the related Home Equity 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 Equity Loan or (ii) from a specific
recovery of costs, expenses or attorneys fees against the party against whom
such enforcement is directed.
Section 3.02 Collection of Certain Home Equity Loan Payments.
(a) The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Home Equity Loans,
and shall, to the extent such procedures shall be consistent with this
Agreement and generally consistent with the Program Guide, follow such
collection procedures as shall be normal and usual in its general mortgage
servicing activities. Consistent with the foregoing, and without limiting the
generality of the foregoing, the Servicer may in its discretion (i) waive any
late payment charge, penalty interest or other fees which may be collected in
the ordinary course of servicing a Home Equity Loan and (ii) arrange with a
Mortgagor a schedule for the payment of principal and interest due and unpaid;
provided, that such arrangement is consistent with the Servicer's policies
with respect to home equity mortgage loans; and provided further, that
notwithstanding such arrangement, such Home Equity Loans will be included in
the information regarding delinquent Home Equity Loans set forth in the
Servicing Certificate. The Servicer may also extend the Due Date for payment
due on a Home Equity Loan in accordance with the Program Guide; provided,
however, that the Servicer shall first determine that any such waiver or
extension will not impair the coverage of any related insurance policy or
materially adversely affect the Lien of the related Mortgage or the interests
of the Securityholders or the Credit Enhancer. Consistent with the terms of
this Agreement, the Servicer may also:
(i) waive, modify or vary any term of any Home Equity Loan;
(ii) consent to the postponement of strict compliance with any such
term or in any manner grant indulgence to any Mortgagor;
(iii) arrange with a Mortgagor a schedule for the payment of
principal and interest due and unpaid;
(iv) forgive any portion of the amounts contractually owed under the
Home Equity Loan;
(v) capitalize past due amounts owed under the Home Equity Loan by
adding any amounts in arrearage to the existing principal balance of the Home
Equity Loan (a "Capitalization Workout") which will result in an increased
Monthly Payment amount, provided that: (A) the amount added to the existing
principal balance of the Home Equity Loan (the "Capitalized Amount") shall be
no greater than five times the Mortgagor's current Monthly Payment amount; and
(B) the Servicer shall not enter into a Capitalization Workout unless the CLTV
of the Home Equity Loan prior to the Capitalization Workout equals or exceeds
80% and the Mortgagor has qualified for the Capitalization Workout under the
Servicer's servicing guidelines; or
(vi) reset the due date for the Home Equity Loan, or any combination
of the foregoing;
if in the Servicer's determination such waiver, modification, postponement or
indulgence is not materially adverse to the interests of the Securityholders
or the Credit Enhancer; provided, however, that the Servicer may not modify or
permit any Subservicer to modify any Home Equity Loan (including without
limitation any modification that would change the Loan Rate, forgive the
payment of any principal or interest (unless in connection with the
liquidation of the related Home Equity Loan) or extend the final maturity date
of such Home Equity Loan) unless such Home Equity Loan is in default or, in
the judgment of the Servicer, such default is reasonably foreseeable.
Notwithstanding the foregoing, any permitted extension of the final maturity
date of a Home Equity Loan shall not exceed the end of the Collection Period
preceding the Final Maturity Date. The general terms of any waiver,
modification, postponement or indulgence with respect to any of the Home
Equity Loans will be included in the Servicing Certificate, and such Home
Equity Loans will not be considered "delinquent" for the purposes of the Basic
Documents so long as the Mortgagor complies with the terms of such waiver,
modification, postponement or indulgence.
(b) The Servicer shall establish a Custodial Account, which shall be
an Eligible Account, in which the Servicer shall deposit or cause to be
deposited any amounts representing payments and collections in respect of the
Initial Home Equity Loans received by it subsequent to the Cut-Off Date or,
with respect to the Subsequent Home Equity Loans, the Subsequent Cut-off Date
(other than in respect of the payments referred to in the following
paragraph), within one Business Day following receipt thereof (or otherwise on
or prior to the Closing Date), including the following payments and
collections received or made by it (without duplication):
(i) all payments of principal of or interest on the Home Equity
Loans received or advanced by the Servicer, net of any portion of the
interest thereof retained by any Subservicer as subservicing fees;
(ii) the aggregate Repurchase Price of the Home Equity Loans
purchased by the Servicer pursuant to Section 3.15; (iii) Net Liquidation
Proceeds, net of any related Foreclosure Profit;
(iv) all proceeds of any Home Equity Loans repurchased by the Seller
pursuant to the Purchase Agreement, and all Substitution Adjustment
Amounts required to be deposited in connection with the substitution of
an Eligible Substitute Loan pursuant to the Purchase Agreement;
(v) Insurance Proceeds, other than Net Liquidation Proceeds,
resulting from any insurance policy maintained on a Mortgaged Property;
and
(vi) amounts required to be paid by the Servicer pursuant to Section
8.08;
provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the Home
Equity Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Custodial Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Custodial Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties,
payable by Mortgagors, or amounts received by the Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments and similar items. In the event any amount not required to be
deposited in the Custodial Account is so deposited, the Servicer may at any
time withdraw such amount from the Custodial Account, any provision herein to
the contrary notwithstanding. The Custodial Account may contain funds that
belong to one or more trust funds created for the notes or certificates of
other series and may contain other funds respecting payments on Home Equity
Loans or other mortgage loans belonging to the Servicer or serviced or
serviced by it on behalf of others. Notwithstanding such commingling of funds,
the Servicer shall keep records that accurately reflect the funds on deposit
in the Custodial Account that have been identified by it as being attributable
to the Home Equity Loans and shall hold all collections in the Custodial
Account to the extent they represent collections on the Home Equity Loans for
the benefit of the Trust, the Credit Enhancer, the Securityholders and the
Indenture Trustee, as their interests may appear. The Servicer shall retain
all Foreclosure Profits as additional servicing compensation.
The Servicer, in its sole discretion, may deposit into the Custodial
Account amounts representing installments of principal of or interest on Home
Equity Loans that were delinquent as of the end of any Collection Period. If
the Servicer makes any such advances of delinquent principal and/or interest,
the Servicer shall be entitled to reimburse itself by withdrawing from the
Custodial Account, as provided herein, any amounts so advanced.
The Servicer may cause the institution maintaining the Custodial
Account to invest any funds in the Custodial Account in Permitted Investments
(including obligations of the Servicer or any of its Affiliates, if such
obligations otherwise qualify as Permitted Investments), which investments
shall mature not later than the Business Day preceding the next succeeding
Payment Date, and which investments shall not be sold or disposed of prior to
maturity. Except as provided above, all income and gain realized from any such
investment shall inure to the benefit of the Servicer and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred
in respect of the principal amount of any such investments shall be deposited
in the Custodial Account by the Servicer out of its own funds immediately as
realized.
(c) The Servicer shall require each Subservicer to hold all funds
constituting collections on the Home Equity Loans, pending remittance thereof
to the Servicer, in one or more accounts meeting the requirements of an
Eligible Account, and shall require all such funds to be invested in Permitted
Investments, unless all such collections are remitted on a daily basis to the
Servicer for deposit into the Custodial Account.
Section 3.03 Withdrawals from the Custodial Account. The Servicer
shall, from time to time as provided herein, make withdrawals from the
Custodial Account of amounts on deposit therein pursuant to Section 3.02 that
are attributable to the Home Equity Loans for the following purposes:
(a) on each Determination Date, the Servicer shall determine the
aggregate amounts to be withdrawn from the Custodial Account and applied
pursuant to Section 3.05(a) of the Indenture and, prior to the close of
business on the Business Day prior to the related Payment Date, shall withdraw
such amounts from the Custodial Account and deposit into the Note Payment
Account to be distributed by the Paying Agent in accordance with and in the
order or priority set forth in Section 3.05(a) of the Indenture for such
Payment Date, in accordance with the Servicer's Certificate;
(b) [Reserved];
(c) to the extent deposited to the Custodial Account, to reimburse
itself or the related Subservicer for previously unreimbursed expenses
incurred in maintaining individual insurance policies pursuant to Section
3.04, or Liquidation Expenses, paid pursuant to Section 3.07 or otherwise
reimbursable pursuant to the terms of this Agreement (to the extent not
payable pursuant to Section 3.09), such withdrawal right being limited to
amounts received on particular Home Equity Loans (other than any Repurchase
Price in respect thereof) that represent late recoveries of the payments for
which such advances were made, or from related Net Liquidation Proceeds or the
proceeds of the purchase of such Home Equity Loan;
(d) to pay to itself out of each payment received on account of
interest on a Home Equity Loan as contemplated by Section 3.09, an amount
equal to the related Servicing Fee (to the extent not retained pursuant to
Section 3.02), and to pay to any Subservicer any subservicing fees not
previously withheld by such Subservicer;
(e) to the extent deposited in the Custodial Account, to pay to
itself as additional servicing compensation any interest or investment income
earned on funds deposited in the Custodial Account that it is entitled to
withdraw pursuant to Sections 3.02(b) and 5.01;
(f) to the extent deposited in the Custodial Account, to pay to
itself as additional servicing compensation any Foreclosure Profits (to the
extent permitted by law);
(g) to pay to itself or the Seller, with respect to any Home Equity
Loan or property acquired in respect thereof that has been purchased or
otherwise transferred to the Seller, the Servicer or other entity, all amounts
received thereon and not required to be distributed to Securityholders as of
the date on which the related Purchase Price or Repurchase Price is
determined;
(h) to withdraw any other amount deposited in the Custodial Account
that was not required to be deposited therein pursuant to Section 3.02;
(i) to pay to itself, with respect to any Home Equity Loan for which
it has made an advance of delinquent principal and/or interest, any previously
unreimbursed advances of such amounts theretofore made to the extent of
receipts of late recoveries of such payments from the related Mortgagors, out
of related Net Liquidation Proceeds or the proceeds of the purchase of such
Home Equity Loans; and
(j) at its option, for as long as it is the sole Certificateholder,
to pay to itself from amounts otherwise required to be remitted to the
Certificate Distribution Account, all amounts payable to it as a
Certificateholder on the related Payment Date.
Since, in connection with withdrawals pursuant to clauses (c), (d),
(e), (f) and (g), the Servicer's entitlement thereto is limited to collections
or other recoveries on the related Home Equity Loan, the Servicer shall keep
and maintain separate accounting, on a Home Equity Loan by Home Equity Loan
basis, for the purpose of justifying any withdrawal from the Custodial Account
pursuant to such clauses. Notwithstanding any other provision of this
Agreement, the Servicer shall be entitled to reimburse itself for any
previously unreimbursed expenses incurred pursuant to Section 3.07 or
otherwise reimbursable pursuant to the terms of this Agreement that the
Servicer determines to be otherwise nonrecoverable (except with respect to any
Home Equity Loan as to which the Repurchase Price has been paid), by
withdrawal from the Custodial Account of amounts on deposit therein
attributable to the Home Equity Loans on any Business Day prior to the Payment
Date succeeding the date of such determination.
Section 3.04 Maintenance of Hazard Insurance; Property Protection
Expenses. To the extent permitted under the related Mortgage Note and
Mortgage, and to the extent the Servicer receives notice that a hazard
insurance policy has been cancelled, the Servicer shall cause to be maintained
for each Home Equity Loan hazard insurance naming the Servicer or related
Subservicer as loss payee thereunder providing extended coverage in an amount
which is at least equal to the lesser of (i) the maximum insurable value of
the improvements securing such Home Equity Loan from time to time or (ii) the
combined principal balance owing on such Home Equity Loan and any mortgage
loan senior to such Home Equity Loan from time to time; provided, however,
that such coverage may not be less than the minimum amount required to fully
compensate for any loss or damage on a replacement cost basis. The Servicer
shall use its best efforts to monitor that hazard insurance is maintained as
described in the previous sentence in the same manner as it would for mortgage
loans in its own portfolio. The Servicer shall also cause to be maintained on
property acquired upon foreclosure, or deed in lieu of foreclosure, of any
Home Equity Loan, fire insurance with extended coverage in an amount which is
at least equal to the amount necessary to avoid the application of any
co-insurance clause contained in the related hazard insurance policy. Amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the related Mortgaged Property or
property thus acquired or amounts released to the Mortgagor in accordance with
the Servicer's normal servicing procedures) shall be deposited in the
Custodial Account to the extent called for by Section 3.02. In cases in which
any Mortgaged Property is located at any time during the life of a Home Equity
Loan in a federally designated flood area, to the extent permitted under the
related Mortgage Note and Mortgage, and to the extent the Servicer receives
notice that the related flood insurance has been cancelled. All such flood
insurance shall be in amounts equal to the lesser of (i) the amount required
to compensate for any loss or damage to the related Mortgaged Property on a
replacement cost basis and (ii) the maximum amount of such insurance available
for such Mortgaged Property under the national flood insurance program
(assuming that the area in which such Mortgaged Property is located is
participating in such program). The Servicer shall use its best efforts to
monitor such flood insurance as described in the previous sentence in the same
manner as it would for mortgage loans in its own portfolio. The Servicer shall
be under no obligation to require that any Mortgagor maintain earthquake or
other additional insurance and shall be under no obligation itself to maintain
any such additional insurance on property acquired in respect of a Home Equity
Loan, other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance. If the
Servicer shall obtain and maintain a blanket policy consistent with its
general mortgage servicing activities insuring against hazard losses on all of
the Home Equity Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.04, it being
understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with the first
sentence of this Section 3.04 and there shall have been a loss which would
have been covered by such policy, deposit in the Custodial Account the amount
not otherwise payable under the blanket policy because of such deductible
clause. Any such deposit by the Servicer shall be made on the last Business
Day of the Collection Period in the month in which payments under any such
policy would have been deposited in the Custodial Account. In connection with
its activities as servicer of the Home Equity Loans, the Servicer agrees to
present, on behalf of itself, the Issuer and the Indenture Trustee, claims
under any such blanket policy.
Section 3.05 Modification Agreements; Release or Substitution of
Lien.
(a) The Servicer or the related Subservicer, as the case may be,
shall be entitled to (a) execute assumption agreements, substitution
agreements, and instruments of satisfaction or cancellation or of partial or
full release or discharge, or any other document contemplated by this
Agreement and other comparable instruments with respect to the Home Equity
Loans and with respect to the related Mortgaged Properties (and the Issuer and
the Indenture Trustee each shall promptly execute any such documents on
request of the Servicer) and (b) approve the granting of an easement thereon
in favor of another Person, any alteration or demolition of such Mortgaged
Properties or other similar matters, if it has determined, exercising its good
faith business judgment in the same manner as it would if it were the owner of
the related Home Equity Loans, that the security for, and the timely and full
collectability of, such Home Equity Loans would not be adversely affected
thereby. A partial release pursuant to this Section 3.05 shall be permitted
only if the CLTV for the related Home Equity Loan after such partial release
does not exceed the CLTV for such Home Equity Loan as of the related Cut-Off
Date. Any fee collected by the Servicer or the related Subservicer for
processing such request will be retained by the Servicer or such Subservicer
as additional servicing compensation.
(b) The Servicer may enter into an agreement with a Mortgagor to
release the lien on the Mortgaged Property relating to a Home Equity Loan (the
"Existing Lien"), if at the time of such agreement the Home Equity Loan is
current in payment of principal and interest, under any of the following
circumstances:
(i) in any case in which, simultaneously with the release of the
Existing Lien, the Mortgagor executes and delivers to the Servicer a
Mortgage on a substitute Mortgaged Property, provided that the CLTV of
the Home Equity Loan (calculated based on the Appraised Value of the
substitute Mortgaged Property) is not greater than the CLTV prior to
releasing the Existing Lien;
(ii) in any case in which, simultaneously with the release of the
Existing Lien, the Mortgagor executes and delivers to the Servicer a
Mortgage on a substitute Mortgaged Property, provided that: (A) the CLTV
of the Home Equity Loan (calculated based on the Appraised Value of the
substitute Mortgaged Property) is not greater than the lesser of (1) 125%
and (2) 105% of the CLTV prior to releasing the Existing Lien; and (B)
the Servicer determines that at least two appropriate compensating
factors are present (compensating factors may include, without
limitation, an increase in the Mortgagor's monthly cash flow after debt
service, the Mortgagor's debt-to-income ratio has not increased since
origination, or an increase in the Mortgagor's credit score); or
(iii) in any case in which, at the time of release of the Existing
Lien, the Mortgagor does not provide the Servicer with a Mortgage on a
substitute Mortgaged Property (any Home Equity Loan that becomes and
remains unsecured in accordance with this subsection, an "Unsecured
Loan"), provided that: (A) the Servicer shall not permit the release of
an Existing Lien under this clause (iii) as to more than 100 Home Equity
Loans in any calendar year; (B) at no time shall the aggregate Principal
Balance of Unsecured Loans exceed 5% of the then Pool Balance; (C) the
Mortgagor agrees to an automatic debit payment plan; and (D) the Servicer
shall provide notice to each Rating Agency and the Credit Enhancer that
has requested notice of such releases.
In connection with any Unsecured Loan, the Servicer may require the Mortgagor
to enter into an agreement under which: (i) the Loan Rate may be increased
effective until a substitute Mortgage meeting the criteria under (i) or (ii)
above is provided; or (ii) any other provision may be made which the Servicer
considers to be appropriate. Thereafter, the Servicer shall determine in its
discretion whether to accept any proposed Mortgage on any substitute Mortgaged
Property as security for the Home Equity Loan, and the Servicer may require
the Mortgagor to agree to any further conditions which the Servicer considers
appropriate in connection with such substitution, which may include a
reduction of the Loan Rate (but not below the Loan Rate in effect at the
Closing Date). Any Home Equity Loan as to which a Mortgage on a substitute
Mortgaged Property is provided in accordance with the preceding sentence shall
no longer be deemed to be an Unsecured Loan.
Section 3.06 Trust Estate; Related Documents.
(a) When required by the provisions of this Agreement, the Issuer or
the Indenture Trustee shall execute instruments to release property from the
terms of the Trust Agreement, Indenture or Custodial Agreement, as applicable,
or convey the Issuer's or the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions
of this Agreement. No party relying upon an instrument executed by the Issuer
or the Indenture Trustee as provided in this Section 3.06 shall be bound to
ascertain the Issuer's or the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) If from time to time the Servicer shall deliver to the Custodian
copies of any written assurance, assumption agreement or substitution
agreement or other similar agreement pursuant to Section 3.05, the Custodian
shall check that each of such documents purports to be an original executed
copy (or a copy of the original executed document if the original executed
copy has been submitted for recording and has not yet been returned) and, if
so, shall file such documents, and upon receipt of the original executed copy
from the applicable recording office or receipt of a copy thereof certified by
the applicable recording office shall file such originals or certified copies
with the Related Documents. If any such documents submitted by the Servicer do
not meet the above qualifications, such documents shall promptly be returned
by the Custodian to the Servicer, with a direction to the Servicer to forward
the correct documentation.
(c) Upon receipt of a Request for Release from the Servicer,
substantially in the form of Exhibit C hereto, to the effect that a Home
Equity Loan has been the subject of a final payment or a prepayment in full
and such Home Equity Loan has been terminated or that substantially all Net
Liquidation Proceeds that have been determined by the Servicer in its
reasonable judgment to be finally recoverable have been recovered, and upon
deposit to the Custodial Account of such final monthly payment, prepayment in
full together with accrued and unpaid interest to the date of such payment
with respect to such Home Equity Loan or, if applicable, Net Liquidation
Proceeds, the Custodian shall promptly release the Related Documents to the
Servicer. The Indenture Trustee shall execute such Related Documents, along
with such documents as the Servicer or the related Mortgagor may request to
evidence satisfaction and discharge of such Home Equity Loan, upon request of
the Servicer. If from time to time and as appropriate for the servicing or
foreclosure of any Home Equity Loan, the Servicer requests the Custodian to
release the Related Documents and delivers to the Custodian a trust receipt
reasonably satisfactory to the Custodian and signed by a Responsible Officer
of the Servicer, the Custodian shall release such Related Documents to the
Servicer. If such Home Equity Loans shall be liquidated and the Custodian
receives a certificate from the Servicer as provided above, then, upon request
of the Servicer, the Custodian shall release the trust receipt to the
Servicer.
Section 3.07 Realization Upon Defaulted Home Equity Loans; Loss
Mitigation. With respect to any Home Equity Loan that comes into and continues
in default, the Servicer shall decide whether to (i) foreclose upon the
related Mortgaged Property, (ii) write off the unpaid Principal Balance
thereof as bad debt, (iii) take a deed in lieu of foreclosure, (iv) accept a
short sale, (v) permit a short refinancing, (vi) arrange for a repayment plan,
(vii) agree to a modification in accordance with this Agreement or (viii) take
an unsecured note in each case subject to the rights of any related first Lien
holder; provided, that in connection with the foregoing, if the Servicer has
actual knowledge that any Mortgaged Property is affected by hazardous or toxic
wastes or substances and that the acquisition of such Mortgaged Property would
not be commercially reasonable, then the Servicer shall not cause the Issuer
or the Indenture Trustee to acquire title to such Mortgaged Property in a
foreclosure or similar proceeding. In connection with such decision, the
Servicer shall follow such practices (including, in the case of any default on
a related senior mortgage loan, the advancing of funds to correct such default
if deemed to be appropriate by the Servicer) and procedures as it shall deem
necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities and as shall be required or permitted by the
Program Guide; provided, that the Servicer shall not be liable in any respect
hereunder if the Servicer is acting in connection with any such foreclosure or
attempted foreclosure which is not completed or other conversion in a manner
that is consistent with the provisions of this Agreement. The foregoing is
subject to the proviso that the Servicer shall not be required to expend its
own funds in connection with any foreclosure or attempted foreclosure which is
not completed or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it shall determine that
such expenditure will increase the related Net Liquidation Proceeds. In the
event of a determination by the Servicer that any such expenditure previously
made pursuant to this Section 3.07 will not be reimbursable from Net
Liquidation Proceeds, the Servicer shall be entitled to reimbursement of its
funds so expended pursuant to Section 3.03.
Notwithstanding any provision of this Agreement, a Home Equity Loan
may be deemed to be finally liquidated if substantially all amounts expected
by the Servicer to be received in connection therewith have been received;
provided, however, that any subsequent collections with respect to any such
Home Equity Loan shall be deposited into the Custodial Account. For purposes
of determining the amount of any Net Liquidation Proceeds, Insurance Proceeds
or other unscheduled collections, the Servicer may take into account minimal
amounts of additional receipts expected to be received or any estimated
additional liquidation expenses expected to be incurred in connection with
such Home Equity Loan.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, which shall hold the same on behalf
of the Issuer in accordance with Section 3.13 of the Indenture.
Notwithstanding any such acquisition of title and cancellation of the related
Home Equity Loan, such Mortgaged Property shall (except as otherwise expressly
provided herein) be considered to be an outstanding Home Equity Loan held as
an asset of the Issuer until such time as such property shall be sold.
Consistent with the foregoing for purposes of all calculations hereunder, so
long as the related Home Equity Loan shall be considered to be an outstanding
Home Equity Loan, it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been
discharged, such Mortgage Note in effect at the time of any such acquisition
of title before any adjustment thereto by reason of any bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period will remain in
effect.
Any proceeds from foreclosure proceedings or the purchase or
repurchase of any Home Equity Loan pursuant to the terms of this Agreement, as
well as any recovery resulting from a collection of Net Liquidation Proceeds
or Insurance Proceeds, shall be applied in the following order of priority:
first, to reimburse the Servicer or the related Subservicer in accordance with
this Section 3.07; second, to pay the Servicer or the related Subservicer all
Servicing Fees payable therefrom; third, to pay accrued and unpaid interest on
such Home Equity Loan, at the Net Loan Rate to the Payment Date on which such
amounts are to be deposited in the Note Payment Account or Certificate
Distribution Account; and fourth, as a recovery of principal on such Home
Equity Loan. Any remaining amount shall constitute Foreclosure Profits.
Section 3.08 Issuer and Indenture Trustee to Cooperate. On or before
each Payment Date, the Servicer will notify the Indenture Trustee or the
Custodian, with a copy to the Issuer, of the termination of or the payment in
full and the termination of any Home Equity Loan during the preceding
Collection Period. Upon receipt of payment in full, the Servicer is authorized
to execute, pursuant to the authorization contained in Section 3.01, an
instrument of satisfaction regarding the related Mortgage, which instrument of
satisfaction shall be recorded by the Servicer if required by applicable law
and be delivered to the Person entitled thereto. It is understood and agreed
that any expenses incurred in connection with such instrument of satisfaction
or transfer shall be reimbursed from amounts deposited in the Custodial
Account. From time to time and as appropriate for the servicing or foreclosure
of any Home Equity Loan, the Custodian shall, upon request of the Servicer and
delivery to the Custodian, with a copy to the Issuer, of a Request for
Release, in the form attached hereto as Exhibit C, signed by a Servicing
Officer, release or cause to be released the related Mortgage File to the
Servicer. The Issuer or Indenture Trustee shall promptly execute such
documents, in the forms provided by the Servicer, as shall be necessary for
the prosecution of any such proceedings or the taking of other servicing
actions. Such trust receipt shall obligate the Servicer to return such
Mortgage File to the Custodian (as specified in such receipt) when the need
therefor by the Servicer no longer exists, unless the Home Equity Loan shall
be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that specified above, such trust receipt shall be released
to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Home Equity Loan that is in default following recordation of the related
Assignment of Mortgage in accordance with the provisions of the Purchase
Agreement, the Indenture Trustee or the Issuer shall, if so requested in
writing by the Servicer, promptly execute an appropriate assignment in the
form provided by the Servicer to assign such Home Equity Loan for the purpose
of collection to the Servicer (any such assignment shall unambiguously
indicate that the assignment is for the purpose of collection only), and, upon
such assignment, such assignee for collection will thereupon bring all
required actions in its own name and otherwise enforce the terms of such Home
Equity Loan and deposit or credit the Net Liquidation Proceeds, exclusive of
Foreclosure Profits, received with respect thereto into the Custodial Account.
In the event that all delinquent payments due under any such Home Equity Loan
are paid by the Mortgagor and any other defaults are cured, then the assignee
for collection shall promptly reassign such Home Equity Loan to the Indenture
Trustee and return all Related Documents to the place where the related
Mortgage File was being maintained.
In connection with the Issuer's obligation to cooperate as provided
in this Section 3.08 and all other provisions of this Agreement requiring the
Issuer to authorize or permit any actions to be taken with respect to the Home
Equity Loans, the Indenture Trustee, as pledgee of the Home Equity Loans and
as assignee of record of the Home Equity Loans on behalf of the Issuer
pursuant to Section 3.13 of the Indenture, expressly agrees, on behalf of the
Issuer, to take all such actions on behalf of the Issuer and to promptly
execute and return all instruments reasonably required by the Servicer in
connection therewith; provided, that if the Servicer requests a signature of
the Indenture Trustee, on behalf of the Issuer, then the Servicer shall
deliver to the Indenture Trustee an Officer's Certificate stating that such
signature is necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
Section 3.09 Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee in
accordance with Sections 3.02 and 3.03 as compensation for its services in
connection with servicing the Home Equity Loans. Moreover, late payment
charges and other receipts not required to be deposited in the Custodial
Account as specified in Section 3.02 shall be retained by the Servicer as
additional servicing compensation. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder (including
payment of all other fees and expenses not expressly stated hereunder to be
for the account of the Securityholders), including the fees and expenses of
the Owner Trustee, Indenture Trustee and the Custodian, and shall not be
entitled to reimbursement therefor.
Section 3.10 Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Issuer, the Indenture Trustee,
the Depositor and the Underwriter, with a copy to the Credit Enhancer,
beginning March 31, 2000, and on or before March 31 of each year thereafter,
an Officer's Certificate stating that (i) a review of the activities of the
Servicer during the preceding calendar year and of its performance under any
servicing agreements to which it is a party, including this Agreement, has
been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has complied in all
material respects with the minimum servicing standards set forth in the
Uniform Single Attestation Program for Mortgage Bankers and has fulfilled all
of its material obligations in all material respects throughout such year, or,
if there has been material noncompliance with such servicing standards or a
default in the fulfillment in all material respects of any such obligation,
such statement shall include a description of such noncompliance or specify
each such default, as the case may be, known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Issuer and the Indenture
Trustee, with a copy to the Credit Enhancer, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with
the giving of notice or the lapse of time or both, would become a Servicing
Default.
Section 3.11 Annual Servicing Report. Beginning March 31, 2000, and
on or before March 31 of each year thereafter, the Servicer at its expense
shall cause a firm of nationally recognized independent public accountants
(which firm may also render other services to the Servicer) to furnish a
report to the Issuer, the Indenture Trustee, the Depositor, the Underwriter,
the Credit Enhancer and each Rating Agency stating its opinion that, on the
basis of an examination conducted by such firm substantially in accordance
with standards established by the American Institute of Certified Public
Accountants, the assertions made pursuant to Section 3.10 regarding compliance
with the minimum servicing standards set forth in the Uniform Single
Attestation Program for Mortgage Bankers during the preceding calendar year
are fairly stated in all material respects, subject to such exceptions and
other qualifications that, in the opinion of such firm, such accounting
standards require it to report. In rendering such statement, such firm may
rely, as to matters relating to the direct servicing of Home Equity Loans by
Subservicers, upon comparable statements for examinations conducted by
independent public accountants substantially in accordance with standards
established by the American Institute of Certified Public Accountants
(rendered within one year of such statement) with respect to such
Subservicers.
Section 3.12 Access to Certain Documentation and Information
Regarding the Home Equity Loans. Whenever required by statute or regulation,
the Servicer shall provide to the Credit Enhancer, any Securityholder upon
reasonable request (or a regulator for a Securityholder) or the Indenture
Trustee, reasonable access to the documentation regarding the Home Equity
Loans. Such access shall be afforded without charge, but only upon reasonable
request and during normal business hours at the offices of the Servicer.
Nothing in this Section 3.12 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding Mortgagors, and the failure of the Servicer to provide access as
provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12.
Section 3.13 Maintenance of Certain Servicing Insurance Policies. The
Servicer shall, during the term of its service as servicer, maintain in force
and effect (i) a policy or policies of insurance covering errors and omissions
in the performance of its obligations as Servicer hereunder and (ii) a
fidelity bond in respect of its officers, employees or agents. Each such
policy or policies and fidelity bond shall be at least equal to the coverage
that would be required by FNMA or FHLMC, whichever is greater, for Persons
performing servicing for mortgage loans purchased by such entity.
Section 3.14 Information Required by the Internal Revenue Service and
Reports of Foreclosures and Abandonments of Mortgaged Property. The Servicer
shall prepare and deliver all federal and state information reports with
respect to the Home Equity Loans when and as required by all applicable state
and federal income tax laws. In particular, with respect to the requirement
under Section 6050J of the Code to the effect that the Servicer or Subservicer
shall make reports of foreclosures and abandonments of any mortgaged property
for each year beginning in 1999, the Servicer or Subservicer shall file
reports relating to each instance occurring during the previous calendar year
in which the Servicer (a) on behalf of the Issuer, acquired an interest in any
Mortgaged Property through foreclosure or other comparable conversion in full
or partial satisfaction of a Home Equity Loan, or (b) knew or had reason to
know that any Mortgaged Property had been abandoned. The reports from the
Servicer or Subservicer shall be in form and substance sufficient to meet the
reporting requirements imposed by Section 6050J and Section 6050H (reports
relating to mortgage interest received) of the Code.
Section 3.15 Optional Repurchase of Defaulted Home Equity Loans.
(a) Notwithstanding any provision in Section 3.07 to the contrary,
the Servicer, at its option and in its sole discretion, may repurchase any
Home Equity Loan delinquent in payment for a period of 60 days or longer for a
price equal to the Repurchase Price.
(b) The Servicer, at its option and in its sole discretion, may
repurchase any Home Equity Loan for a price equal to the Repurchase Price (i)
if the related Mortgage did not have a Lien senior to it as of the related
Cut-Off Date, and the related Mortgagor requests the placement of a Lien on
the related Mortgaged Property senior to that of such Mortgage or (ii) if the
Mortgagor refinances the Lien senior to that of the related Mortgage resulting
in a CLTV above the previous CLTV for such Home Equity Loan.
Section 3.16 Recording of Assignments. If the credit rating of the
parent of the Servicer is reduced to below "BBB" by Standard & Poor's or below
"A3" by Moody's, the Servicer shall, within 60 days after written notification
of such reduction in credit rating by Standard & Poor's, Moody's or the Credit
Enhancer, the Servicer, at its own expense, shall complete and submit for
recording in the appropriate public office for real property records the
Assignments of Mortgage for each Home Equity Loan. While such assignment to be
recorded is being recorded, the Custodian shall retain a photocopy of such
assignment. If any assignment is lost or returned unrecorded to the Custodian
because of any defect therein, the Servicer shall prepare a substitute
assignment or cure such defect, as the case may be, and the Servicer shall
cause such assignment to be recorded in accordance with this paragraph.
Section 3.17 Pre-Funding Account.
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Pre-Funding Account,
Norwest Bank Minnesota, National Association, as Indenture Trustee for GMACM
Loan Trust 1999-HLTV1" (the "Pre-Funding Account"). On the Closing Date, the
Seller shall deposit into the Pre-Funding Account an amount equal to the
Original Pre-Funded Amount from the proceeds of the sale of the Securities. On
each Subsequent Transfer Date, the Servicer shall instruct the Indenture
Trustee in writing to withdraw from the Pre-Funding Account an amount equal to
the aggregate Principal Balance as of the related Subsequent Cut-off Date of
the Subsequent Home Equity Loans to be sold to the Trust on such Subsequent
Transfer Date and purchased with funds on deposit in the Pre-Funding Account,
and to pay such amount to or upon the order of the Seller upon satisfaction of
the conditions set forth in this Agreement, in the Purchase Agreement and in
the related Subsequent Transfer Agreement with respect thereto.
(b) If the Pre-Funded Amount has not been reduced to zero at the
close of business on the last Payment Date of the Pre-Funding Period, after
giving effect to any withdrawal therefrom on such Payment Date, such remaining
Pre-Funded Amount shall be applied as a principal distribution on the Notes in
accordance with the terms of the Indenture.
(c) The Servicer may cause the institution maintaining the
Pre-Funding Account to invest any funds therein in Permitted Investments
having a maturity of up to 90 days or maturing or otherwise available not
later than the Business Day preceding the related Payment Date on which funds
are scheduled to be withdrawn to purchase Subsequent Home Equity Loans;
provided, that any investment in an obligation of the institution with which
the Pre-Funding Account is maintained may mature on or before 10:30 a.m., New
York time, on such Payment Date; and provided further, that no such investment
may be sold or disposed of prior to maturity. Notwithstanding the foregoing,
in the event investment earnings have not matured on any Payment Date, the
amount of such earnings accrued as of such Payment Date shall be advanced by
the Servicer for deposit into the Note Payment Account (which advance shall be
reimbursed to the Servicer from such investment earnings at maturity). At any
time when the Indenture Trustee is maintaining the Pre-Funding Account, any
request by the Servicer to invest funds on deposit therein shall be in
writing, delivered to the Indenture Trustee at or before 10:30 a.m., New York
time, if such investment is to be made on such day. The Servicer shall certify
that the requested investment is a Permitted Investment maturing at or prior
to the time required hereby. Any such investment shall be registered in the
name of the Indenture Trustee or its nominee, and to the extent that any such
investment is certificated, such investment shall be maintained with the
Indenture Trustee at its Corporate Trust Office. All net income or other gain
received from any such investment shall be deposited into or credited to the
Note Payment Account, and may be withdrawn therefrom in accordance with
Section 3.19 hereof. The amount of any net losses incurred in respect of the
principal amount of any such investment shall be deposited into the
Pre-Funding Account by the Servicer out of its own funds immediately as
realized.
Section 3.18 Capitalized Interest Account.
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Capitalized Interest
Account, Norwest Bank Minnesota, National Association, as Indenture Trustee
for GMACM Loan Trust 1999-HLTV1" (the "Capitalized Interest Account"). The
Indenture Trustee shall, promptly upon receipt, deposit in the Capitalized
Interest Account and retain therein the Interest Coverage Amount. If the
Indenture Trustee shall not have received an investment direction from the
Seller, the Indenture Trustee shall invest funds on deposit in the Capitalized
Interest Account in Permitted Investments of the kind described in clause (v)
of the definition of Permitted Investments having a maturity date no later
than the next succeeding Payment Date. The Servicer shall deposit into the
Capitalized Interest Account the amount of any net loss incurred in respect of
any such Permitted Investment immediately upon realization of such loss
without any right of reimbursement therefor. The Servicer shall be the owner
of the Capitalized Interest Account and shall report all items of income,
deduction, gain or loss arising therefrom.
(b) On each Payment Date during the Pre-Funding Period and on the
Payment Date immediately after the end of the Pre-Funding Period, the
Indenture Trustee shall withdraw from the Capitalized Interest Account and
deposit into the Note Payment Account an amount equal to the lesser of (i) the
Capitalized Interest Requirement for such Payment Date and (ii) the excess, if
any, of (A) the amount necessary to pay interest for the related Interest
Accrual Period at the applicable Note Rate on the related Note Balances of the
Notes immediately prior to such Payment Date over (B) the funds on deposit in
the Note Payment Account on such Payment Date (after giving effect to all
other deposits of funds into the Note Payment Account on such Payment Date
other than any Policy Draw Amount pursuant to Section 3.28(a) of the
Indenture).
(c) In connection with each Subsequent Transfer Date occurring in the
Pre-Funding Period, the Servicer, at its option, may recalculate the Interest
Coverage Amount taking into account the amount remaining in the Pre-Funding
Account following the sale of Subsequent Home Equity Loans to the Trust on
such date. The recomputed Interest Coverage Amount shall be not less than the
amount necessary to cover the Capitalized Interest Requirement for each
remaining Payment Date in the Pre-Funding Period. With the written consent of
the Credit Enhancer (which consent shall not be unreasonably withheld), on any
such Subsequent Transfer Date, the Servicer shall instruct the Indenture
Trustee to pay to it from funds in the Capitalized Interest Account the excess
of the amount on deposit therein over the recomputed Interest Coverage Amount.
(d) Upon the earlier of (i) termination of the Trust Agreement in
accordance with Section 8.01 thereof and (ii) the Payment Date following the
end of the Pre-Funding Period, any amount remaining on deposit in the
Capitalized Interest Account shall be withdrawn by the Indenture Trustee and
paid to the Seller.
ARTICLE IV
Servicing Certificate
Section 4.01 Statements to Securityholders.
(a) With respect to each Payment Date, on the Business Day following
the related Determination Date, the Servicer shall forward the Servicing
Certificate to the Indenture Trustee, and the Indenture Trustee, pursuant to
Section 3.26 of the Indenture, shall make available the Servicing Certificate
to each Certificateholder, each Noteholder, the Credit Enhancer, the
Depositor, the Owner Trustee, the Certificate Paying Agent and each Rating
Agency, and the Servicing Certificate shall set forth the following
information as to the Notes and Certificates, to the extent applicable:
(i) the aggregate amount of (a) Interest Collections, (b) Principal
Collections, and (c) Substitution Adjustment Amounts for such Collection
Period;
(ii) the amount of such distribution as principal to the Noteholders;
(iii) the amount of such distribution as interest to the Noteholders;
(iv) the Policy Draw Amount, if any, for such Payment Date and the
aggregate amount of prior draws on the Policy thereunder not yet
reimbursed;
(v) the amount of such distribution to the Certificateholders;
(vi) the aggregate Principal Balance of the Home Equity Loans as of
the end of the preceding Collection Period;
(vii) the number and aggregate Principal Balances of Home Equity
Loans (a) as to which the Monthly Payment is delinquent for 30-59 days,
60-89 days and 90 or more days, respectively, (b) the related Mortgaged
Property of which has been foreclosed upon and (c) as to which the
related Mortgaged Property has become REO Property, in each case as of
the end of the preceding Collection Period; provided, however, that such
information shall not be provided on the statements relating to the first
Payment Date;
(viii) the amount on deposit in the Reserve Account (after giving
effect to any deposits or withdrawals with respect to such Payment Date);
(ix) the aggregate Principal Balance of all Subsequent Home Equity
Loans transferred to the Issuer during the related Collection Period and
subsequent to the Closing Date;
(x) the aggregate Liquidation Loss Amounts with respect to the
related Collection Period, the amount of any Liquidation Loss
Distribution Amounts with respect to the Notes, and the aggregate of the
Liquidation Loss Amounts from all Collection Periods to date expressed as
dollar amount and as a percentage of the aggregate Cut-Off Date Principal
Balances of the Home Equity Loans;
(xi) the aggregate Note Balance of each Class of Notes and the
Certificate Balance of the Certificates after giving effect to the
distribution of principal on such Payment Date;
(xii) the amount on deposit in each of the Pre-Funding Account and
the Capitalized Interest Account as of the end of the preceding
Collection Period;
(xiii) the Percentage Interest applicable to each of the Securities,
after application of payments made on such Payment Date;
(xiv) the Overcollateralization Amount immediately following such
Payment Date;
(xv) the amount of any Yield Supplement Amount paid or to be paid to
the Indenture Trustee with respect to such Payment Date;
(xvi) the amount of any payment to be made to the designee or
designees of the Credit Enhancer with respect to such Payment Date
pursuant to Sections 3.05(a)(iv) and 3.30 of the Indenture and the
Limited Reimbursement Agreement; and
(xvii) the weighted average (based on Principal Balance) Loan Rate
for the related Collection Period net of the Servicing Fee for such
Collection Period.
In the case of information furnished pursuant to clauses (ii) and
(iii) above, the amounts shall be expressed as an aggregate dollar amount per
Note or Certificate, as applicable, with a $1,000 denomination.
If a Servicing Default shall occur, on the Business Day following the
related Determination Date, the Servicer shall forward to the Indenture
Trustee, and the Indenture Trustee, pursuant to Section 3.26 of the Indenture,
shall forward or cause to be forwarded by mail to each Certificateholder, each
Noteholder, the Credit Enhancer, the Depositor, the Owner Trustee, the
Certificate Paying Agent and each Rating Agency, a statement to such effect,
including the nature of such Servicing Default. Such statement may be included
in, or separate from, the regular statement made available to Securityholders.
The Indenture Trustee will make the reports to Securityholders (and,
at its option, any additional files containing the same information in an
alternative format) available each month to Securityholders and the Credit
Enhancer, and other parties to the indenture via the Indenture Trustee's
internet website and its fax-on-demand service. The Indenture Trustee's
fax-on-demand service may be accessed by calling (301) 815-6610. The Indenture
Trustee's internet website shall initially be located at www.ctslink.com.
Assistance in using the website or the fax-on-demand service can be obtained
by calling the Indenture Trustee's customer service desk at (301) 815-6600.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Indenture Trustee shall have the right
to change the way the reports to Securityholders are distributed in order to
make such distribution more convenient and/or more accessible and the
Indenture Trustee shall provide timely and adequate notification to all above
parties regarding any such changes.
(b) In addition, with respect to each Payment Date, on the Business
Day following the related Determination Date, the Servicer shall forward to
the Credit Enhancer and the Rating Agencies the following information for each
Capitalization Workout entered into during the related Collection Period:
(i) the original Home Equity Loan amount;
(ii) the Home Equity Loan amount after the Capitalization Workout;
(iii) the original Monthly Payment amount;
(iv) the Monthly Payment amount after the Capitalization Workout;
(v) the Capitalized Amount as defined in Section 3.02(a)(v) herein;
(vi) the CLTV prior to the Capitalization Workout;
(vii) the CLTV after the Capitalization Workout; and
(viii) if an appraisal was used in determining the CLTV referred to
in (vii) above, the type and date of appraisal.
(c) The Servicer shall forward to the Indenture Trustee any other
information reasonably requested by the Indenture Trustee necessary to make
distributions pursuant to Section 3.05 of the Indenture. Prior to the close of
business on the Business Day next succeeding each Determination Date, the
Servicer shall furnish a written statement to the Certificate Paying Agent and
the Indenture Trustee setting forth the aggregate amounts required to be
withdrawn from the Custodial Account and deposited into the Note Payment
Account on the Business Day preceding the related Payment Date pursuant to
Section 3.03. The determination by the Servicer of such amounts shall, in the
absence of obvious error, be deemed to be presumptively correct for all
purposes hereunder, and the Owner Trustee and the Indenture Trustee shall be
protected in relying upon the same without any independent check or
verification. In addition, upon the Issuer's written request, the Servicer
shall promptly furnish such information reasonably requested by the Issuer
that is reasonably available to the Servicer to enable the Issuer to perform
its federal and state income tax reporting obligations.
ARTICLE V
Note Payment Account and Reserve Account
Section 5.01 Note Payment Account and Reserve Account.
(a) The Indenture Trustee shall establish and maintain an Eligible
Account entitled "Norwest Bank Minnesota, National Association, as Indenture
Trustee, for the benefit of the Securityholders, the Certificate Paying Agent
and the Credit Enhancer, pursuant to the Indenture, dated as of September 1,
1999, between GMACM Loan Trust 1999-HLTV1 and Norwest Bank Minnesota, National
Association" (the "Note Payment Account"). On each Payment Date, amounts on
deposit in the Note Payment Account shall be distributed by the Indenture
Trustee in accordance with Section 3.05 of the Indenture. The Indenture
Trustee may invest or cause the institution maintaining the Note Payment
Account to invest the funds therein in Permitted Investments selected by the
Indenture Trustee and designated in the name of the Indenture Trustee, which
investments shall mature not later than the Business Day next preceding the
Payment Date next following the date of such investment (except that (i) any
investment in the institution with which the Note Payment Account is
maintained may mature on such Payment Date and (ii) any other investment may
mature on such Payment Date if the Indenture Trustee shall advance funds on
such Payment Date to the Note Payment Account in the amount payable on such
investment on such Payment Date, pending receipt thereof to the extent
necessary to make distributions on the Notes) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Servicer and shall be subject to
its withdrawal or order from time to time. The amount of any losses incurred
in respect of any such investments shall be deposited in the Note Payment
Account by the Servicer out of its own funds immediately as realized.
(b) The Indenture Trustee shall establish and maintain an Eligible
Account entitled "Norwest Bank Minnesota, National Association, as Indenture
Trustee, for the benefit of the Securityholders, the Certificate Paying Agent
and the Credit Enhancer, pursuant to the Indenture, dated as of September 1,
1999, between GMACM Loan Trust 1999-HLTV1 and Norwest Bank Minnesota, National
Association" (the "Reserve Account"). On each Payment Date, amounts on deposit
in the Reserve Account shall be applied in accordance with Section 3.28(d) of
the Indenture. The Indenture Trustee may invest or cause the institution
maintaining the Reserve Account to invest the funds therein in Permitted
Investments selected by the Servicer and designated in the name of the
Indenture Trustee, which investments shall mature not later than the Business
Day next preceding the Payment Date next following the date of such investment
and shall not be sold or disposed of prior to maturity. All income and gain
realized from any such investment shall be for the benefit of the Servicer and
shall be subject to withdrawal only to the extent provided in the Indenture.
The amount of any losses incurred in respect of any such investments shall be
deposited in the Reserve Account by the Servicer out of its own funds
immediately as realized. Unless otherwise agreed to in writing by the Credit
Enhancer and the Seller, the amount required to be maintained in the Reserve
Account shall be $0.
ARTICLE VI
The Servicer
Section 6.01 Liability of the Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Servicer herein.
Section 6.02 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. Any corporation into which the Servicer may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any corporation succeeding to the business of the
Servicer, shall be the successor of the Servicer, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
The Servicer may assign its rights and delegate its duties and
obligations under this Agreement; provided, that the Person accepting such
assignment or delegation shall be a Person qualified to service mortgage
loans, is reasonably satisfactory to the Credit Enhancer (provided, that such
consent to assignment may not be unreasonably withheld), is willing to service
the Home Equity Loans and executes and delivers to the Issuer (with a copy to
the Credit Enhancer) an agreement, in form and substance reasonably
satisfactory to the Credit Enhancer, that contains an assumption by such
Person of the due and punctual performance and observance of each covenant and
condition to be performed or observed by the Servicer under this Agreement;
and provided further, that no Rating Event will occur as a result of such
assignment and delegation (as evidenced by a letter to such effect from each
Rating Agency), if determined without regard to the Policy; and provided
further, that the Owner Trustee shall receive an Opinion of Counsel to the
effect that such assignment or delegation will not cause the Issuer to be
treated as an association (or a publicly-traded partnership) taxable as a
corporation for federal income tax purposes.
Section 6.03 Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer, the Owner
Trustee, the Indenture Trustee or the Securityholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability that would otherwise be
imposed by reason of its willful misfeasance, bad faith or gross negligence in
the performance of its duties hereunder or by reason of its reckless disregard
of its obligations and duties hereunder. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Servicer and any director,
officer, employee or agent of the Servicer shall be indemnified by the Issuer
and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Securities,
including any amount paid to the Owner Trustee or the Indenture Trustee
pursuant to Section 6.06(b), other than any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or gross negligence
in the performance of its duties hereunder or by reason of its reckless
disregard of its obligations and duties hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its duties to service the Home Equity Loans in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may in its sole discretion
undertake any such action that it may deem necessary or desirable in respect
of this Agreement, the rights and duties of the parties hereto and the
interests of the Securityholders. In such event, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Issuer, and the Servicer shall be
entitled to be reimbursed therefor. The Servicer's right to indemnity or
reimbursement pursuant to this Section 6.03 shall survive any resignation or
termination of the Servicer pursuant to Section 6.04 or 7.01 with respect to
any losses, expenses, costs or liabilities arising prior to such resignation
or termination (or arising from events that occurred prior to such resignation
or termination).
Section 6.04 Servicer Not to Resign. Subject to the provisions of
Section 6.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and
nature carried on by the Servicer or its subsidiaries or Affiliates at the
date of this Agreement or (b) upon satisfaction of the following conditions:
(i) the Servicer shall have proposed a successor servicer to the Issuer and
the Indenture Trustee in writing and such proposed successor servicer is
reasonably acceptable to the Issuer, the Indenture Trustee and the Credit
Enhancer; (ii) each Rating Agency shall have delivered a letter to the Issuer,
the Credit Enhancer and the Indenture Trustee prior to the appointment of the
successor servicer stating that the proposed appointment of such successor
servicer as Servicer hereunder will not cause a Rating Event, if determined
without regard to the Policy; and (iii) such proposed successor servicer is
reasonably acceptable to the Credit Enhancer, as evidenced by a letter to the
Issuer and the Indenture Trustee; provided, however, that no such resignation
by the Servicer shall become effective until such successor servicer or, in
the case of (a) above, the Indenture Trustee, as pledgee of the Home Equity
Loans, shall have assumed the Servicer's responsibilities and obligations
hereunder or the Indenture Trustee, as pledgee of the Home Equity Loans, shall
have designated a successor servicer in accordance with Section 7.02. Any such
resignation shall not relieve the Servicer of responsibility for any of the
obligations specified in Sections 7.01 and 7.02 as obligations that survive
the resignation or termination of the Servicer. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Indenture Trustee and the Credit
Enhancer.
Section 6.05 Delegation of Duties. In the ordinary course of
business, the Servicer at any time may delegate any of its duties hereunder to
any Person, including any of its Affiliates, that agrees to conduct such
duties in accordance with standards comparable to those with which the
Servicer complies pursuant to Section 3.01. Such delegation shall not relieve
the Servicer of its liabilities and responsibilities with respect to such
duties and shall not constitute a resignation within the meaning of Section
6.04.
Section 6.06 Payment of Indenture Trustee's and Owner Trustee's Fees
and Expenses; Indemnification.
(a) After the Closing Date, the Servicer covenants and agrees to pay
to the Owner Trustee, the Indenture Trustee and any co-trustee of the
Indenture Trustee or the Owner Trustee from time to time, and the Owner
Trustee, the Indenture Trustee and any such co-trustee shall be entitled to,
reasonable compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) for all services
rendered by each of them in the execution of the trusts created under the
Trust Agreement and the Indenture and in the exercise and performance of any
of the powers and duties under the Trust Agreement or the Indenture, as the
case may be, of the Owner Trustee, the Indenture Trustee and any co-trustee,
and the Servicer will pay or reimburse the Indenture Trustee and any
co-trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by the Indenture Trustee or any co-trustee in
accordance with any of the provisions of this Agreement except any such
expense, disbursement or advance as may arise from its negligence, willful
misfeasance or bad faith. In addition, the Indenture Trustee shall be entitled
to be reimbursed from the Servicer for all reasonable costs associated with
the transfer of servicing from the predecessor servicer pursuant to Section
7.02 hereunder, including, without limitation, any reasonable costs or
expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be
required by the Indenture Trustee to correct any errors or insufficiencies in
the servicing data or otherwise to enable the Indenture Trustee to service the
Home Equity Loans properly and effectively.
(b) The Servicer agrees to indemnify the Indenture Trustee and the
Owner Trustee for, and to hold the Indenture Trustee and the Owner Trustee, as
the case may be, harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on the part of the
Indenture Trustee or the Owner Trustee, as the case may be, arising out of, or
in connection with, the acceptance and administration of the Issuer and the
assets thereof, including the costs and expenses (including reasonable legal
fees and expenses) of defending the Indenture Trustee or the Owner Trustee, as
the case may be, against any claim in connection with the exercise or
performance of any of its powers or duties under any Basic Document; provided
that:
(i) with respect to any such claim, the Indenture Trustee or Owner
Trustee, as the case may be, shall have given the Servicer written notice
thereof promptly after the Indenture Trustee or Owner Trustee, as the
case may be, shall have actual knowledge thereof;
(ii) while maintaining control over its own defense, the Issuer, the
Indenture Trustee or Owner Trustee, as the case may be, shall cooperate
and consult fully with the Servicer in preparing such defense; and
(iii) notwithstanding anything in this Agreement to the contrary, the
Servicer shall not be liable for settlement of any claim by the Indenture
Trustee or the Owner Trustee, as the case may be, entered into without
the prior consent of the Servicer.
No termination of this Agreement shall affect the obligations created by this
Section 6.06 of the Servicer to indemnify the Indenture Trustee and the Owner
Trustee under the conditions and to the extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Servicer in this Section 6.06(b) shall not pertain to any loss, liability or
expense of the Indenture Trustee or the Owner Trustee, including the costs and
expenses of defending itself against any claim, incurred in connection with
any actions taken by the Indenture Trustee or the Owner Trustee at the
direction of the Noteholders or Certificateholders, as the case may be,
pursuant to the terms of this Agreement.
ARTICLE VII
Default
Section 7.01 Servicing Default.
(a) If any one of the following events (each, a "Servicing Default")
shall occur and be continuing:
(i) any failure by the Servicer to deposit in the Custodial Account,
the Note Payment Account or the Certificate Distribution Account any
deposit required to be made under the terms of this Agreement that
continues unremedied for a period of five (5) Business Days after the
date upon which written notice of such failure shall have been given to
the Servicer by the Issuer or the Indenture Trustee, or to the Servicer,
the Issuer and the Indenture Trustee by the Credit Enhancer;
(ii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in the Securities or in this Agreement, which failure,
in each case, materially and adversely affects the interests of the
Securityholders or the Credit Enhancer, and which failure continues
unremedied for a period of 45 days after the date on which written notice
of such failure, requiring the same to be remedied, and stating that such
notice is a "Notice of Default" hereunder, shall have been given to the
Servicer by the Issuer or the Indenture Trustee, or to the Servicer, the
Issuer and the Indenture Trustee by the Credit Enhancer;
(iii) the entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises
for the appointment of a trustee, conservator, receiver or liquidator in
any insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(iv) the Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator, receiver, liquidator or similar person
in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of
or relating to all or substantially all of its property, or a decree or
order of a court, agency or supervisory authority having jurisdiction in
the premises for the appointment of a conservator, receiver, liquidator
or similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 60 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
then, and in every such case, so long as a Servicing Default shall not have
been remedied by the Servicer, either the Issuer, the Indenture Trustee (with
the consent of the Credit Enhancer) or the Credit Enhancer, by notice then
given in writing to the Servicer, the Issuer and the Indenture Trustee, may
terminate all of the rights and obligations of the Servicer as servicer under
this Agreement other than its right to receive servicing compensation and
expenses for servicing the Home Equity Loans hereunder during any period prior
to the date of such termination, and the Issuer, the Credit Enhancer or the
Indenture Trustee (with the consent of the Credit Enhancer), may exercise any
and all other remedies available at law or equity. Any such notice to the
Servicer shall also be given to each Rating Agency, the Credit Enhancer and
the Issuer. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Securities or the Home Equity Loans or otherwise, shall pass to
and be vested in the Indenture Trustee, as pledgee of the Home Equity Loans,
pursuant to and under this Section 7.01; and, without limitation, the
Indenture Trustee is hereby authorized and empowered to execute and deliver,
on behalf of the Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Home
Equity Loan and related documents, or otherwise. The Servicer agrees to
cooperate with the Issuer, the Credit Enhancer and Indenture Trustee, as the
case may be, in effecting the termination of the responsibilities and rights
of the Servicer hereunder, including, without limitation, the transfer to the
Indenture Trustee for the administration by it of all cash amounts relating to
the Home Equity Loans that shall at the time be held by the Servicer and to be
deposited by it in the Custodial Account, or that have been deposited by the
Servicer in the Custodial Account or thereafter received by the Servicer with
respect to the Home Equity Loans. All reasonable costs and expenses
(including, but not limited to, attorneys' fees) incurred in connection with
amending this Agreement to reflect such succession as Servicer pursuant to
this Section 7.01 shall be paid by the predecessor Servicer (or if the
predecessor Servicer is the Indenture Trustee, the initial Servicer) upon
presentation of reasonable documentation of such costs and expenses.
(b) Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late
collection of a payment on a Home Equity Loan which was due prior to the
notice terminating the Servicer's rights and obligations hereunder and
received after such notice, that portion to which the Servicer would have been
entitled pursuant to Sections 3.03 and 3.09 as well as its Servicing Fee in
respect thereof, and any other amounts payable to the Servicer hereunder the
entitlement to which arose prior to the termination of its activities
hereunder.
Notwithstanding the foregoing, a delay in or failure of performance
under paragraph 7.01(a)(i) or (ii) above, after the applicable grace periods
specified therein, shall not constitute a Servicing Default if such delay or
failure could not be prevented by the exercise of reasonable diligence by the
Servicer and such delay or failure was caused by an act of God or the public
enemy, acts of declared or undeclared war, public disorder, rebellion or
sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence shall not relieve the
Servicer from using reasonable efforts to perform its respective obligations
in a timely manner in accordance with the terms of this Agreement. The
Servicer shall provide the Indenture Trustee, the Credit Enhancer and the
Securityholders with notice of any such failure or delay by it, together with
a description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee, the Credit Enhancer and the Issuer
in writing of any Servicing Default.
Section 7.02 Indenture Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 7.01 or sends a notice pursuant to Section
6.04, the Indenture Trustee as pledgee of the Home Equity Loans shall itself
become, or shall appoint an affiliate of the Indenture Trustee to become, the
successor in all respects to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
immediately assume all of the obligations of the Servicer to make advances on
Home Equity Loans under Section 3.02(b) and will be subject to all other
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof as soon as practicable, but in no
event later than 90 days after the Indenture Trustee becomes successor
Servicer. Nothing in this Agreement or in the Trust Agreement shall be
construed to permit or require the Indenture Trustee to (i) succeed to the
responsibilities, duties and liabilities of the initial Servicer in its
capacity as Seller under the Purchase Agreement, (ii) be responsible or
accountable for any act or omission of the Servicer prior to the issuance of a
notice of termination hereunder, (iii) require or obligate the Indenture
Trustee, in its capacity as successor Servicer, to purchase, repurchase or
substitute any Home Equity Loan, (iv) fund any losses on any Permitted
Investment directed by any other Servicer, or (v) be responsible for the
representations and warranties of the Servicer. As compensation therefor, the
Indenture Trustee shall be entitled to such compensation as the Servicer would
have been entitled to hereunder if no such notice of termination had been
given. Notwithstanding the foregoing, if the Indenture Trustee is (x)
unwilling to act as successor Servicer itself, or to appoint an affiliate of
the Indenture Trustee to become the successor Servicer, or (y) legally unable
so to act, the Indenture Trustee as pledgee of the Home Equity Loans may (in
the situation described in clause (x)) or shall (in the situation described in
clause (y)) appoint or petition a court of competent jurisdiction to appoint
any established housing and home finance institution, bank or other mortgage
loan servicer having a net worth of not less than $10,000,000 as the successor
to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder; provided,
that any such successor Servicer shall be acceptable to the Credit Enhancer,
as evidenced by the Credit Enhancer's prior written consent, which consent
shall not be unreasonably withheld; and provided further, that the appointment
of any such successor Servicer will not result in a Rating Event, if
determined without regard to the Policy. Pending appointment of a successor to
the Servicer hereunder, unless the Indenture Trustee is prohibited by law from
so acting, the Indenture Trustee shall itself act or appoint an affiliate to
act in such capacity as provided above. In connection with such appointment
and assumption, the successor shall be entitled to receive compensation out of
payments on Home Equity Loans in an amount equal to the compensation that the
Servicer would otherwise have received pursuant to Section 3.09 (or such other
compensation as the Indenture Trustee and such successor shall agree). The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer that may have arisen under this Agreement prior to its
termination as Servicer (including the obligation to purchase Home Equity
Loans pursuant to Section 3.01, to pay any deductible under an insurance
policy pursuant to Section 3.04 or to indemnify the Indenture Trustee pursuant
to Section 6.06), nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of
any of its representations or warranties contained herein or in any related
document or agreement. The Indenture Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Notwithstanding the foregoing, the Indenture
Trustee, in its capacity as successor Servicer, shall not be responsible for
the lack of information and/or documents that it cannot obtain through
reasonable efforts.
(b) Any successor, including the Indenture Trustee, to the Servicer
as servicer shall during its term as Servicer (i) continue to service and
administer the Home Equity Loans for the benefit of the Securityholders, (ii)
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.13 and (iii) be
bound by the terms of the Insurance Agreement.
(c) Any successor Servicer, including the Indenture Trustee, shall
not be deemed in default or to have breached its duties hereunder if the
predecessor Servicer shall fail to deliver any required deposit to the
Custodial Account or otherwise cooperate with any required servicing transfer
or succession hereunder.
Section 7.03 Notification to Securityholders. Upon any termination of
or appointment of a successor to the Servicer pursuant to this Article VII or
Section 6.04, the Indenture Trustee shall give prompt written notice thereof
to the Securityholders, the Credit Enhancer, the Issuer and each Rating
Agency.
ARTICLE VIII
Miscellaneous Provisions
Section 8.01 Amendment. This Agreement may be amended from time to
time by the parties hereto; provided, that any such amendment shall be
accompanied by a letter from each Rating Agency to the effect that such
amendment will not result in a Rating Event, if determined without regard to
the Policy; and provided further, that the Credit Enhancer and the Indenture
Trustee shall consent thereto.
Section 8.02 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 8.03 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Servicer, 100 Witmer Road, Horsham, Pennsylvania
19044, Attention: Anthony Renzi, (b) in the case of the Credit Enhancer, Ambac
Assurance Corporation, One State Street Plaza, 19th Floor, New York, New York
10004: Attention: Structured Finance - Mortgage Backed Securities, (c) in the
case of Moody's, Home Home Equity Loan Monitoring Group, 4th Floor, 99 Church
Street, New York, New York 10001, (d) in the case of Standard & Poor's, 26
Broadway, 15th Floor, New York, New York 10004, Attention: Residential
Mortgage Surveillance Group, (e) in the case of the Owner Trustee, Wilmington
Trust Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Norma Closs and (f) in the case of the Issuer,
GMACM Loan Trust 1999-HLTV1, c/o the Owner Trustee at the address set forth in
clause (e) above, and (g) in the case of the Indenture Trustee, 11000 Broken
Land Parkway, Columbia, Maryland 21044, Attention: Corporate Trust, with a
copy to the Indenture Trustee's Corporate Trust Office; or, with respect to
each of the foregoing Persons, at such other address as shall be designated by
such Person in a written notice to the other foregoing Persons. Any notice
required or permitted to be mailed to a Securityholder shall be given by first
class mail, postage prepaid, at the address of such Securityholder as shown in
the Note Register or Certificate Register, as the case may be. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the related Securityholder
receives such notice. Any notice or other document required to be delivered or
mailed by the Indenture Trustee to any Rating Agency shall be given on a
reasonable efforts basis and only as a matter of courtesy and accommodation,
and the Indenture Trustee shall have no liability for failure to deliver any
such notice or document to any Rating Agency.
Section 8.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or the Securities
or the rights of the Securityholders.
Section 8.05 Third-Party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, the Securityholders,
the Credit Enhancer, the Owner Trustee and their respective successors and
permitted assigns. Except as otherwise provided in this Agreement, no other
Person shall have any right or obligation hereunder.
Section 8.06 Counterparts. This instrument may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 8.07 Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 8.08 Termination Upon Purchase by the Servicer or Liquidation
of All Home Equity Loans.
(a) The respective obligations and responsibilities of the Servicer,
the Issuer and the Indenture Trustee created hereby shall terminate upon the
last action required to be taken by the Issuer pursuant to the Trust Agreement
and by the Indenture Trustee pursuant to the Indenture following the earlier
of:
(i) the date on or before which the Indenture or the Trust Agreement
is terminated, or
(ii) the purchase by the Servicer from the Issuer of all Home Equity
Loans and REO Property if the aggregate Pool Balance (after applying
payments received in the related Collection Period) as of any date is
less than 10% of the sum of (a) the aggregate Principal Balance of the
Initial Home Equity Loans as of the Cut-Off Date and (b) the Pre-Funded
Amount as of the Closing Date (provided that a draw on the Policy would
not occur as a result of such purchase), at a price equal to 100% of the
aggregate unpaid Principal Balance of all such remaining Home Equity
Loans (and, in the case of REO Property, the unpaid Principal Balance of
the related mortgage loan), plus accrued and unpaid interest thereon at
the weighted average of the Loan Rates thereon up to the date preceding
the Payment Date on which such amounts are to be distributed to the
Securityholders, plus any amounts due and owing to the Credit Enhancer
under the Insurance Agreement (and any unpaid Servicing Fee shall be
deemed to have been paid at such time) plus any Interest Carry-Forward
Amount and interest owed thereon to the Noteholders.
If such right is exercised by the Servicer, the Servicer shall deposit the
amount calculated pursuant to clause (ii) above with the Indenture Trustee
pursuant to Section 4.10 of the Indenture and, upon the receipt of such
deposit, the Indenture Trustee or Custodian shall release to the Servicer, the
files pertaining to the Home Equity Loans being purchased.
(b) The Servicer, at its expense, shall prepare and deliver to the
Indenture Trustee for execution, at the time the related Home Equity Loans are
to be released to the Servicer, appropriate documents assigning each such Home
Equity Loans from the Indenture Trustee or the Issuer to the Servicer or the
appropriate party.
(c) The Servicer shall give the Indenture Trustee not less than seven
Business Days' prior written notice of the Payment Date on which the Servicer
anticipates that the final distribution will be made to Noteholders. Notice of
any termination, specifying the anticipated Final Maturity Date or other
Payment Date (which shall be a date that would otherwise be a Payment Date)
upon which the Noteholders may surrender their Notes to the Indenture Trustee
(if so required by the terms hereof) for payment of the final distribution and
cancellation, shall be given promptly by the Servicer to the Indenture Trustee
specifying:
(i) the anticipated Final Maturity Date or other Payment Date upon
which final payment of the Notes is anticipated to be made upon
presentation and surrender of Notes at the office or agency of the
Indenture Trustee therein designated; and
(ii) the amount of any such final payment, if known.
Section 8.09 Certain Matters Affecting the Indenture Trustee. For all
purposes of this Agreement, in the performance of any of its duties or in the
exercise of any of its powers hereunder, the Indenture Trustee shall be
subject to and entitled to the benefits of Article VI of the Indenture.
Section 8.10 Owner Trustee and Indenture Trustee Not Liable for
Related Documents. The recitals contained herein shall be taken as the
statements of the Servicer, and the Owner Trustee and Indenture Trustee assume
no responsibility for the correctness thereof. The Owner Trustee and Indenture
Trustee make no representations as to the validity or sufficiency of this
Agreement, of any Basic Document or Related Document, or of the Certificates
(other than the signatures of the Owner Trustee and Indenture Trustee on the
Certificates) or the Notes. The Owner Trustee and Indenture Trustee shall at
no time have any responsibility or liability with respect to the sufficiency
of the Trust Estate or its ability to generate the payments to be distributed
to Certificateholders under the Trust Agreement or the Noteholders under the
Indenture, including the compliance by the Depositor, the Seller or the
Servicer with any warranty or representation made under any Basic Document or
the accuracy of any such warranty or representation, or any action of the
Certificate Paying Agent, the Certificate Registrar or the Indenture Trustee
taken in the name of the Owner Trustee.
IN WITNESS WHEREOF, the Servicer, the Issuer and the Indenture
Trustee have caused this Agreement to be duly executed by their respective
officers or representatives all as of the day and year first above written.
GMAC MORTGAGE CORPORATION,
as Servicer
By:________________________________
Name:
Title:
GMACM LOAN TRUST 1999-HLTV1,
as Issuer
By: Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee
By:________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
By:_______________________________
Name:
Title:
EXHIBIT A
HOME EQUITY LOAN SCHEDULE
EXHIBIT B
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PREMISES:
That Norwest Bank Minnesota, National Association, as indenture
trustee (the "Indenture Trustee"), under the indenture dated as of September
1, 1999 (the "Indenture"), between GMACM Loan Trust 1999-HLTV1 and the
Indenture Trustee, a national banking association organized and existing under
the laws of the United States of America, and having its principal office
located at Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479-0070, hath made, constituted and appointed, and does by these presents
make, constitute and appoint GMAC Mortgage Corporation, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania, its
true and lawful Attorney-in-Fact, with full power and authority to sign,
execute, acknowledge, deliver, file for record, and record any instrument on
its behalf and to perform such other act or acts as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated
transactions in respect of any of the Mortgages securing a Home Equity Loan
and the related Mortgage Notes for which the undersigned is acting as
Indenture Trustee for various Securityholders (whether the undersigned is
named therein as mortgagee or beneficiary or has become mortgagee by virtue of
endorsement of such Mortgage Note secured by any such Mortgage) and for which
GMAC Mortgage Corporation is acting as Servicer pursuant to a Servicing
Agreement dated as of September 1, 1999 (the "Servicing Agreement").
This appointment shall apply to the following enumerated transactions only:
1. The modification or re-recording of a Mortgage, where said modification
or re-recording is for the purpose of correcting the Mortgage to conform
same to the original intent of the parties thereto or to correct title
errors discovered after such title insurance was issued and said
modification or re-recording, in either instance, does not adversely
affect the Lien of the Mortgage as insured.
2. The subordination of the Lien of a Mortgage to an easement in favor of a
public utility company or a government agency or unit with powers of
eminent domain; this section shall include, without limitation, the
execution of partial satisfactions/releases, partial reconveyances or the
execution of requests to trustees to accomplish same.
3. With respect to a Mortgage, the foreclosure, the taking of a deed in lieu
of foreclosure, or the completion of judicial or non-judicial foreclosure
or termination, cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:
a. The substitution of trustee(s) serving under a Mortgage, in
accordance with state law and the Mortgage;
b. Statements of breach or non-performance;
c. Notices of default;
d. Cancellations/rescissions of notices of default and/or notices of
sale;
e. The taking of a deed in lieu of foreclosure; and
f. Such other documents and actions as may be necessary under the terms
of the Mortgage or state law to expeditiously complete said
transactions.
4. The conveyance of the properties to the mortgage insurer, or the closing
of the title to the property to be acquired as real estate owned, or
conveyance of title to real estate owned.
5. The completion of loan assumption agreements.
6. The full satisfaction/release of a Mortgage or full reconveyance upon
payment and discharge of all sums secured thereby, including, without
limitation, cancellation of the related Mortgage Note.
7. The assignment of any Mortgage and the related Mortgage Note, in
connection with the repurchase of the Home Equity Loan secured and
evidenced thereby.
8. The full assignment of a Mortgage upon payment and discharge of all sums
secured thereby in conjunction with the refinancing thereof, including,
without limitation, the endorsement of the related Mortgage Note.
9. The modification or re-recording of a Mortgage, where said modification
or re-recording is for the purpose of any modification pursuant to
Section 3.01 of the Servicing Agreement.
10. The subordination of the Lien of a Mortgage, where said subordination is
in connection with any modification pursuant to Section 3.01 of the
Servicing Agreement, and the execution of partial satisfactions/releases
in connection with such same Section 3.01.
The undersigned gives said Attorney-in-Fact full power and authority
to execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or
could do, and hereby does ratify and confirm to all that said Attorney-in-Fact
shall lawfully do or cause to be done by authority hereof.
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in Appendix A to the Indenture.
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of Attorney; and may be satisfied that
this Limited Power of Attorney shall continue in full force and effect has not
been revoked unless an instrument of revocation has been made in writing by
the undersigned.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Indenture Trustee
By:_______________________
Name:
Title:
STATE OF )
SS.
COUNTY OF )
On this 23rd day of September, 1999, before me the undersigned,
Notary Public of said State, personally appeared _____________________,
personally known to me to be duly authorized officers of Norwest Bank
Minnesota, National Association that executed the within instrument and
personally known to me to be the persons who executed the within instrument on
behalf of Norwest Bank Minnesota, National Association therein named, and
acknowledged to me such Norwest Bank Minnesota, National Association executed
the within instrument pursuant to its by-laws.
WITNESS my hand and official seal.
Notary Public in and for the
State of __________________________
After recording, please mail to:
Attn:
EXHIBIT C
FORM OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with your administration of the Home Equity Loans, we request
the release of the Mortgage File described below.
Servicing Agreement Dated:
Series #:
Account #:
Pool #:
Loan #:
Borrower Name(s):
Reason for Document Request: (circle one) Home Equity Loan Prepaid in Full
Home Equity Loan Repurchased
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Servicing Agreement."
________________________________
GMAC Mortgage Corporation
Authorized Signature
******************************************************************
TO CUSTODIAN: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files
in accordance with the terms of the Servicing Agreement.
Enclosed Documents: [ ] Mortgage Note
[ ] Mortgage or Deed of Trust
[ ] Assignment(s) of Mortgage or
Deed of Trust
[ ] Title Insurance Policy
[ ] Other: ____________________
Name
Title
Date
Exhibit 10.4
Ambac Ambac Assurance Corporation
Certificate Guaranty Insurance Policy c/o CT Corporation Systems
44 East Mifflin Street, Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, New York 10004
Telephone: 212) 668-0340
Insured Obligations: Policy Number:
GMACM Loan Trust 1999-HLTV1 AB0293BE
Loan-Backed Term Notes,
Series 1999-HLTV1
Premium:
As specified in the endorsement
attached hereto.
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees unconditionally and irrevocably to pay to the Trustee for
the benefit of the Holders of the Insured Obligations, that portion of the
Insured Amounts which shall become Due for Payment but shall be unpaid by
reason of Nonpayment.
Ambac will make such payments to the Trustee from its own funds on the later of
(a) one (1) Business Day following notification of Ambac of Nonpayment or (b)
the Business Day on which the Insured Amounts are Due for Payment. Such payments
of principal or interest shall be made only upon presentation of an instrument
of assignment in form and substance satisfactory to Ambac, transferring to Ambac
all rights under such Insured Obligations to receive the principal of and
interest on the Insured Obligation. Ambac shall be subrogated to all the
Holders' rights to payment on the Insured Obligations to the extent of the
insurance disbursements so made. Once payments of the Insured Amounts have been
made to the Trustee, Ambac shall have no further obligation hereunder in respect
of such Insured Amounts.
In the event the Trustee for the Insured Obligations has notice that any payment
of principal or interest on an Insured Obligation which has become Due for
Payment and which is made to a Holder by or on behalf of the Trustee has been
deemed a preferential transfer and theretofore recovered from its Holder
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Holder will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
This Policy is noncancelable by Ambac for any reason, including failure to
receive payment of any premium due hereunder. The premium on this Policy is
not refundable for any reason. This Policy does not insure against loss of any
prepayment or other acceleration payment which at any time may become due in
respect of any Insured Obligation, other than at the sole option of Ambac, nor
against any risk other than Nonpayment,including failure of the Trustee to
make any payment due Holders of Insured Amounts.
To the fullest extent permitted by applicable law, Ambac hereby waives and
agrees not to assert any and all rights and defenses, to the extent such rights
and defenses may be available to Ambac, to avoid payment of its obligations
under this Policy in accordance with the express provisions hereof.
Any capitalized terms not defined herein shall have the meaning given such
terms in the endorsement attached hereto or in the Agreement.
In witness whereof, Ambac has caused this Policy to be affixed with its
corporate seal and to be signed by its duly authorized officers in facsimile to
become effective as their original signatures and binding upon Ambac by virtue
of the countersignature of its duly authorized representative.
President Secretary
Effective Date: September 23, 1999 Authorized Representative
EXECUTED VERSION
================
CERTIFICATE GUARANTY INSURANCE POLICY ENDORSEMENT
Attached to and forming Effective Date of Endorsement:
part of Policy No. AB0293BE September 23, 1999
issued to:
Norwest Bank Minnesota, National Association,
as Indenture Trustee on behalf of GMACM Loan
Trust 1999-HLTV1, and for the benefit of the
Holders of the Notes issued by GMACM Loan
Trust 1999-HLTV1
For all purposes of this Policy, the following terms shall have the
following meanings:
"Due for Payment" shall mean the Payment Date on which Insured Amounts are
due.
"Final Payment Date" shall mean the Payment Date in November 2025.
"First Payment Date" shall mean October 18, 1999.
"Indenture" shall mean the Indenture, dated as of September 1, 1999,
between GMACM Loan Trust 1999-HLTV1, as Issuer, and Norwest Bank Minnesota,
National Association, as Indenture Trustee, as such Indenture may be amended,
modified or supplemented from time to time as set forth in the Indenture.
"Indenture Trustee" shall mean Norwest Bank Minnesota National
Association, or its successor-in-interest, in its capacity as indenture trustee
under the Indenture, or if any successor indenture trustee or any co-indenture
trustee shall be appointed as provided therein, then "Indenture Trustee" shall
also mean such successor indenture trustee or such co-indenture trustee, as the
case may be, subject to the provisions thereof.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time), dated as of
September 23, 1999, by and among the Insurer, GMAC Mortgage Corporation, as
Seller and Servicer, the Depositor, the Issuer and Norwest Bank Minnesota,
National Association, as Indenture Trustee.
"Insurance Draw Amount" (1) shall mean, with respect to any Payment Date
(other than the Final Payment Date), the sum of (x) the amount by which accrued
interest on the Notes at the respective Note Rate on such Payment Date
(exclusive of any Relief Act Shortfalls) exceeds the amount on deposit in the
Note Payment Account available for interest distributions on such Payment Date
and (y) any Liquidation Loss Amount to the extent not currently covered by a
Liquidation Loss Distribution Amount or a reduction in the Overcollateralization
Amount and (2) shall mean, with respect to the Final Payment Date, the amount by
which the Note Balance of the Notes, together with interest on the Notes at the
respective Note Rate during the related Interest Period (exclusive of any
Relief Act Shortfalls), exceeds the payments otherwise available to be made to
the Holders thereof on the Final Payment Date. For purposes of calculating the
Insurance Draw Amount, amounts in the Note Payment Account available for
interest distributions on any Payment Date shall be deemed to include all
amounts in the Note Payment Account for such Payment Date, other than the
Principal Distribution Amount and the Liquidation Loss Distribution Amount (if
any) distributed thereon. Any Relief Act Shortfalls shall not be included in an
Insurance Draw Amount.
"Insurance Policy" or "Policy" shall mean this Certificate Guaranty
Insurance Policy together with each and every endorsement hereto.
"Insured Amounts" shall mean, with respect to any Payment Date, the
Insurance Draw Amount for such Payment Date and shall mean, with respect to
the Final Payment Date, the Insurance Draw Amount for the Final Payment
Date.
"Insured Payments" shall mean, with respect to any Payment Date, the
aggregate amount actually paid by the Insurer to the Indenture Trustee in
respect of Insured Amounts for such Payment Date.
"Insurer" shall mean Ambac Assurance Corporation, or any successor
thereto, as issuer of the Insurance Policy.
"Late Payment Rate" shall mean the lesser of (a) the greater of (i) the
per annum rate of interest publicly announced from time to time by Citibank,
N.A. as its prime or base lending rate (any change in such rate of interest to
be effective on the date such change is announced by Citibank, N.A.), and (ii)
the then applicable highest rate of interest on any of the Securities and (b)
the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate shall be computed on the basis of the
actual number of days elapsed over a year of 360 days for any Payment Date.
"Nonpayment" shall mean, with respect to any Payment Date or with respect
to the Dissolution Payment Date, an Insurance Draw Amount owing in respect of
such Payment Date or Dissolution Payment Date.
"Note Payment Account" shall mean the account created and maintained with
the Indenture Trustee for the benefit of the Noteholders and the Insurer
pursuant to Section 3.01 of the Indenture.
"Notice" shall mean the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Indenture Trustee specifying the Insured Amount which
shall be due and owing on the applicable Payment Date.
"Payment Date" shall mean the 18th day of each month (or if such 18th day
is not a Business Day, the first Business Day immediately following) beginning
with the First Payment Date.
"Reimbursement Amount" shall mean, as to any Payment Date, the sum of
(x)(i) all Insured Payments paid by the Insurer, but for which the Insurer
has not been reimbursed prior to such Payment Date pursuant to Section
3.05(a) of the Indenture, plus (ii) interest accrued thereon, calculated at
the Late Payment Rate from the date the Indenture Trustee received the related
Insured Payments, and (y)(i) any other amounts then due and owing to the
Insurer under the Insurance Agreement, but for which the Insurer has not been
reimbursed prior to such Payment Date pursuant to Section 3.05(a) of the
Indenture plus (ii) interest on such amounts at the Late Payment Date.
"Trustee" shall mean, for the purposes of the Policy, the Indenture
Trustee.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Indenture (including Appendix A thereto).
The Insurer hereby agrees that if, as of any Payment Date, it has become
subrogated to the rights of Holders by virture of a previous payment under this
Policy, no recovery of such payment will occur unless the full amount of the
Holders' allocable distributions for such Payment Date can be made. In so
doing the Insurer does not waive its rights to seek full payment of all
Reimbursement Amounts owed to it under the Indenture.
As provided by the Policy, the Insurer will pay any amount payable
hereunder no later than 12:00 noon, New York City time, on the later of the
Payment Date on which the related Insured Amount is due or the Business Day
following receipt in New York, New York on a Business Day by the Insurer of a
Notice; provided that, if such Notice is received after 12:00 noon, New York
City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have been received for purposes of this paragraph, and
the Insurer shall promptly so advise the Indenture Trustee and the Indenture
Trustee may submit an amended Notice.
The terms and provisions of the Indenture constitute the instrument of
assignment referred to in the second paragraph of the face of this Policy.
A premium will be payable on this Policy on each Payment Date as provided
in Section 3.05(a) of the Indenture, beginning with the First Payment Date, in
the amount specified in Section 3.02(c) of the Insurance Agreement.
The Policy to which this Endorsement is attached and of which it forms a
part is hereby amended to provide that there shall be no acceleration payment
due under the Policy unless such acceleration is at the sole option of the
Insurer. The Policy is further hereby amended, to the extent necessary, to
clarify that the reference to "loss of any prepayment or any other
acceleration payment" in the fourth paragraph of the face of the Policy does
not refer to that portion of any shortfall, if any, in interest on any
Mortgage Loan in any month in which such Mortgage Loan is paid prior to its
stated maturity.
Nothing herein contained shall be held to vary, alter, waive or extend
any of the terms, conditions, provisions, agreements or limitations of the
above mentioned Policy other than as above stated.
This Policy is issued under and pursuant to, and shall be construed
under, the laws of the State of New York (without giving effect to the
conflict of laws provisions thereof).
IN WITNESS WHEREOF, the Insurer has caused this Endorsement to the Policy
to be signed by its duly authorized officers.
First Vice President Assistant Secretary
______________________________ _______________________
EXHIBIT A
TO THE CERTIFICATE GUARANTY INSURANCE POLICY
Policy No. AB0293BE
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Reference if made to Certificate Guaranty Insurance Policy No. AB0293BE
(the "Policy") issued by Ambac Assurance Corporation ("Ambac"). Terms
capitalized herein and not otherwise defined shall have the meanings specified
in the Policy and the Indenture (including Appendix A thereto), as the case
may be, unless the context otherwise requires.
1. The Indenture Trustee hereby certifies as follows:
2. The Indenture Trustee is the Indenture Trustee under the Indenture
for the Noteholders.
3. The relevant Payment Date or Final Payment Date is [date].
4. Payment on the Notes in respect of the Payment Date is due to be
received on ________________________ under the Servicing Agreement and
the Indenture, in an amount equal to $__________________.
[4. The amount to be paid to the Holders of the Notes on the Final Pay-
ment Date is $________________.]
5. There is an Insurance Draw Amount of $__________________ in respect
of the Notes, which amount is an Insured Amount pursuant to the
terms of the Policy.
6. The sum of $_______________ is the Insured Amount that is Due For
Payment.
7. The Indenture Trustee has not heretofore made a demand for the
Insured Amount in respect of the Payment Date.
8. The Indenture Trustee hereby requests the payment of the Insured
Amount that is Due for Payment be made by Ambac under the Policy and
directs that payment under the Policy be made to the following
account by bank wire transfer of federal or other immediately
available funds in accordance with the terms of the Policy to:
__________________________ Indenture Trustee's account number.
9. The Indenture Trustee hereby agrees that, following receipt of the
Insured Amount from Ambac, it shall (a) hold such amounts in trust
and apply the same directly to the distribution of payment on the
Notes when due; (b) not apply such funds for any other purpose;
(c) deposit such funds to the Note Payment Account and not commingle
such funds with other funds held by the Indenture Trustee and (d)
maintain an accurate record of such payments with respect to the
Notes and the corresponding claim on the Policy and proceeds thereof.
By:______________________________
Indenture Trustee
Title:___________________________
(Officer)