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EXHIBIT 99.1
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SEQUOIA MORTGAGE TRUST 1,
Issuer
and
FIRST UNION NATIONAL BANK,
Trustee
INDENTURE
Dated as of June 1, 1997
Relating to
SEQUOIA MORTGAGE TRUST 1
COLLATERALIZED MORTGAGE BONDS
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Cross-reference sheet showing the location in the indenture of the
provisions inserted pursuant to Sections 310 through 318(a) inclusive of the
Trust Indenture Act of 1939.
TIA Indenture Section
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Section 310
(a) (1) ............................................. 6.08
(a) (2) ............................................. 6.09
(a) (3) ............................................. 6.14(2)
(a) (4) ............................................. Not Applicable
(a) (5) ............................................. 6.08
(b) ............................................. 6.08
............................................. 6.10
............................................. 11.05
(c) ............................................. Not Applicable
Section 311
(a) ............................................. 6.13
(b) ............................................. 6.13
Section 312
(a) ............................................. 7.01(a)
............................................. 7.02(a)
(b) ............................................. 7.02(b)
(c) ............................................. 7.02(c)
Section 313
(a) ............................................. 7.03(a)
(b) ............................................. 7.03(a)
(c) ............................................. 7.03(a)
............................................. 11.05
(d) ............................................. 7.03(b)
Section 314
(a) ............................................. 7.04
............................................. 11.05
............................................. 3.10
(b) (1) ............................................. 2.12(c)(viii)
(b) (2) ............................................. 3.06
(c) (1) ............................................. 2.12(d)
............................................. 4.01
............................................. 11.01
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TIA Indenture Section
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(c) (2) ............................................. 2.12(c)(ii)
............................................. 4.01
............................................. 11.01
(c) (3) ............................................. 1.01
............................................. 2.12(f)
(d) (1) ............................................. 1.01
............................................. 8.12
(d) (2) ............................................. 1.01
............................................. Not Applicable
(d) (3) ............................................. 1.01
............................................. 2.12(f)
(e) ............................................. 11.01
Section 315
(a) ............................................. 6.01(b)
............................................. 6.01(c)(1)
(b) ............................................. 6.02
............................................. 11.05
(c) ............................................. 6.01(a)
(d) ............................................. 6.01(c)
(d) (1) ............................................. 6.01(b)
(d) (2) ............................................. 6.01(c)(2)
(d) (3) ............................................. 6.01(c)(3)
(e) ............................................. 5.16
Section 316
(a) (1) (A).......................................... 5.14
............................................. 8.01
(a) (1) (B).......................................... 5.02
............................................. 5.15
(a) (2) ............................................. Not Applicable
(b) ............................................. 5.10
(c) ............................................. Not Applicable
Section 317
(a) (1) ............................................. 5.03
(a) (2) ............................................. 5.06
(b) ............................................. 3.03
Section 318
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TIA Indenture Section
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(a) ............................................. 11.07
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TABLE OF CONTENTS
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PARTIES
PRELIMINARY STATEMENT
GRANTING CLAUSE
ARTICLE I
DEFINITIONS
SECTION 1.01. General Definitions............................................... I-1
"Accountant".................................................................... I-1
"Act" .......................................................................... I-1
"Adjusted Net Mortgage Rate".................................................... I-1
"Advance"....................................................................... I-1
"Affiliate"..................................................................... I-1
"Agent" ........................................................................ I-2
"Appraised Value"............................................................... I-2
"Assignments"................................................................... I-2
"Authenticating Agent".......................................................... I-2
"Authorized Officer"............................................................ I-2
"Bank" ........................................................................ I-2
"Bankruptcy Code"............................................................... I-2
"Beneficial Owner".............................................................. I-2
"Bond Account".................................................................. I-3
"Bond Distribution Amount"...................................................... I-3
"Bondholder" or "Holder"........................................................ I-3
"Bond Interest Rate"............................................................ I-3
"Bond Register" and "Bond Registrar"............................................ I-3
"Bonds" ........................................................................ I-3
"Book Entry Bonds".............................................................. I-3
"Business Day".................................................................. I-3
"Class" ........................................................................ I-3
"Closing Date".................................................................. I-3
"Code" ........................................................................ I-3
"Commission".................................................................... I-3
"Corporate Trust Office"........................................................ I-4
"Cut-Off Date".................................................................. I-4
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"Debt Service Reduction"........................................................ I-4
"Default"....................................................................... I-4
"Defaulted Pledged Mortgage".................................................... I-4
"Definitive Bonds".............................................................. I-4
"Deleted Pledged Mortgage"...................................................... I-4
"Denomination".................................................................. I-4
"Depositor"..................................................................... I-5
"Depository".................................................................... I-5
"Depository Participants"....................................................... I-5
"Deposit Trust Agreement"....................................................... I-5
"Distribution Account".......................................................... I-5
"Eligible Account".............................................................. I-5
"Event of Default".............................................................. I-6
"Expense Fee Rate".............................................................. I-6
"FDIC" ........................................................................ I-6
"FHLMC" ........................................................................ I-6
"FIRREA"........................................................................ I-6
"FNMA" ........................................................................ I-6
"Grant" ........................................................................ I-6
"Highest Lawful Rate"........................................................... I-7
"Holder"........................................................................ I-7
"Indenture" or "this Indenture"................................................. I-7
"Independent"................................................................... I-7
"Index" ........................................................................ I-7
"Indirect Participant".......................................................... I-7
"Individual Bond"............................................................... I-7
"Investor Certificate".......................................................... I-8
"Issuer"........................................................................ I-8
"Issuer Order" and "Issuer Request"............................................. I-8
"Letter Agreement".............................................................. I-8
"Margin"........................................................................ I-8
"Master Servicer"............................................................... I-8
"Master Servicing Agreement".................................................... I-8
"Master Servicing Fee".......................................................... I-8
"Maturity"...................................................................... I-8
"Maximum Rate".................................................................. I-8
"MBIA" ........................................................................ I-8
"MBIA Policy"................................................................... I-9
"Moody's"....................................................................... I-10
"Mortgage"...................................................................... I-10
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"Mortgage Documents"............................................................ I-10
"Mortgage Note"................................................................. I-10
"Mortgage Rate"................................................................. I-10
"Mortgaged Property"............................................................ I-10
"Mortgagor"..................................................................... I-10
"Net Mortgage Rate"............................................................. I-10
"Officers' Certificate"......................................................... I-10
"Officer's Certificate of the Master Servicer".................................. I-10
"Operative Agreements".......................................................... I-10
"Opinion of Counsel"............................................................ I-11
"Original Class A-1 Principal Balance".......................................... I-11
"Original Class A-2 Principal Balance".......................................... I-11
"OTS" .......................................................................... I-11
"Outstanding"................................................................... I-11
"Outstanding Pledged Mortgage".................................................. I-12
"Owner Trustee"................................................................. I-12
"Paying Agent".................................................................. I-12
"Payment Date Statement"........................................................ I-12
"Permitted Encumbrance"......................................................... I-13
"Person"........................................................................ I-13
"Pledged Accounts".............................................................. I-13
"Pledged Mortgages"............................................................. I-13
"Predecessor Bonds"............................................................. I-13
"Prepayment Period"............................................................. I-14
"Principal Prepayment".......................................................... I-14
"Principal Prepayment in Full".................................................. I-14
"Proceeding".................................................................... I-14
"Prospectus Supplement"......................................................... I-14
"Rating Agency"................................................................. I-14
"Record Date"................................................................... I-15
"Redemption Date"............................................................... I-15
"Redemption Price".............................................................. I-15
"Refinancing Pledged Mortgage".................................................. I-15
"Request for Release"........................................................... I-15
"Responsible Officer"........................................................... I-15
"S&P" .......................................................................... I-15
"SAIF" ........................................................................ I-15
"Sale" ........................................................................ I-15
"Scheduled Payment"............................................................. I-15
"Securities Act"................................................................ I-16
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"Servicer"...................................................................... I-16
"Servicing Agreement"........................................................... I-16
"Servicing Fee"................................................................. I-16
"Servicing Fee Rate"............................................................ I-16
"Servicing Officer"............................................................. I-16
"Stated Maturity"............................................................... I-16
"Stated Principal Balance"...................................................... I-16
"Successor Master Servicer"..................................................... I-16
"Trust Estate".................................................................. I-17
"Trust Indenture Act" or "TIA".................................................. I-17
"Trustee"....................................................................... I-17
"Trustee Mortgage File"......................................................... I-17
ARTICLE II
THE BONDS
SECTION 2.01. Forms Generally............................................... II-1
SECTION 2.02. Forms of Bonds and Certificate of Authentication.............. II-1
SECTION 2.03. Bonds Issuable in Classes; Provisions with Respect to
Principal and Interest Payments............................... II-2
SECTION 2.04. Denominations................................................. II-3
SECTION 2.05. Execution, Authentication, Delivery and Dating................ II-4
SECTION 2.06. Temporary Bonds............................................... II-4
SECTION 2.07. Registration, Registration of Transfer and Exchange........... II-5
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Bonds.................... II-6
SECTION 2.09. Payments of Principal and Interest............................ II-7
SECTION 2.10. Persons Deemed Owners......................................... II-9
SECTION 2.11. Cancellation.................................................. II-9
SECTION 2.12. Authentication and Delivery of Bonds.......................... II-9
SECTION 2.13. Matters Relating to Book Entry Bonds.......................... II-14
SECTION 2.14. Termination of Book Entry System.............................. II-15
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ARTICLE III
COVENANTS
SECTION 3.01. Payment of Bonds.............................................. III-1
SECTION 3.02. Maintenance of Office or Agency............................... III-1
SECTION 3.03. Money for Bond Payments to Be Held in Trust................... III-1
SECTION 3.04. Corporate Existence of Owner Trustee.......................... III-4
SECTION 3.05. Protection of Trust Estate.................................... III-4
SECTION 3.06. Opinions as to Trust Estate................................... III-5
SECTION 3.07. Performance of Obligations; Master Servicing Agreement........ III-6
SECTION 3.08. Investment Company Act........................................ III-7
SECTION 3.09. Negative Covenants............................................ III-7
SECTION 3.10. Annual Statement as to Compliance............................. III-8
SECTION 3.11. Recording of Assignments...................................... III-9
SECTION 3.12. Limitation of Liability of Wilmington Trust Company........... III-9
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture....................... IV-1
SECTION 4.02. Application of Trust Money.................................... IV-2
ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01. Event of Default.............................................. V-1
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment............ V-2
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee....................................................... V-4
SECTION 5.04. Remedies...................................................... V-5
SECTION 5.05. [Reserved].................................................... V-5
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SECTION 5.06. Trustee May File Proofs of Claim.............................. V-5
SECTION 5.07. Trustee May Enforce Claims without Possession of Bonds........ V-6
SECTION 5.08. Application of Money Collected................................ V-6
SECTION 5.09. Limitation on Suits........................................... V-7
SECTION 5.10. Unconditional Rights of Bondholders to Receive Principal
and Interest.................................................. V-8
SECTION 5.11. Restoration of Rights and Remedies............................ V-8
SECTION 5.12. Rights and Remedies Cumulative................................ V-8
SECTION 5.13. Delay or Omission Not Waiver.................................. V-9
SECTION 5.14. Control by Bondholders........................................ V-9
SECTION 5.15. Waiver of Past Defaults....................................... V-9
SECTION 5.16. Undertaking for Costs........................................ V-10
SECTION 5.17. Waiver of Stay or Extension Laws............................. V-10
SECTION 5.18. Sale of Trust Estate......................................... V-10
SECTION 5.19. Action on Bonds.............................................. V-12
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties of Trustee............................................ VI-1
SECTION 6.02. Notice of Default............................................ VI-3
SECTION 6.03. Rights of Trustee............................................ VI-3
SECTION 6.04. Not Responsible for Recitals or Issuance of Bonds............ VI-5
SECTION 6.05. May Hold Bonds............................................... VI-5
SECTION 6.06. Money Held in Trust.......................................... VI-5
SECTION 6.07. Compensation and Reimbursement............................... VI-5
SECTION 6.08. Eligibility; Disqualification................................ VI-7
SECTION 6.09. Trustee's Capital and Surplus................................ VI-7
SECTION 6.10. Resignation and Removal; Appointment of Successor............ VI-7
SECTION 6.11. Acceptance of Appointment by Successor....................... VI-9
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee.......................................... VI-9
SECTION 6.13. Preferential Collection of Claim Against Issuer.............. VI-10
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SECTION 6.14. Co-trustees and Separate Trustees........................... VI-10
SECTION 6.15. Authenticating Agents....................................... VI-11
SECTION 6.16. Payment of Certain Insurance Premiums....................... VI-13
ARTICLE VII
BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Trustee Names and Addresses of
Bondholders................................................. VII-1
SECTION 7.02. Preservation of Information; Communications to Bondholders.. VII-1
SECTION 7.03. Reports by Trustee.......................................... VII-1
SECTION 7.04. Reports by Issuer........................................... VII-2
SECTION 7.05. Notice to the Rating Agencies and to MBIA................... VII-2
ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
SECTION 8.01. Collection of Moneys....................................... VIII-1
SECTION 8.02. Distribution Account....................................... VIII-1
SECTION 8.03. General Provisions Regarding Pledged Accounts.............. VIII-2
SECTION 8.04. Purchases of Defective Pledged Mortgages................... VIII-3
SECTION 8.05. Grant of Replacement Pledged Mortgage...................... VIII-5
SECTION 8.06. Reports by Trustee to Bondholders.......................... VIII-5
SECTION 8.07. Reports by Trustee......................................... VIII-5
SECTION 8.08. Trust Estate; Release and Delivery of Mortgage Documents... VIII-6
SECTION 8.09. Amendments to the Master Servicing Agreement............... VIII-7
SECTION 8.10. Servicers and Master Servicer as Agents and Bailees
of Trustee................................................. VIII-7
SECTION 8.11. Opinion of Counsel......................................... VIII-8
SECTION 8.12. Release of Pledged Mortgages............................... VIII-8
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Bondholders........ IX-1
SECTION 9.02. Supplemental Indentures With Consent of Bondholders........... IX-2
SECTION 9.03. Execution of Supplemental Indentures.......................... IX-4
SECTION 9.04. Effect of Supplemental Indentures............................. IX-5
SECTION 9.05. Conformity with Trust Indenture Act........................... IX-5
SECTION 9.06. Reference in Bonds to Supplemental Indentures................. IX-5
SECTION 9.07. Amendments to Deposit Trust Agreement or Master Servicing
Agreement..................................................... IX-5
ARTICLE X
REDEMPTION OF BONDS
SECTION 10.01. Redemption.................................................... X-1
SECTION 10.02. Form of Redemption Notice..................................... X-1
SECTION 10.03. Bonds Payable on Redemption Date.............................. X-2
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions.......................... XI-1
SECTION 11.02. Form of Documents Delivered to Trustee........................ XI-1
SECTION 11.03. Acts of Bondholders........................................... XI-3
SECTION 11.04. Notices, etc. to Trustee and Issuer........................... XI-3
SECTION 11.05. Notices and Reports to Bondholders; Waiver of Notices......... XI-4
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SECTION 11.06. Rules by Trustee and Agents................................... XI-5
SECTION 11.07. Conflict with Trust Indenture Act............................. XI-5
SECTION 11.08. Effect of Headings and Table of Contents...................... XI-5
SECTION 11.09. Successors and Assigns........................................ XI-5
SECTION 11.10. Separability.................................................. XI-5
SECTION 11.11. Benefits of Indenture......................................... XI-6
SECTION 11.12. Legal Holidays................................................ XI-6
SECTION 11.13. Governing Law................................................. XI-6
SECTION 11.14. Counterparts.................................................. XI-6
SECTION 11.15. Recording of Indenture........................................ XI-6
SECTION 11.16. Issuer Obligation............................................. XI-7
SECTION 11.17. Inspection.................................................... XI-7
SECTION 11.18. Usury......................................................... XI-7
SECTION 11.19. No Petition................................................... XI-8
ARTICLE XII
THE BOND INSURER
SECTION 12.01. Certain Matters Regarding MBIA and The MBIA Policy............ XII-1
TESTIMONIUM................................................................... S-1
SIGNATURES AND SEALS.......................................................... S-1
ACKNOWLEDGMENTS............................................................... S-3
SCHEDULE A - Schedule of Pledged Mortgages................................... A-1
EXHIBIT I - Letter Agreement with the Depository
EXHIBIT II - Form of Class A-1 Bond
EXHIBIT III - Form of Class A-2 Bond
EXHIBIT IV - Form of Bond Insurance Policy
EXHIBIT V - Form of Fair Value Certificate
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PARTIES
INDENTURE, dated as of June 1, 1997 (as amended or supplemented
from time to time as permitted hereby, the "Indenture"), between Sequoia
Mortgage Trust 1 (herein, together with its permitted successors and assigns,
called the "Issuer"), a statutory business trust created under the Deposit Trust
Agreement (as defined herein), and First Union National Bank, a national banking
association, as trustee (together with its permitted successors in the trusts
hereunder, the "Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of
this Indenture to provide for its Collateralized Mortgage Bonds, (the "Bonds"),
issuable as provided in this Indenture. All covenants and agreements made by the
Issuer herein are for the benefit and security of the Holders of the Bonds and
MBIA. The Issuer is entering into this Indenture, and the Trustee is accepting
the trusts created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of
the Issuer in accordance with its terms have been done.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee, for the exclusive
benefit of the Holders of the Bonds and MBIA, all of the Issuer's right, title
and interest in and to (a) the Pledged Mortgages identified in Schedule A to
this Indenture, including the related Mortgage Documents, which the Issuer has
caused to be delivered to the related Custodian herewith, and all interest and
principal received or receivable by the Issuer on or with respect to the Pledged
Mortgages after the Cut-Off Date and all interest and principal payments on the
Pledged Mortgages received prior to the Cut-off Date in respect of installments
of interest and principal due thereafter, but not including payments of interest
and principal due and payable on the Pledged Mortgages on or before the Cut-off
Date, and all other proceeds received in respect of such Pledged Mortgages, (b)
the Issuer's rights under
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the Mortgage Loan Purchase Agreement, the Management Agreement, the Master
Servicing Agreement, the Servicing Agreements and the Purchase and Sale
Agreements (c) the Insurance Policies, (d) all cash, instruments or other
property held or required to be deposited in the Bond Account or the
Distribution Account (exclusive of any earnings on investments made with funds
deposited in the Distribution Account or the Bond Account), (e) property that
secured a Pledged Mortgage that has become an REO property, and (f) all proceeds
of the conversion, voluntary or involuntary, of any of the foregoing into cash
or other liquid assets, including, without limitation, all Insurance Proceeds,
Liquidation Proceeds and condemnation awards. Such Grants are made, however, in
trust, to secure the Bonds equally and ratably without prejudice, priority or
distinction between any Bond and any other Bond by reason of difference in time
of issuance or otherwise, and for the benefit of MBIA and to secure (i) the
payment of all amounts due on the Bonds in accordance with their terms, (ii) the
payment of all other sums payable under this Indenture with respect to the
Bonds, (iii) compliance with the provisions of this Indenture, all as provided
in this Indenture and to secure all amounts due by the Issuer to MBIA, including
the obligations of the Issuer to MBIA under this Indenture, the Master Servicing
Agreement and the Insurance Agreement. All terms used in the foregoing granting
clauses that are defined in Section 1.01 are used with the meanings given in
said Section.
The Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required to the best of its ability to the end that
the interests of the Holders of the Bonds and MBIA may be adequately and
effectively protected.
The Trustee agrees that it will hold the MBIA Policy in trust
and that it will hold any proceeds of any claim made upon the MBIA Policy,
solely for the use and benefit of the Bondholders in accordance with the terms
hereof and of the MBIA Policy.
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ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL DEFINITIONS.
Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture, and the definitions of such terms are applicable
to the singular as well as to the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms. Whenever
reference is made herein to an Event of Default or a Default known to the
Trustee or of which the Trustee has notice or knowledge, such reference shall be
construed to refer only to an Event of Default or Default of which the Trustee
is deemed to have notice or knowledge pursuant to Section 6.01(d). Capitalized
terms that are used but not defined in this Indenture and which are defined in
the Master Servicing Agreement have the meanings assigned to them therein. All
other terms used herein which are defined in the Trust Indenture Act (as
hereinafter defined), either directly or by reference therein, have the meanings
assigned to them therein.
"ACCOUNTANT": A Person engaged in the practice of accounting who
(except when this Indenture provides that an Accountant must be Independent) may
be employed by or affiliated with the Issuer or an Affiliate of the Issuer.
"ACT": With respect to any Bondholder, as defined in Section
11.03.
"ADJUSTED NET MORTGAGE RATE": As to each Pledged Mortgage and at
any time, the per annum rate equal to the Mortgage Rate less the related
Servicing Fee Rate.
"ADVANCE": The payment of any principal or interest required to
be made by a Servicer with respect to any Payment Date pursuant to the related
Servicing Agreement or required to be made by Master Servicer pursuant to
Section 5 of the Master Servicing Agreement.
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"AFFILIATE": With respect to any Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGENT": Any Bond Registrar, Paying Agent or Authenticating
Agent.
"APPRAISED VALUE": With respect to any Pledged Mortgage, the
Appraised Value of the related Mortgaged Property shall be: (i) with respect to
a Pledged Mortgage other than a Refinancing Pledged Mortgage, the lesser of (a)
the value of the Mortgaged Property based upon the appraisal made at the time of
the origination of such Pledged Mortgage and (b) the sales price of the
Mortgaged Property at the time of the origination of such Pledged Mortgage; (ii)
with respect to a Refinancing Pledged Mortgage, the value of the Mortgaged
Property based upon the appraisal made at the time of the origination of such
Refinancing Pledged Mortgage.
"ASSIGNMENTS": Collectively (i) the original instrument of
assignment of a Mortgage, including any interim assignments from the originator
or any other holder of any Pledged Mortgage, and (ii) the original instrument of
assignment of such Mortgage, made by the Issuer to the Trustee (which in either
case may, to the extent permitted by the laws of the state in which the related
Mortgaged Property is located, be a blanket instrument of assignment covering
other Mortgages as well and which may also, to the extent permitted by the laws
of the state in which the related Mortgaged Property is located, be an
instrument of assignment running directly from the mortgagee of record under the
related Mortgage to the Trustee).
"AUTHENTICATING AGENT": The Person, if any, appointed as
Authenticating Agent by the Trustee at the request of the Issuer pursuant to
Section 6.15, until any successor Authenticating Agent for the Bonds is named,
and thereafter "Authenticating Agent" shall mean such successor.
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"AUTHORIZED OFFICER": Any officer of the Owner Trustee who is
authorized to act for the Owner Trustee in respect of the Issuer and whose name
appears on a list of such authorized officers furnished by the Owner Trustee to
the Trustee, as such list may be amended or supplemented from time to time, and
any officer of the Issuer who is authorized to act pursuant to the Deposit Trust
Agreement and whose name appears on a list furnished by the Depositor to the
Owner Trustee and the Trustee, as such list may be amended or supplemented from
time to time.
"BANK": Wilmington Trust Company, a Delaware banking
corporation, in its individual capacity and not as Owner Trustee.
"BANKRUPTCY CODE": The United States Bankruptcy Reform Act of
1978, as amended.
"BENEFICIAL OWNER": With respect to a Book Entry Bond, the
Person who is the beneficial owner of such Book Entry Bond.
"BOND ACCOUNT": The separate Eligible Account or Accounts
created and maintained by the Master Servicer pursuant to the Master Servicing
Agreement with a depository institution in the name of the Master Servicer for
the benefit of the Trustee on behalf of Bondholders and MBIA and designated
"Bond Account in trust for the registered holders of Sequoia Mortgage Trust 1
Collateralized Mortgage Bonds."
"BOND DISTRIBUTION AMOUNT": As to any Payment Date, the sum of
(i) the Interest Payment Amount and (ii) the Principal Payment Amount.
"BONDHOLDER" OR "HOLDER": The Person in whose name a Bond is
registered in the Bond Register.
"BOND INTEREST RATE": The Class A-1 Interest Rate or the Class
A-2 Interest Rate, as applicable.
"BOND REGISTER" AND "BOND REGISTRAR": As defined in Section
2.07.
"BONDS": Any bonds authorized by, and authenticated and
delivered under, this Indenture.
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"BOOK ENTRY BONDS": The Bonds shall be registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"BOOK ENTRY TERMINATION": As defined in Section 2.14.
"BUSINESS DAY": Any day other than (i) a Saturday or a Sunday,
or (ii) a day on which banking institutions in the City of New York, New York,
the state of Maryland, or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to be
closed.
"CLASS": Collectively, all of the Bonds bearing the same class
designation. The Bonds are divided into Classes as provided in Section 2.03.
"CLOSING DATE": July 29, 1997.
"CODE": The Internal Revenue Code of 1986, including any
successor or amendatory provisions.
"COMMISSION": Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or if at
any time such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body performing such duties at
such time under the Trust Indenture Act or similar legislation replacing the
Trust Indenture Act.
"CONVERTED MORTGAGE LOAN": A Convertible Mortgage that has
converted to a fixed rate mortgage.
"CONVERTIBLE MORTGAGE": A Pledged Mortgage that provides the
Mortgagor with an option to convert the Mortgage Rate to a fixed rate.
"CORPORATE TRUST OFFICE": The principal corporate trust office
of the Trustee located at 000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, XX
00000, or at such other address as the Trustee may designate from time to time
by notice to the
X-0
00
Xxxxxxxxxxx, XXXX and the Issuer, or the principal corporate trust office of any
successor Trustee.
"CUSTODIAL AGREEMENTS": The agreements between the Trustee and
each Custodian.
"CUSTODIAN": Norwest Bank Minnesota, N.A. and Bankers Trust
Company of California, N.A., each as a custodian under a Custodial Agreement.
"CUT-OFF DATE": With respect to the Pledged Mortgages, June 1,
1997.
"DEBT SERVICE REDUCTION": With respect to any Pledged Mortgage,
a reduction by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code in the Scheduled Payment for such Pledged Mortgage which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
"DEFAULT": Any occurrence which is, or with notice or the lapse
of time or both would become, an Event of Default.
"DEFAULTED PLEDGED MORTGAGE": The meaning specified in Section
8.04(e).
"DEFICIENT VALUATION": With respect to any Pledged Mortgage, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Pledged Mortgage,
or any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court which is final and
non-appealable in a proceeding under the Bankruptcy Code.
"DEFINITIVE BONDS": Bonds other than Book Entry Bonds.
"DELETED PLEDGED MORTGAGE": As defined in Section 2 of the
Master Servicing Agreement.
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"DENOMINATION": With respect to each Bond, the amount set forth
on the face thereof as the "Initial Principal Amount of this Bond".
"DEPOSITOR": Sequoia Mortgage Funding Corporation, a Delaware
corporation.
"DEPOSITORY": The initial Depository with respect to each Class
of Book Entry Bonds shall be The Depository Trust Company of New York, the
nominee for which is Cede & Co. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"DEPOSITORY PARTICIPANTS": A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"DEPOSIT TRUST AGREEMENT": The Deposit Trust Agreement, dated as
of July 16, 1997, between the Bank and the Depositor, creating the Issuer, as
amended by the Amended and Restated Deposit Trust Agreement, dated July 17,
1997, and as otherwise amended or supplemented from time to time.
"DISTRIBUTION ACCOUNT": The separate Eligible Account created
and maintained by the Trustee pursuant to Section 8.02 in the name of the
Trustee for the benefit of the Bondholders and MBIA and designated "First Union
National Bank in trust for registered holders of Sequoia Mortgage Trust,
Collateralized Mortgage Bonds." Funds in the Distribution Account shall be held
in trust for the Bondholders and MBIA for the uses and purposes set forth in
this Indenture.
"ESCROW ACCOUNT": The Eligible Account or Accounts established
and maintained pursuant to each Servicing Agreement.
"EVENT OF DEFAULT": The meaning specified in Section 5.01.
"EXPENSE FEE RATE": As to each Pledged Mortgage, and any
calendar month, equals the sum of the Servicing Fee Rate for such Pledged
Mortgage and the per annum rate that represents such
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Pledged Mortgage's pro rata share, for such month, of the sum of the Management
Fee and the MBIA Premium.
"FDIC": The Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
"FIRREA": The Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
"FNMA": The Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
"GRANT": To grant, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, mortgage, pledge, create and grant a security
interest in, deposit, set-over and confirm. A Grant of a Pledged Mortgage and
related Mortgage Documents, a Permitted Investment, the Master Servicing
Agreement, an Insurance Policy, or any other instrument shall include all
rights, powers and options (but none of the obligations) of the Granting party
thereunder, including, without limitation, the immediate and continuing right to
claim for, collect, receive and give receipts for principal and interest
payments thereunder, Insurance Proceeds, condemnation awards, purchase prices
and all other moneys payable thereunder and all proceeds thereof, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise, and generally to do and receive anything which the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"HIGHEST LAWFUL RATE": The meaning specified in Section 11.18.
"HOLDER": The holder of Bonds issued pursuant to this Indenture.
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"INDENTURE" or "THIS INDENTURE": This instrument as originally
executed and, if from time to time supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof, as so supplemented or amended. All references in this
instrument to designated "Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this instrument as originally executed. The words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section, Subsection or
other subdivision.
"INDEPENDENT": When used with respect to any specified Person
means such a Person who (i) is in fact independent of the Issuer and any other
obligor upon the Bonds, (ii) does not have any direct financial interest or any
material indirect financial interest in the Issuer or in any such other obligor
or in an Affiliate of the Issuer or such other obligor and (iii) is not
connected with the Issuer or any such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Trustee, such Person shall be appointed
by an Issuer Order and with the approval of the Trustee, which approval shall
not be unreasonably withheld, and such opinion or certificate shall state that
the signer has read this definition and that the signer is Independent within
the meaning hereof.
"INDEX": As to each Pledged Mortgage, the index from time to
time in effect for the adjustment of the Mortgage Rate set forth as such on the
related Mortgage Note.
"INDIRECT PARTICIPANT": A broker, dealer, bank or other
financial institution or other Person that clears through or maintains a
custodial relationship with a Depository Participant.
"INDIVIDUAL BOND": A Bond of an original principal amount of
$1,000; a Bond of an original principal amount in excess of $1,000 shall be
deemed to be a number of Individual
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Bonds equal to the quotient obtained by dividing such original principal amount
by $1,000.
"INSURANCE AGREEMENT": The insurance agreement dated, July 1,
1997, by and among the MBIA, the Master Servicer, Redwood, the Company, the
Issuer, and the Trustee.
"INVESTOR CERTIFICATE": As defined in Section 1.01 of the
Deposit Trust Agreement.
"ISSUER": Sequoia Mortgage Trust 1 formed pursuant to the
Deposit Trust Agreement.
"ISSUER ORDER" and "ISSUER REQUEST": A written order or request
that is dated and signed in the name of the Issuer by an Authorized Officer and
delivered to the Trustee.
"LETTER AGREEMENT": With respect to the Book Entry Bonds, the
letter agreement among the Issuer, the Trustee and the Depository governing book
entry transfers of, and certain other matters with respect to, such Book Entry
Bonds and attached as Exhibit I hereto.
"MARGIN": As to each Pledged Mortgage, the percentage amount set
forth on the related Mortgage Note which is to be added to the Index in
calculating the Mortgage Rate thereon.
"MASTER SERVICER": Norwest Bank Minnesota, N.A., a national
banking association, as Master Servicer under the Master Servicing Agreement,
and its permitted successors and assigns thereunder.
"MASTER SERVICING AGREEMENT": The master servicing agreement
dated as of June 1, 1997, among the Issuer, the Trustee and the Master Servicer,
as such agreement may be amended or supplemented from time to time as permitted
thereby.
"MASTER SERVICING FEE": As to any Payment Date, the amount
specified in Section 6(a) of the Master Servicing Agreement.
"MATURITY": With respect to any Bond, the date on which the
entire unpaid principal amount of such Bond becomes due
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and payable as therein or herein provided, whether at the Stated Maturity of the
final installment of such principal or by declaration of acceleration, call for
redemption or otherwise.
"MAXIMUM RATE": As to any Pledged Mortgage, the maximum rate set
forth on the related Mortgage Note at which interest can accrue on such Pledged
Mortgage.
"MBIA": MBIA Insurance Corporation and any successor thereto,
the issuer of the MBIA Policy.
"MBIA DEFAULT": The existence and continuance of any of the
following:
(a) a MBIA Payment Default; or
(b) the filing of any petition or commencement of any case or
proceeding by MBIA under any state or federal law relating to insolvency or
bankruptcy or the consent of MBIA to the entry of any decree or order for relief
in an involuntary case or proceeding under any state or federal bankruptcy or
insolvency law or the making of a general assignment of MBIA for the benefit of
its creditors or the admission of MBIA in writing in its inability to pay its
debts as they become due; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory agency enters a final and nonappealable
order, judgment or decrees which is unstayed and in effect for a period of 60
consecutive days under any state or federal bankruptcy to insolvency law appoint
a custodia, trustee, agent or receiver for MBIA or for all or any material
portion of MBIA's property or authorizing the taking of possession by custodian,
trustee, agent or receiver of MBIA or the taking of possession of all or any
material portion of MBIA's property.
"MBIA POLICY": The financial guaranty insurance policy issued by
MBIA covering the Bonds issued pursuant to this Agreement.
"MBIA PAYMENT DEFAULT": Failure and continued failure by MBIA to
make an Insured Payment required under the MBIA Policy in accordance with its
terms.
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"MBIA PREMIUM RATE": The rate set forth in the Insurance
Agreement.
"MOODY'S": Xxxxx'x Investors Service, Inc., or any successor
thereto. For purposes of Section 11.04 the address for notices to Moody's shall
be Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Residential Surveillance Mortgage Group or such other address as
Moody's may hereafter furnish to the Issuer and the Master Servicer.
"MORTGAGE": The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
"MORTGAGE DOCUMENTS": With respect to each Pledged Mortgage, the
mortgage documents listed in the related Custodial Agreement pertaining to such
Pledged Mortgage and any additional documents delivered to the related Custodian
to be added to the Mortgage Documents pursuant to the Master Servicing Agreement
or the related Servicing Agreement.
"MORTGAGE NOTE": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mort- gagor under a Pledged
Mortgage.
"MORTGAGE RATE": The annual rate of interest borne by a Mortgage
Note from time to time.
"MORTGAGED PROPERTY": The underlying property securing a Pledged
Mortgage.
"MORTGAGOR": The obligor(s) on a Mortgage Note.
"NET MORTGAGE RATE": As to any Pledged Mortgage and Payment
Date, the related Mortgage Rate as of the Due Date in the month preceding the
month of such Payment Date reduced by the related Expense Fee Rate.
"OFFICERS' CERTIFICATE": A certificate signed by two Authorized
Officers.
"OFFICER'S CERTIFICATE OF THE MASTER SERVICER": A certificate
(i) signed by either of the Chairman of the Board,
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the Vice Chairman of the Board, the President, a Managing Director, a Vice
President (however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Master Servicer, or (ii) if provided for herein, signed by a Servicing Officer,
as the case may be, and delivered to the Trustee, as required hereby.
"OPERATIVE AGREEMENTS": The meaning ascribed thereto in the
Deposit Trust Agreement.
"OPINION OF COUNSEL": A written opinion of counsel who may,
except as otherwise expressly provided in this Indenture, be counsel for the
Issuer, and who shall be reasonably satisfactory to the Trustee and MBIA.
"ORIGINAL CLASS A-1 PRINCIPAL BALANCE": $334,347,000.
"ORIGINAL CLASS A-2 PRINCIPAL BALANCE": $200,000,000.
"ORIGINAL PLEDGED MORTGAGE": The Pledged Mortgage refinanced in
connection with the origination of a Refinancing Pledged Mortgage.
"ORIGINAL POOL PRINCIPAL BALANCE": The Pool Principal Balance as
of the Cut-off Date.
"OTS": The Office of Thrift Supervision.
"OUTSTANDING": As of the date of determination, all Bonds
theretofore authenticated and delivered under this Indenture except:
(i) Bonds theretofore cancelled by the Bond Registrar or
delivered to the Bond Registrar for cancellation;
(ii) Bonds or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Issuer) in trust
for the Holders of such Bonds; provided, however, that if such Bonds are
to be redeemed, notice of such redemption has been duly given
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pursuant to this Indenture or provision therefor, satisfactory to the
Trustee, has been made;
(iii) Bonds in exchange for or in lieu of which other Bonds
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee and MBIA is presented that any such
Bonds are held by a bona fide purchaser (as defined by the Uniform
Commercial Code of the applicable jurisdiction); and
(iv) Bonds alleged to have been destroyed, lost or stolen for
which replacement Bonds have been issued as provided for in Section
2.08;
provided, however, that in determining whether the Holders of the requisite
percentage of the aggregate Principal Amount of the Outstanding Bonds have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Bonds owned by the Issuer, any other obligor upon the Bonds or any
Affiliate of the Issuer or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Bonds which the Trustee knows to be so owned
shall be so disregarded. Bonds so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Bonds and that
the pledgee is not the Issuer, any other obligor upon the Bonds or any Affiliate
of the Issuer or such other obligor; provided further, however, that Bonds that
have been paid with proceeds of the MBIA Policy shall be deemed to remain
Outstanding for purposes of this Indenture until MBIA has been paid as subrogee
under this Indenture, such payment to be evidenced by a written notice from MBIA
to the Trustee, and MBIA shall be deemed to be the Holder thereof to the extent
of any payments thereon made by MBIA; provided further that MBIA shall not be
entitled to receive more than the Insurer Reimbursement Amount, in accordance
with Section 2.03(b) of this Indenture.
"OUTSTANDING PLEDGED MORTGAGE": As of any Due Date, a Pledged
Mortgage with a Stated Principal Balance greater than zero which was not the
subject of a Principal Prepayment in Full
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prior to such Due Date and which did not become a Liquidated Pledged Mortgage
prior to such Due Date.
"OWNER TRUSTEE": Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Deposit Trust Agreement, until a successor Person shall have become the
Owner Trustee pursuant to the applicable provisions of the Deposit Trust
Agreement, and thereafter "Owner Trustee" shall mean such successor Person.
"PARTICIPANT": A participating organization that utilizes the
services of the Depository Trust Company.
"PAYING AGENT": The Trustee or any other depository institution
or trust company that is authorized by the Issuer pursuant to Section 3.03 to
pay the principal of, or interest on, any Bonds on behalf of the Issuer.
"PAYMENT DATE": With respect to the Bonds and the Investor
Certificate, the 4th day of each calendar month after the initial issuance of
the Bonds and the Investor Certificate or, if such 4th day is not a Business
Day, the next succeeding Business Day, commencing in August 1997.
"PAYMENT DATE STATEMENT": The meaning specified in Section 3(m)
of the Master Servicing Agreement.
"PERMITTED ENCUMBRANCE": Any lien, charge, security interest,
mortgage or other encumbrance Granted by the Issuer in the Trust Estate,
provided that:
(i) such lien, charge, security interest, mortgage or
encumbrance extends only to a portion of the Trust Estate which is
limited to cash deliverable or payable to the Issuer pursuant to Section
8.01 or Section 8.02(d);
(ii) such lien, charge, security interest, mortgage or other
encumbrance secures indebtedness which the Issuer is permitted to incur
under the terms of this Indenture; and
(iii) the beneficiary of such lien, charge, security interest,
mortgage or other encumbrance has agreed that in connection with the
enforcement thereof it will not bring
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any Proceeding seeking, or which would result in, the sale of any
portion of the Trust Estate and will not file any petition for the
commencement of insolvency proceedings with respect to the Issuer under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar
law, or for the appointment of any receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer
or of any of its property, or seeking an order for the winding up or
liquidation of the affairs of the Issuer.
"PERSON": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PLEDGED ACCOUNTS": The Bond Account and the Distribution
Account (exclusive of any earnings on investments made with funds deposited in
the Distribution Account or the Bond Account).
"PLEDGED MORTGAGES": Such of the mortgage loans Granted to the
Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Estate (including any REO Property), the mortgage loans so
held being identified in the Schedule of Pledged Mortgages, notwithstanding
foreclosure or other acquisition of title of the related Mortgaged Property.
"PREDECESSOR BONDS": With respect to any particular Bond of a
Class, every previous Bond of that Class evidencing all or a portion of the same
debt as that evidenced by such particular Bond; and, for the purpose of this
definition, any Bond authenticated and delivered under Section 2.08 in lieu of a
lost, destroyed or stolen Bond shall be deemed to evidence the same debt as the
lost, destroyed or stolen Bond.
"PREFERENCE CLAIM": Any amount previously distributed to a
Bondholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code as amended
from time, in accordance with a final nonappealable order of a court having
competent jurisdiction.
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"PREPAYMENT PERIOD": As to any Payment Date, the second calendar
month preceding the month of such Payment Date.
"PRINCIPAL AMOUNT": As of any Payment Date, in the case of the
Class A-1 Bonds, the Original Class A-1 Principal Balance reduced by all amounts
previously distributed to holders of the Class A-1 Bonds as payments of
principal or, in the case of the Class A-2 Bonds, the Original Class A-2
Principal Balance reduced by all amounts previously distributed to holders of
the Class A-2 Bonds as payments of principal and, or, if the context so
provides, the aggregate of such balances for both Classes of Bonds.
"PRINCIPAL PREPAYMENT": Any payment of principal by a Mortgagor
on a Pledged Mortgage that is received in advance of its scheduled Due Date and
is not accompanied by an amount representing scheduled interest due on any date
or dates in any month or months subsequent to the month of prepayment.
"PRINCIPAL PREPAYMENT IN FULL": Any Principal Prepayment made by
a Mortgagor of the entire principal balance of a Pledged Mortgage.
"PROCEEDING": Any suit in equity, action at law or other
judicial or administrative proceeding.
"PROSPECTUS SUPPLEMENT": The Prospectus Supplement dated July
25, 1997 relating to the Bonds.
"PURCHASE AND SALE AGREEMENTS": Each Agreement on Schedule VI to
the Master Servicing Agreement providing certain rights to the owner of Pledged
Mortgages and each of which is being assigned to the Trustee as part of the
Trust Estate.
"RATING AGENCY": Each of S&P and Xxxxx'x. If either such
organization or a successor is no longer in existence, "Rating Agency" shall be
such nationally recognized statistical rating organization, or other comparable
Person, as is designated by the Issuer, notice of which designation shall be
given to the Trustee. References herein to a given rating or rating category of
a Rating Agency shall mean such rating category without giving effect to any
modifiers.
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"RECORD DATE": With respect to any Payment Date, the date on
which the Persons entitled to receive any payment of principal of, or interest
on, any Bonds (or notice of a payment in full of principal) due and payable on
such Payment Date are determined; such date shall be the last day of the second
month preceding the month of such Payment Date.
"REDEMPTION DATE": Any Payment Date on which Bonds are to be
redeemed.
"REDEMPTION PRICE": With respect to the Bonds to be redeemed, an
amount equal to 100% of the Principal Amount of the Bonds, together with all
unpaid Interest Payment Amounts.
"REDWOOD": Redwood Trust, Inc.
"REFINANCING PLEDGED MORTGAGE": Any Pledged Mortgage originated
in connection with the refinancing of an existing mortgage loan.
"REQUEST FOR RELEASE": The Request for Release submitted by a
Servicer to the Custodian, substantially in the form of Exhibit D to the Master
Servicing Agreement.
"RESPONSIBLE OFFICER": With respect to the Trustee, any officer
in the corporate trust department or similar group of the Trustee and also, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his or her knowledge of and familiarity with the
particular subject.
"S&P": Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx Inc. For purposes of Section 11.04 the address for notices to S&P
shall be Standard & Poor's Ratings Group, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Mortgage Surveillance Monitoring, or such other address
as S&P may hereafter furnish to the Issuer and the Master Servicer.
"SAIF": The Savings Association Insurance Fund, or any successor
thereto.
"SALE": The meaning specified in Section 5.18(a).
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"SCHEDULED PAYMENT": The scheduled monthly payment on a Pledged
Mortgage due on any Due Date allocable to principal and/or interest on such
Pledged Mortgage which, unless otherwise specified in the Master Servicing
Agreement, shall give effect to any related Debt Service Reduction and any
Deficient Valuation that affects the amount of the monthly payment due on such
Pledged Mortgage.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SERVICER": Any Person with which Redwood Trust, Inc. has
entered into a Servicing Agreement.
"SERVICING ACCOUNT": The account or accounts created and
maintained pursuant to each Servicing Agreement.
"SERVICING AGREEMENT": Each agreement between Redwood Trust,
Inc. and the related Servicer relating to servicing set forth on Schedule V of
the Master Servicing Agreement.
"SERVICING FEE": As to each Pledged Mortgage and any Payment
Date, an amount equal to one month's interest at the applicable Servicing Fee
Rate on the Stated Principal Balance of such Pledged Mortgage.
"SERVICING FEE RATE": With respect to any Pledged Mortgage, the
per annum rate set forth in the Pledged Mortgage Schedule for such Pledged
Mortgage.
"SERVICING OFFICER": Any officer of a Servicer or the Master
Servicer involved in, or responsible for, the administration and servicing of
the Pledged Mortgages whose name and facsimile signature appear on a list of
servicing officers furnished to the Trustee by the related Servicer or the
Master Servicer on the Closing Date pursuant to the related Servicing Agreement
or the Master Servicing Agreement, as such list may from time to time be
amended.
"STATED MATURITY": With respect to any and all Bonds, May 4,
2029.
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"STATED PRINCIPAL BALANCE": As to any Pledged Mortgage and Due
Date, the unpaid principal balance of such Pledged Mortgage as of such Due Date
as specified in the amortization schedule at the time relating thereto (before
any adjustment to such amortization schedule by reason of any moratorium or
similar waiver or grace period) after giving effect to any previous partial
Principal Prepayments and Liquidation Proceeds allocable to principal (other
than with respect to any Liquidated Pledged Mortgage) and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment by
the related Mortgagor.
"SUCCESSOR MASTER SERVICER": A Person appointed by the Trustee
who succeeds either the Trustee or the Master Servicer, pursuant to the
applicable provisions of the Master Servicing Agreement.
"TRUST ESTATE": All money, instruments and other property
subject or intended to be subject to the lien of this Indenture for the benefit
of the Bondholders and MBIA as of any particular time (including, without
limitation, all property and interests Granted to the Trustee), including all
proceeds thereof.
"TRUST INDENTURE ACT" OR "TIA": The Trust Indenture Act of 1939,
as amended, as in force at the Closing Date, unless otherwise specifically
provided.
"TRUSTEE": First Union National Bank, a national banking
association, and any Person succeeding as Trustee hereunder pursuant to Section
6.12 or any other applicable provision hereof.
"TRUSTEE MORTGAGE FILE": With respect to each Pledged Mortgage,
the original documents and instruments relating thereto to be retained in the
custody and possession of the Custodian, as set forth and enumerated in the
Master Servicing Agreement.
"VOTING RIGHTS": With respect to all of the provisions of this
Indenture requiring the consent, vote, resolution or similar action of the
Bondholders, the voting rights represented by each Bond as against the other
Bondholders, which voting
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rights shall be in the proportion borne by the Principal Amount of such Bond to
the aggregate Principal Amounts of the Bonds.
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ARTICLE II
THE BONDS
SECTION 2.01. FORMS GENERALLY.
The Bonds and the Trustee's certificate of authentication shall
be in substantially the form required by this Article II, 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 be
required to comply with the rules of any securities exchange on which the Bonds
may be listed, or as may, consistently herewith, be determined by the officers
executing such Bonds, as evidenced by their execution thereof. Any portion of
the text of any Bond may be set forth on the reverse thereof with an appropriate
reference on the face of the Bond.
The Definitive Bonds may be produced in any manner determined by
the officers executing such Bonds, as evidenced by their execution thereof;
provided, however, that in the event the Bonds are listed on any securities
exchange, the Bonds shall be produced in accordance with the rules of any
securities exchange on which the Bonds may be listed.
SECTION 2.02. FORMS OF BONDS AND CERTIFICATE OF AUTHENTICATION.
(a) The form of Bond which is a Class A-1 Bond is attached
hereto as Exhibit II.
(b) The form of Bond which is a Class A-2 Bond is attached
hereto as Exhibit III.
(c) The form of the Trustee's certificate of authentication
is as follows:
"This is one of the Bonds referred to in the within mentioned
Indenture.
----------------------------------
as Trustee
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By:________________________________
Authorized Signatory"
(d) The form of assignment is as follows:
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"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 of Assignee)
the within Bond of Sequoia Mortgage Trust 1, and does hereby irrevocably
constitute and appoint _________________________ Attorney to transfer such Bond
on the books of the within named trust, with full power of substitution in the
premises.
Dated: ___________________________ ________________________________________
Notice: The signature to this assignment
must correspond with the name as written
upon the face of this Bond in every
particular without alteration or
enlargement or any change whatever. The
signature must be guaranteed by a member
of a signature guaranty medallion
program. Notarized or witnessed
signatures are not acceptable."
SECTION 2.03. BONDS ISSUABLE IN CLASSES; PROVISIONS WITH RESPECT TO PRINCIPAL
AND INTEREST PAYMENTS.
(a) General.
The Bonds shall be designated generally as the Sequoia Mortgage
Trust 1, "Collateralized Mortgage Bonds" of the Issuer. Each Bond shall bear
upon the face thereof the designation so selected for the Class to which it
belongs.
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Bonds of each Class shall constitute Book Entry Bonds as set
forth in Section 2.13 hereof. The Bonds shall be issued in two Classes, the
Class A-1 Bonds and the Class A-2 Bonds. The aggregate principal amount of Bonds
that may be authenticated and delivered under this Indenture is limited to
$334,347,000 with respect to the Class A-1 Bonds and $200,000,000 with respect
to the Class A-2 Bonds, except for Bonds authenticated and delivered upon
registration of, transfer of or in exchange for, or in lieu of Bonds pursuant to
Sections 2.06, 2.07 and 2.08 hereof.
All of the Bonds shall be issued in the appropriate forms
attached as Exhibits hereto with such additions and completions as are
appropriate for each such Class.
The final installments of principal of the Classes of Bonds
shall be payable at the Stated Maturity. The principal of each Bond shall be
payable in installments ending no later than the Stated Maturity of the final
installment of the principal thereof unless the unpaid principal of such Bond
becomes due and payable at an earlier date by declaration of acceleration or
call for redemption or otherwise. For each Payment Date prior to the Stated
Maturity, the aggregate amount of each installment of principal due and payable
on each Class of Bonds shall be equal to such Class's pro rata share of the
Principal Payment Amount for such Payment Date. All payments made with respect
to any Bond shall be applied first to the interest then due and payable on such
Bond, then, if applicable, to any Bondholders' Interest Carryover then to the
principal thereof.
(b) Payments of Principal of and Interest on the Bonds.
On each Payment Date, the Trustee shall withdraw Net Available
Funds (and any amounts on deposit pursuant to claims under the MBIA Policy) from
the Distribution Account and distribute such funds to the Bondholders and MBIA,
as applicable, in the respective amounts and order of priority set forth in
Section 3(f)(vi) and (vii) of the Master Servicing Agreement, in each case, to
the extent of funds remaining.
All payments on the Bonds shall be made pro rata among all Bonds
and as between the Class A-1 and Class A-2 Bonds shall be made, pro rata, in the
case of interest, in the proportion
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that the Class A-1 Interest Payment Amount and the Class A-2 Interest Payment
Amount, respectively, bear to each other, in case of Bondholders' Interest
Carryover, in the proportion that the Class A-1 Bondholders' Interest Carryover
and the Class A-2 Bondholders' Interest Carryover, respectively, bear to each
other, and, in the case of principal, in the proportion that the Principal
Amount of each such Class bears to each other.
SECTION 2.04. DENOMINATIONS.
Each Class of Book Entry Bonds shall be evidenced initially by a
single Bond representing the entire aggregate Principal Amount of such Class of
Bonds as of the Closing Date, beneficial ownership of which may be held in
denominations representing Principal Amounts of $1,000 and in multiples of
$1,000 in excess thereof. All of the Book Entry Bonds shall be initially
registered on the Bond Register in the name of Cede & Co., the nominee of the
Depository, and no Beneficial Owner will receive a Definitive Bond representing
such Beneficial Owner's interest in the Book Entry Bonds, except in the event of
Book Entry Termination.
SECTION 2.05. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Bonds shall be executed by an Authorized Officer in the name
and on behalf of the Issuer. The signature of such officer on the Bonds may be
manual or facsimile.
Bonds bearing the manual or facsimile signature of an individual
who was at any time an Authorized Officer shall bind the Issuer, notwithstanding
that such individual has ceased to hold such office prior to the authentication
and delivery of such Bonds or did not hold such office at the date of such
Bonds.
At any time and from time to time after the execution and
delivery of this Indenture, the Issuer may deliver Bonds executed on behalf of
the Issuer to the Trustee for authentication; and the Trustee shall authenticate
and deliver such Bonds as in this Indenture provided and not otherwise.
Each Bond authenticated on the Closing Date shall be dated the
Closing Date. All other Bonds which are authenticated after the Closing Date for
any other purpose hereunder shall be dated the date of their authentication.
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No Bond shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or by any Authenticating Agent by the manual signature
of one of its authorized officers or employees, and such certificate upon any
Bond shall be conclusive evidence, and the only evidence, that such Bond has
been duly authenticated and delivered hereunder.
SECTION 2.06. TEMPORARY BONDS.
So long as the Book Entry Bonds are held by the Depository for
the Participants in book-entry form, they may be typewritten or in any other
form acceptable to the Issuer, the Trustee and the Depository. At any time
during which the Book Entry Bonds are not held by the Depository for the
Participants in book-entry form, the Definitive Bonds shall be lithographed or
printed with steel engraved borders.
Pending the preparation of Definitive Bonds, the Issuer may
execute, and upon Issuer Order the Trustee shall authenticate and deliver,
temporary Bonds which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Bonds in lieu of which they may be so issued and with such
variations as the officers executing such Bonds may determine, as evidenced by
their execution of such Bonds.
If temporary Bonds are issued, the Issuer will cause definitive
Bonds to be prepared without unreasonable delay. After the preparation of
definitive Bonds, the temporary Bonds shall be exchangeable for definitive Bonds
upon surrender of the temporary Bonds at the office or agency of the Issuer to
be maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender or cancellation of any one or more temporary Bonds, the Issuer shall
execute and the Trustee shall authenticate and deliver and exchange therefor a
like principal amount of definitive Bonds of the same Class and of authorized
denominations. Until so exchanged, the temporary Bonds shall in
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all respects be entitled to the same benefits under this Indenture as Definitive
Bonds of the same Class.
SECTION 2.07. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Issuer shall cause to be kept a register (the "Bond
Register") in which, subject to such reasonable regulations as it may prescribe,
the Issuer shall provide for the registration of Bonds and the registration of
transfers of Bonds. The Trustee is hereby initially appointed "Bond Registrar"
for the purpose of registering Bonds and transfers of Bonds as herein provided.
Upon any resignation of any Bond Registrar appointed by the Issuer, the Issuer
shall promptly appoint a successor or, in the absence of such appointment, shall
assume the duties of Bond Registrar.
At any time the Trustee is not also the Bond Registrar, the
Trustee shall be a co-Bond Registrar. The Issuer shall cause each co-Bond
Registrar to furnish the Bond Registrar, promptly after each authentication of a
Bond by it, appropriate information with respect thereto for entry by the Bond
Registrar into the Bond Register. If the Trustee shall at any time not be
authorized to keep and maintain the Bond Register, the Trustee shall have the
right to inspect such Bond Register at all reasonable times and to rely
conclusively upon a certificate of the Person in charge of the Bond Register as
to the names and addresses of the Holders of the Bonds and the principal amounts
and numbers of such Bonds so held.
Upon surrender for registration of transfer of any Bond at the
office or agency of the Issuer to be maintained as provided in Section 3.02, the
Issuer shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Bonds of any
authorized denominations and of a like aggregate principal amount and Class.
At the option of the Holder, Bonds may be exchanged for other
Bonds of any authorized denominations, and of a like aggregate initial principal
amount and Class, upon surrender of the Bonds to be exchanged at such office or
agency. Whenever any Bonds are so surrendered for exchange, the Issuer shall
execute,
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and the Trustee shall authenticate and deliver, the Bonds which the Bondholder
making the exchange is entitled to receive.
All Bonds issued upon any registration of transfer or exchange
of Bonds shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Bonds surrendered
upon such registration of transfer or exchange.
Every Bond presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by the Holder thereof
or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Bonds, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge as may be imposed in connection with
any registration of transfer or exchange of Bonds, other than exchanges pursuant
to Section 2.08 not involving any transfer.
SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN BONDS.
If (1) any mutilated Bond is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Bond and (2) there is delivered to the Trustee such security or indemnity
as may be required by the Trustee and MBIA to save the Issuer and MBIA and the
Trustee harmless, then, in the absence of notice to the Issuer or the Trustee
that such Bond has been acquired by a bona fide purchaser, the Issuer shall
execute and upon its request the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a
new Bond or Bonds of the same tenor, aggregate initial principal amount and
Class bearing a number not contemporaneously outstanding. If, after the delivery
of such new Bond, a bona fide purchaser of the original Bond in lieu of which
such new Bond was issued presents for payment such original Bond, the Issuer and
the Trustee shall be entitled to recover such new Bond from the person to whom
it was delivered or any person taking therefrom, except a bona fide purchaser,
and shall be entitled to recover upon the security or indemnity provided
therefor to the
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extent of any loss, damage, cost or expenses incurred by the Issuer or the
Trustee in connection therewith. If any such mutilated, destroyed, lost or
stolen Bond shall have become or shall be about to become due and payable, or
shall have become subject to redemption in full, instead of issuing a new Bond,
the Issuer may pay such Bond without surrender thereof, except that any
mutilated Bond shall be surrendered.
Upon the issuance of any new Bond under this Section, the Issuer
may require the payment 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 Trustee) connected
therewith.
Every new Bond issued pursuant to this Section in lieu of any
destroyed, lost or stolen Bond shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Bond shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Bonds duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Bonds.
SECTION 2.09. PAYMENTS OF PRINCIPAL AND INTEREST; PRINCIPAL AND INTEREST RIGHTS
RESERVED.
(a) The Bonds of each Class shall bear interest for each Interest
Accrual Period at the Bond Interest Rate for the Bonds of such Class, which
interest shall be due and payable on each Payment Date on the unpaid principal
amount of the Bonds of such Class commencing on the Closing Date and continuing
on each Payment Date thereafter until the entire unpaid principal amount of the
Bonds of such Class is paid, whether by acceleration or otherwise, and (to the
extent lawful and enforceable) shall bear interest on overdue interest at the
Bond Interest Rate for the Bonds of such Class all as specified herein, in the
forms of the Bonds and in the Master Servicing Agreement. In addition, in the
circumstances specified in the Master Servicing Agreement, Bondholders' Interest
Carryover may accrue with respect to the
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Bonds which shall be payable as specified herein, in the forms of the Bonds and
in the Master Servicing Agreement.
The principal of the Bonds shall be payable as specified herein, in the
forms of the Bonds and in the Master Servicing Agreement until the entire unpaid
principal balance of the Bonds of such Series is paid.
(b) Each payment of principal of and interest on, and any
Bondholders' Interest Carryover with respect to, a Book Entry Bond shall be paid
to the Depository, which shall credit the amount of such payments to the
accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
payments to the Beneficial Owners of the Book Entry Bonds that it represents and
to each indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Beneficial Owners of the Book Entry
Bonds that it represents. All such credits and disbursements are to be made by
the Depository and the Depository Participants in accordance with the provisions
of the Bonds. Neither the Trustee, the Bond Registrar, MBIA nor the Issuer shall
have any responsibility for such credits and disbursements.
Each payment of principal of and interest on, and any Bondholders'
Interest Carryover with respect to, a Definitive Bond shall be paid to the
Person in whose name such Bond (or one or more Predecessor Bonds) is registered
at the close of business on the Record Date, for the applicable Payment Date by
check mailed to such Person's address as it appears in the Bond Register on such
Record Date, except for the final installment of principal payable with respect
to such Bond, which shall be payable as provided in Section 2.09(c).
All payments of principal of and interest on, and any Bondholders'
Interest Carryover with respect to, the Bonds shall be made only from the Trust
Estate and any other assets of the Issuer, and each Holder of the Bonds, by its
acceptance of the Bonds, agrees that it will have recourse solely against such
Trust Estate and such other assets of the Issuer and that neither the Owner
Trustee in its individual capacity, the Owner nor any of their respective
partners, beneficiaries, agents, officers,
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directors, employees or successors or assigns shall be personally liable for any
amounts payable, or performance due, under the Bonds or this Indenture.
(c) All reductions in the principal amount of a Bond (or one or more
Predecessor Bonds) effected by payments of installments of principal made on any
Payment Date shall be binding upon all Holders of such Bond and any Bond issued
upon transfer thereof or in exchange therefor or in lieu thereof. The final
installment of principal of each Bond (including the Redemption Price of any
Bond called for redemption, shall be payable only upon presentation and
surrender thereof on or after the Payment Date therefor at the office or agency
of the Issuer maintained by it for such purpose in the Borough of Manhattan, the
City of New York, State of New York, pursuant to Section 3.02. Whenever the
Trustee expects that the entire remaining unpaid principal amount of any Bond
will become due and payable on the next Payment Date, it shall, no later than
five days prior to such Payment Date, mail or cause to be mailed to the Holder
of each Bond as of the close of the business on such otherwise applicable Record
Date a notice to the effect that:
(i) the Trustee expects that funds sufficient to pay such
final installment will be available in the Distribution Account on such
Payment Date; and
(ii) if such funds are available, such final installment will
be payable on such Payment Date, but only upon presentation and
surrender of such Bond at the office or agency of the Issuer maintained
for such purpose pursuant to Section 3.02 (the address of which shall be
set forth in such notice).
Notices in connection with redemptions of Bonds shall be mailed to
Holders in accordance with Section 10.02.
SECTION 2.10. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any
Bond, the Issuer, MBIA, the Trustee, any Agent and any other agent of the
Issuer, MBIA, or the Trustee shall treat the Person in whose name any Bond is
registered as the owner of such Bond (a) on the applicable Record Date for the
purpose of
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receiving payments of the principal of, and interest on, such Bond and (b) on
any other date for all other purposes whatsoever, whether or not such Bond is
overdue, and neither the Issuer, MBIA, the Trustee, any Agent nor any other
agent of the Issuer or the Trustee shall be affected by notice to the contrary.
SECTION 2.11. CANCELLATION.
All Bonds surrendered for payment, registration of transfer,
exchange or redemption (unless the Issuer elects not to retire redeemed Bonds)
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. The Issuer may at any time
deliver to the Trustee for cancellation any Bond previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner whatsoever,
and all Bonds so delivered shall be promptly cancelled by the Trustee. No Bonds
shall be authenticated in lieu of or in exchange for any Bonds cancelled as
provided in this Section, except as expressly permitted by this Indenture. All
cancelled Bonds held by the Trustee shall be held by the Trustee in accordance
with its standard retention policy, unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it.
SECTION 2.12. AUTHENTICATION AND DELIVERY OF BONDS.
The Bonds may be executed by the Issuer and delivered to the
Trustee for authentication, and thereupon the same shall be authenticated and
delivered by the Trustee, provided, that such execution and authentication may
be made in counterpart, upon Issuer Request and upon receipt by the Trustee of
the following:
(a) an Issuer Order authorizing the execution,
authentication and delivery of the Bonds and specifying the Classes, the
Stated Maturity of the final installment of principal, the principal
amount and the Bond Interest Rate, of each Class of such Bonds to be
authenticated and delivered;
(b) an Issuer Order authorizing the execution and delivery
of this Indenture;
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(c) one or more Opinions of Counsel addressed to the
Trustee, complying with the requirements of Section 11.01, reasonably
satisfactory in form and substance to the Trustee, and to the effect
that:
(i) all instruments furnished to the Trustee by the
Issuer pursuant to this Section 2.12 in connection with the
Bonds conform in all material respects to the requirements of
this Indenture and constitute all the documents required to be
delivered under this Section 2.12 for the Trustee to
authenticate and deliver the Bonds (counsel rendering such
opinion or opinions need not express any opinion as to whether
the Pledged Mortgages Granted to the Trustee as security conform
to the requirements of this Indenture);
(ii) all conditions precedent provided for in this
Indenture relating to the authentication and delivery of the
Bonds have been complied with in all material respects (counsel
rendering such opinion or opinions need not express any opinion
as to the matters set forth in the parenthetical clause at the
end of paragraph (i) above or as to whether the amount of cash
or other collateral, if any, delivered to the Trustee pursuant
to any subsection of this Section 2.12 is the requisite amount);
(iii) the Bank has corporate power to execute and
deliver the Deposit Trust Agreement, the Deposit Trust Agreement
authorizes the Issuer to execute and deliver the Bonds and this
Indenture, and to issue the Bonds, and the Owner Trustee has
duly taken all necessary action under the Deposit Trust
Agreement for those purposes;
(iv) the Issuer is a statutory business trust created
under the laws of the State of Delaware and duly authorized by
the Deposit Trust Agreement;
(v) assuming due authorization, execution and
delivery thereof by the Trustee, this Indenture will be the
legally valid and binding obligation of the
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Issuer, enforceable against the Issuer in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws and equitable
principles relating to or limiting creditors' rights generally
and such counsel need express no opinion as to the availability
of equitable remedies;
(vi) the Bonds, when issued, delivered, authenticated
and paid for, will be the legally valid and binding obligations
of the Issuer, entitled to the benefits of this Indenture, and
enforceable against the Issuer in accordance with their terms,
except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws and equitable
principles relating to or limiting creditors' rights generally
and such counsel need express no opinion as to the availability
of equitable remedies;
(vii) assuming due execution and delivery thereof by
the Trustee and by the Master Servicer, the Master Servicing
Agreement constitutes the legally valid and binding obligation
of the Master Servicer and of the Issuer, respectively,
enforceable against the Master Servicer and the Issuer in
accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws and equitable principles relating to or limiting creditors'
rights generally and such counsel need express no opinion as to
the availability of equitable remedies;
(viii) the Mortgage Notes included in the Original
Pledged Mortgages have been duly and validly assigned, delivered
and pledged to the Trustee to the extent contemplated by this
Indenture, and this Indenture together with such assignment,
delivery and pledge to the Trustee, creates as security for the
Bonds a valid and perfected security interest of first priority
in such Mortgage Notes, except to the extent limited in the
event (A) the Trustee relinquishes possession of any such
Mortgage Note, (B) the Depositor, the Issuer, the Master
Servicer or any
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Servicer transfers any such Mortgage Note or the related
Mortgage to a bona fide purchaser for value without notice prior
to notification to the Mortgagor of the assignment to the
Trustee of such Mortgage Note or due recordation of the
Assignment to the Trustee of the related Mortgage or (C) the
Depositor, the Issuer, the Master Servicer or any Servicer
discharges any such Mortgage Note or the related Mortgage prior
to such notification or recordation; the Mortgages delivered to
the Trustee with the Original Mortgage Notes will continue to
secure the Mortgage Notes included in the Original Pledged
Mortgages, as though, and to the same extent as if, such
Mortgage Notes had not been assigned, delivered and pledged; and
it is not necessary to record or file this Indenture or to take
any other action, except as set forth above, in order to make
effective the lien and security interest created by this
Indenture in the Mortgage Notes included in the Original Pledged
Mortgages;
(ix) this Indenture has been duly qualified under the
TIA; and
(x) the Issuer's registration statement with respect
to the Bonds has become effective under the Securities Act of
1933, as amended, and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of such registration
statement has been issued and is in effect under such act and no
proceedings for that purpose have been instituted or are pending
under such act.
In rendering the opinions set forth above, such counsel may rely
upon officers' certificates of the Depositor, the Owner Trustee, the
Issuer, any Servicer, the Master Servicer and the Trustee, without
independent confirmation or verification, as to the following matters
and as to such other matters as shall be reasonably acceptable to the
Trustee: (A) the accuracy of the descriptions of the Mortgage Notes
included in the Original Pledged Mortgages and the conformity thereof to
the descriptions in this Indenture, (B) the ownership by Sequoia
Mortgage Funding Corporation, the Depositor and the Issuer of such
Mortgage Notes free and clear of any lien, claim, charge or interest of
any kind of any third party, (C) the physical delivery of such Mortgage
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Notes to the Trustee, (D) the absence of any evidence appearing on any
such Mortgage Note of any right or interest inconsistent with the
opinions expressed, and (E) the form of endorsement approved by such
counsel having been made on each such Mortgage Note. In rendering the
opinions set forth above, such counsel need express no opinion as to (A)
the perfection of the security interest in any collateral not governed
by Article 9 of the Uniform Commercial Code of the State of California
or New York, (B) the existence of, or the priority of the security
interest created by the Indenture against, any liens or other interests
which arise by operation of law and which do not require any filing or
similar action in order to take priority over a perfected security
interest or (C) the priority of the security interest created by this
Indenture with respect to any claim or lien in favor of the United
States or any agency or instrumentality thereof (including federal tax
liens and liens arising under Title IV of the Employee Retirement Income
Security Act of 1974, as amended).
(d) an Officers' Certificate complying with the requirements
of Section 11.01 and stating that:
(i) the Issuer is not in Default under this
Indenture and the issuance of the Bonds will not result in any
breach of any of the terms, conditions or provisions of, or
constitute a default under, the Deposit Trust Agreement or any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency
entered in any proceeding to which the Issuer is a party or by
which it may be bound or to which it may be subject, and that
all conditions precedent provided in this Indenture relating to
the authentication and delivery of the Bonds have been complied
with;
(ii) the Issuer is the owner of each Original Pledged
Mortgage, free and clear of any lien, security interest or
charge, has not assigned any interest or
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participation in any such Pledged Mortgage (or, if any such
interest or participation has been assigned, it has been
released) and has the right to Grant each such Original Pledged
Mortgage to the Trustee;
(iii) the information set forth in the Schedule of
Pledged Mortgages attached as Schedule A to this Indenture is
true and correct in all material respects as of the Closing
Date;
(iv) the Issuer has Granted to the Trustee all of its
right, title and interest in each Pledged Mortgage;
(v) as of the Closing Date, no lien in favor of the
United States described in Section 6321 of the Code, or lien in
favor of the Pension Benefit Guaranty Corporation described in
Section 4068(a) of the Employee Retirement Income Security Act
of 1974, as amended, has been filed as described in subsections
6323(f) and 6323(g) of the Code upon any property belonging to
the Issuer; and
(vi) attached thereto is a true and correct copy of
letters signed by the Rating Agencies confirming that the Class
A-1 Bonds and Class A-2 Bonds have been rated Aaa by Moody's and
AAA by S&P.
(e) An executed counterpart of the Master Servicing
Agreement.
(f) A certificate of one or more Independent Persons with
respect to the fair value to the Issuer of the Original Pledged
Mortgages, substantially in the form of Exhibit V hereto.
SECTION 2.13. MATTERS RELATING TO BOOK ENTRY BONDS.
(a) If the Bonds are listed on any stock exchange at any
time after the Closing Date, the Issuer shall, if required as a condition to
such listing, prepare and deliver to the Trustee Bonds in substantially the same
form as the Bonds issued on the Closing Date, but with such other additional
features and such
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modifications, if any, as shall be necessary or appropriate in order to comply
with the requirements of such stock exchange for the listing of the Bonds on
such exchange. Bonds in the form issued on the Closing Date shall thereafter be
exchangeable for Bonds in such revised form to the same extent as temporary
Bonds are exchangeable for Definitive Bonds pursuant to Section 2.06.
(b) Each Class of Book Entry Bonds will be issued in the
form of a single typewritten bond certificate (each, a "DTC Certificate") to be
delivered to the Depository by the Issuer substantially in the respective forms
for each such Class attached as Exhibits hereto. The DTC Certificate for each
such Class of Book Entry Bonds shall be initially registered on the Bond
Register in the name of the nominee of such Depository and no Beneficial Owner
will receive a certificate representing its interests in any Class of Book Entry
Bonds except in the event that the Trustee issues Definitive Bonds, as provided
in Section 2.14. Pursuant to the Letter Agreement, while each Class of the Book
Entry Bonds remains outstanding and such Depository remains the Holder, it will
agree to make book-entry transfers among the Depository Participants and receive
and transmit payments of principal and interest on the Book Entry Bonds until
and unless the Trustee authenticates and delivers Definitive Bonds to the
Beneficial Owners of the Book Entry Bonds or their nominees, as described in
Section 2.14.
(c) Prior to Book Entry Termination, each Class of Book
Entry Bonds will remain registered in the name of the Depository or its nominee
and at all times: (i) registration of the Book Entry Bonds may not be
transferred by the Trustee or the Bond Registrar except to another Depository;
(ii) the Depository shall maintain book-entry records with respect to the
Beneficial Owners and with respect to ownership and transfers of such Book Entry
Bonds; (iii) ownership and transfers of registration of the Book Entry Bonds on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository, Depository Participants and interest participating
firms as representatives of the Beneficial Owners of the Book Entry Bonds for
purposes of exercising the rights of holders under the Indenture, and requests
and directions for and votes of such representatives shall not be deemed to be
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inconsistent if they are made with respect to different Beneficial Owners; and
(vi) the Trustee and MBIA may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and Persons shown on the books of such indirect
participating firms as direct or indirect Beneficial Owners.
All transfers by Beneficial Owners of Book Entry Bonds shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Beneficial Owner. Each Depository
Participant shall only transfer Book Entry Bonds of Beneficial Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
SECTION 2.14. TERMINATION OF BOOK ENTRY SYSTEM.
(a) The book entry system through the Depository with
respect to any Class of Book Entry Bonds may be terminated (a "Book Entry
Termination") upon the happening of any of the following:
(i) The Depository or the Issuer advises the Trustee
in writing that the Depository is no longer willing or able to
properly discharge its responsibilities as Depository and the
Issuer is unable to locate a qualified successor clearing agency
satisfactory to the Trustee and the Issuer;
(ii) The Issuer at its option advises the Trustee in
writing that it elects to terminate the book entry system
through the Depository; or
(iii) After the occurrence of an Event of Default (at
which time the Trustee shall use all reasonable efforts to
promptly notify each Beneficial Owner through the Depository of
such Event of Default when such notice shall be given pursuant
to Section 6.02), the Beneficial Owners of a majority in
aggregate Principal Amount of the Book Entry Bonds together
advise the Trustee and the Depository through the
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Depository Participants in writing that the continuation of a
book entry system through the Depository is no longer in the
best interests of the Beneficial Owners.
(b) Upon the occurrence of any event described in subsection
(a) above, the Trustee shall notify all Beneficial Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Bond certificates to Beneficial Owners requesting the same, in an
aggregate Principal Amount representing the interest of each, making such
adjustments and allowances as it may find necessary or appropriate as to accrued
interest, if any, and previous calls for redemption. Definitive Bond
certificates shall be issued only upon surrender to the Trustee of the Book
Entry Bond by the Depository, accompanied by registration instructions for the
Definitive Bond certificates. Neither the Issuer nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon issuance of the
Definitive Bond certificates, all references herein to obligations imposed upon
or to be performed by the Depository shall cease to be applicable and the
provisions relating to Definitive Bonds shall be applicable.
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ARTICLE III
COVENANTS
SECTION 3.01. PAYMENT OF BONDS.
The Issuer will pay or cause to be duly and punctually paid the
principal of, and interest on, the Bonds (and, to the extent applicable,
Bondholders' Interest Carryover accrued thereon) in accordance with the terms of
the Bonds and this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer will maintain in the Borough of Manhattan, the City
of New York, the State of New York an office or agency where Bonds may be
presented or surrendered for payment or may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Bonds and this Indenture may be served. The Issuer will give
prompt written notice to the Trustee and MBIA of the location and any change in
the location, of such office or agency. Until written notice of any change in
the location of such office or agency is delivered to the Trustee or if at any
time the Issuer shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee and MBIA with the address thereof, Bonds may
be so presented and surrendered, and such notices and demands may be made or
served, at the Corporate Trust Office, and the Issuer hereby appoints the
Trustee as its agent to receive all such surrenders, notices and demands.
The Issuer may also from time to time designate one or more
other offices or agencies (in or outside the City of New York) where the Bonds
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that (i) no such
designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York, the State of New York, for the purposes set forth in the preceding
paragraph, (ii) presentations or surrenders of Bonds for payment may be made
only in the City of New York, the State of New York or at the Corporate Trust
Office of the Trustee and (iii) any designation of an office or
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agency for payment of Bonds shall be subject to Section 3.03. The Issuer will
give prompt written notice to the Trustee and MBIA of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 3.03. MONEY FOR BOND PAYMENTS TO BE HELD IN TRUST.
All payments of amounts due and payable with respect to any
Bonds which are to be made from amounts withdrawn from the Distribution Account
pursuant to Section 8.02(c) or Section 5.08 shall be made on behalf of the
Issuer by the Trustee or by a Paying Agent, and no amounts so withdrawn from the
Distribution Account for payments of Bonds shall be paid over to the Issuer
under any circumstances except as provided in this Section 3.03 or in Section
5.08.
If the Issuer shall have a Paying Agent that is not also the
Bond Registrar, it shall furnish, or cause the Bond Registrar to furnish, no
later than the fifth calendar day after each Record Date or the first Business
Day after a Record Date applicable to a Payment Date on which the Bonds will be
redeemed in full, a list, in such form as such Paying Agent may reasonably
require, of the names and addresses of the Holders of Bonds and of the number of
Individual Bonds of each Class held by each such Holder.
Whenever the Issuer shall have a Paying Agent other than the
Trustee, it will, on or before the Business Day next preceding each Payment
Date, direct the Trustee to deposit with such Paying Agent an aggregate sum
sufficient to pay the amounts then becoming due (to the extent funds are then
available for such purpose in the Distribution Account), such sum to be held in
trust for the benefit of the Persons entitled thereto. Any moneys deposited with
a Paying Agent in excess of an amount sufficient to pay the amounts then
becoming due on the Bonds with respect to which such deposit was made shall,
upon Issuer Order, be paid over by such Paying Agent to the Trustee for
application in accordance with Article VIII.
Any Paying Agent other than the Trustee shall be appointed by
Issuer Order, subject to MBIA's written consent, provided, that, no MBIA Default
shall have occurred and be continuing. The Trustee is hereby appointed as the
initial
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Paying Agent. The Issuer shall not appoint any Paying Agent which is not, at the
time of such appointment, a depository institution or trust company whose
obligations would be Permitted Investments pursuant to clause (iv) of the
definition of the term "Permitted Investments". The Issuer will cause each
Paying Agent other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee (and if the
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(1) allocate all sums received for payment to the Holders of
Bonds on each Payment Date among such Holders in the proportion
specified in the applicable Payment Date Statement, as the case may be,
in each case to the extent permitted by applicable law;
(2) hold all sums held by it for the payment of amounts due
with respect to the Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(3) if such Paying Agent is not the Trustee, immediately
resign as a Paying Agent and forthwith pay to the Trustee all sums held
by it in trust for the payment of the Bonds if at any time it ceases to
meet the standards set forth above required to be met by a Paying Agent
at the time of its appointment;
(4) if such Paying Agent is not the Trustee, give the
Trustee notice of any Default by the Issuer (or any other obligor upon
the Bonds) in the making of any payment required to be made with respect
to any Bonds for which it is acting as Paying Agent;
(5) if such Paying Agent is not the Trustee, at any time
during the continuance of any such Default, upon the written request of
the Trustee, forthwith pay to the Trustee all sums so held in trust by
such Paying Agent; and
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(6) comply with all requirements of the Code, and all
regulations thereunder, with respect to the withholding from any
payments made by it on any Bonds of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting
requirements in connection therewith; provided, however, that with
respect to withholding and reporting requirements applicable to original
issue discount (if any) on any Class of Bonds, the Issuer has provided
the calculations pertaining thereto to the Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or any other purpose, by Issuer
Order direct any Paying Agent, if other than the Trustee, to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by such Paying
Agent; and upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable escheat laws, any money held by the
Trustee or any Paying Agent in trust for the payment of any amount due with
respect to any Bond and remaining unclaimed for six years after such amount has
become due and payable to the Holder of such Bond shall be discharged from such
trust and, upon its written request, paid to the Issuer; and the Holder of such
Bond shall thereafter, as an unsecured general creditor, look only to the Issuer
for payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease. The Trustee may, but shall not be
required to, adopt and employ, at the expense of the Issuer, any reasonable
means of notification of such repayment (including, but not limited to, mailing
notice of such repayment to Holders whose Bonds have been called but have not
been surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Trustee or any
Agent, at the last address of record for each such Holder).
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SECTION 3.04. CORPORATE EXISTENCE OF OWNER TRUSTEE.
(a) Any corporation or association into which the Owner
Trustee may be merged or with which it may be consolidated, or any corporation
or association resulting from any merger or consolidation to which the Owner
Trustee shall be a party, shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto, anything herein, or in any
agreement relating to such merger or consolidation, by which any such Owner
Trustee may seek to retain certain powers, rights and privileges therefore
obtaining for any period of time following such merger or consolidation, to the
contrary notwithstanding.
(b) Any successor to the Owner Trustee appointed pursuant to
Section 10.01 of the Deposit Trust Agreement shall be the successor Owner
Trustee under this Indenture without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession
to the Owner Trustee in accordance with this Section 3.04, the Person formed by
or surviving such consolidation or merger (if other than the Issuer) or the
Person succeeding to the Owner Trustee under the Deposit Trust Agreement may
exercise every right and power of the Owner Trustee, on behalf of the Issuer,
under this Indenture with the same effect as if such Person had been named as
the Owner Trustee herein.
SECTION 3.05. PROTECTION OF TRUST ESTATE.
(a) The Issuer will 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 as may be necessary or advisable to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain or preserve the lien of this Indenture
or carry out more effectively the purposes hereof;
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(iii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture;
(iv) enforce any of the Mortgage Documents; or
(v) preserve and defend title to the Trust Estate
and the rights of the Trustee, and of the Bondholders and MBIA,
in the Pledged Mortgages and the other property held as part of
the Trust Estate against the claims of all Persons and parties.
The Issuer hereby designates the Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required pursuant to this Section 3.05; provided, however, that
such designation shall not be deemed to create a duty in the Trustee to monitor
the compliance of the Issuer with the foregoing covenants; and provided further,
however, that the duty of the Trustee to execute any instrument required
pursuant to this Section 3.05 shall arise only if the Trustee has knowledge
pursuant to Section 6.01(d) of the occurrence of a failure of the Issuer to
comply with provisions of this Section 3.05.
(b) Except as permitted by Section 8.08, the 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 3.06 (or from the jurisdiction in which it was held, or to
which it is intended to be removed, as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 2.12(c), if no Opinion of
Counsel has yet been delivered pursuant to Section 3.06) or cause or permit
ownership or the pledge of any portion of the Trust Estate that consists of
book-entry securities to be recorded on the books of a Person located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such time unless the Trustee and MBIA 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.
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SECTION 3.06. OPINIONS AS TO TRUST ESTATE.
On or before February 15 in each calendar year, beginning with
the first calendar year commencing more than three months after the Closing
Date, the Issuer shall furnish to the Trustee and MBIA an Opinion of Counsel
reasonably satisfactory in form and substance to the Trustee and MBIA either
stating that, in the opinion of such counsel, such action has been taken as is
necessary to maintain the lien and security interest created by this Indenture
and reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security interest.
Such Opinion of Counsel shall also describe all such actions, if any, that will,
in the opinion of such counsel, be required to be taken to maintain the lien and
security interest of this Indenture with respect to the Trust Estate until May
15 in the following calendar year.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; MASTER SERVICING AGREEMENT.
(a) The Issuer shall punctually perform and observe all of
its obligations and agreements contained in the Deposit Trust Agreement. The
Issuer and the Trustee shall punctually perform and observe all of their
respective obligations and agreements contained in the Master Servicing
Agreement.
(b) The Issuer shall not take any action and will use its
reasonable good faith efforts not to 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 Mortgage Documents or under any instrument included in the
Trust Estate, or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any of the Mortgage Documents, except as expressly provided or
permitted in this Indenture and the Master Servicing Agreement or such Mortgage
Document or other instrument or unless such action will not adversely affect the
interests of the Holders of the Bonds and MBIA.
(c) The Issuer shall monitor the performance of the Master
Servicer under the Master Servicing Agreement, and shall use its reasonable good
faith efforts to cause the Master
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Servicer duly and punctually to perform all of its duties and obligations
thereunder. Upon the occurrence of a Master Servicing Default of which an
Authorized Officer of the Issuer has actual knowledge under the Master Servicing
Agreement, the Issuer shall promptly notify the Trustee and MBIA thereof, and
shall, subject to the prior written consent of MBIA, specify in such notice the
action, if any, the Issuer is taking in respect of such Master Servicing
Default. So long as any such Master Servicing Default shall be continuing and
subject to the prior written consent of MBIA, the Trustee may (i) terminate all
of the rights and powers of the Master Servicer pursuant to the applicable
provisions of the Master Servicing Agreement; (ii) exercise any rights it may
have to enforce the Master Servicing Agreement against the Master Servicer;
and/or (iii) waive any such Master Servicing Default under the Master Servicing
Agreement or take any other action with respect to such Master Servicing Default
as is permitted thereunder.
(d) Upon any termination by the Trustee of the Master
Servicer's rights and powers pursuant to the Master Servicing Agreement, the
rights and powers of the Master Servicer with respect to the Pledged Mortgages
shall vest in the Trustee and the Trustee shall be the successor in all respects
to the Master Servicer in its capacity as Master Servicer with respect to such
Pledged Mortgages under the Master Servicing Agreement, until the Trustee shall
have appointed, with the consent of the Issuer, such consent not to be
unreasonably withheld, and the Rating Agencies and MBIA, provided, however, with
respect to MBIA such consent shall not be required if a MBIA Default shall have
occurred and be continuing, and in accordance with the applicable provisions of
the Master Servicing Agreement a new Person to serve as successor to the Master
Servicer. With such consent, the Trustee may elect to continue to serve as
successor Master Servicer under the Master Servicing Agreement. Upon appointment
of a successor Master Servicer, the Trustee and such successor Master Servicer
shall enter into a master servicing agreement in a form substantially similar to
the Master Servicing Agreement. In connection with any such appointment, the
Trustee may make such arrangements for the compensation of such successor as it
and such successor shall agree, but in no event shall such compensation of any
successor Master Servicer (including the Trustee) be in excess of that payable
to the Master Servicer under the Master Servicing Agreement.
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(e) Upon any termination of the Master Servicer's rights and
powers pursuant to the Master Servicing Agreement, the Trustee shall promptly
notify the Issuer, MBIA and the Rating Agencies, specifying in such notice that
the Trustee or any successor Master Servicer, as the case may be, has succeeded
the Master Servicer under the Master Servicing Agreement, which notice shall
also specify the name and address of any such successor Master Servicer.
SECTION 3.08. INVESTMENT COMPANY ACT.
The Issuer shall at all times conduct its operations so as not
to be subject to the Investment Company Act of 1940, as amended (or any
successor statute), and the rules and regulations thereunder.
SECTION 3.09. NEGATIVE COVENANTS.
The Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any
portion of the Trust Estate except as expressly permitted by this
Indenture or the Master Servicing Agreement;
(b) claim any credit on, or make any deduction from, the
principal of, or interest on, any of the Bonds by reason of the payment
of any taxes levied or assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than in
connection with, or relating to, the issuance of the Bonds and the
Investor Certificate pursuant to this Indenture and the Deposit Trust
Agreement, respectively, or amend Section 2.03 or Section 10.01 of the
Deposit Trust Agreement as in effect on the Closing Date without, in
each case, the consent of MBIA and the consent of the Holders of 662/3%
of the aggregate Principal Amount of the Bonds then Outstanding;
(d) incur any indebtedness or assume or guaranty any
indebtedness of any Person, except for such indebtedness as
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may be incurred by the Issuer in connection with the issuance of the
Bonds pursuant to this Indenture;
(e) dissolve or liquidate in whole or in part; or
(f) (i) permit the validity or effectiveness of this
Indenture or any Grant 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 under this Indenture, except as may be expressly permitted
hereby, (ii) permit any lien, charge, security interest, mortgage or
other encumbrance (other than the lien of this Indenture, the lien
created by Section 8.04 of the Deposit Trust Agreement, as in effect on
the Closing Date, or any Permitted Encumbrance) to be created on or
extended 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 perfected
first priority security interest in the Trust Estate.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.
On or before 120 days after the end of the first fiscal year of
the Issuer which ends more than three months after the Closing Date, and each
fiscal year thereafter, the Issuer shall deliver to the Trustee and MBIA, unless
a MBIA Default has occurred and is continuing, a written statement, signed by an
Authorized Officer, stating that:
(1) a review of the fulfillment by the Issuer during such
year of its obligations under this Indenture has been made under such
officer's supervision; and
(2) to the best of such officer's knowledge, based on such
review, the Issuer has fulfilled all of its obligations under this
Indenture throughout such year, or, if there has been a Default in the
fulfillment of any such obligation, specifying each such Default known
to such officer and the nature and status thereof.
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SECTION 3.11. RECORDING OF ASSIGNMENTS.
The Issuer shall cause the Assignments of the Pledged Mortgages
securing the Bonds to be duly recorded in the manner specified in Section
2(a)(i) of the Master Servicing Agreement. If the Issuer fails to cause the
Assignments to be recorded within the time limit provided thereunder, the Issuer
shall purchase such corresponding Pledged Mortgages pursuant to Section 8.04 and
the applicable provisions of the Master Servicing Agreement.
SECTION 3.12. LIMITATION OF LIABILITY OF WILMINGTON TRUST COMPANY.
It is expressly understood and agreed by the parties hereto that
(a) this Indenture is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as owner trustee of Sequoia Mortgage Trust
1 under the Deposit Trust Agreement, in the exercise of the powers and authority
conferred and vested in it as Owner Trustee, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company, but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any being expressly waived by the Trustee, MBIA, and the Bondholders and by
any Person claiming by, through or under the Trustee, MBIA, and the Bondholders
and (d) under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Issuer or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Issuer under this Indenture or the other
Operative Agreements.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions shall have been satisfied:
(1) either
(A) all Bonds theretofore authenticated and
delivered (other than (i) Bonds which have been destroyed, lost
or stolen and which have been replaced or paid as provided in
Section 2.08, and (ii) Bonds for whose payment money has
theretofore been deposited in trust and thereafter repaid to the
Issuer, as provided in Section 3.03) have been delivered to the
Trustee for cancellation; or
(B) all Bonds not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the
Stated Maturity of the final installment of the
principal thereof within one year, or
(iii) are to be called for redemption within
one year under irrevocable arrangements satisfactory to
the Trustee for the giving of notice of redemption by
the Trustee in the name, and at the expense, of the
Issuer,
and the Issuer, in the case of clause (B)(i), (B)(ii) or (B)(iii) above,
has deposited or caused to be deposited with the Trustee, in trust for
such purpose, an amount sufficient to pay and discharge the entire
indebtedness on such Bonds not theretofore delivered to the Trustee for
cancellation, for principal and interest to the Stated Maturity of their
entire unpaid principal amount or to the applicable Redemption Date, as
the case may be, and in the case of
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Bonds which were not paid at the Stated Maturity of their entire unpaid
principal amount, for all overdue principal and all interest payable on
such Bonds to the next succeeding Payment Date therefor;
(2) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(3) the Issuer has delivered to the Trustee and MBIA, unless
a MBIA Default has occurred and is continuing, an Officers' Certificate
and an Opinion of Counsel reasonably satisfactory in form and substance
to the Trustee each stating that all conditions precedent herein
providing for the satisfaction and discharge of this Indenture have been
complied with;
then, upon Issuer Request, this Indenture and the lien, rights and interests
created hereby shall cease to be of further effect, and the Trustee and each
co-trustee and separate trustee, if any, then acting as such hereunder shall, at
the expense of the Issuer, execute and deliver all such instruments as may be
necessary to acknowledge the satisfaction and discharge of this Indenture and
shall pay, or assign or transfer and deliver, to the Issuer or upon Issuer Order
all Pledged Mortgages, cash, securities and other property held by it as part of
the Trust Estate remaining after satisfaction of the conditions set forth in
clauses (1) and (2) above.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Issuer to the Trustee under Section 6.07, the
obligations of the Trustee to the Issuer and the Holders of Bonds under Section
3.03, the obligations of the Trustee to the Holders of Bonds under Section 4.02
and the provisions of Article II with respect to lost, stolen, destroyed or
mutilated Bonds, registration of transfers of Bonds and rights to receive
payments of principal of, and interest on, the Bonds shall survive.
SECTION 4.02. APPLICATION OF TRUST MONEY.
All money deposited with the Trustee pursuant to Sections 3.03
and 4.01 shall be held in trust and applied by it, in accordance with the
provisions of the Bonds and this
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Indenture, to the payment, either directly or through any Paying Agent, as the
Trustee may determine, to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee.
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ARTICLE V
DEFAULTS AND REMEDIES
SECTION 5.01. EVENT OF DEFAULT.
"Event of Default", wherever used herein, means, with respect to
Bonds issued hereunder, any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) if the Issuer shall
(A) default in the payment when and as due of any
installment of principal of or interest on any Bond, or
(B) default in the payment of the Redemption Price
of any Bond which has been called for redemption pursuant to
Article X;
(2) if the Issuer shall breach, or default in the due
observance, of any one or more of the covenants set forth in clauses (a)
through (e) of Section 3.09;
(3) if the Issuer shall breach, or default in any material
respect in the due observance or performance of, any other of its
covenants in this Indenture and such Default shall continue for a period
of 30 days (such 30 day period to be automatically extended for 30 days
upon delivery by the Issuer of an Officers' Certificate setting forth
the steps being taken and stating the default is curable, to the Trustee
and, provided no MBIA Default has occurred and is continuing, to MBIA)
after there shall have been given, by registered or certified mail, to
the Issuer and MBIA by the Trustee, or to the Issuer and the Trustee by
MBIA, or, during the existence of a MBIA Default by the Holders of Bonds
representing more than 50% of the aggregate Principal Amount of the
Bonds, a written notice specifying such Default and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder;
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(4) if any representation or warranty of the Issuer made in
this Indenture, or any certificate or other writing delivered pursuant
hereto or in connection herewith shall prove to be incorrect in any
material respect as of the time when the same shall have been made and,
within 30 days (such 30 day period to be automatically extended for 30
days upon delivery by the Issuer of an Officers' Certificate setting
forth the steps being taken and stating the default is curable, to the
Trustee and, provided no MBIA Default has occurred and is continuing, to
MBIA) after there shall have been given, by registered or certified
mail, written notice thereof to the Issuer and MBIA by the Trustee, or
to the Issuer and the Trustee by MBIA, or, during the existence of a
MBIA Default, by the Holders of Bonds representing more than 50% of the
aggregate Principal Amount of the Bonds, the circumstance or condition
in respect of which such representation or warranty was incorrect shall
not have been eliminated or otherwise cured;
(5) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Issuer in an involuntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future federal or state bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or of
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(6) the commencement by the Issuer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar
law, or the consent by the Issuer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or of any
substantial part of its property or the making by the Issuer of an
assignment for the benefit of creditors or the failure by the Issuer
generally to pay its debts as such
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debts become due or the taking of corporate action by the Issuer in
furtherance of any of the foregoing.
(a) [Reserved]
(b) Notwithstanding the foregoing, the failure of the Issuer
to pay when and as due any installment of principal of (regardless of the lapse
of any grace period) any Bond shall not constitute an Event of Default hereunder
unless the Principal Amount of the Bonds after application of all available
amounts on deposit in the Distribution Account on a Payment Date exceeds the
Pool Principal Balance with respect to such Payment Date or unless the aggregate
Principal Amount of the Bonds is not paid in full on the Stated Maturity.
Subject to the foregoing, Section 5.01 of the Indenture shall otherwise apply in
all respects to the Bonds.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
Subject to Section 12.01(a)(vi) hereof, if an Event of Default
occurs and is continuing with respect to the Bonds, then and in every such case
the Trustee or the Holders of Bonds representing more than 50% of the aggregate
Principal Amount of the Bonds may declare all the Bonds to be immediately due
and payable, provided, however, that if a MBIA Default shall have occurred and
is continuing, such declaration may not have occurred prior to the 45th day
after the occurrence of the applicable Event of Default, by a notice in writing
to the Issuer (and to the Trustee if given by Bondholders), and upon any such
declaration such Bonds shall become immediately due and payable in an amount
equal to:
(i) the aggregate Principal Amount of all Classes of Bonds,
(ii) accrued and unpaid interest at the Class A-1 Interest
Rate or Class A-2 Interest Rate, as applicable, on the aggregate
Principal Amounts through the date of acceleration, and
(iii) interest (but only to the extent payment thereof shall
be legally enforceable) on any overdue
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installments of interest on the Bonds from the due date of any such
installments to the date of the acceleration at the Bond Interest Rate
at which such interest accrued or such lower rate at which payment of
such interest shall be legally enforceable.
At any time after such a declaration of acceleration of maturity
of the Bonds has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, MBIA or, in the case of a MBIA Default, the Holders of Bonds
representing more than 50% of the aggregate Principal Amount of the Bonds, by
written notice to the Issuer and the Trustee, may rescind and annul such
declaration and its consequences if:
(1) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all payments of principal of, and interest on,
all Bonds and all other amounts which would then be due
hereunder or upon such Bonds if the Event of Default giving rise
to such acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default, other than the nonpayment of the
principal of Bonds which have become due solely by such acceleration,
have been cured or waived as provided in Section 5.15.
No such rescission shall affect any subsequent Default or impair
any right consequent thereon.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Issuer covenants that if an Event of Default shall occur and
be continuing in respect to the Bonds and the Bonds have been declared due and
payable and such declaration and its
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consequences have not been rescinded and annulled, the Issuer will, upon demand
of the Trustee, pay to the Trustee, for the benefit of the Holders of the Bonds:
(i) the amounts specified in the first paragraph of
Section 5.02, and
(ii) 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 Trustee, its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, and at
the direction of MBIA, 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 any other obligor upon
the Bonds and collect, out of the Trust Estate (as defined in the Deposit Trust
Agreement), wherever situated, of the Issuer, the moneys adjudged or decreed to
be payable in the manner provided by law; provided, however, that neither the
Bank nor any of its agents, officers, directors, employees, successors or
assigns shall be personally liable for any amounts due under the Bonds or this
Indenture.
If an Event of Default occurs and is continuing, the Trustee
shall, with the prior written consent of MBIA, or, in the case of a MBIA
Default, the Trustee may proceed to protect and enforce its rights and the
rights of the Bondholders by any Proceedings the Trustee deems appropriate 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 enforce any other proper remedy, including, without
limitation, instituting a Proceeding prior to any declaration of acceleration of
the Stated Maturity of the Bonds for the collection of all amounts then due and
unpaid on such Bonds, prosecuting such Proceeding to final judgment or decree,
enforcing the same against the Issuer and collecting out of the property,
wherever situated, of the Issuer the moneys adjudged or decreed to be payable in
the manner provided by law.
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SECTION 5.04. REMEDIES.
Subject to the rights of MBIA under Article XII hereof, if an
Event of Default shall have occurred and be continuing and the Bonds have been
declared due and payable and such declaration and its consequences have not been
rescinded and annulled, the Trustee (subject to Section 5.18, to the extent
applicable) may do one or more of the following:
(a) institute Proceedings for the collection of all amounts
then payable on the Bonds, or under this Indenture, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer moneys adjudged due;
(b) in accordance with Section 5.18, sell the Trust Estate
or any portion thereof or rights or interest therein, at one or more
public or private Sales called and conducted in any manner permitted by
law;
(c) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate; and
(d) exercise any remedies of a secured party under the
Uniform Commercial Code and take any other appropriate action to protect
and enforce the rights and remedies of the Trustee or the Holders of the
Bonds hereunder,
provided, however, subject to the rights of MBIA under Article XII hereof, that
prior to exercising the foregoing, the Trustee shall have consulted with the
Issuer concerning alternative pay down scenarios but in no event shall such
consultation in any way restrict the rights of MBIA to exercise the remedies set
forth in this Section 5.04.
SECTION 5.05. [RESERVED].
SECTION 5.06. TRUSTEE MAY FILE PROOFS OF CLAIM.
Subject to Article XII hereof, including the rights of MBIA
thereunder, and in case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement,
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composition or other judicial Proceeding relative to the Issuer or any other
obligor upon any of the Bonds or the property of the Issuer or of such other
obligor or their creditors, the Trustee (irrespective of whether the Bonds shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Issuer for
the payment of any overdue principal or interest) shall be entitled and
empowered, by intervention in such Proceeding or otherwise to:
(i) file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Bonds and file
such other papers or documents and take such other actions as it deems
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Bondholders allowed in such Proceeding; and
(ii) collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator or sequestrator (or
other similar official) in any such Proceeding is hereby authorized by
each Bondholder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly
to the Bondholders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 6.07.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Bondholder any plan of reorganization, arrangement, adjustment or composition
affecting any of the Bonds or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Bondholder in any such
Proceeding.
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SECTION 5.07. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF BONDS.
All rights of action and claims under this Indenture or any of
the Bonds may be prosecuted and enforced by the Trustee without the possession
of any of the Bonds or the production thereof in any Proceeding relating
thereto, and any such Proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall
be for the ratable benefit of the Holders of the Bonds in respect of which such
judgment has been recovered. Any surplus shall be available, in accordance with
Section 5.08, for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 5.08. APPLICATION OF MONEY COLLECTED.
If the Bonds have been declared due and payable following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, any money collected by the Trustee with respect to the
Bonds pursuant to this Article or otherwise and any monies that may then be held
or thereafter received by the Trustee with respect to the Bonds shall be
applied, after payment to the Trustee of such amounts as may be payable to it
under Section 6.07, in the order, at the date or dates fixed by the Trustee and,
in case of the distribution of the entire amount due on account of principal of,
and interest on, such Bonds, upon presentation and surrender thereof:
First: To the payment of amounts then due and unpaid to any
Servicer or the Master Servicer in respect of Nonrecoverable Advances or
Nonrecoverable Master Servicer Advances made by such Servicer or the
Master Servicer pursuant to the related Servicing Agreement or the
Master Servicing Agreement;
Second: To the payment of amounts of interest and principal then
due and unpaid upon the Outstanding Bonds in accordance with the
priorities set forth in Section 2.03(b); and
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Third: To the payment of the remainder, if any, to the Issuer or
any other Person legally entitled thereto.
SECTION 5.09. LIMITATION ON SUITS.
No Holder of a Bond shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the
Trustee and MBIA, unless a MBIA Default has occurred and is continuing,
of a continuing Event of Default;
(2) the Holders of Bonds representing more than 50% of the
aggregate Principal Amount of the Bonds, with the prior written consent
of MBIA unless there is a MBIA Default, shall have made written request
to the Trustee to institute Proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity in full against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
Proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by MBIA or the
Holders of Bonds representing more than 50% of the aggregate Principal
Amount of the Bonds in the case of a MBIA Default;
it being understood and intended that no one or more Holders of Bonds shall have
any right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Bonds or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all the
Holders of Bonds.
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SECTION 5.10. UNCONDITIONAL RIGHTS OF BONDHOLDERS TO RECEIVE PRINCIPAL AND
INTEREST.
Notwithstanding any other provision in this Indenture, other
than the provisions hereof limiting the right to recover amounts due on a Bond
to recovery from the property of the Issuer, the Holder of any Bond shall have
the right, to the extent permitted by applicable law, which right is absolute
and unconditional, to receive payment of each installment of interest on such
Bond on the respective Stated Maturities of such installments of interest, to
receive payment of each installment of principal of such Bond when due (or, in
the case of any Bond called for redemption, on the date fixed for such
redemption) and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
SECTION 5.11. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee, MBIA or any Bondholder has instituted any
Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee, MBIA or to such Bondholder, then and in
every such case the Issuer, the Trustee, MBIA and the Bondholders 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 Trustee, MBIA and the Bondholders shall continue as though no such
Proceeding had been instituted.
SECTION 5.12. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the
Trustee, MBIA or to the Bondholders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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SECTION 5.13. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Bond
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 or by law
to the Trustee, MBIA or to the Bondholders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Bondholders,
as the case may be.
SECTION 5.14. CONTROL BY BONDHOLDERS.
Subject to the rights of MBIA under Article XII hereof, the
Holders of Bonds representing more than 50% of the aggregate Principal Amount of
the Bonds shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, however, that:
(1) such direction shall not be in conflict with any rule of
law or with this Indenture;
(2) any direction to the Trustee to undertake a Sale of the
Trust Estate shall be by the Holders of Bonds representing the
percentage of the aggregate Principal Amount of the Bonds specified in
Section 5.18(b)(1), unless Section 5.18(b)(2) is applicable; and
(3) [Reserved];
(4) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction; provided,
however, that, subject to Section 6.01, the Trustee need not take any
action which it determines might involve it in liability or be unjustly
prejudicial to the Bondholders not consenting.
SECTION 5.15. WAIVER OF PAST DEFAULTS.
Subject to the rights of MBIA under Article XII hereof, the
Holders of Bonds representing more than 50% of the aggregate
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Principal Amount of the Bonds may waive any past Default hereunder and its
consequences, except a Default:
(1) in the payment of any installment of principal of, or
interest on, any Bond; or
(2) in respect of a covenant or provision hereof which under
Section 9.02 cannot be modified or amended without the consent of the
Holder of each Outstanding Bond affected.
Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 5.16. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Bond
by his or her acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Bondholder, or group of Bondholders,
holding in the aggregate Bonds representing more than 10% of the aggregate
Principal Amount of the Bonds, or to any suit instituted by any Bondholder for
the enforcement of the payment of any installment of interest on any Bond on or
after the Stated Maturity thereof expressed in such Bond or for the enforcement
of the payment of any installment of principal of any Bond when due (or, in the
case of any Bond called for redemption, on or after the applicable redemption
date).
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SECTION 5.17. 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 of law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
in, or the performance of, this Indenture; and the Issuer (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 5.18. SALE OF TRUST ESTATE.
(a) The power to effect any sale (a "Sale") of any portion
of the Trust Estate pursuant to Section 5.04 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 Bonds and under this Indenture with respect thereto shall
have been paid. The Trustee may from time to time postpone any public Sale by
public announcement made at the time and place of such Sale. The Trustee hereby
expressly waives its right to any amount fixed by law as compensation for any
Sale.
(b) To the extent permitted by law, the Trustee shall not in
any private Sale sell or otherwise dispose of the Trust Estate, or any portion
thereof, unless:
(1) the Holders of all Bonds consent to, or direct the
Trustee to make, such Sale; or
(2) the proceeds of such Sale would be not less than the
entire amount which would be distributable to the Holders of the Bonds,
in full payment thereof in accordance with Section 5.08, on the Payment
Date next succeeding the date of such Sale.
(3) [Reserved]
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The purchase by the Trustee of all or any portion of the Trust
Estate at a private Sale shall not be deemed a Sale or disposition thereof for
purposes of this Section 5.18(b).
(c) Unless the Holders of all Bonds have otherwise consented
or directed the 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 (2) of subsection (b) of this Section 5.18 has not been established by
the Trustee and no Person bids an amount equal to or greater than such amount,
the 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:
(1) any Holder or Holders of Bonds may bid for and 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 Bonds 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 Bonds, in case the amount so payable
thereon shall be less than the amount due thereon, shall be returned to
the Holders thereof after being appropriately stamped to show such
partial payment;
(2) the Trustee may bid for and acquire the property offered
for Sale in connection with any public Sale thereof, and, in lieu of
paying cash therefor, may make settlement for the purchase price by
crediting the gross Sale price against the sum of (A) the amount which
would be distributable to the Holders of the Bonds as a result of such
Sale in accordance with Section 5.08 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 which are reimbursable to it,
without being required to produce the Bonds in order to complete any
such Sale or in order for the net Sale price to be credited against such
Bonds, and any property so acquired by the
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Trustee shall be held and dealt with by it in accordance with the
provisions of this Indenture;
(3) the 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;
(4) the 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
(5) no purchaser or transferee at such a Sale shall be bound
to ascertain the Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys.
SECTION 5.19. ACTION ON BONDS.
The Trustee's right to seek and recover judgment 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 Trustee, MBIA or the Holders of
Bonds shall be impaired by the recovery of any judgment by the Trustee against
the Issuer or by the levy of any execution under such judgment upon any portion
of the Trust Estate.
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ARTICLE VI
THE TRUSTEE
SECTION 6.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of 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
his or her own affairs. If a MBIA Default has occurred and is continuing the
Trustee shall use reasonable efforts to locate an additional insurer; provided
that no additional insurance policy to the MBIA Policy shall be accepted unless
the Rating Agencies shall have provided written confirmation that, upon such
policy being in force, the ratings on the Bonds would be in the highest rating
category of each such agency and the Issuer has consented to such additional
insurer.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that
are specifically set forth in this Indenture and no others and no
implied covenants or obligations shall be read into this Indenture; and
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. The Trustee shall, however, examine such certificates
and opinions to determine whether they conform to the requirements of
this Indenture.
(c) The 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:
(1) This paragraph does not limit the effect of
subsection (b) of this Section;
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(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(3) The 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 5.14 or Section 5.18;
(4) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith at the direction of
Bondholders or MBIA.
(d) Except with respect to duties of the Trustee prescribed
by the TIA, as to which this Section 6.01(d) shall not apply, for all purposes
under this Indenture, the Trustee shall not be deemed to have notice or
knowledge of any Event of Default described in Section 5.01(2), 5.01(5) or
5.01(6) or any Default described in Section 5.01(3) or 5.01(4) or any Master
Servicing Default or default under the Master Servicing Agreement unless a
Responsible Officer assigned to and working in the Trustee's corporate trust
department has actual knowledge thereof or unless written notice of any event
which is in fact such an Event of Default, Master Servicing Default or default
is received by the Trustee at the Corporate Trust Office, and such notice
references the Bonds generally, the Issuer, the Trust Estate or this Indenture.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any 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 for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. In determining that such repayment or indemnity is
not reasonably assured to it, the Trustee must consider not only the likelihood
of repayment or indemnity by or on behalf of the Issuer but also the likelihood
of repayment or indemnity from amounts payable to it from the Trust Estate
pursuant to Sections 6.07 and 8.02(d); provided, however, that, except as
provided in the first sentence of this Section 6.01(e), the Trustee shall not
refuse or fail to perform any of its duties hereunder solely as a result of
nonpayment of
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its reasonable fees and expenses; and provided further, however, that nothing in
this Section 6.01(e) shall be construed to limit the exercise by the Trustee of
any right or remedy permitted under this Indenture or otherwise in the event of
the Issuer's failure to pay the amounts due the Trustee pursuant to Section
6.07.
(f) Every provision of this Indenture that in any way
relates to the Trustee is subject to the provisions of this Section.
(g) Notwithstanding any extinguishment of all right, title
and interest of the Issuer in and to the Trust Estate following an Event of
Default and a consequent declaration of acceleration of the Stated Maturity of
the Bonds, whether such extinguishment occurs through a Sale of the Trust Estate
to another Person, the acquisition of the Trust Estate by the Trustee or
otherwise, the rights, powers and duties of the Trustee with respect to the
Trust Estate (or the proceeds thereof) and the Bondholders and MBIA and the
rights of Bondholders and MBIA shall continue to be governed by the terms of
this Indenture.
SECTION 6.02. NOTICE OF DEFAULT.
Upon the Trustee obtaining knowledge of the occurrence of any
Default, the Trustee shall transmit by mail to MBIA and all Holders of Bonds
notice of each such Default; provided, however, that except in the case of a
Default of the type described in Section 5.01(1), the Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders of the Bonds; and provided, further,
that the Trustee shall not withhold such notice from MBIA; and provided,
further, that in the case of any Default of the character specified in Section
5.01(3) or 5.01(4) no such notice to MBIA and Holders of the Bonds shall be
given until at least 30 days after the occurrence thereof. Concurrently with the
mailing of any such notice to MBIA and the Holders of the Bonds, the Trustee
shall transmit by mail a copy of such notice to the Rating Agencies.
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SECTION 6.03. RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 6.01 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein
shall be sufficiently evidenced by an Issuer Request or Issuer Order, and any
resolution of the board of directors may be sufficiently evidenced by a written
resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate or the Officer's Certificate of the
Master Servicer;
(d) the Trustee may consult with counsel, and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Bondholders pursuant to this Indenture, unless such
Bondholders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Trustee, in its discretion may make
such further inquiry or investigation into such facts or matters as it may see
fit, and if the Trustee shall determine to make such
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further inquiry or investigation, it shall be entitled, on reasonable prior
notice to the Issuer, to examine the books, records and premises of the Issuer,
personally or by agent or attorney, during the Issuer's normal business hours;
provided that the Trustee shall and shall cause its agents to hold in confidence
all such information except to the extent disclosure may be required by law and
except to the extent that the Trustee, in its sole judgment, may determine that
such disclosure is consistent with its obligations hereunder;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, provided, however, that the Trustee shall remain liable for
the execution and performance of any powers and duties by the Trustee directly
or by or through agents or attorneys appointed and supervised by the Trustee
hereunder;
(h) the 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;
(i) prior to the time that one of its Responsible Officers
obtains actual knowledge of a Master Servicing Default as defined in the Master
Servicing Agreement or a failure by the Master Servicer thereunder which with
notice and the passage of time will become a Master Servicing Default, the
Trustee shall not be responsible for taking action with respect thereto;
(j) the Trustee shall not be responsible for supervising,
monitoring or reviewing the Master Servicer's performance of its duties under
the Master Servicing Agreement except to the extent of determining (i) that the
periodic reports, certificates and opinions required to be delivered by the
Master Servicer to it thereunder are delivered in timely fashion and conform to
the requirements of the Master Servicing Agreement and (ii) that the amounts
received by it from the Master Servicer for deposit in the Distribution Account
during any month are as shown in the Master Servicer's report for such month;
and
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(k) the provisions of this Section, other than clauses (e),
(i) and (j), and of Sections 6.01(b) and (c) shall apply to the Trustee as it
may be Successor Master Servicer under the Master Servicing Agreement.
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF BONDS.
The recitals contained herein and in the Bonds, except the
certificates of authentication on the Bonds, shall be taken as the statements of
the Issuer, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations with respect to the Trust Estate or as to the
validity or sufficiency of this Indenture or of the Bonds. The Trustee shall not
be accountable for the use or application by the Issuer of the Bonds or the
proceeds thereof or any money paid to the Issuer or upon Issuer Order pursuant
to the provisions hereof.
SECTION 6.05. MAY HOLD BONDS.
The Trustee, any Agent, or any other agent of the Issuer, in its
individual or any other capacity, may become the owner or pledgee of Bonds and,
subject to Sections 6.08 and 6.13, may otherwise deal with the Issuer or any
Affiliate of the Issuer with the same rights it would have if it were not the
Trustee, Agent or such other agent.
SECTION 6.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by this Indenture or
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Issuer and except
to the extent of income or other gain on investments which are obligations of
the Trustee, in its commercial capacity, and income or other gain actually
received by the Trustee on investments, which are obligations of others.
SECTION 6.07. COMPENSATION AND REIMBURSEMENT.
The Issuer agrees to indemnify the Trustee and its agents for,
and to hold them harmless against, any loss,
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liability or expense incurred without negligence or bad faith on their part,
arising out of, or in connection with, the acceptance or administration of this
trust, including the costs and expenses of defending themselves against any
claim in connection with the exercise or performance of any of their powers or
duties hereunder, provided, however that unless a MBIA Default exists, the
Trustee shall notify MBIA of such legal action (provided that the failure to
notify MBIA shall not waive the rights of the Trustee to indemnification) and
such indemnification by the Trustee out of the Bond Account shall be
preconditioned on the Trustee's duty (i) to allow MBIA to control the defense or
settlement of any such action and (ii) to allow MBIA to direct the Trustee with
respect thereto; provided, further, that (a) if MBIA does not assume control of
the defense of any such action within a reasonable period of time after the
filing of such action, the Trustee shall have the right to act on its own in
defending the action until such time as MBIA assumes control of the defense, (b)
the Trustee along with MBIA shall have the right to consent to any counsel hired
to defend the Trustee (which consent of the Trustee shall not be unreasonably
withheld) and (c) the Trustee along with MBIA shall have the right to consent to
any settlement if the amount of such settlement is less than full
indemnification and the Trustee would not be fully released from liability with
respect to such action as a result of such settlement. Any amounts payable to
the Trustee and its agents, in respect of indemnification provided by this
paragraph, or pursuant to any other right of reimbursement from the Bond Account
that the Trustee and its agents, may have hereunder in its capacity as such,
including but not limited to the following paragraph of this Section 6.07, may
be withdrawn by the Master Servicer from the Bond Account and payable to the
Trustee, or its agents, at any time subject to a maximum amount of $150,000 in
any calendar year pursuant to Section 3(f)(iii)(D) of the Master Servicing
Agreement. Any such amounts due to the Trustee, or its agents, in excess of
$150,000 in such calendar year shall be reimbursable to the Trustee pursuant to
Section 3(f)(vii)(G) of the Master Servicing Agreement.
As security for the performance of the obligations of the Issuer
under this Section, the Trustee shall have a lien ranking junior to the lien of
the Bonds with respect to which any claim of the Trustee under this Section
arose upon all property and funds held or collected as part of the Trust Estate
by the
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Trustee in its capacity as such payable pursuant to Section 3(f)(viii)(G) of the
Master Servicing Agreement. The Trustee shall not institute any Proceeding
seeking the enforcement of such lien against the Trust Estate unless such
Proceeding is in connection with a Proceeding in accordance with Article V for
enforcement of the lien of this Indenture after the occurrence of an Event of
Default (other than an Event of Default arising solely from the Issuer's failure
to pay amounts due the Trustee under this Section 6.07) and a resulting
declaration of acceleration of Stated Maturity of the Bonds which has not been
rescinded and annulled.
The Trustee shall be compensated for its services rendered
hereunder pursuant to a separate agreement between it and the Master Servicer
and shall not look to the Issuer therefor.
SECTION 6.08. ELIGIBILITY; DISQUALIFICATION.
Irrespective of whether this Indenture is qualified under the
TIA, this Indenture shall always have a Trustee who satisfies the requirements
of TIA Sections 310(a)(1) and 310(a)(5). The Trustee shall always have a
combined capital and surplus as stated in Section 6.09. The Trustee shall be
subject to TIA Section 310(b).
SECTION 6.09. TRUSTEE'S CAPITAL AND SURPLUS.
The Trustee shall at all times have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding company
system, the aggregate combined capital and surplus of which is at least
$50,000,000; provided, however, that the Trustee's separate capital and surplus
shall at all times be at least the amount required by TIA Section 310(a)(2) if
this Indenture is qualified under the TIA. If the Trustee publishes annual
reports of condition of the type described in TIA Section 310(a)(2), its
combined capital and surplus for purposes of this Section 6.09 shall be as set
forth in the latest such report.
SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
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become effective until the acceptance of appointment by the successor Trustee
under Section 6.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Issuer and MBIA. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by (1) MBIA or
(2) by Act of the Holders representing more than 50% of the aggregate Principal
Amount of the Bonds, with the prior written consent of MBIA; provided, however,
MBIA shall have no such right if a MBIA Default exists and is continuing,
delivered to the Trustee and to the Issuer.
(d) If at any time:
(1) the Trustee shall have a conflicting interest
prohibited by Section 6.08 and shall fail to resign or eliminate such
conflicting interest in accordance with Section 6.08 after written
request therefor by the Issuer, MBIA or by any Bondholder; provided,
however, that this Section 6.10(d)(1) shall not be operative as part of
this Indenture unless and until this Indenture is qualified under the
TIA, and until such qualification this Indenture shall be construed as
if this Section 6.10(d)(1) were not contained herein; or
(2) the Trustee shall cease to be eligible under
Section 6.09 or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Issuer by an Issuer Order may remove the Trustee
or (ii) subject to Section 5.16, MBIA or any Bondholder who has been a bona fide
Holder of a Bond for at least six months may, on behalf of itself and all others
similarly
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situated, and with the prior written consent of MBIA unless a MBIA Default
exists and is continuing, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee, unless this
Indenture is qualified under the TIA and the Trustee's duty to resign is stayed
as provided in Section 310(b) of the TIA.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Trustee
for any cause, the Issuer, by an Issuer Order and with the prior written consent
of MBIA unless a MBIA Default exists and is continuing, shall promptly appoint a
successor Trustee. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy a successor Trustee shall be
appointed by MBIA or by Act of the Holders of Bonds representing more than 50%
of the aggregate Principal Amount of the Bonds and with the prior written
consent of MBIA unless a MBIA Default exists and is continuing, delivered to the
Issuer and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Issuer. If no successor
Trustee shall have been so appointed by the Issuer, MBIA or Bondholders and
shall have accepted appointment in the manner hereinafter provided, MBIA or any
Bondholder who has been a bona fide Holder of a Bond for at least six months
may, on behalf of itself and all others similarly situated and with the prior
written consent of MBIA unless a MBIA Default exists and is continuing, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to MBIA and
the Holders of Bonds. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuer, MBIA and the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee
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shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee. Notwithstanding the foregoing, on request of the
Issuer or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder subject nevertheless to its lien,
if any, provided for in Section 6.07. Upon request of any such successor
Trustee, the Issuer shall execute and deliver any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF
TRUSTEE.
Any corporation into which the Trustee 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 Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article and be acceptable to MBIA, unless a MBIA Default has occurred
and is continuing, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Bonds have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Bonds so authenticated with the same effect
as if such successor Trustee had authenticated such Bonds.
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SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIM AGAINST ISSUER.
If this Indenture is qualified under the TIA, the Trustee shall
be subject to TIA Section 311(a), excluding any creditor relationship listed in
TIA Section 311(b), and a Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
SECTION 6.14. CO-TRUSTEES AND SEPARATE TRUSTEES.
Subject to the rights of MBIA under Article XII hereof, at any
time or times, for the purpose of meeting the legal requirements of the TIA or
of any jurisdiction in which any of the Trust Estate may at the time be located,
the Issuer and the Trustee shall have power to appoint, and, upon the written
request of the Trustee or of the Holders of Bonds representing more than 50% of
the aggregate Principal Amount of the Bonds with respect to which a co-trustee
or separate trustee is being appointed, the Issuer shall for such purpose join
with the Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Trustee either to act as co-trustee, jointly with the Trustee, of all or any
part of the Trust Estate, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section. If the Issuer does not join in such
appointment within 15 days after the receipt by it of a request to do so, or in
case an Event of Default has occurred and is continuing, the Trustee alone shall
have power to make such appointment.
Should any written instrument from the Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Issuer. Each notice shall include the name and address of any such
co-trustee or successor trustee.
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Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the following
terms:
(1) The Bonds shall be authenticated and delivered
and all rights, powers, duties and obligations hereunder in respect of
the custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder, shall
be exercised solely by the Trustee.
(2) The rights, powers, duties and obligations
hereby conferred or imposed upon the Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such
co-trustee or separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee, except to the
extent that under any law of any jurisdiction in which any particular
act is to be performed, the Trustee shall be incompetent or unqualified
to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or
separate trustee.
(3) The Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the Issuer evidenced by
an Issuer Order, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section, and, in case of an
Event of Default has occurred and is continuing, the Trustee shall have
power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Issuer. Upon the written
request of the Trustee, the Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee which has resigned or
has been removed may be appointed in the manner provided in this
Section.
(4) No co-trustee or separate trustee shall be
required to satisfy the eligibility requirements under
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Sections 6.08 and 6.09. No co-trustee or separate trustee hereunder
shall be personally liable by reason of any act or omission of the
Trustee, or any other such trustee hereunder.
(5) Any Act of Bondholders delivered to the Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 6.15. AUTHENTICATING AGENTS.
Upon the request of the Issuer, the Trustee shall appoint an
Authenticating Agent with power to act on its behalf and subject to its
direction in the authentication and delivery of the Bonds designated for such
authentication by the Issuer and containing provisions therein for such
authentication (or with respect to which the Issuer has made other arrangements,
satisfactory to the Trustee and such Authenticating Agent, for notation on the
Bonds of the authority of an Authenticating Agent appointed after the initial
authentication and delivery of such Bonds) in connection with transfers and
exchanges under Sections 2.06 and 2.07, if any, as fully to all intents and
purposes as though the Authenticating Agent had been expressly authorized by
those Sections to authenticate and deliver Bonds. For all purposes of this
Indenture (other than in connection with the authentication and delivery of
Bonds pursuant to Sections 2.05 and 2.12 in connection with their initial
issuance and for purposes of Section 2.08), the authentication and delivery of
Bonds by the Authenticating Agent pursuant to this Section shall be deemed to be
the authentication and delivery of Bonds "by the Trustee". Such Authenticating
Agent shall at all times be a Person that both meets the requirements of Section
6.09 for the Trustee hereunder and has its principal office in the Borough of
Manhattan, City and State of New York.
Any Authenticating Agent shall also serve as Bond Registrar or
co-Bond Registrar, as provided in Section 2.07. Any Authenticating Agent
appointed by the Trustee pursuant to the terms of this Section 6.15 or pursuant
to the terms of any supplemental indenture shall deliver to the Trustee as a
condition precedent to the effectiveness of such appointment an instrument
accepting the trusts, duties and responsibilities of Authenticating Agent and of
Bond Registrar or co-Bond Registrar
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and indemnifying the Trustee for and holding the Trustee harmless against, any
loss, liability or expense (including reasonable attorneys' fees) incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance, administration of the trust or exercise of authority by
such Authenticating Agent, Bond Registrar or co-Bond Registrar.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section, without the execution or filing of any further act
on the part of the parties hereto or the Authenticating Agent or such successor
corporation.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and the Issuer. The Trustee may at
any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and the Issuer. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time any Authenticating Agent shall cease to be eligible under this Section,
the Trustee shall promptly appoint a successor Authenticating Agent, shall give
written notice of such appointment to the Issuer and shall mail notice of such
appointment to all Holders of Bonds.
The Trustee agrees, subject to Section 6.01(e), to pay to any
Authenticating Agent from time to time reasonable compensation for its services
and the Trustee shall be entitled to be reimbursed for such payments, subject to
Section 6.07. The provisions of Sections 2.10, 6.04 and 6.05 shall be applicable
to any Authenticating Agent.
SECTION 6.16. PAYMENT OF CERTAIN INSURANCE PREMIUMS.
Notwithstanding anything to the contrary contained in this
Indenture, the Trustee agrees, for the benefit of the Holders of the Bonds and
MBIA, that, should it fail to receive notice from any Servicer, or the
applicable Insurer, within the
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time period required pursuant to the related Servicing Agreement, to the effect
that any premiums due with respect to any Insurance Policies the premiums for
which are required to be paid by the Servicer or the Master Servicer from
amounts on deposit in any related escrow account, or required to be advanced by
the related Servicer the Trustee shall proceed with diligence to make inquiries
of the related Servicer, the Master Servicer, the Issuer and the applicable
Insurers as to whether such premiums have been paid at the times set forth in
the related Servicing Agreement. In the event such premiums have not been paid
and the coverage provided under the related Insurance Policy may be interrupted
or adversely affected, the Trustee agrees promptly to pay such premiums from
amounts on deposit in the Distribution Account, pursuant to Section 8.02(d) and
in accordance with its obligations under the applicable provisions of the Master
Servicing Agreement.
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ARTICLE VII
BONDHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF BONDHOLDERS.
(a) The Issuer shall furnish or cause to be furnished to the
Trustee or, upon request, to the Master Servicer (i) semi-annually, not less
than 45 days nor more than 60 days after the Interest Payment Date occurring
closest to six months after the Closing Date and each Interest Payment Date
occurring at six-month intervals thereafter, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of Bonds and
(ii) at such other times, as the Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Bond Registrar,
no such list shall be required to be furnished to the Trustee.
(b) In addition to furnishing to the Trustee the Bondholder
lists, if any, required under subsection (a), the Issuer shall also furnish all
Bondholder lists, if any, required under Section 3.03 at the times required by
Section 3.03.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO BONDHOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Bonds
contained in the most recent list, if any, furnished to the Trustee as provided
in Section 7.01 and the names and addresses of the Holders of Bonds received by
the Trustee in its capacity as Bond Registrar. The Trustee may destroy any list
furnished to it as provided in Section 7.01 upon receipt of a new list so
furnished.
(b) If this Indenture is qualified under the TIA,
Bondholders may communicate pursuant to TIA Section 312(b) with other
Bondholders with respect to their rights under this Indenture or under the
Bonds.
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(c) If this Indenture is qualified under the TIA, the
Issuer, the Trustee and the Bond Registrar shall have the protection of TIA
Section 312(c).
SECTION 7.03. REPORTS BY TRUSTEE.
(a) If this Indenture is qualified under the TIA, then
within 30 days after May 15 of each year (the "reporting date"), commencing with
the year after the issuance of the Bonds, (i) in the circumstance required by
TIA Section 313(a), the Trustee shall mail to all Holders and MBIA a brief
report dated as of such reporting date that complies with TIA Section 313(a),
(ii) the Trustee shall also mail to Holders of Bonds and MBIA with respect to
which it has made advances any reports with respect to such advances that are
required by TIA Section 313(b)(2) and (iii) the Trustee shall also mail to
Holders of Bonds and MBIA any reports required by TIA Section 313(b)(1). For
purposes of the information required to be included in any such reports pursuant
to TIA Sections 313(a)(3), 313(b)(1) (if applicable) or 313(b)(2), the principal
amount of indenture securities outstanding on the date as of which such
information is provided shall be the aggregate Principal Amount of the then
Bonds covered by the report. The Trustee shall comply with TIA Section 313(c)
with respect to any reports required by this Section 7.03(a).
(b) If this Indenture is qualified under the TIA, a copy of
each report required under this Section 7.03 shall, at the time of such
transmission to Holders of Bonds and MBIA be filed by the Trustee with the
Commission and with each securities exchange upon which the Bonds are listed.
The Issuer will notify the Trustee when the Bonds are listed on any securities
exchange.
SECTION 7.04. REPORTS BY ISSUER.
If this Indenture is qualified under the TIA, the Issuer (a)
shall file with the Trustee, within 15 days after it files them with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Issuer is required
to file with the Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 and (b) shall also comply with the other provisions of TIA
Section 314(a).
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SECTION 7.05. NOTICE TO THE RATING AGENCIES AND TO MBIA.
The Issuer shall use its best efforts promptly to provide notice
to the Rating Agencies and MBIA of any of the following events of which it has
actual knowledge:
(a) any material change to or amendment of this Indenture;
(b) the occurrence of any Default or Event of Default that
has not been cured;
(c) the resignation or termination of the Trustee;
(d) the substitution of Pledged Mortgages;
(e) the final payment of Bondholders; and
(f) any payment or claim made under the MBIA Policy.
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ARTICLE VIII
ACCOUNTS, PAYMENTS OF INTEREST AND PRINCIPAL, AND RELEASES
SECTION 8.01. COLLECTION OF MONEYS.
Except as otherwise expressly provided herein, the 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 Trustee pursuant to
this Indenture. The Trustee shall hold all such money and property received by
it as part of the Trust Estate and shall apply it as provided in this Indenture.
Except as otherwise expressly provided herein, if any default occurred in the
making of any payment or performance under any agreement or instrument that is
part of the Trust Estate, the 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 hereunder and any
right to proceed thereafter as provided in Article V.
SECTION 8.02. DISTRIBUTION ACCOUNT.
(a) On or prior to the Closing Date, the Issuer shall cause
the Master Servicer to establish and maintain, in the name of the Trustee, for
the benefit of the Bondholders, MBIA and the Holder of the Investor Certificate,
the Pledged Accounts as provided in Section 3(f) of the Master Servicing
Agreement.
(b) [Reserved.]
(c) The Trustee shall establish and maintain, on behalf of
the Bondholders and MBIA, the Distribution Account. The Trustee shall, promptly
upon receipt, deposit in the Distribution Account and retain therein the
following:
(i) the aggregate amount remitted by the Master
Servicer to the Trustee pursuant to Section 3(f)(iv) of the
Master Servicing Agreement; and
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(ii) any other amounts deposited hereunder which are
required to be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Bondholders and MBIA until disbursed in
accordance with this Indenture or withdrawn in accordance with Section 2.03(b).
In no event shall the Trustee incur liability other than any liability arising
out of its recklessness, bad faith or willful misconduct, for withdrawals from
the Distribution Account at the direction of the Master Servicer.
(d) Subject to Sections 5.02 and 5.08, on each Payment Date
and Redemption Date, the Trustee shall distribute all amounts on deposit in the
Distribution Account to Bondholders in respect of the Bonds to the extent of
amounts due and unpaid on the Bonds for principal and interest in the amounts
and in accordance with Section 2.03(b).
SECTION 8.03. GENERAL PROVISIONS REGARDING PLEDGED ACCOUNTS.
(a) Each Pledged Account shall relate solely to the Bonds,
the Investor Certificate and to the Pledged Mortgages, Permitted Investments and
other property securing the Bonds. Funds and other property in each Pledged
Account shall not be commingled with any other moneys or property of the Issuer
or any Affiliate thereof. Notwithstanding the foregoing, the Trustee may hold
any funds or other property received or held by it as part of a Pledged Account,
other than the Distribution Account, in collective accounts maintained by it in
the normal course of its business and containing funds or property held by it
for other Persons (which may include the Issuer or an Affiliate), provided that
such accounts are under the sole control of the Trustee and the Trustee
maintains adequate records indicating the ownership of all such funds or
property and the portions thereof held for credit to each Pledged Account.
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(b) So long as no Default or Event of Default shall have
occurred and be continuing, all or a portion of the funds in the Pledged
Accounts shall be invested in Permitted Investments and reinvested by the
Trustee upon written direction of Redwood or the Master Servicer, subject to the
provisions of Section 3(f) of the Master Servicing Agreement. The income and
gain (net of any losses) realized from any such investment of funds on deposit
in the Pledged Accounts shall be for the benefit of Redwood or the Master
Servicer as provided in Section 3(f)(ix) of the Master Servicing Agreement and
shall be remitted to it monthly as provided in the Master Servicing Agreement.
The amount of any realized losses in the Pledged Accounts incurred in respect of
any such investments shall promptly be deposited by Redwood or the Master
Servicer, as applicable, in the applicable Pledged Account. The Master Servicer
will not direct the Trustee to make any investment of any funds or to sell any
investment held in any of the Pledged Accounts unless the security interest
Granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment or sale, if requested by the Trustee, the Master
Servicer shall deliver to the Trustee an Opinion of Counsel, acceptable to the
Trustee, to such effect.
(c) Subject to Section 6.01(c), the Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Pledged Accounts
resulting from any loss on any Permitted Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Permitted
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(d) If (i) the Master Servicer shall have failed to give
investment directions for any funds on deposit in the Pledged Accounts to the
Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by the
Master Servicer and Trustee) on any Business Day or (ii) a Default or Event of
Default shall have occurred and be continuing with respect to the Bonds but the
Bonds shall not have been declared due and payable pursuant to Section 5.02 or
(iii) if such Bonds shall have been declared due and payable following an Event
of Default, amounts collected or receivable from the Trust Estate are being
applied
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in accordance with Section 5.05 as if there had not been such a declaration,
then the Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Pledged Accounts in one or more Permitted Investments.
(e) The Trustee shall, at all times while any Bonds are
outstanding, maintain in its possession, or in the possession of an agent whose
actions with respect to such items are under the sole control of the Trustee,
all certificates or other instruments, if any, evidencing any investment of
funds in a Pledged Account. The Trustee shall relinquish possession of such
items, or direct its agent to do so, only for purposes of collecting the final
payment receivable on such investment or certificate or, in connection with the
sale of any investment held in a Pledged Account, against delivery of the amount
receivable in connection with any sale.
SECTION 8.04. PURCHASES OF DEFECTIVE PLEDGED MORTGAGES; CONVERTED MORTGAGE
LOANS.
(a) If at any time the Issuer, MBIA or the Trustee discovers
or is notified by the Master Servicer (i) that there has been a breach of any of
Redwood's representations and warranties with respect to Pledged Mortgages
contained in the Master Servicing Agreement that materially and adversely
affects the interests of the Bondholders or MBIA in any Pledged Mortgage, (ii)
that any of the Mortgage Documents for a Pledged Mortgage has not been properly
executed by the Mortgagor or contains a material defect or (iii) that any
Mortgage Documents for a Pledged Mortgage shall not have been received by the
Trustee within the applicable time periods and in the forms set forth in Section
3.11 or Section 6.16, as the case may be, and the Master Servicing Agreement,
then the party discovering such defect or omission or receiving notice thereof
shall promptly notify the other parties and the Master Servicer (other than in
cases where the Master Servicer has given notice thereof).
(b) If any defect, misrepresentation or omission described
in subsection (a) of this Section 8.04 materially and adversely affects the
interests of the Bondholders or MBIA, then Redwood, on behalf of the Issuer
shall, pursuant to the applicable provisions of the Master Servicing Agreement,
either (i) cure any such defect, misrepresentation or omission, (ii)
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remove such Pledged Mortgage and substitute in its place a Replacement Pledged
Mortgage or (iii) purchase the affected Pledged Mortgage, in each case at the
times and in the manner set forth in the Master Servicing Agreement.
(c) Upon any such purchase or substitution, the Issuer shall
be entitled to request a release of the defective Pledged Mortgage from the lien
of this Indenture pursuant to Section 8.08(c) and Section 8.12.
(d) If the Issuer or Redwood shall either (i) purchase any
Pledged Mortgage it is required to purchase pursuant to the Master Servicing
Agreement and deposit the Purchase Price therefor in the Bond Account or (ii)
(a) remove such Pledged Mortgage from the Trust Estate and substitute in its
place a Replacement Pledged Mortgage and (b) deposit in the Bond Account any
related Substitution Adjustment Amount, in each case in the manner set forth in
the Master Servicing Agreement, then the Issuer shall be deemed to have complied
with all requirements imposed upon it by this Section 8.04 with respect to such
Pledged Mortgage.
(e) Each related Servicer shall, in its sole discretion,
have the right to purchase for its own account from the Trust Estate any Pledged
Mortgage which is 91 days or more delinquent and Redwood shall, pursuant to the
Management Agreement, in its sole discretion, have the right to purchase for its
own account from the Trust Estate any Delinquent Pledged Mortgage, in either
case, at the Purchase Price therefor and in the same manner as that specified
for the purchase of Defective Pledged Mortgages pursuant to Section 2(c)(iv) of
the Master Servicing Agreement. Upon purchase of such Pledged Mortgage by the
related Servicer or Redwood, the Master Servicer and the Issuer shall have the
right to treat such Pledged Mortgage (a "Defaulted Pledged Mortgage") as having
been the subject of a Principal Prepayment in Full and request the release
thereof from the lien of this Indenture pursuant to Section 8.12.
(f) With respect to any Converted Mortgage Loan that is
serviced pursuant to a Servicing Agreement that does not require the related
Servicer to purchase or otherwise take any action to effect the purchase of a
Converted Mortgage Loan, Redwood shall, pursuant to the Management Agreement,
repurchase
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such a Converted Mortgage Loan from the Issuer at the Purchase Price therefor on
or prior to the Withdrawal Date for the Prepayment Period during which Redwood
obtained notice of such conversion. With respect to any Converted Mortgage Loan
that is serviced pursuant to a Servicing Agreement that does not require the
related Servicer to purchase a Converted Mortgage Loan but does require
reasonable or other efforts on the part of the Servicer to effect the purchase
of the Converted Mortgage Loan by the related subservicer, Redwood itself shall,
pursuant to the Management Agreement, use reasonable efforts to attempt to
effect the purchase of such a Converted Mortgage Loan from the Issuer; provided,
that Redwood shall have no obligation to purchase any such Converted Mortgage
Loan. With respect to any Converted Mortgage Loan that is serviced pursuant to a
Servicing Agreement that requires the related Servicer to purchase a Converted
Mortgage Loan, neither Redwood or the Issuer shall have any obligation to
purchase such a Converted Mortgage Loan should the related Servicer fail to do
so. Any purchase of a Converted Mortgage Loan by a Servicer, any subservicer or
any other Person shall be at a price which shall not be less than the Purchase
Price therefor. Upon any such purchase of a Converted Mortgage Loan, the Master
Servicer and the Issuer shall have the right to treat such Pledged Mortgage as
having been the subject of a Principal Prepayment in Full and shall request the
release thereof from the lien of this Indenture pursuant to Sections 8.08(c) and
8.12.
SECTION 8.05. GRANT OF REPLACEMENT PLEDGED MORTGAGE.
The Issuer shall be permitted to substitute any Pledged Mortgage
for any Original Pledged Mortgage initially Granted to the Trustee on the
Closing Date pursuant to this Indenture as set forth in Sections 2(a)(ii) and
2(c)(iv) of the Master Servicing Agreement.
SECTION 8.06. REPORTS BY TRUSTEE TO BONDHOLDERS.
On each Payment Date, upon receipt from the Master Servicer, the
Trustee shall deliver a Payment Date Statement to each Holder of Bonds.
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SECTION 8.07. REPORTS BY TRUSTEE.
In addition to any statements required to be delivered or
prepared by the Trustee pursuant to Section 2.09, 8.02 or 10.01, the Trustee
shall deliver to the Issuer and MBIA, within two Business Days after the request
of the Issuer or MBIA, a written report setting forth the amount of each Pledged
Account established hereunder and the identity of the investments included
therein. Without limiting the generality of the foregoing, the Trustee shall,
upon the request of the Issuer or MBIA, promptly transmit to the Issuer and MBIA
copies of all accountings of, and information with respect to, collections
furnished to it by the Master Servicer and shall promptly notify the Issuer and
MBIA if on the Payment Date, the related Bond Distribution Amount or any portion
thereof has not been received by the Trustee.
SECTION 8.08. TRUST ESTATE; RELEASE AND DELIVERY OF MORTGAGE DOCUMENTS.
(a) The Trustee may, and when required by the provisions of
this Indenture shall, execute instruments in form supplied to it to release
property from the lien of this Indenture, or convey the Trustee's interest in
the same, in a manner and under circumstances which are not inconsistent with
the provisions of this Indenture and the TIA. No party relying upon an
instrument executed by the Trustee as provided in this Article VIII shall be
bound to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) In order to facilitate the servicing of the Pledged
Mortgages by the Servicers, the Master Servicer is authorized under the Master
Servicing Agreement for the benefit of the Trustee, the Bondholders, MBIA and
the Issuer, to supervise, administer, monitor and oversee the servicing of the
Pledged Mortgages by the Servicers and the observance and performance by the
Servicers of all services, duties, responsibilities and obligations which are to
be observed or performed by each Servicer pursuant to the respective Servicing
Agreement.
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(c) Upon request by a Servicer accompanied by a Request for
Release of Documents in the form of Exhibit Two to the applicable Custodial
Agreement to the effect that a Pledged Mortgage has been the subject of a
Prepayment in Full or has otherwise been paid in full, together with any other
items required under Section 8.12, the Trustee shall promptly request that the
Custodian release the related Mortgage Documents and execute such other
documents as the Servicer may request to evidence satisfaction and discharge of
such Pledged Mortgage.
(d) The Trustee shall, at such time as there are no Bonds
Outstanding, release all of the Trust Estate to the Issuer (other than any cash
held for the payment of the Bonds pursuant to Section 3.03 or Section 4.02),
subject, however, to Section 4.01 and the rights of the Trustee under Section
6.07.
SECTION 8.09. AMENDMENTS TO THE MASTER SERVICING AGREEMENT.
The Trustee may enter into or consent to any amendment or
supplement to the Master Servicing Agreement or waive any Master Servicing
Default only in accordance with the applicable provisions of the Master
Servicing Agreement. The Trustee may, in its discretion, decline to enter into
or consent to any such supplement or amendment or make any such waiver (i)
unless the Trustee receives an Opinion of Counsel that the interests of the
Holders would not be materially adversely affected or (ii) if its own rights,
duties or immunities would be adversely affected.
SECTION 8.10. SERVICERS AND MASTER SERVICER AS AGENTS AND BAILEES OF TRUSTEE.
In order to facilitate the servicing of the Pledged Mortgages by
the each Servicer or by the Master Servicer, each Servicer shall deposit in a
Servicing Account proceeds of the Pledged Mortgages in accordance with the
provisions of the Servicing Agreements and this Indenture, prior to the time
they are deposited into the Bond Account. In addition, on each Withdrawal Date,
each Servicer shall be required to remit to the Master Servicer for deposit in
the Bond Account all funds held in the related Servicing Account that are
required to be remitted to the Master Servicer in accordance with the terms of
the Servicing Agreement and the Master Servicing Agreement. Solely for purposes
of perfection under Section 9-305 of the Uniform
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Commercial Code or similar provision of law in the state in which such property
is held by the Servicers or the Master Servicer, the Trustee hereby designates
the Master Servicer and each Servicer as its agents and bailees to hold such
funds with respect to the Pledged Mortgages until they are deposited into the
Distribution Account as well as its agents and bailees in holding any Mortgage
Documents or other documents contained in a Trustee Mortgage File released to it
by the Custodian pursuant to Section 8.08(d), and any other items constituting a
part of the Trust Estate which from time to time come into possession of any
Servicer or the Master Servicer. It is intended that, by the Servicers' and
Master Servicer's acceptance of such agency pursuant to the Servicing Agreements
and the Master Servicing Agreement, the Trustee, as secured party, will be
deemed to have possession of such Mortgage Documents, such moneys and such other
items for purposes of Section 9-305 of the Uniform Commercial Code or similar
provision of law of the states in which such property is held by such Servicer
or the Master Servicer.
SECTION 8.11. OPINION OF COUNSEL.
The Trustee shall be entitled to receive at least five Business
Days' notice of any action to be taken pursuant to Section 8.08(a) (other than
in connection with releases of Pledged Mortgages which were the subject of a
Principal Prepayment in Full) accompanied by copies of any instruments involved,
and the Trustee shall be entitled to request an Opinion of Counsel, in form and
substance reasonably satisfactory to the 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. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
SECTION 8.12. RELEASE OF PLEDGED MORTGAGES.
(a) The Issuer shall be entitled to request a release from
the lien of this Indenture of any Pledged Mortgage at any time after such
Pledged Mortgage has been the subject of a Principal Prepayment in Full or in
accordance with the requirements of Section 8.04 if:
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(i) the related Servicer has complied with all
requirements imposed on it by Section 8.04 in connection with such
Pledged Mortgage (or is deemed to have complied with such requirements
by reason of the provisions of Section 8.04(e));
(ii) at the time such release is requested, no
Default or Event of Default has occurred and is continuing; provided,
however, that if a Pledged Mortgage has been the subject of a Principal
Prepayment in Full, then the Trustee shall release such Pledged Mortgage
from the lien of this Indenture upon compliance with all other
conditions of this subsection (a), notwithstanding the existence of a
Default or Event of Default;
(iii) the applicable Servicers, the Issuer or Redwood
delivers to the Trustee an Officers' Certificate (A) identifying the
Pledged Mortgage to be released, (B) requesting the release thereof, (C)
setting forth the amount deposited in the Bond Account with respect
thereto, if any, and (D) certifying that the conditions set forth in
clauses (i) and (ii) above have been satisfied; and
(iv) the Issuer delivers to the Trustee a certificate
of fair value if required by Section 314(d)(1) or Section 314(d)(3) of
the TIA.
(b) Upon satisfaction of the conditions specified in
subsection (a) of this Section 8.12, the Trustee shall release from the lien of
this Indenture and deliver to or upon the order of the Issuer the Pledged
Mortgage to be released (including all related Mortgage Documents) described in
the Request for Release.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF BONDHOLDERS.
Subject to the rights of MBIA under Article XII hereof and
without the consent of the Holders of any Bonds, the Issuer and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) 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 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;
(2) to add to the conditions, limitations and restrictions
on the authorized amount, terms and purposes of the issuance,
authentication and delivery of any Bonds, as herein set forth,
additional conditions, limitations and restrictions thereafter to be
observed;
(3) to evidence the succession of another Person to the
Issuer, and the assumption by any such successor of the covenants of the
Issuer herein and in the Bonds contained;
(4) to add to the covenants of the Issuer, for the benefit
of the Holders of all Bonds or to surrender any right or power herein
conferred upon the Issuer;
(5) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, which shall not be
inconsistent with the provisions of this Indenture, provided that such
action shall not adversely affect the interests of the Holders of the
Bonds and MBIA (any such action shall be deemed not to adversely affect
the interests of the Bondholders and MBIA
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if the Issuer delivers to the Trustee letters from each Rating Agency to
the effect that such action will not result in a downgrading of the
Bonds);
(6) 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; or
(7) to modify, eliminate or add to any provision of the
Indenture as shall be necessary in order to procure another bond
insurance policy in the event of a MBIA Default.
The 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, but the Trustee shall not be
obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise except to the extent required by law.
The Trustee may in its discretion determine whether or not the
rights of the Holder of Bonds would be adversely affected by any supplemental
indenture, and any such determination shall be conclusive upon the Holders of
all Bonds, whether theretofore or thereafter authenticated and delivered
hereunder. In making such determination, a supplemental indenture shall be
conclusively deemed by the Trustee not to adversely affect the Bonds if (i) the
Trustee receives a letter or other writing from each Rating Agency rating the
Bonds to the effect that execution of the supplemental indenture will not result
in any change in the current rating assigned by that Rating Agency to the Bonds
(or in the case of clause (7) above; that will not result in the Bonds not being
assigned by each agency the highest credit rating of each agency and (ii) the
supplemental indenture effects no change in principal priority schedules,
interest rates, Redemption Prices, substitution of Mortgage Collateral, Payment
Dates, Record Dates, terms or redemption, the application of surplus to the
payment of the Bonds or other payment terms. The Trustee shall not be liable for
any such determination made in good faith.
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The Trustee shall provide MBIA, if any, with a copy of any
supplemental indenture executed pursuant to this Section, by first class mail
mailed to MBIA within five Business Days after the execution of such
supplemental indenture. Notwithstanding the foregoing, no supplemental indenture
may be entered into without the prior written consent of MBIA (except in the
case of clause (7) above).
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF BONDHOLDERS.
Subject to the rights of MBIA under Article XII hereof and with
the consent of the Holders of Bonds representing not less than two-thirds of the
aggregate Principal Amount of the Bonds by Act of said Holders delivered to the
Issuer and the Trustee and MBIA, the Issuer and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Bonds under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Bond
affected thereby:
(1) change the Stated Maturity of the final installment of
the principal of, or any installment of interest on, any Bond or reduce
the principal amount thereof, the Bond Interest Rate thereon or the
Redemption Price with respect thereto, change the earliest date on which
any Bond may be redeemed at the option of the Issuer, change any place
of payment where, or the coin or currency in which, any Bond or any
interest thereon is payable, or impair the right to institute suit for
the enforcement of the payment of any installment of interest due on any
Bond on or after the Stated Maturity thereof or for the enforcement of
the payment of the entire remaining unpaid principal amount of any Bond
on or after the Stated Maturity of the final installment of the
principal thereof (or, in the case of redemption, on or after the
applicable Redemption Date);
(2) reduce the percentage of the aggregate Principal Amount
of the Bonds, the consent of the Holders of which is
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required for any such supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance with
provisions of this Indenture or Defaults hereunder and their
consequences provided for in this Indenture;
(3) modify any of the provisions of this Section, Section
5.14 or Section 5.18(b) except to increase any percentage specified
therein or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Bond affected thereby;
(4) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(5) 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 (except for Permitted Encumbrances) or terminate the lien
of this Indenture on any property at any time subject hereto or deprive
the Holder of any Bond of the security afforded by the lien of this
Indenture; or
(6) modify any of the provisions of this Indenture in such
manner as to materially and adversely affect rights of the Holders of
the Bonds to the benefits of any provisions for the mandatory redemption
of Bonds contained herein.
The Trustee may in its discretion determine whether or not the
rights of the Holder of any Bonds would be materially and adversely affected by
any supplemental indenture and any such determination shall be conclusive upon
the Holders of all Bonds authenticated and delivered hereunder, provided,
however, that unless a MBIA Default has occurred and is continuing, written
consent of MBIA shall be required unless such action shall not, as evidenced by
an Opinion of Counsel delivered to the Trustee and MBIA adversely affect in any
material respect the interests of MBIA. The Trustee shall not be liable for any
such determination made in good faith.
It shall not be necessary for any Act of Bondholders under this
Section to approve the particular form of any proposed
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supplemental indenture, but it shall be sufficient if such Act shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Trustee of
any supplemental indenture pursuant to this Section, the Trustee shall mail to
the Holders of the Bonds to which such supplemental indenture relates a notice
setting forth in general terms the substance of such supplemental indenture. The
Trustee shall mail to MBIA a copy of any supplemental indenture executed
pursuant to this Section, by first class mail, mailed to MBIA within five
Business Days after the execution of such supplemental indenture. Any failure of
the 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, consenting to or accepting the additional trusts
created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture, the Trustee and
MBIA, unless a MBIA default has occurred and is continuing, shall be entitled to
receive, and (subject to Section 6.01) 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 Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Executed copies of any supplemental indenture permitted by this Article shall be
provided by the Trustee to the Rating Agencies.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Bonds to which such supplemental indenture relates which have
theretofore been or thereafter are authenticated and delivered hereunder shall
be bound thereby.
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SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
SECTION 9.06. REFERENCE IN BONDS TO SUPPLEMENTAL INDENTURES.
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Bonds so modified as to conform, in the opinion of the Trustee and the
Issuer, to any such supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Trustee in exchange for Bonds.
SECTION 9.07. AMENDMENTS TO DEPOSIT TRUST AGREEMENT OR MASTER SERVICING
AGREEMENT.
Subject to the rights of MBIA under Article XII hereof, the
Trustee shall, upon Issuer Request, consent to any proposed amendment to the
Deposit Trust Agreement or Master Servicing Agreement, or an amendment to or
waiver of any provision of any other document relating to the Deposit Trust
Agreement or Master Servicing Agreement, such consent to be given without the
necessity of obtaining the consent of the Holders of any Bonds upon receipt by
the Trustee of:
(i) an Opinion of Counsel to the effect that such amendment
or waiver will not materially and adversely affect the interests of the
Holders of the Bonds and that all conditions precedent to such consent
specified in this Section 9.07 have been satisfied; provided, however,
that no such Opinion of Counsel shall be required if the Person
requesting the amendment obtains a letter from each Rating Agency
stating that the amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the Bonds; it
being understood and agreed that any such letter in and of itself will
not represent a determination as to the materiality of any such
amendment
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and will represent a determination only as to the credit issues
affecting any such rating;
(ii) an Officers' Certificate, to which such proposed
amendment or waiver shall be attached, stating that such attached copy
is the true copy of the proposed amendment or waiver and that all
conditions precedent to such consent specified in this Section 9.07 have
been satisfied;
(iii) written confirmation from the Rating Agencies that the
implementation of the proposed amendment or waiver will not adversely
affect their rating of the Bonds; and
(iv) any other document required pursuant to Section 11.01;
provided, however, amendments to the definitions of Specified
Overcollateralization Amount, Base Specified Overcollateraliz- ation Amount,
Target Percentage and Serious Delinquencies, (each of which is contained in the
Master Servicing Agreement), may be made solely upon (i) the written consent of
the Issuer and MBIA and (ii) advise of tax counsel to the Issuer.
Notwithstanding the foregoing, the Trustee may decline to
consent to a proposed waiver or amendment that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
Nothing in this Section 9.07 shall be construed to require that
any Person obtain the consent of the Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Trustee is not prohibited by
this Indenture or by the terms of the document that is the subject of the
proposed amendment or waiver.
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ARTICLE X
REDEMPTION OF BONDS
SECTION 10.01. REDEMPTION.
(a) The Bonds shall not be subject to special redemption.
(b) The Bonds shall be subject to redemption by the Issuer,
in whole but not in part, at the option of the Issuer, on any Payment Date on or
after the earlier of (i) seven years after the Closing Date and (ii) the Payment
Date after which the Pool Principal Balance with respect to such Payment Date,
is 35% or less than the Initial Pool Principal Balance, on the terms and
conditions specified in this subsection (b) at the Redemption Price plus all
amounts due to MBIA pursuant to the Insurance Agreement. If the Issuer elects to
so redeem the Bonds, it shall, no later than 30 days prior to the Payment Date
selected for such redemption, deliver notice of such election to the Trustee and
MBIA, together with the Redemption Price therefor plus all amounts due to MBIA
pursuant to the Insurance Agreement to be deposited in the Distribution Account.
(c) The Bonds will be subject to mandatory redemption and
retirement by the Issuer at the Redemption Price in the event that the Master
Servicer or the Insurer exercises its option to purchase all of the remaining
Pledged Mortgages. Such option may be exercised by the Master Servicer (or if
the Master Servicer fails to exercise such option, by MBIA) on any Payment Date
after the Payment Date with respect to which the Pool Principal Balance is equal
to 10% or less of the Initial Pool Principal Balance. To exercise such option,
the Master Servicer or MBIA, as the case may be, must solicit and turn over to
the Trustee at least three bids or the remaining Pledged Mortgages each from a
Person that is not an affiliate of the Master Servicer or MBIA. The Trustee
shall accept the highest such bid submitted provided, further, that the price to
be paid for the remaining Pledged Mortgages shall not be less than the
Redemption Price, plus all amounts due to MBIA pursuant to the Insurance
Agreement and plus all other amounts due by the Issuer to, the Trustee, the
Master Servicer, Redwood and plus the amount of any other claims against the
Issuer then outstanding, regardless of whether said claims are
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enforceable in a court of law or equity. In addition, in order to exercise the
option to purchase the remaining Pledged Mortgages, in the manner set forth
above, prior to soliciting such bids, the Master Servicer or MBIA shall provide
the Issuer with notice 90 days' prior to their exercise of such options.
(d) In effecting any redemption pursuant to subsections (b)
or (c), concurrent with the notice provided for therein, the Issuer shall
deliver an Issuer Order directing the Trustee to effect such redemption, any
certification and opinion required pursuant to Section 11.01 and a form of
redemption notice. All Bonds so redeemed shall be due and payable on such
Redemption Date upon the giving of the notice thereof required by Section 10.02.
(e) If the Issuer elects to retain and resell the Bonds,
other than to an affiliate, following any redemption pursuant to subsection (b)
of this Section 10.01, the Issuer shall be required to provide, as a condition
precedent to such sale, the opinion set forth in Section 2.12(c) with such
modifications thereto as shall be acceptable to MBIA provided that no MBIA
Default shall have occurred and be continuing.
SECTION 10.02. FORM OF REDEMPTION NOTICE.
Notice of redemption shall be given by the Trustee in the name
of and at the expense of the Issuer by first class mail, postage prepaid, mailed
not less than thirty days prior to the applicable Redemption Date (but in no
event prior to the date on which the Redemption Price with respect to the Bonds
to be redeemed pursuant to Section 10.01 has been deposited in the Distribution
Account) to MBIA and each Holder of Bonds to be redeemed, such Holders being
determined as of the Record Date with respect to the Payment Date on which such
redemption is to occur.
All notices of redemption shall state:
(1) the Redemption Date; and
(2) the fact of such payment in full and the place where
such Bonds are to be surrendered for payment of the
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Redemption Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.02). Failure to give notice of
redemption, or any defect therein, to any Holder of any Bond selected
for redemption shall not impair or affect the validity of the redemption
of any other Bond.
SECTION 10.03. BONDS PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as provided in Section
10.02, the Bonds or portions thereof so to be redeemed shall, on the applicable
Redemption Date, become due and payable at the Redemption Price and (unless the
Issuer shall default in the payment of the Redemption Price or elect not to
retire the Bonds so redeemed, as provided in Section 10.04) no interest shall
accrue on such Redemption Price for any period after the last day preceding the
day on which such Redemption Date occurs.
SECTION 10.04. RETENTION OF BONDS BY ISSUER.
In the event that the Issuer effects a redemption of the Bonds
in accordance with the provisions of Section 10.01(b), it may elect to cause the
Bonds to remain Outstanding and not release the lien of the Indenture with
respect to the Trust Estate securing such Bonds or terminate such Bonds. If the
Issuer so elects, the Bonds shall not merge with the security therefor, but
shall remain validly Outstanding, subject to the following paragraph and Section
10.01(e).
Notwithstanding the foregoing, no redemption of any Bond shall
be permitted without retiring it unless the Issuer shall have delivered to the
Trustee and MBIA, provided a MBIA Default has not occurred and is continuing, an
Opinion of Counsel that such redemption without retirement will not adversely
affect the status of any Bond, for federal income tax purposes, as debt of the
Person that is considered the beneficial owner of the Pledged Mortgages.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with and 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
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate, opinion or letter with respect to compliance
with a condition or covenant provided for in this Indenture (including one
furnished pursuant to specific requirements of this Indenture relating to a
particular application or request) shall include:
(1) a statement that each individual signing such
certificate, opinion or letter has read such covenant or condition and
the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate, opinion or letter are based;
(3) a statement that, in the opinion of each such
individual, he or she has made such examination or investigation as is
necessary to enable such individual to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
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SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO 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 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 other certificate or opinion is based
are erroneous. Any such Issuer certificate or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer or Officers of the Owner Trustee or a
certificate of the officers of the Depositor or the manager of the Issuer,
stating that the information with respect to such factual matters is in the
possession of the Owner Trustee, or the Depositor or the manager of the Issuer,
unless such officer or 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. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
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.
Wherever in this Indenture, in connection with any application
or certificate or report to the Trustee, it is
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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 Trustee's right to
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Section 6.01(b)(2).
Whenever in this Indenture it is provided that the absence of
the occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Trustee at the request or direction
of the Issuer, then, notwithstanding that the satisfaction of such condition is
a condition precedent to the Issuer's right to make such request or direction,
the Trustee shall be protected in acting in accordance with such request or
direction if it does not have knowledge of the occurrence and continuation of
such Default or Event of Default as provided in Section 6.01(d).
SECTION 11.03. ACTS OF BONDHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Bondholders may be embodied in any evidence by one or more instruments of
substantially similar tenor signed by such Bondholders in person or by an agent
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 Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Bondholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
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(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Whenever such execution is by an officer of a corporation or a member of a
partnership on behalf of such corporation or partnership, such certificate or
affidavit shall also constitute sufficient proof of his or her authority.
(c) The ownership of Bonds shall be proved by the Bond
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Bonds shall bind the Holder
of every Bond issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Issuer in reliance thereon, whether or not any
notation of such action is made upon such Bonds.
SECTION 11.04. NOTICES, ETC. TO TRUSTEE AND ISSUER.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Bondholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Bondholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with and received by the Trustee at its Corporate
Trust Office;
(2) the Issuer by the Trustee or by any Bondholder shall be
sufficient for every purpose hereunder (except as provided in Sections
5.01(3) and (4)) if in writing and mailed, first-class, postage prepaid,
to the Issuer addressed to it c/o Wilmington Trust Company, as Owner
Trustee, Xxxxxx Square North, 0000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx, XX
00000-0000, Attention: Corporate Trust Administration, or at any other
address previously furnished in writing to the Trustee by the Issuer;
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(3) any Rating Agency by the Trustee, the Issuer or the
Master Servicer shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with and received by such
Rating Agency at the address specified therefor in the definition
corresponding to the name of such Rating Agency; or
(4) MBIA by the Trustee, the Issuer or any Bondholder shall
be sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid to MBIA at MBIA Insurance Corporation, 000
Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention: Insured Portfolio
Management (IPM- SF) (Sequoia Mortgage Trust 1/Collateralized Mortgage
Bonds, Class A-1 and Class A-2.
SECTION 11.05. NOTICES AND REPORTS TO BONDHOLDERS; WAIVER OF NOTICES.
Where this Indenture provides for notice to Bondholders of any
event or the mailing of any report to Bondholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class, postage prepaid, to each Bondholder affected by such event or to
whom such report is required to be mailed, at the address of such Bondholder as
it appears on the Bond Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice or the mailing
of such report. In any case where a notice or report to Bondholders is mailed in
the manner provided above, neither the failure to mail such notice or report,
nor any defect in any notice or report so mailed, to any particular Bondholder
shall affect the sufficiency of such notice or report with respect to other
Bondholders, and any notice or report which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
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. Waiver of notice by any Bondholder shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
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In case, by reason of the suspension of regular mail service as
a result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Bondholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to Bondholders of any
event, such notice shall also be sent to S&P, so long as S&P is a Rating Agency
and to Moody's so long as Xxxxx'x is a Rating Agency.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for any meeting of
Bondholders. Any Agent may make reasonable rules and set reasonable requirements
for its functions.
SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT.
If this Indenture is qualified under the TIA and any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this Indenture by any of the provisions of the TIA,
such required provision shall control.
SECTION 11.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 11.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Issuer
shall bind its successors and assigns, whether so expressed or not.
SECTION 11.10. SEPARABILITY.
In case any provision in this Indenture or in the Bonds shall be
invalid, illegal or unenforceable, the validity,
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legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11. BENEFITS OF INDENTURE.
Except as provided in Section 12.01(i) hereof, nothing in this
Indenture or in the Bonds, expressed or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, any separate trustee or
co-trustee appointed under Section 6.14 and the Bondholders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 11.12. LEGAL HOLIDAYS.
In any case where the date of any Payment Date, Redemption Date
or any other date on which principal of, or interest on, any Bond is proposed to
be paid shall not be a Business Day, then (notwithstanding any other provision
of the Bonds or this Indenture) payment need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on the nominal date of any such Payment Date, Redemption Date or other date
for the payment of principal of, or interest on, any Bond, as the case may be,
and no interest shall accrue for the period from and after any such nominal
date, provided such payment is made in full on such next succeeding Business
Day.
SECTION 11.13. GOVERNING LAW.
This Indenture and each Bond shall be construed in accordance
with and governed by the substantive laws of the State of New York applicable to
agreements made and to be performed in the State of New York and the
obligations, rights and remedies of the parties hereto and the Bondholders shall
be determined in accordance with such laws.
SECTION 11.14. COUNTERPARTS.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
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SECTION 11.15. RECORDING OF INDENTURE.
This Indenture is subject to recording in any appropriate public
recording office, such recording to be effected by the Issuer and at its expense
in compliance with any Opinion of Counsel delivered pursuant to Section 2.12(c)
or Section 3.06.
SECTION 11.16. ISSUER OBLIGATION.
No recourse may be taken, directly or indirectly, against (i)
the Bank, (ii) any incorporator, subscriber to the capital stock, stockholder,
officer or director of the Bank or of any predecessor or successor of the Bank,
(iii) any holder of a beneficial interest in the Issuer (solely in its capacity
as such), (iv) any incorporator, subscriber to the capital stock, stockholder,
partner, beneficiary, agent, officer, director, employee, or successor or assign
of a holder of a beneficial interest in the Issuer, (v) the Depositor or any
Affiliate thereof (other than the Issuer) or (vi) any incorporator, subscriber
to the capital stock, stockholder, officer, director or employee of the Trustee
or any predecessor or successor of the Trustee with respect to the Issuer's
obligation with respect to the Bonds or the obligation of the Issuer or the
Trustee under this Indenture or any certificate or other writing delivered in
connection herewith or therewith.
SECTION 11.17. INSPECTION.
The Issuer agrees that, on reasonable prior notice, it will
permit any representative of the Trustee or MBIA, during the Issuer's normal
business hours, to examine all 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 Accountants selected by the Trustee or MBIA, as the
case may be, and to discuss its affairs, finances and accounts with its
officers, employees and Independent Accountants (and by this provision the
Issuer hereby authorizes its Accountants to discuss with such representatives
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested. Any reasonable expense incident to the exercise
by the Trustee or MBIA of any rights under this Section 11.17 shall be borne by
the Issuer.
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SECTION 11.18. USURY.
The amount of interest payable or paid on any Bond under the
terms of this Indenture shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the
United States or the State of New York (whichever shall permit the higher rate),
which could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Bond exceeds the Highest
Lawful Rate, the Issuer stipulates that such excess amount will be deemed to
have been paid as a result of an error on the part of both the Trustee, acting
on behalf of the Holder of such Bond, and the Issuer, and the Holder receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Issuer or the Trustee, refund the amount of such excess or, at
the option of the Trustee, apply the excess to the payment of principal of such
Bond, if any, remaining unpaid.
SECTION 11.19. NO PETITION.
The Trustee, by entering into this Indenture, and each
Bondholder, by accepting a Bond, hereby covenant and agree that they will not at
any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Bonds, this Indenture or any
of the Operative Agreements.
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ARTICLE XII
THE BOND INSURER
SECTION 12.01. CERTAIN MATTERS REGARDING MBIA AND THE MBIA POLICY.
(a) Rights of MBIA to Exercise Certain Rights of
Bondholders. By accepting its Bond, each bondholder agrees that unless a MBIA
Default exists, MBIA shall have the right to exercise the Voting Rights of the
Bondholders with respect to all matters, including without limitation the
following matters without any further consent of the Bondholders, to the extent
such rights are provided for herein:
(i) the right to direct the Trustee to terminate the
rights and obligations of the Master Servicer under the Master Servicing
Agreement in the event of a default by the Master Servicer;
(ii) the right to consent to or direct any waivers of
defaults by the Master Servicer;
(iii) the right to remove the Trustee pursuant to this
Indenture;
(iv) the right to institute proceedings against the
Master Servicer and the right to direct Proceedings pursuant to Section
5.14 of this Indenture;
(v) the right to require the Issuer, the Company or
Redwood to repurchase or substitute Pledged Mortgage Loans pursuant to
this Indenture;
(vi) the right to accelerate maturity of the Bonds or
rescind a declaration of acceleration pursuant to Section 5.02 of this
Indenture;
(vii) the right to direct the exercise of all remedies
pursuant to Section 5.04 of this Indenture;
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(viii) the right to request that the Trustee take
possession of and retain the Trust Estate pursuant to Section 5.05 of
this Indenture or to rescind such election by the Trustee pursuant to
the same section; and
(ix) the right to waive any past Default pursuant to
Section 5.15 of this Indenture.
In addition, unless a MBIA Default exists, MBIA's consent will
be required prior to, among other things, (i) the appointment of any successor
Trustee, Master Servicer or Servicer or (ii) any amendment to the Indenture;
provided, however, that MBIA shall not unreasonably withhold, condition or delay
its consent. Each Bondholder agrees that, unless a MBIA Default exists, the
rights specifically set forth above may be exercised by the Bondholders only
with the prior written consent of MBIA.
(b) Issuer to Act Solely with Consent of MBIA. Unless a MBIA
Default exists and is continuing, the Issuer shall not exercise the right to
appoint a co-trustee pursuant to Section 6.14 of this Indenture or successor
trustee pursuant to Section 6.10 of this Indenture without the prior written
consent of MBIA.
Unless a MBIA Default exists and is continuing, the Issuer and
the Trustee shall not undertake any litigation with respect to the Trust Estate
without the prior consent and at the direction of MBIA.
(c) Trustee to Act Solely with Consent of MBIA. Unless a
MBIA Default exists and is continuing, the Trustee shall not exercise the right
to:
(i) agree to any amendment of this Indenture,
Deposit Trust Agreement or Master Servicing Agreement pursuant to
Article IX of this Indenture;
(ii) undertake any litigation pursuant to the
Indenture or incur any expenses reimbursable pursuant to Section 6.03 of
this Indenture;
(iii) exercise any of the remedies set forth in
Section 5.04 or 5.06 of this Indenture;
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(iv) appoint co-trustees or separate trustees
pursuant to Section 6.14 of this Indenture; or
(v) agree to any amendment to, or grant any waiver
of rights under, the Servicing Agreements, or Master Servicing
Agreement;
without the prior written consent of MBIA, which shall not be unreasonably
withheld; provided, however, during the existence and continuation of a MBIA
Default the Trustee shall not require the prior written consent of MBIA to
exercise any of the rights enumerated above.
(d) Trust Estate and Accounts Held for Benefit of MBIA and
the Bondholders. The Trustee shall hold the Trust Estate (subject to the
obligations of each Custodian) for the benefit of the Bondholders and, unless a
MBIA Default exists and is continuing, MBIA, and all references in this
Indenture and in the Bonds to the benefit of Holders of the Bonds shall, unless
a MBIA Default exists and is continuing, be deemed to include MBIA. The Trustee
shall, unless a MBIA Default exists and is continuing, cooperate in all
reasonable respects with any reasonable request by MBIA for action to preserve
or enforce MBIA's rights or interests under this Indenture and the Bonds.
(e) Claims Upon the MBIA Policy.
(i) The Trustee shall (A) receive as
attorney-in-fact of each Bondholder any Insured Payment from MBIA or on
behalf of MBIA and (B) disburse such Insured Payment to such Bondholders
in accordance with Section 2.03(b) hereof for the benefit of the related
Bondholders. Any Insured Payment received by the Trustee shall be held
by the Trustee uninvested. Insured Payments disbursed by the Trustee
from proceeds of the MBIA Policy shall not be considered payment by the
Issuer with respect to the Bonds, nor shall such payments discharge the
obligation of the Issuer with respect to such Bonds, and MBIA shall
become the owner of such unpaid amounts due from the Issuer in respect
of such Insured Payments as the deemed assignee and subrogee of such
Bondholders and shall be entitled to receive the MBIA Reimbursement
Amount in respect thereof. The Trustee hereby agrees on behalf of each
Bondholder for the benefit of MBIA
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that it recognizes that to the extent MBIA makes Insured Payments for
the benefit of the Bondholders, MBIA will be entitled to receive the
related MBIA Reimbursement Amount in accordance with the priority of
distributions referenced in Section 2.03(b) hereof.
(ii) The Trustee shall promptly notify MBIA of any
proceeding or the institution of any action, of which an Officer of the
Trustee has actual knowledge, constituting a Preference Claim in respect
of any payment made on the Bonds. Each Bondholder that pays any amount
pursuant to a Preference Claim theretofore received by such Bondholder
on account of a Bond will be entitled to receive reimbursement for such
amounts from MBIA in accordance with the terms of the MBIA Policy. Each
Bondholder, by its purchase of Bonds, and the Trustee hereby agree that,
MBIA (so long as no MBIA Payment Default exists) may at any time during
the continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order relating to
such Preference Claim and (ii) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without
limitation of the foregoing, MBIA shall be subrogated to the rights of
the Trustee and each Bondholder in the conduct of any such Preference
Claim, including, without limitation, all rights of any party to any
adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
(iii) Each Bondholder, by its purchase of Bonds, and
the Trustee hereby agree that, unless a MBIA Payment Default exists and
is continuing, MBIA shall have the right to direct all matters relating
to the Bonds in any proceeding in a bankruptcy of the Issuer, including
without limitation any proceeding relating to a Preference Claim, any
appeal of any order relating to a Preference Claim and the posting of
any surety or bond pending any such appeal.
(iv) With respect to a Preference Claim, the Trustee
shall be responsible for procuring and delivering the items set forth in
Section 3(o) of the Master Servicing Agreement to the Master Servicer.
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(f) Trustee to Cooperate. Unless a MBIA Default exists and
is continuing, the Trustee shall cooperate in all respects with any reasonable
request by MBIA for action to preserve or enforce MBIA's rights or interests
hereunder without limiting the rights or affecting the interests of the
Bondholders as otherwise set forth herein.
(g) Surrender and Cancellation. The Trustee shall surrender
the MBIA Policy to MBIA for cancellation upon the expiration of the term of the
MBIA Policy as provided in the MBIA Policy.
(h) Reports to MBIA. All notices, statements, reports,
certificates or opinions required by this Indenture to be sent to any other
party hereto or to any of the Bondholders shall also be sent to MBIA. The Issuer
and the Trustee shall make available to MBIA their books and records for the
purpose of copying and inspection of any information about the Bonds or the
Bondholders.
(i) Third-Party Beneficiary. MBIA shall be a third- party
beneficiary of this Indenture, entitled to enforce the provisions thereof as if
a party thereto.
(j) Costs and Expenses. MBIA shall not be responsible for
any costs or expenses relating to the Trust Estate or the Pledged Mortgages
except for the payment of amounts pursuant to the MBIA Policy.
(k) Survival of MBIA's Right to be Reimbursed.
Notwithstanding Section 4.01 of this Indenture, this Indenture shall not be
discharged or satisfied until satisfaction of the conditions set forth therein
and payment of the MBIA Reimbursement Amount. MBIA's right to receive the MBIA
Reimbursement Amount shall survive the satisfaction and discharge of this
Indenture.
(l) Opinions of Counsel. While the MBIA Policy is in effect,
each Opinion of Counsel rendered pursuant to the Indenture or the Master
Servicing Agreement, the MLPA, the Deposit Trust Agreement, Custodial Agreements
or Management Agreement also shall be addressed to MBIA.
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IN WITNESS WHEREOF, each party has caused this Indenture to be
executed by its duly authorized officer or officers as of the day and year first
above written.
SEQUOIA MORTGAGE TRUST 1
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee
By: /s/ Xxxxx Xxxxxx
-----------------------
Name: Xxxxx Xxxxxx
Title: Administrative Account Manager
FIRST UNION NATIONAL BANK
as Trustee
By: /s/ Pablo de la Canal
------------------------
Authorized Officer
By: /s/ Xxxxx X. Xxxxx
------------------------
Name: Xxxxx X. Xxxxx
Title: Assistant Secretary
X-0
000
XXXXX XX XXXXXXXX )
) ss.:
COUNTY OF NEW CASTLE )
On the ____ day of July in the year one thousand nine hundred
and ninety-seven before me personally came ______________________ ______________
, to me known, who being by me duly sworn did depose and say that she/he resides
in _____________________, that she/he is the ___________________ of
_____________________, the corporation described in and which executed the above
instrument and that she/he signed her/his name thereto by authority of the Board
of Directors of said corporation.
[NOTARIAL SEAL]
-----------------------------
Notary Public
X-0
000
XXXXX OF _________________ )
) ss.:
COUNTY OF ________________ )
On the ____ day of ___________ , 1997, before me, a notary
public in and for said State, personally appeared ________________
______________________ , known to me (or proved to me on the basis of
satisfactory evidence) to be a __________________________ of ___________________
_______________________, the _____________________ corporation that executed the
within instrument, and also known to me (or proved to me on the basis of
satisfactory evidence) to be the persons who executed it on behalf of said
____________________ corporation, and acknowledged to me that such
____________________ corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
-----------------------------
Notary Public
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EXHIBIT I
LETTER AGREEMENT WITH THE DEPOSITORY
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EXHIBIT II
FORM OF CLASS A-1 BOND
PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE PRINCIPAL AMOUNT OF THIS BOND AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE PRINCIPAL AMOUNT OF THIS BOND MAY
BE ASCERTAINED ONLY BY OBTAINING A CONFIRMATION THEREOF FROM THE TRUSTEE UNDER
THE INDENTURE REFERRED TO BELOW.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND SO
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 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.
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SEQUOIA MORTGAGE TRUST 1
a Delaware Statutory Business Trust
Collateralized Mortgage Bonds
CLASS A-1
STATED MATURITY: May 4, 2029
ISSUE DATE: July 29, 1997
Initial Principal
Amount of this Bond:
$200,000,000 CUSIP NO. 817435 AA 8
CERTIFICATE NUMBER 1
Sequoia Mortgage Trust 1 (the "Issuer"), a statutory business
trust formed under a deposit trust agreement dated as of July 16, 1997 and
having Wilmington Trust Company, a Delaware banking corporation, as Owner
Trustee, for value received, hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) in
monthly installments on the fourth day of each month, commencing on August 4,
1997 (each, a "Payment Date"), and ending on or before May 4, 2029, (the "Stated
Maturity" of such final installment of principal), and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) on the Principal Amount
(as defined in the Indenture hereinafter referred to) of this Bond on each
Payment Date for the related period, commencing on the immediately preceding
Payment Date (or, in the case of the first Interest Accrual Period, commencing
on the Closing Date) and ending on the date immediately preceding such Payment
Date, as set forth herein and in the Indenture and the Master Servicing
Agreement referred to below. If any Payment Date shall not be a "Business Day"
(as defined in the Indenture), payment of the amount due will be made on the
next succeeding Business Day.
Installments of principal of this Bond are due and payable as
described in the Indenture and in the master servicing agreement dated as of
June 1, 1997 (the "Master Servicing Agreement"), among the Issuer, the Trustee
and the Master Servicer, as such agreement may be amended or supplemented from
time to time as permitted thereby.
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The principal of, and interest on, this Bond are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Bond shall be applied as set forth in the Indenture.
Any installment of principal or interest which is not paid when and as due shall
bear interest as described herein and in the Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Sequoia Mortgage Trust 1 has caused this
instrument to be duly executed by its duly authorized officer.
Dated: July 29, 1997 SEQUOIA MORTGAGE TRUST 1
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee
By:___________________________________
Title:________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds referred to in the within-mentioned
Indenture.
_______________________________,
as Trustee
By:________________________________
Authorized Signatory
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This Bond is one of a duly authorized issue of Bonds of the
Issuer, designated as its Collateralized Mortgage Bonds (herein called the
"Bonds"). The Bonds are issuable in one or more classes; the Bonds of particular
Classes being herein called the Class A-1 and Class A-2 Bonds, all issued and to
be issued under the Issuer's Indenture dated as of June 1, 1997 between the
Issuer and First Union National Bank (the "Trustee", which term includes any
successor Trustee under the Indenture), which authorized the Bonds, and
reference is hereby made thereto for a statement of the respective rights
thereunder of the Issuer, the Trustee and the Holders of the Bonds of each
particular Class thereof and the terms upon which the Bonds of each Class are,
and are to be, authenticated and delivered. The Bond is one of the Class A-1
Bonds.
All terms used in this Bond which are defined in the Indenture
shall have the meanings assigned to them in the Indenture or, if not defined
therein, in the Master Servicing Agreement.
The interest rate for the Class A-1 Bonds (the "Class A-1
Interest Rate") on each Payment Date after the first Payment Date and up to and
including the Payment Date on which the Issuer is first permitted to exercise
its option to redeem the Bonds will be equal to the lesser of (i) a per annum
floating rate equal to LIBOR (as defined in the Master Servicing Agreement), for
the related Interest Accrual Period plus 0.38% and (ii) 10% per annum. If the
Issuer does not exercise its option to redeem the Bonds on the first Payment
Date on which it is permitted to do so, on the next succeeding Payment Date, the
Class A-1 Interest Rate will increase and for the remaining term of the Bonds
will be equal to the lesser of (i) a per annum floating rate equal to LIBOR for
the related Interest Accrual Period plus 0.76% and (ii) 10.38% per annum. The
Class A-1 Interest Rate for the first Payment Date will equal 6.02844% per
annum.
As provided in the Indenture, the Bonds are issuable in Classes
which may vary as is provided or permitted in the Indenture. Bonds of each Class
are equally and ratably secured by the collateral pledged as security therefor
to the extent provided by the Indenture.
For each Payment Date, the aggregate amount of each installment
of interest due and payable on the Class A-1 Bonds will
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be equal to the Class A-1 Interest Payment Amount for such Payment Date.
The "Class A-1 Interest Payment Amount" means, as of any Payment
Date, the sum of (i) one month's interest at the Class A-1 Interest Rate on the
then outstanding Principal Amount of the Class A-1 Bonds immediately prior to
such Payment Date and (ii) the sum of the amounts, if any, by which the amount
described in clause (i) above on each prior Payment Date exceeded the amount
actually distributed as interest on such Bonds on such prior Payment Dates and
was not subsequently distributed, together with, to the extent permitted by
applicable law, interest on the amount described in clause (ii) at the Class A-1
Interest Rate; provided, that, solely in the case where an MBIA Default shall
have occurred and is continuing, the rate at which the amount in clause (i)
above is calculated shall be the lesser of the Class A-1 Interest Rate and the
Weighted Average Net Mortgage Rate for the related Payment Date (unless such
Payment Date would be the seventh consecutive Payment Date on which at least one
of the Bond Interest Rates would be equal to the Weighted Average Net Mortgage
Rate, in which case, this proviso shall be disregarded for such Payment Date
regardless of any continuation of such MBIA Default). For any Payment Date on
which interest accrues in the Class A-1 Bonds based on the Weighted Average Net
Mortgage Rate, Class A-1 Bondholders' Interest Carryover will accrue which will
be payable as provided in the Master Servicing Agreement and the Indenture.
For each Payment Date, the aggregate amount of each installment
of principal due and payable on the Class A-1 Bonds will be equal to such
Class's pro rata share of the Principal Payment Amount for such Payment Date.
The Principal Payment Amount shall be as defined in the Master Servicing
Agreement and shall in no event be less for any Payment Date than the excess, if
any, of the aggregate Principal Amount of the Bonds immediately prior to such
Payment Date over the Pool Principal Balance with respect to such Payment Date.
The entire unpaid principal amount of this Bond shall be due and payable, if not
then previously paid, on the Stated Maturity set forth on the face hereof.
All payments of principal of, and interest on, the Bonds shall
be made only from the Trust Estate Granted as security for the Bonds, the Policy
referred to below and any other assets of the Issuer that have not been Granted
as security for any other bonds
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or obligations of the Issuer, and each Holder hereof, by its acceptance of this
Bond, agrees that it will have recourse solely against such Trust Estate and
such other assets of the Issuer and that neither Wilmington Trust Company in its
individual capacity, any holder of a beneficial interest in the Issuer nor any
of their respective shareholders, partners, beneficiaries, agents, officers,
directors, employees, successors or assigns shall be personally liable for any
amounts payable, or performance due, under this Bond or the Indenture.
Payment of the then remaining unpaid principal amount of this
Bond on the Stated Maturity of its final installment of principal or on such
earlier date as the Issuer shall be required to pay the then remaining unpaid
principal amount of this Bond or payment of the Redemption Price payable on any
date as of which this Bond has been called for redemption in full, shall be made
upon presentation of this Bond to the office or agency of the Issuer maintained
for such purpose. Payments of interest on this Bond due and payable on each
Payment Date or on any Redemption Date, to the extent this Bond is not being
paid in full, together with any installment of principal of this Bond due and
payable on each Payment Date or the Redemption Date, to the extent not in full
payment of this Bond, shall be made by check mailed to the Person whose name
appears as the registered Holder of this Bond (or one or more Predecessor Bonds)
on the Bond Register as of the last day of the second month preceding the month
in which such Payment Date occurs (each a "Record Date").
Checks for amounts which include installments of principal due
on this Bond shall be mailed to the Person entitled thereto at the address of
such Person as it appears on the Bond Register as of the applicable Record Date
without requiring that this Bond be submitted for notation of payment and checks
returned undelivered will be held for payment to the Person entitled thereto,
subject to the terms of the Indenture, at the office or agency in the United
States of America designated by the Issuer for such purpose pursuant to the
Indenture. Any reduction in the principal amount of this Bond (or any one or
more Predecessor Bonds) effected by any payments made on any Payment Date shall
be binding upon all Holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon.
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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 Bond on a
Payment Date or Redemption Date which is prior to the Stated Maturity of the
final installment of principal hereof, then the Trustee, on behalf of the
Issuer, will notify the Person who was the registered Holder hereof on the last
day of the month prior to the month in which such Payment Date or Redemption
Date occurs, and the amount then due and payable shall, if sufficient funds
therefor are available, be payable only upon presentation of this Bond to the
office or agency of the Issuer maintained for such purpose.
The failure of the Issuer to pay when and as due any installment
of principal of (regardless of the lapse of any grace period) any Bond shall not
constitute an Event of Default under the Indenture unless the aggregate
Principal Amount of the Bonds exceeds the Pool Principal Balance with respect to
a Payment Date of the Pledged Mortgages after application of all available
amounts on deposit in the Distribution Account on a Payment Date or unless the
Bonds are not paid in full at their Stated Maturity.
If an Event of Default as defined in the Indenture shall occur
and be continuing with respect to the Bonds, the Bonds may become or be declared
due and payable in the manner and with the effect provided in the Indenture. If
any such acceleration of maturity occurs prior to the Stated Maturity of the
final installment of principal of this Bond, the amount payable to the Holder of
this Bond will be equal to the Principal Amount of this Bond on the date this
Bond becomes so due and payable, together with accrued interest. Following the
acceleration of the maturity of the Bonds, all amounts collected as proceeds of
the collateral securing the Bonds or otherwise shall be applied as described in
the Indenture. Following such acceleration, interest on any overdue installments
of interest on all Bonds shall be payable at the rate set forth in the
Indenture.
The Bonds are not prepayable or redeemable at the option or
direction of the Issuer except that the Bonds are subject to redemption in
whole, but not in part, at the option of the Issuer on any Payment Date after
the earlier of (a) seven years after the initial issuance of the Bonds and (b)
the Payment Date after which the Pool Principal Balance with respect to such
Payment Date, is 35% or less of the Original Pool Principal Balance, at a
redemption
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price equal to 100% of the unpaid Principal Balance for each such Class of
Bonds, plus accrued and unpaid interest thereon at the Class A-1 Bond Interest
Rate. The Bonds are also subject to redemption by the Issuer upon the exercise
by the Master Servicer or the Insurer of its right to purchase the remaining
outstanding Pledged Mortgages which right may be exercised, upon the giving of
required notice to the Issuer, on any Payment Date after the Payment Date with
respect to which the Pool Principal Balance is equal to 10% or less of the
Original Pool Principal Balance. Any redemption of the Bond shall be at a price
equal to 100% of the unpaid principal amount of this Bond plus accrued and
unpaid interest hereon to the date of interest redemption.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond may be registered on the Bond
Register of the Issuer, upon surrender of this Bond for registration of transfer
at the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Bonds of the same
Class, of authorized denominations and in the same aggregate initial principal
amount, will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of
this Bond, the Issuer, the Trustee, and any agent of the Issuer shall treat the
Person in whose name this Bond is registered (i) on any Record Date, for
purposes of making payments, and (ii) on any other date for any other purposes,
as the owner hereof, whether or not this Bond be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, subject to the rights of the Insurer and
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Issuer and the rights of the
Holders of the Bonds under the Indenture at any time by the Issuer with the
consent of the Holders of Bonds representing two-thirds of the Balance Amount of
the Bonds. The Indenture also contains provisions permitting the Holders of
Bonds representing specified percentages of the aggregate Principal Amount of
the Bonds on behalf of the Holders of all the Bonds, subject to the rights of
the Insurer, to
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waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder, at the time of the giving thereof, of this Bond
(or any one or more Predecessor Bonds) shall be conclusive and binding upon such
Holder and upon all future holders of this Bond and of any Bond issued upon the
registration of transfer herefor or in exchange herefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Bond. The
Indenture also permits the Trustee, subject to the rights of the Insurer, to
amend or waive certain terms and conditions set forth in the Indenture without
the consent of the Holders of the Bonds of any Series issued thereunder and also
permits certain amendments without the consent of Bondholders.
As provided in the Indenture, the Insurer shall have the right
to control the exercise of certain remedies set forth therein and to exercise
certain of the voting rights of the Holders of the Bonds and certain other
rights may only be exercised with the consent of the Insurer.
The Bonds are "Book Entry Bonds" which will be available to
investors only through the book entry facilities of The Depository Trust
Company, and bond certificates for all Classes of Bonds will be available only
under certain limited circumstances as described in the Indenture.
AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE SHALL
BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
No reference herein to the Indenture and no provision of this
Bond or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional to the extent permitted by applicable law,
to pay the principal of, and interest on, this Bond at the times, place and
rate, and in the coin or currency herein prescribed.
STATEMENT OF INSURANCE
OBLIGATIONS: $534,347,000
Sequoia Mortgage Trust 1
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Collateralized Mortgage Bonds
Class A-1 and Class A-2 Bonds
MBIA Insurance Corporation (the "Insurer"), has issued a
Financial Guaranty Insurance Policy (the "Policy") relating to the Obligations
containing the following provisions, the Policy being on file at the Corporate
Trust Office of the Trustee.
The Insurer, in consideration of the payment of the premium and
subject to the terms of the Policy, hereby unconditionally and irrevocably
guarantees to any Owner (as defined below) that an amount equal to each full and
complete Insured Payment will be received by First Union National Bank,
Charlotte, NC, or its successor, as trustee for the Owners (the "Trustee"), on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligations under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the applicable Insured Payment are
received by the Trustee, whether or not such funds are properly applied by the
Trustee. Insured Payments shall be made only at the time set forth in the Policy
and no accelerated Insured Payments shall be made regardless of any acceleration
of the Obligations, unless such acceleration is at the sole option of the
Insurer.
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Issuer or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of the order requiring the
return of a preference payment, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment and (iv) appropriate instruments to
effect the appointment of the Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments being in a
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form satisfactory to the Insurer, provided that if such documents are received
after 12:00 noon New York City time on such Business Day, they will be deemed to
be received on the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case payment shall be disbursed
to such Owner.
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The Insurer will pay any other amount payable hereunder no later
than 12:00 noon New York City time on the later of the Payment Date on which the
related Deficiency Amount is due or the second Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); 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 received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim under the Policy, it shall be
deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.
Subject to the terms of the Indenture, the Insurer shall be
subrogated to the rights of each Owner to receive payments under the Obligations
to the extent of any payment by the Insurer under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Master Servicing Agreement dated as of
June 1, 1997 among Sequoia Mortgage Trust 1, as Issuer, the Master Servicer,
Redwood Trust, Inc. and the Trustee, as trustee, without
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regard to any amendment or supplement thereto unless such amendment or
supplement has been approved in writing by the Insurer.
"Business Day" means any day other than a Saturday, a Sunday or
a day on which the Insurer or banking institutions in the State of Maryland or
The City of New York or in the city in which the corporate trust office of the
Trustee under the Agreement is located are authorized or obligated by law or
executive order to close.
"Deficiency Amount" means (A) for any Payment Date prior to the
Stated Maturity, an amount equal to the sum of (i) the Interest Payment Amount
over the Net Available Funds for such Payment Date and (ii) the Subordination
Deficit, if any; (B) for the Stated Maturity, an amount equal to the sum of (i)
the excess, if any, of the Interest Payment Amount over the Net Available Funds
for such Payment Date and (ii) the excess, if any, of the Bond Principal Balance
of the Bonds over Net Available Funds not used to pay the Interest Payment
Amount for such Stated Maturity; and (C) for any date on which the acceleration
or redemption of the Bonds has been directed or consented to by the Insurer
pursuant to the Agreement, an amount equal to the excess, if any, of the sum of
the Bond Principal Balance of the Bonds, together with accrued and unpaid
interest thereon through the date of payment of such accelerated or redeemed
Bonds, over the Net Available Funds for such Payment Date; provided, that, for
purposes of determining the Deficiency Amount, the Interest Payment Amount shall
be calculated for each Payment Date without regard or reference to the Weighted
Average Net Mortgage Rate.
"Indenture" means the Indenture dated as of June 1, 1997 among
the Issuer and the Trustee, as trustee.
"Insured Payment" means (i) as of any Payment Date any
Deficiency Amount and (ii) any Preference Amount.
"Issuer" means the Sequoia Mortgage Trust 1.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
hereto, the original of which is subsequently delivered by registered or
certified mail, from the Trustee or the Master Servicer, as agent of the
Trustee, specifying the Insured
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Payment which shall be due and owing on the applicable Payment Date.
"Owner" means each bondholder (as defined in the Agreement) who,
on the applicable Payment Date, is entitled under the terms of the applicable
Bonds to payment thereunder.
"Preference Amount" means any amount previously distributed to
an Owner on the Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined
therein shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment to or modification of the
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Agreement, unless such amendment or modification has been approved in writing by
the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent or the Insurer may be made at the address listed below for the Fiscal
Agent or such other address as the Insurer shall specify in writing to the
Trustee and Master Servicer.
The notice address of the Fiscal Agent is 00xx Xxxxx, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Trustee
and the Master Servicer in writing.
The Policy is being 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 principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.
MBIA INSURANCE CORPORATION
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PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE PRINCIPAL AMOUNT OF THIS BOND AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE PRINCIPAL AMOUNT OF THIS BOND MAY
BE ASCERTAINED ONLY BY OBTAINING A CONFIRMATION THEREOF FROM THE TRUSTEE UNDER
THE INDENTURE REFERRED TO BELOW.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND SO 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 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.
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SEQUOIA MORTGAGE TRUST 1
a Delaware Statutory Business Trust
Collateralized Mortgage Bonds
CLASS A-1
STATED MATURITY: May 4, 2029
ISSUE DATE: July 29, 1997
Initial Principal
Amount of this Bond:
$134,347,000 CUSIP NO. 817435 AA 8
CERTIFICATE NUMBER 2
Sequoia Mortgage Trust 1 (the "Issuer"), a statutory business
trust formed under a deposit trust agreement dated as of July 16, 1997 and
having Wilmington Trust Company, a Delaware banking corporation, as Owner
Trustee, for value received, hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of ONE HUNDRED THIRTY FOUR MILLION THREE HUNDRED
FORTY SEVEN THOUSAND DOLLARS ($134,347,000) in monthly installments on the
fourth day of each month, commencing on August 4, 1997 (each, a "Payment Date"),
and ending on or before May 4, 2029, (the "Stated Maturity" of such final
installment of principal), and to pay interest (computed on the basis of a
360-day year of twelve 30-day months) on the Principal Amount (as defined in the
Indenture hereinafter referred to) of this Bond on each Payment Date for the
related period, commencing on the immediately preceding Payment Date (or, in the
case of the first Interest Accrual Period, commencing on the Closing Date) and
ending on the date immediately preceding such Payment Date, as set forth herein
and in the Indenture and the Master Servicing Agreement referred to below. If
any Payment Date shall not be a "Business Day" (as defined in the Indenture),
payment of the amount due will be made on the next succeeding Business Day.
Installments of principal of this Bond are due and payable as
described in the Indenture and in the master servicing agreement dated as of
June 1, 1997 (the "Master Servicing Agreement"), among the Issuer, the Trustee
and the Master Servicer,
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as such agreement may be amended or supplemented from time to time as permitted
thereby.
The principal of, and interest on, this Bond are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Bond shall be applied as set forth in the Indenture.
Any installment of principal or interest which is not paid when and as due shall
bear interest as described herein and in the Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Sequoia Mortgage Trust 1 has caused this
instrument to be duly executed by its duly authorized officer.
Dated: July 29, 1997 SEQUOIA MORTGAGE TRUST 1
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee
By:_________________________________
Title:______________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds referred to in the within-mentioned
Indenture.
_______________________________,
as Trustee
By:_______________________________
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Authorized Signatory
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This Bond is one of a duly authorized issue of Bonds of the
Issuer, designated as its Collateralized Mortgage Bonds (herein called the
"Bonds"). The Bonds are issuable in one or more classes; the Bonds of particular
Classes being herein called the Class A-1 and Class A-2 Bonds, all issued and to
be issued under the Issuer's Indenture dated as of June 1, 1997 between the
Issuer and First Union National Bank (the "Trustee", which term includes any
successor Trustee under the Indenture), which authorized the Bonds, and
reference is hereby made thereto for a statement of the respective rights
thereunder of the Issuer, the Trustee and the Holders of the Bonds of each
particular Class thereof and the terms upon which the Bonds of each Class are,
and are to be, authenticated and delivered. The Bond is one of the Class A-1
Bonds.
All terms used in this Bond which are defined in the Indenture
shall have the meanings assigned to them in the Indenture or, if not defined
therein, in the Master Servicing Agreement.
The interest rate for the Class A-1 Bonds (the "Class A-1
Interest Rate") on each Payment Date after the first Payment Date and up to and
including the Payment Date on which the Issuer is first permitted to exercise
its option to redeem the Bonds will be equal to the lesser of (i) a per annum
floating rate equal to LIBOR (as defined in the Master Servicing Agreement), for
the related Interest Accrual Period plus 0.38% and (ii) 10% per annum. If the
Issuer does not exercise its option to redeem the Bonds on the first Payment
Date on which it is permitted to do so, on the next succeeding Payment Date, the
Class A-1 Interest Rate will increase and for the remaining term of the Bonds
will be equal to the lesser of (i) a per annum floating rate equal to LIBOR for
the related Interest Accrual Period plus 0.76% and (ii) 10.38% per annum. The
Class A-1 Interest Rate for the first Payment Date will equal 6.02844% per
annum.
As provided in the Indenture, the Bonds are issuable in Classes
which may vary as is provided or permitted in the Indenture. Bonds of each Class
are equally and ratably secured by the collateral pledged as security therefor
to the extent provided by the Indenture.
For each Payment Date, the aggregate amount of each installment
of interest due and payable on the Class A-1 Bonds will
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be equal to the Class A-1 Interest Payment Amount for such Payment Date.
The "Class A-1 Interest Payment Amount" means, as of any Payment
Date, the sum of (i) one month's interest at the Class A-1 Interest Rate on the
then outstanding Principal Amount of the Class A-1 Bonds immediately prior to
such Payment Date and (ii) the sum of the amounts, if any, by which the amount
described in clause (i) above on each prior Payment Date exceeded the amount
actually distributed as interest on such Bonds on such prior Payment Dates and
was not subsequently distributed, together with, to the extent permitted by
applicable law, interest on the amount described in clause (ii) at the Class A-1
Interest Rate; provided, that, solely in the case where an MBIA Default shall
have occurred and is continuing, the rate at which the amount in clause (i)
above is calculated shall be the lesser of the Class A-1 Interest Rate and the
Weighted Average Net Mortgage Rate for the related Payment Date (unless such
Payment Date would be the seventh consecutive Payment Date on which at least one
of the Bond Interest Rates would be equal to the Weighted Average Net Mortgage
Rate, in which case, this proviso shall be disregarded for such Payment Date
regardless of any continuation of such MBIA Default). For any Payment Date on
which interest accrues in the Class A-1 Bonds based on the Weighted Average Net
Mortgage Rate, Class A-1 Bondholders' Interest Carryover will accrue which will
be payable as provided in the Master Servicing Agreement and the Indenture.
For each Payment Date, the aggregate amount of each installment
of principal due and payable on the Class A-1 Bonds will be equal to such
Class's pro rata share of the Principal Payment Amount for such Payment Date.
The Principal Payment Amount shall be as defined in the Master Servicing
Agreement and shall in no event be less for any Payment Date than the excess, if
any, of the aggregate Principal Amount of the Bonds immediately prior to such
Payment Date over the Pool Principal Balance with respect to such Payment Date.
The entire unpaid principal amount of this Bond shall be due and payable, if not
then previously paid, on the Stated Maturity set forth on the face hereof.
All payments of principal of, and interest on, the Bonds shall be
made only from the Trust Estate Granted as security for the Bonds, the Policy
referred to below and any other assets of the Issuer that have not been Granted
as security for any other bonds
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or obligations of the Issuer, and each Holder hereof, by its acceptance of this
Bond, agrees that it will have recourse solely against such Trust Estate and
such other assets of the Issuer and that neither Wilmington Trust Company in its
individual capacity, any holder of a beneficial interest in the Issuer nor any
of their respective shareholders, partners, beneficiaries, agents, officers,
directors, employees, successors or assigns shall be personally liable for any
amounts payable, or performance due, under this Bond or the Indenture.
Payment of the then remaining unpaid principal amount of this
Bond on the Stated Maturity of its final installment of principal or on such
earlier date as the Issuer shall be required to pay the then remaining unpaid
principal amount of this Bond or payment of the Redemption Price payable on any
date as of which this Bond has been called for redemption in full, shall be made
upon presentation of this Bond to the office or agency of the Issuer maintained
for such purpose. Payments of interest on this Bond due and payable on each
Payment Date or on any Redemption Date, to the extent this Bond is not being
paid in full, together with any installment of principal of this Bond due and
payable on each Payment Date or the Redemption Date, to the extent not in full
payment of this Bond, shall be made by check mailed to the Person whose name
appears as the registered Holder of this Bond (or one or more Predecessor Bonds)
on the Bond Register as of the last day of the second month preceding the month
in which such Payment Date occurs (each a "Record Date").
Checks for amounts which include installments of principal due
on this Bond shall be mailed to the Person entitled thereto at the address of
such Person as it appears on the Bond Register as of the applicable Record Date
without requiring that this Bond be submitted for notation of payment and checks
returned undelivered will be held for payment to the Person entitled thereto,
subject to the terms of the Indenture, at the office or agency in the United
States of America designated by the Issuer for such purpose pursuant to the
Indenture. Any reduction in the principal amount of this Bond (or any one or
more Predecessor Bonds) effected by any payments made on any Payment Date shall
be binding upon all Holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon.
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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 Bond on a
Payment Date or Redemption Date which is prior to the Stated Maturity of the
final installment of principal hereof, then the Trustee, on behalf of the
Issuer, will notify the Person who was the registered Holder hereof on the last
day of the month prior to the month in which such Payment Date or Redemption
Date occurs, and the amount then due and payable shall, if sufficient funds
therefor are available, be payable only upon presentation of this Bond to the
office or agency of the Issuer maintained for such purpose.
The failure of the Issuer to pay when and as due any installment
of principal of (regardless of the lapse of any grace period) any Bond shall not
constitute an Event of Default under the Indenture unless the aggregate
Principal Amount of the Bonds exceeds the Pool Principal Balance with respect to
a Payment Date of the Pledged Mortgages after application of all available
amounts on deposit in the Distribution Account on a Payment Date or unless the
Bonds are not paid in full at their Stated Maturity.
If an Event of Default as defined in the Indenture shall occur
and be continuing with respect to the Bonds, the Bonds may become or be declared
due and payable in the manner and with the effect provided in the Indenture. If
any such acceleration of maturity occurs prior to the Stated Maturity of the
final installment of principal of this Bond, the amount payable to the Holder of
this Bond will be equal to the Principal Amount of this Bond on the date this
Bond becomes so due and payable, together with accrued interest. Following the
acceleration of the maturity of the Bonds, all amounts collected as proceeds of
the collateral securing the Bonds or otherwise shall be applied as described in
the Indenture. Following such acceleration, interest on any overdue installments
of interest on all Bonds shall be payable at the rate set forth in the
Indenture.
The Bonds are not prepayable or redeemable at the option or
direction of the Issuer except that the Bonds are subject to redemption in
whole, but not in part, at the option of the Issuer on any Payment Date after
the earlier of (a) seven years after the initial issuance of the Bonds and (b)
the Payment Date after which the Pool Principal Balance with respect to such
Payment Date, is 35% or less of the Original Pool Principal Balance, at a
redemption
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price equal to 100% of the unpaid Principal Balance for each such Class of
Bonds, plus accrued and unpaid interest thereon at the Class A-1 Bond Interest
Rate. The Bonds are also subject to redemption by the Issuer upon the exercise
by the Master Servicer or the Insurer of its right to purchase the remaining
outstanding Pledged Mortgages which right may be exercised, upon the giving of
required notice to the Issuer, on any Payment Date after the Payment Date with
respect to which the Pool Principal Balance is equal to 10% or less of the
Original Pool Principal Balance. Any redemption of the Bond shall be at a price
equal to 100% of the unpaid principal amount of this Bond plus accrued and
unpaid interest hereon to the date of interest redemption.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond may be registered on the Bond
Register of the Issuer, upon surrender of this Bond for registration of transfer
at the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Bonds of the same
Class, of authorized denominations and in the same aggregate initial principal
amount, will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of
this Bond, the Issuer, the Trustee, and any agent of the Issuer shall treat the
Person in whose name this Bond is registered (i) on any Record Date, for
purposes of making payments, and (ii) on any other date for any other purposes,
as the owner hereof, whether or not this Bond be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, subject to the rights of the Insurer and
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Issuer and the rights of the
Holders of the Bonds under the Indenture at any time by the Issuer with the
consent of the Holders of Bonds representing two-thirds of the Balance Amount of
the Bonds. The Indenture also contains provisions permitting the Holders of
Bonds representing specified percentages of the aggregate Principal Amount of
the Bonds on behalf of the Holders of all the Bonds, subject to the rights of
the Insurer, to
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waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder, at the time of the giving thereof, of this Bond
(or any one or more Predecessor Bonds) shall be conclusive and binding upon such
Holder and upon all future holders of this Bond and of any Bond issued upon the
registration of transfer herefor or in exchange herefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Bond. The
Indenture also permits the Trustee, subject to the rights of the Insurer, to
amend or waive certain terms and conditions set forth in the Indenture without
the consent of the Holders of the Bonds of any Series issued thereunder and also
permits certain amendments without the consent of Bondholders.
As provided in the Indenture, the Insurer shall have the right
to control the exercise of certain remedies set forth therein and to exercise
certain of the voting rights of the Holders of the Bonds and certain other
rights may only be exercised with the consent of the Insurer.
The Bonds are "Book Entry Bonds" which will be available to
investors only through the book entry facilities of The Depository Trust
Company, and bond certificates for all Classes of Bonds will be available only
under certain limited circumstances as described in the Indenture.
AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE SHALL
BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
No reference herein to the Indenture and no provision of this
Bond or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional to the extent permitted by applicable law,
to pay the principal of, and interest on, this Bond at the times, place and
rate, and in the coin or currency herein prescribed.
STATEMENT OF INSURANCE
OBLIGATIONS: $534,347,000
Sequoia Mortgage Trust 1
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Collateralized Mortgage Bonds
Class A-1 and Class A-2 Bonds
MBIA Insurance Corporation (the "Insurer"), has issued a
Financial Guaranty Insurance Policy (the "Policy") relating to the Obligations
containing the following provisions, the Policy being on file at the Corporate
Trust Office of the Trustee.
The Insurer, in consideration of the payment of the premium and
subject to the terms of the Policy, hereby unconditionally and irrevocably
guarantees to any Owner (as defined below) that an amount equal to each full and
complete Insured Payment will be received by First Union National Bank,
Charlotte, NC, or its successor, as trustee for the Owners (the "Trustee"), on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligations under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the applicable Insured Payment are
received by the Trustee, whether or not such funds are properly applied by the
Trustee. Insured Payments shall be made only at the time set forth in the Policy
and no accelerated Insured Payments shall be made regardless of any acceleration
of the Obligations, unless such acceleration is at the sole option of the
Insurer.
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Issuer or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of the order requiring the
return of a preference payment, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment and (iv) appropriate instruments to
effect the appointment of the Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments being in a
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form satisfactory to the Insurer, provided that if such documents are received
after 12:00 noon New York City time on such Business Day, they will be deemed to
be received on the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case payment shall be disbursed
to such Owner.
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The Insurer will pay any other amount payable hereunder no later
than 12:00 noon New York City time on the later of the Payment Date on which the
related Deficiency Amount is due or the second Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); 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 received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim under the Policy, it shall be
deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.
Subject to the terms of the Indenture, the Insurer shall be
subrogated to the rights of each Owner to receive payments under the Obligations
to the extent of any payment by the Insurer under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Master Servicing Agreement dated as of
June 1, 1997 among Sequoia Mortgage Trust 1, as Issuer, the Master Servicer,
Redwood Trust, Inc. and the Trustee, as trustee, without
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regard to any amendment or supplement thereto unless such amendment or
supplement has been approved in writing by the Insurer.
"Business Day" means any day other than a Saturday, a Sunday or
a day on which the Insurer or banking institutions in the State of Maryland or
The City of New York or in the city in which the corporate trust office of the
Trustee under the Agreement is located are authorized or obligated by law or
executive order to close.
"Deficiency Amount" means (A) for any Payment Date prior to the
Stated Maturity, an amount equal to the sum of (i) the Interest Payment Amount
over the Net Available Funds for such Payment Date and (ii) the Subordination
Deficit, if any; (B) for the Stated Maturity, an amount equal to the sum of (i)
the excess, if any, of the Interest Payment Amount over the Net Available Funds
for such Payment Date and (ii) the excess, if any, of the Bond Principal Balance
of the Bonds over Net Available Funds not used to pay the Interest Payment
Amount for such Stated Maturity; and (C) for any date on which the acceleration
or redemption of the Bonds has been directed or consented to by the Insurer
pursuant to the Agreement, an amount equal to the excess, if any, of the sum of
the Bond Principal Balance of the Bonds, together with accrued and unpaid
interest thereon through the date of payment of such accelerated or redeemed
Bonds, over the Net Available Funds for such Payment Date; provided, that, for
purposes of determining the Deficiency Amount, the Interest Payment Amount shall
be calculated for each Payment Date without regard or reference to the Weighted
Average Net Mortgage Rate.
"Indenture" means the Indenture dated as of June 1, 1997 among
the Issuer and the Trustee, as trustee.
"Insured Payment" means (i) as of any Payment Date any
Deficiency Amount and (ii) any Preference Amount.
"Issuer" means the Sequoia Mortgage Trust 1.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
hereto, the original of which is subsequently delivered by registered or
certified mail, from the Trustee or the Master Servicer, as agent of the
Trustee, specifying the Insured
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Payment which shall be due and owing on the applicable Payment Date.
"Owner" means each bondholder (as defined in the Agreement) who,
on the applicable Payment Date, is entitled under the terms of the applicable
Bonds to payment thereunder.
"Preference Amount" means any amount previously distributed to
an Owner on the Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined
therein shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment to or modification of the Agreement, unless such amendment or
modification has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent or the Insurer may be made at the address listed below for the Fiscal
Agent or such other address as the Insurer shall specify in writing to the
Trustee and Master Servicer.
The notice address of the Fiscal Agent is 00xx Xxxxx, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Trustee
and the Master Servicer in writing.
The Policy is being 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 principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.
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MBIA INSURANCE CORPORATION
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EXHIBIT III
FORM OF CLASS A-2 BOND
PRINCIPAL OF THIS BOND IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE PRINCIPAL AMOUNT OF THIS BOND AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE PRINCIPAL AMOUNT OF THIS BOND MAY
BE ASCERTAINED ONLY BY OBTAINING A CONFIRMATION THEREOF FROM THE TRUSTEE UNDER
THE INDENTURE REFERRED TO BELOW.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND SO
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 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.
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SEQUOIA MORTGAGE TRUST 1
a Delaware Statutory Business Trust
Collateralized Mortgage Bonds
CLASS A-2
STATED MATURITY: May 4, 2029
ISSUE DATE: July 29, 1997
Initial Principal
Amount of this Bond:
$200,000,000 CUSIP NO. 817435 AB 6
CERTIFICATE NUMBER 1
Sequoia Mortgage Trust 1 (the "Issuer"), a statutory business
trust formed under a deposit trust agreement dated as of July 16, 1997 and
having Wilmington Trust Company, a Delaware banking corporation, as Owner
Trustee, for value received, hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of Two Hundred Million Dollars ($200,000,000) in
monthly installments on the fourth day of each month, commencing on August 4,
1997 (each, a "Payment Date"), and ending on or before May 4, 2029 (the "Stated
Maturity" of such final installment of principal), and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) on the Principal Amount
(as defined in the Indenture hereinafter referred to) of this Bond on each
Payment Date for the related period, commencing on the immediately preceding
Payment Date (or, in the case of the first Interest Accrual Period, commencing
on the Closing Date) and ending on the date immediately preceding such Payment
Date, as set forth herein and in the Indenture and the Master Servicing
Agreement referred to below. If any Payment Date shall not be a "Business Day"
(as defined in the Indenture), payment of the amount due will be made on the
next succeeding Business Day.
Installments of principal of this Bond are due and payable as
described in the Indenture and in the master servicing agreement dated as of
June 1, 1997 (the "Master Servicing Agreement"), among the Issuer, the Trustee
and the Master Servicer, as such agreement may be amended or supplemented from
time to time as permitted thereby.
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The principal of, and interest on, this Bond are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Bond shall be applied as set forth in the Indenture.
Any installment of principal or interest which is not paid when and as due shall
bear interest as described herein and in the Indenture.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled to
any benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Sequoia Mortgage Trust 1 has caused this
instrument to be duly executed by its duly authorized officer.
Dated: July 29, 1997 SEQUOIA MORTGAGE TRUST 1
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee
By:_____________________________________
Title:__________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds referred to in the within-mentioned
Indenture.
_________________________________,
as Trustee
By:__________________________________
Authorized Signatory
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This Bond is one of a duly authorized issue of Bonds of the
Issuer, designated as its Collateralized Mortgage Bonds (herein called the
"Bonds"). The Bonds are issuable in one or more classes; the Bonds of particular
Classes being herein called the Class A-1 and Class A-2 Bonds, all issued and to
be issued under the Issuer's Indenture dated as of June 1, 1997 between the
Issuer and First Union National Bank (the "Trustee", which term includes any
successor Trustee under the Indenture), which authorized the Bonds, and
reference is hereby made thereto for a statement of the respective rights
thereunder of the Issuer, the Trustee and the Holders of the Bonds of each
particular Class thereof and the terms upon which the Bonds of each Class are,
and are to be, authenticated and delivered. The Bond is one of the Class A-2
Bonds.
All terms used in this Bond which are defined in the Indenture
shall have the meanings assigned to them in the Indenture or, if not defined
therein, in the Master Servicing Agreement.
The interest rate for the Class A-2 Bonds (the "Class A-2
Interest Rate") on each Payment Date after the first Payment Date and up to and
including the Payment Date on which the Issuer is permitted to exercise its
option to redeem the Bonds will be equal to the lesser of (i) a per annum
floating rate equal to the Fed Funds Average Rate (as defined in the Master
Servicing Agreement), for the related Interest Accrual Period plus, 0.54% and
(ii) 10% per annum. If the Issuer does not exercise its option to redeem the
Bonds on the first Payment Date on which it is permitted to do so, on the next
succeeding payment date, the Class A-2 Interest Rate will increase and for the
remaining term of the Bonds will be equal to the lesser of (i) a per annum
floating rate equal to the Fed Funds Average Rate for the related Interest
Accrual Period plus 0.92% and (ii) 10.38% per annum. The Class A-2 Interest Rate
for the first Payment Date will equal 6.04% per annum.
As provided in the Indenture, the Bonds are issuable in Classes
which may vary as is provided or permitted in the Indenture. Bonds of each Class
are equally and ratably secured by the collateral pledged as security therefor
to the extent provided by the Indenture.
For each Payment Date, the aggregate amount of each installment
of interest due and payable on the Class A-2 Bonds will
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be equal to the Class A-2 Interest Payment Amount for such Payment Date.
The "Class A-2 Interest Payment Amount" means, as of any Payment
Date, the sum of (i) one month's interest at the Class A-2 Interest Rate on the
then outstanding Principal Amount of the Class A-2 Bonds immediately prior to
such Payment Date and (ii) the sum of the amounts, if any, by which the amount
described in clause (i) above on each prior Payment Date exceeded the amount
actually distributed as interest on such Bonds on such prior Payment Dates and
was not subsequently distributed, together with, to the extent permitted by
applicable law, interest on the amount described in clause (ii) at the Class A-2
Interest Rate; provided, that, solely in the case where an MBIA Default shall
have occurred and is continuing, the rate at which the amount in clause (i)
above is calculated shall be the lesser of the Class A-2 Interest Rate and the
Weighted Average Net Mortgage Rate for the related Payment Date (unless such
Payment Date would be the seventh consecutive Payment Date on which at least one
of the Bond Interest Rates would be equal to the Weighted Average Net Mortgage
Rate, in which case, this proviso shall be disregarded for such Payment Date
regardless of any continuation of such MBIA Default). For any Payment Date in
which interest accrues in the Class A-2 Bonds based on the Weighted Average Net
Mortgage Rate, Class A-2 Bondholders' Interest Carryover will accrue which will
be payable as provided in the Master Servicing Agreement and the Indenture.
For each Payment Date, the aggregate amount of each installment
of principal due and payable on the Class A-2 Bonds will be equal to such
Class's pro rata share of the Principal Payment Amount for such Payment Date.
The Principal Payment Amount shall be as defined in the Master Servicing
Agreement and shall in no event be less for any Payment Date than the excess, if
any, of the aggregate Principal Amount of the Bonds immediately prior to such
Payment Date over the Pool Principal Balance with respect to such Payment Date.
The entire unpaid principal amount of this Bond shall be due and payable, if not
then previously paid, on the Stated Maturity set forth on the face hereof.
All payments of principal of, and interest on, the Bonds shall
be made only from the Trust Estate Granted as security for the Bonds, the Policy
referred to below and any other assets of the Issuer that have not been Granted
as security for any other bonds
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or obligations of the Issuer, and each Holder hereof, by its acceptance of this
Bond, agrees that it will have recourse solely against such Trust Estate and
such other assets of the Issuer and that neither Wilmington Trust Company in its
individual capacity, any holder of a beneficial interest in the Issuer nor any
of their respective shareholders, partners, beneficiaries, agents, officers,
directors, employees, successors or assigns shall be personally liable for any
amounts payable, or performance due, under this Bond or the Indenture.
Payment of the then remaining unpaid principal amount of this
Bond on the Stated Maturity of its final installment of principal or on such
earlier date as the Issuer shall be required to pay the then remaining unpaid
principal amount of this Bond or payment of the Redemption Price payable on any
date as of which this Bond has been called for redemption in full, shall be made
upon presentation of this Bond to the office or agency of the Issuer maintained
for such purpose. Payments of interest on this Bond due and payable on each
Payment Date or on any Redemption Date, to the extent this Bond is not being
paid in full, together with any installment of principal of this Bond due and
payable on each Payment Date or the Redemption Date, to the extent not in full
payment of this Bond, shall be made by check mailed to the Person whose name
appears as the registered Holder of this Bond (or one or more Predecessor Bonds)
on the Bond Register as of the last day of the second month preceding the month
in which such Payment Date occurs (each a "Record Date").
Checks for amounts which include installments of principal due
on this Bond shall be mailed to the Person entitled thereto at the address of
such Person as it appears on the Bond Register as of the applicable Record Date
without requiring that this Bond be submitted for notation of payment and checks
returned undelivered will be held for payment to the Person entitled thereto,
subject to the terms of the Indenture, at the office or agency in the United
States of America designated by the Issuer for such purpose pursuant to the
Indenture. Any reduction in the principal amount of this Bond (or any one or
more Predecessor Bonds) effected by any payments made on any Payment Date shall
be binding upon all Holders of this Bond and of any Bond issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not noted hereon.
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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 Bond on a Payment Date or Redemption Date which is prior to the Stated
Maturity of the final installment of principal hereof, then the Trustee, on
behalf of the Issuer, will notify the Person who was the registered Holder
hereof on the last day of the month prior to the month in which such Payment
Date or Redemption Date occurs, and the amount then due and payable shall, if
sufficient funds therefor are available, be payable only upon presentation of
this Bond to the office or agency of the Issuer maintained for such purpose.
The failure of the Issuer to pay when and as due any installment
of principal of (regardless of the lapse of any grace period) any Bond shall not
constitute an Event of Default under the Indenture unless the aggregate
Principal Amount of the Bonds exceeds the Pool Principal Balance with respect to
a Payment Date of the Pledged Mortgages after application of all available
amounts on deposit in the Distribution Account on such Payment Date or unless
the Bonds are not paid in full at their Stated Maturity.
If an Event of Default as defined in the Indenture shall occur
and be continuing with respect to the Bonds, the Bonds may become or be declared
due and payable in the manner and with the effect provided in the Indenture. If
any such acceleration of maturity occurs prior to the Stated Maturity of the
final installment of principal of this Bond, the amount payable to the Holder of
this Bond will be equal to the Principal Amount of this Bond on the date this
Bond becomes so due and payable, together with accrued interest. Following the
acceleration of the maturity of the Bonds, all amounts collected as proceeds of
the collateral securing the Bonds or otherwise shall be applied as described in
the Indenture. Following such acceleration, interest on any overdue installments
of interest on all Bonds shall be payable at the rate set forth in the
Indenture.
The Bonds are not prepayable or redeemable at the option or
direction of the Issuer except that the Bonds are subject to redemption in
whole, but not in part, at the option of the Issuer on any Payment Date after
the earlier of (a) seven years after the initial issuance of the Bonds and (b)
the Payment Date after which the Pool Principal Balance with respect to such
Payment Date is 35% or less of the Original Pool Principal Balance, at a
redemption
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price equal to 100% of the unpaid Principal Amount for each such Class of Bonds,
plus accrued and unpaid interest thereon at the Class A-2 Bond Interest Rate.
The Bonds are also subject to redemption by the Issuer upon the exercise by the
Master Servicer or the Insurer of its right to purchase the remaining
outstanding Pledged Mortgages which right may be exercised, upon the giving of
required notice to the Issuer, on any Payment Date after the Payment Date with
respect to which the Pool Principal Balance is equal to 10% or less of the
Original Pool Principal Balance. Any redemption of this Bond shall be at a price
equal to 100% of the unpaid principal amount of this Bond plus accrued and
unpaid interest hereon to the date of such redemption.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond may be registered on the Bond
Register of the Issuer, upon surrender of this Bond for registration of transfer
at the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Bonds of the same
Class, of authorized denominations and in the same aggregate initial principal
amount, will be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of
this Bond, the Issuer, the Trustee, and any agent of the Issuer shall treat the
Person in whose name this Bond is registered (i) on any Record Date, for
purposes of making payments, and (ii) on any other date for any other purposes,
as the owner hereof, whether or not this Bond be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, subject to the rights of MBIA and with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Issuer and the rights of the
Holders of the Bonds under the Indenture at any time by the Issuer with the
consent of the Holders of Bonds representing two-thirds of the Balance Amount of
the Bonds. The Indenture also contains provisions permitting the Holders of
Bonds representing specified percentages of the aggregate Principal Amount of
the Bonds on behalf of the Holders of all the Bonds, subject to the rights of
MBIA, to waive compliance by the Issuer
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with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder, at
the time of the giving thereof, of this Bond (or any one or more Predecessor
Bonds) shall be conclusive and binding upon such Holder and upon all future
holders of this Bond and of any Bond issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Bond. The Indenture also permits the
Trustee, subject to the rights of MBIA, to amend or waive certain terms and
conditions set forth in the Indenture without the consent of the Holders of the
Bonds of any Series issued thereunder and also permits certain amendments
without the consent of Bondholders.
As provided in the Indenture, the Insurer shall have the right
to control the exercise of certain remedies set forth therein and to exercise
certain of the voting rights of the Holders of the Bonds and certain other
rights may only be exercised with the consent of the Insurer.
The Bonds are "Book Entry Bonds" which will be available to
investors only through the book entry facilities of The Depository Trust
Company, and bond certificates for all Classes of Bonds will be available only
under certain limited circumstances as described in the Indenture.
AS PROVIDED IN THE INDENTURE, THIS BOND AND THE INDENTURE SHALL
BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN.
No reference herein to the Indenture and no provision of this
Bond or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional to the extent permitted by applicable law,
to pay the principal of, and interest on, this Bond at the times, place and
rate, and in the coin or currency herein prescribed.
STATEMENT OF INSURANCE
OBLIGATIONS: $534,347,000
Sequoia Mortgage Trust 1
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Collateralized Mortgage Bonds
Class A-1 and Class A-2 Bonds
MBIA Insurance Corporation (the "Insurer"), has issued a
Financial Guaranty Insurance Policy (the "Policy") relating to the Obligations
containing the following provisions, the Policy being on file at the Corporate
Trust Office of the Trustee.
The Insurer, in consideration of the payment of the premium and
subject to the terms of the Policy, hereby unconditionally and irrevocably
guarantees to any Owner (as defined below) that an amount equal to each full and
complete Insured Payment will be received by First Union National Bank,
Charlotte, NC, or its successor, as trustee for the Owners (the "Trustee"), on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligations under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the applicable Insured Payment are
received by the Trustee, whether or not such funds are properly applied by the
Trustee. Insured Payments shall be made only at the time set forth in the Policy
and no accelerated Insured Payments shall be made regardless of any acceleration
of the Obligations, unless such acceleration is at the sole option of the
Insurer.
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Issuer or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of the order requiring the
return of a preference payment, (ii) an opinion of counsel satisfactory to the
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Insurer, irrevocably assigning to
the Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment and (iv) appropriate instruments to
effect the appointment of the Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments being in a
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form satisfactory to the Insurer, provided that if such documents are received
after 12:00 noon New York City time on such Business Day, they will be deemed to
be received on the following Business Day. Such payments shall be disbursed to
the receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case payment shall be disbursed
to such Owner.
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The Insurer will pay any other amount payable hereunder no later
than 12:00 noon New York City time on the later of the Payment Date on which the
related Deficiency Amount is due or the second Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); 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 received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim under the Policy, it shall be
deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only and the Fiscal
Agent shall in no event be liable to Owners for any acts of the Fiscal Agent or
any failure of the Insurer to deposit, or cause to be deposited, sufficient
funds to make payments due under this Policy.
Subject to the terms of the Indenture, the Insurer shall be
subrogated to the rights of each Owner to receive payments under the Obligations
to the extent of any payment by the Insurer under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Master Servicing Agreement dated as of
June 1, 1997 among Sequoia Mortgage Trust 1, as Issuer, the Master Servicer,
Redwood Trust, Inc. and the Trustee, as trustee, without
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regard to any amendment or supplement thereto unless such amendment or
supplement has been approved in writing by the Insurer.
"Business Day" means any day other than a Saturday, a Sunday or
a day on which the Insurer or banking institutions in the State of Maryland or
The City of New York or in the city in which the corporate trust office of the
Trustee under the Agreement is located are authorized or obligated by law or
executive order to close.
"Deficiency Amount" means (A) for any Payment Date prior to the
Stated Maturity, an amount equal to the sum of (i) the Interest Payment Amount
over the Net Available Funds for such Payment Date and (ii) the Subordination
Deficit, if any; (B) for the Stated Maturity, an amount equal to the sum of (i)
the excess, if any, of the Interest Payment Amount over the Net Available Funds
for such Payment Date and (ii) the excess, if any, of the Bond Principal Balance
of the Bonds over Net Available Funds not used to pay the Interest Payment
Amount for such Stated Maturity; and (C) for any date on which the acceleration
or redemption of the Bonds has been directed or consented to by the Insurer
pursuant to the Agreement, an amount equal to the excess, if any, of the sum of
the Bond Principal Balance of the Bonds, together with accrued and unpaid
interest thereon through the date of payment of such accelerated or redeemed
Bonds, over the Net Available Funds for such Payment Date; provided, that, for
purposes of determining the Deficiency Amount, the Interest Payment Amount shall
be calculated for each Payment Date without regard or reference to the Weighted
Average Net Mortgage Rate.
"Indenture" means the Indenture dated as of June 1, 1997 among
the Issuer and the Trustee, as trustee.
"Insured Payment" means (i) as of any Payment Date any
Deficiency Amount and (ii) any Preference Amount.
"Issuer" means the Sequoia Mortgage Trust 1.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
hereto, the original of which is subsequently delivered by registered or
certified mail, from the Trustee or the Master Servicer, as agent of the
Trustee, specifying the Insured
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Payment which shall be due and owing on the applicable Payment Date.
"Owner" means each bondholder (as defined in the Agreement) who,
on the applicable Payment Date, is entitled under the terms of the applicable
Bonds to payment thereunder.
"Preference Amount" means any amount previously distributed to
an Owner on the Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined
therein shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment to or modification of the
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Agreement, unless such amendment or modification has been approved in writing by
the Insurer.
Any notice under the Policy or service of process on the Fiscal
Agent or the Insurer may be made at the address listed below for the Fiscal
Agent or such other address as the Insurer shall specify in writing to the
Trustee and Master Servicer.
The notice address of the Fiscal Agent is 00xx Xxxxx, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Municipal Registrar and Paying
Agency, or such other address as the Fiscal Agent shall specify to the Trustee
and the Master Servicer in writing.
The Policy is being 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 principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the
Policy is not refundable for any reason including payment, or provision being
made for payment, prior to maturity of the Obligations.
MBIA INSURANCE CORPORATION
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EXHIBIT IV
FORM OF BOND INSURANCE POLICY
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EXHIBIT V
FORM OF FAIR VALUE CERTIFICATE
INDEPENDENT ACCOUNTANT'S REPORT ON
APPLYING AGREED-UPON PROCEDURES
Redwood Trust, Inc.
000 Xxxxxxx Xxxxxxx
Xxxxx 0000
Xxxx Xxxxxx, XX 00000
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
We have performed the procedures enumerated below, which were agreed to by
Redwood Trust, Inc. (the "Company") and First National Union Bank, solely to
assist you in connection with the requirement of the Trust Indenture (the
"Indenture") dated June 1, 1997 between Sequoia Mortgage Trust 1 (the "Issuer")
and First National Union Bank (the "Trustee") as described in Section 2.12(f) of
the Indenture with respect to the fair value to the Issuer of the collateral
being pledged under the Indenture. This engagement to apply agreed-upon
procedures was performed in accordance with standards established by the
American Institute of Certified Public Accountants. The sufficiency of these
procedures is solely the responsibility of the Company and the Trustee.
Consequently, we make no representation regarding the sufficiency of the
procedures described below either for the purpose for which this report has been
requested or for any other purpose.
The procedures and the associated findings are as follows:
1. We traced and agreed the amounts of the whole loan pools listed on the
attached Exhibit A under the heading "Face Value of Redwood's Mortgage
Loans at June 1, 1997" to the remittance
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reports (maintained by the Company) received from the various servicers
for the loan pools.
Based on the above procedure no exceptions were noted.
2. We recalculated the amounts shown on the attached Exhibit A under the
heading "Face Value of Pledged Mortgages at June 1, 1997" as the
difference between the amounts under the heading "Face Value of
Redwood's Mortgage Loans at June 1, 1997" and "Loans Not Pledged".
However, we make no comment with respect to any aspect related to the
amounts listed under the heading "Loans Not Pledged".
Based on the above procedure no exceptions were noted.
3. We traced and agreed the prices shown on the attached Exhibit A under
the heading "Price of Mortgage Loans" to the fax copy of the bid price
from the respective servicers as received and maintained by the Company.
In addition, we directly confirmed the bid prices with respective
servicers for the following Redwood Asset No.'s: 2, 3, 4, 5, 7, 8, 9,
11, 12, 13, 15, 16, 18, and 19. However, we make no comment with respect
to the accuracy or appropriateness of the "Price of Mortgage Loans".
Based on the above procedure no exceptions were noted.
4. We recalculated the amounts under the heading "Fair Value of Pledged
Mortgages" as shown on the attached Exhibit A, as the product of the
amounts under the heading "Price of Mortgage Loans" and the heading
"Loans Not Pledged".
Based on the above procedure no exceptions were noted.
We were not engaged to, and did not, perform an audit, the objective of which
would be the expression of an opinion on the specified elements, accounts or
items. Accordingly, we do not express such an opinion. Had we performed
additional procedures, other matters might have come to our attention that would
have been reported to you.
This report is intended solely for the use of the Company and the Trustee and
should not be used by those who have not agreed to the
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procedures and taken responsibility for the sufficiency of the procedures for
their purposes.
San Francisco, California
July __, 1997
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