EXECUTED VERSION
----------------
AMBAC ASSURANCE CORPORATION,
as Insurer,
EQUITY ONE, INC.,
as a Seller and the Servicer,
EQUITY ONE ABS, INC.,
as Depositor
and
THE CHASE MANHATTAN BANK,
as Trustee
INSURANCE AND INDEMNITY AGREEMENT
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1998-1
Dated as of December 9, 1998
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be part of this Agreement. All capitalized terms used in this
Agreement and not otherwise defined shall have the meanings set forth in Article
I of this Agreement.)
Page
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ARTICLE I DEFINITIONS ................................................................................... 1
Section 1.01. Defined Terms ................................................................. 1
Section 1.02. Other Definitional Provisions ................................................. 4
Section 1.03 EOI as Representative of Affiliated Sellers.................................... 4
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS .................................................... 4
Section 2.01. Representations and Warranties of EOI, the Affiliated
Sellers and the Depositor ..................................................... 4
Section 2.02. Affirmative Covenants of EOI, the Affiliated Sellers
and the Depositor ............................................................. 8
Section 2.03. Negative Covenants of EOI, the Affiliated Sellers and the
Depositor......................................................................13
Section 2.04. Representations, Warranties and Covenants of the Insurer.......................14
ARTICLE III THE POLICY; REIMBURSEMENT ...................................................................16
Section 3.01. Issuance of the Policy ........................................................16
Section 3.02. Payment of Fees and Premium ...................................................18
Section 3.03. Reimbursement Obligation ......................................................18
Section 3.04. Indemnification ...............................................................19
Section 3.05. Payment Procedure .............................................................22
Section 3.06. Joint and Several Liability ...................................................22
ARTICLE IV FURTHER AGREEMENTS ...........................................................................22
Section 4.01. Effective Date; Term of the Insurance Agreement ...............................22
Section 4.02. Further Assurances and Corrective Instruments .................................22
Section 4.03. Obligations Absolute ..........................................................23
Section 4.04. Assignments; Reinsurance; Third-Party Rights ..................................24
Section 4.05. Liability of the Insurer ......................................................25
25
Section 4.06. Annual Servicing Audit and Certification ......................................25
ARTICLE V DEFAULTS AND REMEDIES .........................................................................25
Section 5.01. Defaults ......................................................................25
Section 5.02. Remedies; No Remedy Exclusive .................................................26
Section 5.03. Waivers .......................................................................27
ARTICLE VI MISCELLANEOUS ................................................................................27
Section 6.01. Amendments, Etc................................................................27
Section 6.02. Notices .......................................................................28
Section 6.03. Severability ..................................................................29
Section 6.04. Governing Law .................................................................29
Section 6.05. Consent to Jurisdiction .......................................................29
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Section 6.06. Consent of the Insurer ........................................................30
Section 6.07. Counterparts ..................................................................30
Section 6.08. Headings ......................................................................30
Section 6.09. Trial by Jury Waived ..........................................................30
Section 6.10. Limited Liability .............................................................30
Section 6.11. Entire Agreement ..............................................................31
ii
INSURANCE AND INDEMNITY AGREEMENT (as may be amended, modified or
supplemented from time to time, this "Insurance Agreement"), dated as of
December 9, 1998, by and among AMBAC ASSURANCE CORPORATION, as Insurer, EQUITY
ONE, INC., as a Seller and the Servicer, EQUITY ONE ABS, INC., as Depositor, and
THE CHASE MANHATTAN BANK, as Trustee.
W I T N E S S E T H :
WHEREAS, a Pooling and Servicing Agreement, dated as of November 30, 1998,
by and among the Depositor, EOI, the Affiliated Sellers and the Trustee (as may
be amended, modified or supplemented from time to time as set forth therein, the
"P & S Agreement") provides for, among other things, the sale of certain Loans
by EOI and each of the Affiliated Sellers to the Depositor, the sale of such
Loans by the Depositor to the Trustee for the benefit of the Certificateholders
and the Insurer and the issuance of Mortgage Pass-Through Certificates, Series
1998-1 (the "Certificates") evidencing the entire beneficial ownership interest
in a trust fund (the "Trust Fund") consisting primarily of a pool of
conventional, fixed rate, residential and mixed use mortgage loans (the "Loans")
deposited into the Trust Fund by the Depositor;
WHEREAS, EOI has undertaken under the P & S Agreement to perform certain
obligations of the Affiliated Sellers if an Affiliated Seller fails to do so and
EOI wishes to provide similar undertakings to the Insurer as set forth in this
Insurance Agreement;
WHEREAS, the Insurer has issued the Policy, pursuant to which it has agreed
to pay in favor of the Trustee for the benefit of the Holders of the Class A
Certificates, certain payments in respect of the Loans;
WHEREAS, the Insurer shall be paid a Premium as set forth herein; and
WHEREAS, each of EOI and the Depositor has undertaken certain obligations
in consideration for the Insurer's issuance of its Policy;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. Unless the context clearly requires otherwise,
all capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the P & S Agreement or the Policy described below.
For purposes of this Insurance Agreement, the following terms shall have the
following meanings:
"Affiliated Seller" means each of Equity One, Incorporated, a Pennsylvania
corporation; Equity One Mortgage Company, a North Carolina corporation; Equity
One Mortgage, Inc., a Delaware corporation; Equity One, Inc., a Minnesota
corporation; Equity One Consumer Loan Company, Inc., a New Hampshire
corporation; Equity One of West Virginia, Inc., a West Virginia corporation; and
Equity One Mortgage, Inc., a New York corporation.
"Certificates" has the meaning given such term in the recitals.
"Closing Date" means December 9, 1998.
"Commission" means the Securities and Exchange Commission.
"Default" means any event which results, or which with the giving of notice
or the lapse of time or both would result, in an Event of Default.
"Depositor" means Equity One ABS, Inc., a Delaware corporation, or any
successor thereto, as Depositor under the P & S Agreement.
"Documents" has the meaning given such term in Section 2.01(j).
"EOI" means Equity One, Inc., a Delaware corporation, as one of the Sellers
and as the Servicer under the P & S Agreement.
"Event of Default" means any event of default specified in Section 5.01 of
this Insurance Agreement.
"Financial Statements" means, with respect to EOI, (i) the consolidated
statements of financial condition as of November 30, 1996 and 1997 and the
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended November 30, 1997 and the notes thereto,
and (ii) the unaudited quarterly statements of financial condition as of August
31, 1998.
"Holder" has the meaning given such term in the Policy.
"Insurance Agreement" has the meaning given such term in the initial
paragraph hereof.
"Insurer" means Ambac Assurance Corporation, or any successor thereto, as
issuer of the Policy.
"Insurer Information" has the meaning given such term in Section
3.04(a)(v).
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest publicly announced from time to time by Citibank, N.A. as
its prime or base lending rate (any change in such rate of interest to be
effective on the date such change is announced by Citibank, N.A.), and (ii) the
then applicable highest rate of interest on any of the Class A Certificates and
(b) the maximum rate permissible under applicable usury or similar laws limiting
interest rates. The Late Payment Rate for any Distribution Date shall be
computed on the basis of the actual number of days elapsed over a year of 360
days.
"Loans" has the meaning given such term in the recitals.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in the ability of such Person to perform its obligations under
any of the Operative
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Documents, including any material adverse change in the business, financial
condition, results of operations or properties of such Person on a consolidated
basis with its subsidiaries which might have such effect.
"Moody's" means Xxxxx'x Investors Service, Inc., and any successor thereto.
"Offering Document" means the Prospectus, dated August 31, 1998, as
supplemented by the Prospectus Supplement, dated December 4, 1998, in respect of
the Class A Certificates.
"Operative Documents" means this Insurance Agreement, the Certificates, and
the P & S Agreement.
"P & S Agreement" has the meaning given such term in the recitals.
"Person" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, partnership or
other organization or entity (whether governmental or private).
"Policy" means the Certificate Guaranty Insurance Policy No. AB0204BE,
together with all endorsements thereto, issued by the Insurer in favor of the
Trustee, for the benefit of the Holders of the Class A Certificates.
"Premium" means the premium payable in accordance with the Policy which
shall be an amount equal to 1/12th of the product of (i) the Premium Percentage
and (ii) the aggregate Certificate Principal Balance of the Class A Certificates
on each Distribution Date (after giving effect to any distributions of principal
to be made on such Distribution Date); provided that the initial premium will be
equal to 1/12th of the product of the (i) Premium Percentage and (ii) aggregate
Certificate Principal Balance of the Class A Certificates as of the Cut-off Date
and will be paid on the Closing Date.
"Premium Percentage" shall mean 0.15% per annum.
"Registration Statement" means the registration statement on Form S-3 (No.
333-24599), including the prospectus, relating to the Class A Certificates, at
the time it became effective.
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx Companies,
Inc., and any successor thereto.
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Transaction" means the transactions contemplated by the Operative
Documents, including the transactions described in the Offering Document.
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"Trust Fund" has the meaning given such term in the recitals.
"Trustee" means The Chase Manhattan Bank, a New York banking corporation,
as trustee under the P & S Agreement, and any successor thereto under the P & S
Agreement.
"Underwriter" means Xxxxxxx Xxxxx Xxxxxx Inc.
"Underwriting Agreement" means the Underwriting Agreement, dated November
20, 1998, among the Underwriter, the Depositor and EOI, as may be amended,
modified or supplemented from time to time.
Section 1.02. Other Definitional Provisions. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Insurance
Agreement shall refer to this Insurance Agreement as a whole and not to any
particular provision of this Insurance Agreement, and Section, subsection,
Schedule and Exhibit references are to this Insurance Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
"include" and "including" shall be deemed to be followed by the phrase "without
limitation."
Section 1.03. EOI as Representative of Affiliated Sellers. Each of the
Affiliated Sellers is a direct or indirect wholly owned subsidiary of EOI.
Pursuant to this Insurance Agreement and in consideration of the issuance of the
Policy, EOI, on behalf of each Affiliated Seller, is making representations and
warranties to the Insurer concerning each Affiliated Seller and is undertaking
to assure the Insurer that each Affiliated Seller will perform the covenants
that EOI, on behalf of each Affiliated Seller, has agreed that each Affiliated
Seller will perform. Each representation, warranty or covenant made or
undertaken by an Affiliated Seller pursuant to this Insurance Agreement shall be
deemed also to be made or undertaken by EOI as representative of the Affiliated
Seller and EOI shall be fully responsible to the Insurer for any breach of any
representation or warranty made with respect to any Affiliated Seller or for any
failure of any Affiliated Seller to perform any covenant applicable to such
Affiliated Seller.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of EOI, the Affiliated Sellers
and the Depositor. Each of EOI, the Affiliated Sellers and the Depositor
represents and warrants as of the Closing Date, and as of the date of the
transfer of each of the Loans pursuant to the P & S Agreement, as follows:
(a) Due Organization and Qualification. Each of EOI, the Affiliated
Sellers and the Depositor is a corporation, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of EOI, the Affiliated Sellers and the Depositor is, or
will become, duly qualified to do business, is, or will be, in good
standing and has obtained, or will obtain, all necessary licenses, permits,
charters, registrations and approvals (together, "approvals") necessary for
the conduct of its business as currently conducted and as described in the
Offering Document and the
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performance of its obligations under the Operative Documents to which it is
a party in each jurisdiction in which the failure to be so qualified or to
obtain such approvals would render any Operative Document unenforceable in
any respect or would have a material adverse effect upon the Transaction.
(b) Power and Authority. Each of EOI, the Affiliated Sellers and the
Depositor has all necessary power and authority to conduct its business as
currently conducted and as described in the Offering Document, to execute,
deliver and perform its obligations under the Operative Documents to which
it is a party and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and performance of the
Operative Documents by each of EOI, the Affiliated Sellers and the
Depositor has been duly authorized by all necessary action and does not
require any additional approvals or consents, or other action by or any
notice to or filing with any Person, including any governmental entity or
any of the stockholders of EOI, the Affiliated Sellers or the Depositor,
which have not previously been obtained or given by EOI, the Affiliated
Sellers or the Depositor.
(d) Noncontravention. The execution and delivery by each of EOI, the
Affiliated Sellers or the Depositor of the Operative Documents to which it
is a party, the consummation of the Transaction and the satisfaction of the
terms and conditions of the Operative Documents do not and will not:
(i) conflict with or result in any breach or violation of any
provision of the applicable organizational documents of EOI, an
Affiliated Seller or the Depositor or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
currently in effect having applicability to EOI, an Affiliated Seller
or the Depositor or any of their respective material properties,
including regulations issued by any administrative agency or other
governmental authority having supervisory powers over EOI, an
Affiliated Seller or the Depositor, which conflict, breach or
violation reasonably could result in a Material Adverse Change;
(ii) constitute a default by EOI, an Affiliated Seller or the
Depositor under, result in the acceleration of any obligation under,
or breach any provision of any loan agreement, mortgage, indenture or
other agreement or instrument to which EOI, an Affiliated Seller or
the Depositor is a party or by which any of their respective
properties is or may be bound or affected, which default, acceleration
or breach reasonably could result in a Material Adverse Change; or
(iii) result in or require the creation of any lien upon or in
respect of any assets of EOI, an Affiliated Seller or the Depositor,
which lien reasonably could result in a Material Adverse Change.
(e) Legal Proceedings. There is no action, proceeding or investigation
by or before any court, governmental or administrative agency or arbitrator
against or affecting EOI, an Affiliated Seller or the Depositor or any of
their respective subsidiaries, any properties or rights of EOI, an
Affiliated Seller or the Depositor or any of their respective
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subsidiaries or any of the Loans pending or, to EOI's, an Affiliated
Seller's or the Depositor's knowledge after reasonable inquiry, threatened,
which, in any case, if decided adversely to EOI, an Affiliated Seller or
the Depositor or any such subsidiary could result in a Material Adverse
Change with respect to EOI, an Affiliated Seller or the Depositor.
(f) Valid and Binding Obligations. The Operative Documents (other than
the Certificates), when executed and delivered by EOI, an Affiliated Seller
or the Depositor, will constitute the legal, valid and binding obligations
of each of EOI, an Affiliated Seller and the Depositor, enforceable in
accordance with their respective terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general equitable
principles and public policy considerations as to rights of indemnification
for violations of federal securities laws. The Certificates, when executed,
authenticated and delivered in accordance with the P & S Agreement, will be
validly issued and outstanding and entitled to the benefits of the P & S
Agreement. Each of EOI, the Affiliated Sellers and the Depositor will not
at any time in the future deny that the Operative Documents to which it is
a party constitute the legal, valid and binding obligations of EOI, the
Affiliated Sellers and the Depositor, as applicable.
(g) Financial Statements. The Financial Statements of EOI, copies of
which have been furnished to the Insurer, (i) are, as of the dates and for
the periods referred to therein, complete and correct in all material
respects, (ii) present fairly the financial condition and results of
operations of EOI as of the dates and for the periods indicated and (iii)
have been prepared in accordance with generally accepted accounting
principles consistently applied, except as noted therein (subject as to
interim statements to normal year-end adjustments). Since the date of the
most recent Financial Statements, there has been no Material Adverse Change
in respect of EOI, any Affiliated Seller or the Depositor. Except as
disclosed in the Financial Statements, EOI is not subject to any contingent
liabilities or commitments that, individually or in the aggregate, have a
material possibility of causing a Material Adverse Change in respect of
EOI, any Affiliated Seller or the Depositor.
(h) Compliance with Law, Etc. No practice, procedure or policy
employed, or proposed to be employed, by EOI, any Affiliated Seller or the
Depositor in the conduct of its business violates any law, regulation,
judgment, agreement, order or decree applicable to EOI, any Affiliated
Seller or the Depositor that, if enforced, could result in a Material
Adverse Change with respect to EOI, any Affiliated Seller or the Depositor.
(i) Taxes. Each of EOI, any Affiliated Seller or the Depositor has
filed prior to the date hereof all federal and state tax returns that are
required to be filed and has paid all taxes, including any assessments
received by it that are not being contested in good faith, to the extent
that such taxes have become due. Any taxes, fees and other governmental
charges payable by EOI, any Affiliated Seller or the Depositor in
connection with the Transaction, the execution and delivery of the
Operative Documents and the issuance of the Certificates have been paid or
shall have been paid at or prior to the Closing Date if such taxes, fees or
other governmental changes were due on or prior to the Closing Date.
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(j) Accuracy of Information. Neither the Operative Documents nor other
material information relating to the Loans, the operations of EOI, any
Affiliated Seller or the Depositor or the financial condition of EOI, any
Affiliated Seller or the Depositor (collectively, the "Documents"), as
amended, supplemented or superseded, furnished to the Insurer in writing or
in electronic form by EOI, any Affiliated Seller or the Depositor contains
any statement of a material fact which was untrue or misleading in any
material respect when made. Each of EOI, the Affiliated Sellers and the
Depositor has no knowledge of any circumstances that could reasonably be
expected to cause a Material Adverse Change with respect to EOI, the
Affiliated Sellers or the Depositor. Since the furnishing of the Documents,
there has been no change nor any development or event involving a
prospective change known to EOI, any Affiliated Seller or the Depositor
that would render any of the Documents untrue or misleading in any material
respect.
(k) Compliance With Securities Laws. The offer of the Class A
Certificates complies in all material respects with all requirements of
law, including all registration requirements of applicable securities laws.
Without limiting the foregoing, the Offering Document does not contain any
untrue statement of a material fact and does not omit to state a material
fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that no representation is made with respect to the information in
the Offering Document regarding the Insurer set forth under the captions
"THE INSURER" and "DESCRIPTION OF THE CERTIFICATES -- Certificate Guaranty
Insurance Policy" or the financial statements of the Insurer included in or
incorporated by reference in the Offering Document. The offer of the Class
A Certificates has not been and will not be in violation of the Securities
Act or any other federal or state securities laws. Based upon advice of
legal counsel, the P & S Agreement is not required to be qualified under
the Trust Indenture Act and the Trust Fund is not required to be registered
as an "investment company" under the Investment Company Act. EOI will
satisfy in all material respects any of the information reporting
requirements of the Securities Exchange Act arising out of the Transaction
to which it, the Affiliated Sellers or the Depositor are subject.
(l) Operative Documents. Each of the representations and warranties of
EOI, any Affiliated Seller and the Depositor contained in the applicable
Operative Documents and the Underwriting Agreement is true and correct in
all material respects and each of EOI, the Affiliated Sellers and the
Depositor hereby makes each such representation and warranty to, and for
the benefit of, the Insurer as if the same were set forth in full herein;
provided, however, that the remedy for any breach of a representation and
warranty of EOI in Sections 2.03 and 2.03A, any Affiliated Seller in
Section 2.03 and the Depositor in Section 2.04 of the P & S Agreement and
the remedy with respect to any defective Loan or any Loan as to which there
has been a breach of a representation or warranty under Sections 2.03,
2.03A or 2.04 of the P & S Agreement shall each be limited to the remedies
specified in the P & S Agreement.
(m) Solvency; Fraudulent Conveyance. Each of EOI, the Affiliated
Sellers and the Depositor is solvent and will not be rendered insolvent by
the Transaction and, after giving effect to the Transaction, EOI, the
Affiliated Sellers and the Depositor will not be left with an unreasonably
small amount of capital with which to engage in the ordinary course of its
business, and each of EOI, the Affiliated Sellers and the Depositor
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does not intend to incur, or believe that it has incurred, debts beyond its
ability to pay as they mature. Each of EOI, the Affiliated Sellers and the
Depositor does not contemplate the commencement of insolvency, liquidation
or consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of EOI, the Affiliated
Sellers and the Depositor or any of their respective assets. The amount of
consideration being received by EOI and each Affiliated Seller upon the
sale of the Loans to the Depositor constitutes reasonably equivalent value
and fair consideration for the Loans. The amount of consideration being
received by the Depositor upon the sale of the Class A Certificates
constitutes reasonably equivalent value and fair consideration for the
ownership interest evidenced by the Class A Certificates. EOI and each
Affiliated Seller is not transferring the Loans to the Depositor nor is the
Depositor selling the Class A Certificates, as provided in the Operative
Documents, with any intent to hinder, delay or defraud any of EOI's, any
Affiliated Seller's or the Depositor's creditors.
(n) Principal Place of Business. The principal place of business of
EOI is Mt. Laurel, New Jersey. The principal place of business of the
Depositor is Wilmington, Delaware.
Section 2.02. Affirmative Covenants of EOI, the Affiliated Sellers and the
Depositor. Each of EOI, the Affiliated Sellers and the Depositor hereby agrees
that during the term of this Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. Each of EOI, the
Affiliated Sellers and the Depositor shall comply in all material respects
with the terms and conditions of and perform its obligations under the
Operative Documents to which it is a party in all cases in which failure to
so comply or perform would result in a default thereunder and shall comply
with all requirements of any law, rule or regulation applicable to it in
all circumstances where non-compliance reasonably could result in a
Material Adverse Change.
(b) Corporate Existence. Each of EOI, the Affiliated Sellers and the
Depositor and their respective successors and permitted assigns shall
maintain its corporate existence and shall at all times continue to be duly
organized under the laws of their formation and duly qualified and duly
authorized (as described in subsections 2.01(a), (b) and (c) hereof) and
shall conduct its business in accordance with the terms of its applicable
organizational documents.
(c) Financial Statements; Accountants' Reports; Other Information.
Each of EOI, the Affiliated Sellers and the Depositor shall keep or cause
to be kept in reasonable detail books and records of account of its assets
and business relating to the Transaction, and shall, as applicable, clearly
reflect therein the sale of the Loans to the Depositor, the transfer of the
Loans to the Trust Fund and the sale of the Certificates, respectively, as
a sale of the Loans by EOI and the Affiliated Sellers to the Depositor, a
sale of the Loans to the Trust Fund and a sale of the beneficial ownership
interest in the Trust Fund to the Holders of the Certificates. EOI shall
furnish or cause to be furnished to the Insurer:
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(i) Annual Financial Statements. As soon as available, and in any
event within 105 days after the close of each fiscal year of EOI, the
audited consolidated statement of financial condition of EOI and its
subsidiaries as of the end of such fiscal year and the related audited
consolidated statements of operations, stockholders' equity and cash
flows for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and
period in the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently applied, and
accompanied by the audit opinion of EOI's independent accountants
(which shall be a nationally recognized independent public accounting
firm or otherwise acceptable to the Insurer) and by the certificate
specified in Section 2.02(d).
(ii) Quarterly Financial Statements. Upon the reasonable request
of the Insurer, the unaudited consolidated statement of financial
condition of EOI and its subsidiaries as of the end of the first three
quarters of each fiscal year of EOI and the related unaudited
consolidated statements of operations, stockholders' equity and cash
flows for the portion of the fiscal year then ended, all in reasonable
detail and stating in comparative form the respective figures for the
corresponding date and period in the preceding fiscal year, prepared
in accordance with generally accepted accounting principles
consistently applied (subject to normal year-end adjustments); each
delivery of quarterly financial statements shall be accompanied by a
certificate of one (or more) corporate officers stating that the
quarterly financial statements are correct in all material respects
and present fairly the financial condition and results of operations
of EOI and its subsidiaries as of the dates and for the periods
indicated, in accordance with generally accepted accounting principles
consistently applied (subject to normal year-end adjustments).
(iii) Initial Report. On or before the Closing Date, a copy of
the magnetic tape or Loan Schedule to be delivered to the Trustee on
the Closing Date setting forth, as to each Loan, the information
required under the definition of "Loan Schedule" in the P & S
Agreement.
(iv) Certain Information. Upon the reasonable request of the
Insurer, copies of any requested proxy statements, financial
statements, reports and registration statements that EOI or the
Depositor files with, or delivers to, the Commission or any national
securities exchange.
(v) Other Information. (A) Promptly upon receipt thereof, copies
of all schedules, financial statements or other similar reports
delivered to or by EOI, any Affiliated Seller, the Depositor or the
Trustee pursuant to the terms of any of the Operative Documents,
including all reports provided to either the Trustee or any
Certificateholder pursuant to the P & S Agreement, (B) promptly upon
request, such other data as the Insurer may reasonably request and (C)
all information required to be furnished to the Trustee or the
Certificateholders simultaneously with the furnishing thereof to the
Trustee or the Certificateholders, as the case may be.
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All financial statements specified in clauses (i) and (ii) of this
subsection (c) shall be furnished in consolidated form for EOI and all its
subsidiaries in the event that EOI shall consolidate its financial
statements with its subsidiaries.
(d) Compliance Certificate. Each of EOI (in its capacity as Servicer)
and the Depositor shall deliver to the Insurer, on or before March 31 of
each year beginning with March 31, 2000, certificates of one (or more) of
its officers stating that:
(i) a review of the performance of EOI or the Depositor, as
applicable, under the Operative Documents to which it is a party
during such period has been made under such officer's supervision;
(ii) to the best of such officer's knowledge following reasonable
inquiry, no Default or Event of Default has occurred, or if a Default
or Event of Default has occurred, specifying the nature thereof and,
if EOI or the Depositor has a right to cure pursuant to Section 5.01,
stating in reasonable detail (including, if applicable, any supporting
calculations) the steps, if any, being taken by EOI or the Depositor
to cure such Default or Event of Default or to otherwise comply with
the terms of the agreement to which such Default or Event of Default
relates; and
(iii) EOI, as Servicer, has in full force and effect a fidelity
bond (or direct surety bond) and an errors and omissions policy in
accordance with the terms and requirements of Section 3.18 of the P &
S Agreement.
So long as EOI shall continue to act as Servicer, the annual Officer's
Certificate prepared by EOI as Servicer pursuant to Section 3.16 of the P &
S Agreement shall be deemed to satisfy EOI's obligations as imposed by
clauses (i) and (ii) of this Section 2.02(d).
(e) Access to Records; Discussions with Officers and Accountants. On
an annual basis, or upon the occurrence of a Material Adverse Change, EOI,
each Affiliated Seller and the Depositor shall, upon the reasonable request
of the Insurer, permit the Insurer or its authorized agents:
(i) to inspect the books and records of EOI, each Affiliated
Seller and the Depositor as they may relate to the Certificates, the
obligations of EOI, each Affiliated Seller and the Depositor under the
Operative Documents to which it is a party and the Transaction;
(ii) to discuss the affairs, finances and accounts of EOI with
the Chief Operating Officer and the Chief Financial Officer of EOI;
and
(iii) if the Insurer reasonably believes that a Material Adverse
Change may have occurred and with EOI's consent, which consent shall
not be unreasonably withheld or delayed, to discuss the affairs,
finances and accounts of EOI with EOI's independent accountants;
provided, however, that an officer of EOI shall have the right to be
present during such discussions.
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Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of EOI, any
Affiliated Seller or the Depositor. The books and records of EOI and the
Depositor shall be maintained at the address of EOI designated herein for
receipt of notices, unless EOI shall otherwise advise the parties hereto in
writing.
(f) Notice of Material Events. EOI, each Affiliated Seller and the
Depositor shall be obligated (which obligation shall be satisfied as to
each if performed by EOI or the Depositor) promptly to inform the Insurer
in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation or threat of
any legal process, litigation or administrative or judicial
investigation, or rule making or disciplinary proceeding by or against
EOI, any Affiliated Seller or the Depositor that (A) would be required
to be disclosed to the Commission or EOI's shareholders or (B) could
result in a Material Adverse Change with respect to EOI, any
Affiliated or the Depositor, or to the best of the knowledge of EOI or
the Depositor, the promulgation of any proceeding or any proposed or
final rule which, would likely result in a Material Adverse Change
with respect to EOI, any Affiliated Seller or the Depositor or any of
their respective subsidiaries;
(ii) any change in the location of the principal office of EOI or
the Depositor or any of their respective subsidiaries;
(iii) the occurrence of any Default or Event of Default or any
Material Adverse Change in respect of EOI, any Affiliated Seller or
the Depositor;
(iv) the commencement of any proceedings by or against EOI, any
Affiliated Seller or the Depositor under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or other
similar law now or hereafter in effect or of any proceeding in which a
receiver, liquidator, conservator, trustee or similar official shall
have been, or may be, appointed or requested for EOI, any Affiliated
Seller or the Depositor or any of their respective assets; or
(v) the receipt of notice that (A) EOI, any Affiliated Seller or
the Depositor is being placed under regulatory supervision, (B) any
license, permit, charter, registration or approval necessary for the
conduct of EOI's, any Affiliated Seller's or the Depositor's business
is to be, or may be, suspended or revoked or (C) EOI, any Affiliated
Seller or the Depositor is to cease and desist any practice, procedure
or policy employed by EOI, any Affiliated Seller or the Depositor in
the conduct of their respective business, and such suspension,
revocation or cessation may reasonably be expected to result in a
Material Adverse Change with respect to EOI, any Affiliated Seller or
the Depositor.
(g) Financing Statements and Further Assurances. EOI will cause to be
filed all necessary financing statements or other instruments, and any
amendments or continuation statements relating thereto, necessary to be
kept and filed in such manner and in such places as may be required by law
to preserve and protect fully the interest of
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the Trustee in the Trust Estate. Each of EOI and the Depositor shall, upon
the reasonable request of the Insurer, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, within ten days of such request, such amendments hereto and such
further instruments and take such further action as may be reasonably
necessary to effectuate the intention, performance and provisions of the
Operative Documents. In addition, each of EOI and the Depositor agrees to
cooperate with S&P and Moody's in connection with any review of the
Transaction that may be undertaken by S&P and Moody's after the date
hereof.
(h) Maintenance of Licenses. Each of EOI, the Affiliated Sellers and
the Depositor, and any successors thereof, shall maintain all licenses,
permits, charters and registrations the loss or suspension of which could
result in a Material Adverse Change.
(i) Retirement of Class A Certificates. EOI and the Depositor shall
instruct the Trustee, upon a retirement or other payment of all of the
Class A Certificates, to surrender the Policy to the Insurer for
cancellation.
(j) Disclosure Document. Any Offering Document delivered with respect
to the Class A Certificates shall clearly disclose that the Policy is not
covered by the property/casualty insurance security fund specified in
Article 76 of the New York Insurance Law.
(k) Third-Party Beneficiary. Each of EOI, the Affiliated Sellers and
the Depositor agrees that the Insurer shall have all rights provided to the
Insurer in the Operative Documents and that the Insurer shall constitute a
third-party beneficiary with respect to such rights in respect of the
Operative Documents and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for the
benefit of the Insurer; provided, however, that the remedy for any breach
of a representation and warranty of EOI in Sections 2.03 and 2.03A, any
Affiliated Seller in Section 2.03 and the Depositor in Section 2.04 of the
P & S Agreement and the remedy with respect to any defective Loan or any
Loan as to which there has been a breach of a representation or warranty
under Sections 2.03, 2.03A or 2.04 of the P & S Agreement shall each be
limited to the remedies specified in the P & S Agreement.
(l) Servicing of Loans. All Loans will be serviced in all material
respects in compliance with the P & S Agreement, and EOI, as Servicer,
agrees that the P & S Agreement shall provide that EOI's obligations under
this Insurance Agreement shall be binding on any successor Servicers
thereunder but only to the extent of EOI's obligations as Servicer under
the P & S Agreement and from the effective time of any such succession.
(m) Closing Documents. EOI and the Depositor shall provide or cause to
be provided to the Insurer an executed original copy of each document
executed in connection with the Transaction within 30 days after the
Closing Date.
(n) Distribution, Spread and Certificate Accounts. Monies on deposit
in the Distribution, Spread and Certificate Accounts shall be invested in
Permitted Investments maturing as provided in the P & S Agreement.
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(o) Corporate Formalities. Each of EOI, the Affiliated Sellers and the
Depositor shall observe all the formalities necessary to preserve its
corporate existence under the laws of the State of its formation,
including, as applicable, (i) the obligation to hold annual meetings of its
members, beneficial owners, shareholders or its board of directors and (ii)
the obligation to prepare and file annual income, franchise and other tax
returns.
(p) Due Diligence. The Insurer shall have the right, so long as the
Class A Certificates remain outstanding, to conduct an ongoing review of
EOI's practices as Servicer through reviews of the Loans, reappraisals of
Mortgaged Properties and reviews of servicing practices. Such ongoing due
diligence shall be conducted at the expense of the Insurer and in a
reasonable manner convenient to both EOI and the Insurer.
EOI shall use its best efforts to cause the Depositor to observe the
provisions of this Section 2.02.
Section 2.03. Negative Covenants of EOI, the Affiliated Sellers and the
Depositor. Each of EOI, the Affiliated Sellers and the Depositor hereby agrees
that during the term of this Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) Impairment of Rights. Neither EOI, any Affiliated Seller nor the
Depositor shall take any action, or fail to take any action, if such action
or failure to take action may result in a Material Adverse Change with
respect to EOI, any Affiliated Seller or the Depositor, nor interfere in
any material respect with the enforcement of any rights of the Insurer
under or with respect to any of the Operative Documents. EOI, each
Affiliated Seller and the Depositor shall give the Insurer written notice
of any such action or, to the best of the knowledge of any of EOI, an
Affiliated Seller or the Depositor, any such failure to act on the earlier
of: (i) the date upon which any publicly available filing or release is
made with respect to such action or failure to act and (ii) promptly prior
to the date of consummation of such action or failure to act. Each of EOI,
any Affiliated Seller and the Depositor shall furnish to the Insurer all
information reasonably requested by it that is necessary to determine
compliance with this paragraph.
(b) Waiver, Amendments, Etc. Neither EOI, any Affiliated Seller nor
the Depositor shall modify, waive or amend, or consent to any modification,
waiver or amendment of, any of the terms, provisions or conditions of the
Operative Documents to which it is a party (other than any amendment to the
Offering Document required by law) without the prior written consent of the
Insurer thereto, which consent shall not be unreasonably withheld,
conditioned or delayed.
(c) Limitation on Mergers, Etc. EOI and the Depositor shall not
consolidate with or merge with or into any Person or transfer all or
substantially all of its assets to any Person or liquidate or dissolve
except as provided in the Operative Documents or as permitted hereby. EOI
and the Depositor shall furnish to the Insurer all information requested by
it that is reasonably necessary to determine compliance with this
paragraph.
(d) Successors. Neither EOI, any Affiliated Seller nor the Depositor
shall terminate or designate, or consent to the termination or designation
of, any successor
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Servicer, Paying Agent, or Trustee without the prior written approval of
the Insurer, which approval shall not be unreasonably withheld, conditioned
or delayed.
EOI shall use its best efforts to cause the Depositor to observe the
provisions of this Section 2.03.
Section 2.04. Representations, Warranties and Covenants of the Insurer. The
Insurer represents, warrants and covenants to the Underwriter, EOI, each
Affiliated Seller and the Depositor as follows:
(a) Organization and Licensing. The Insurer is a duly organized,
validly existing and in good standing Wisconsin stock insurance company
duly qualified to conduct an insurance business in the State of New York
and in any other jurisdiction where qualification may be necessary to
accomplish the Transaction.
(b) Corporate Power. The Insurer has the corporate power and authority
to issue the Policy and execute and deliver this Insurance Agreement and to
perform all of its obligations hereunder and thereunder.
(c) Authorization; Approvals. Proceedings legally required for the
issuance and execution of the Policy and the execution, delivery and
performance of this Insurance Agreement have been taken and licenses,
orders, consents or other authorizations or approvals of any governmental
boards or bodies legally required for the enforceability of the Policy and
the conduct by the Insurer of the business and activities contemplated by
the Transaction have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to the
enforceability of the Policy.
(d) Enforceability. The Policy, when issued, and this Insurance
Agreement will each constitute a legal, valid and binding obligation of the
Insurer, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, receivership and other similar laws
affecting creditors' rights generally and to general principles of equity
and subject to principles of public policy limiting the right to enforce
the indemnification provisions contained therein and herein, insofar as
such provisions relate to indemnification for liabilities arising under
federal securities laws.
(e) Financial Information. The balance sheet of the Insurer as of
December 31, 1997 and the related statements of income, stockholder's
equity and cash flows for the three fiscal years ended December 31, 1997,
and the accompanying footnotes, together with an opinion thereon dated
January 29, 1998 of KPMG Peat Marwick, independent certified public
accountants, a copy of which is incorporated by reference into the Offering
Document, fairly present in all material respects the financial condition
of the Insurer as of such dates and for the periods covered by such
statements in accordance with generally accepted accounting principles
consistently applied. The balance sheet of the Insurer as of September 30,
1998 and the related statements of operations, stockholder's equity and
cash flows for the nine-month period ended September 30, 1998 and the
accompanying footnotes, a copy of which is incorporated by reference into
the Offering Document relating to the Class A Certificates, fairly present
in all material respects the financial condition of the Insurer as of such
date and for such
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nine-month period in accordance with generally accepted accounting
principles consistently applied. Since September 30, 1998, there has been
no material change in such financial condition of the Insurer that would
materially and adversely affect its ability to perform its obligations
under the Policy.
(f) Insurer Information. The Insurer Information is true and correct
in all material respects and does not contain any untrue statement of a
material fact.
(g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would materially and adversely affect its ability to
perform its obligations under the Policy or this Insurance Agreement.
(h) Confidential Information. The Insurer agrees that it and its
shareholders, directors, agents, accountants and attorneys shall keep
confidential any matter of which it becomes aware during the inspections
conducted or discussions had pursuant to Section 2.02(e), unless such
information is readily available from public sources or except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its rights
or security under or to enforce the Operative Documents; provided, however,
that the foregoing shall not limit the right of the Insurer to make such
information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants. If the
Insurer is requested or required (by oral questions, interrogatories,
requests for information or documents subpoena, civil investigative demand
or similar process) to disclose any information of which it becomes aware
through such inspections or discussions, the Insurer will promptly notify
EOI of such request(s) so that EOI may seek an appropriate protective order
and/or waive the Insurer's compliance with the provisions of this Insurance
Agreement. If, in the absence of a protective order or the receipt of a
waiver hereunder, the Insurer is, nonetheless, in the opinion of its
counsel, compelled to disclose such information to any tribunal or else
stand liable for contempt or suffer other censure or significant penalty,
the Insurer may disclose such information to such tribunal that the Insurer
is compelled to disclose; provided, however, that a copy of all information
disclosed is provided to EOI promptly upon such disclosure.
(i) Compliance with Law, Etc. No practice, procedure or policy
employed, or proposed to be employed, by the Insurer in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Insurer that, if enforced, could result in a Material
Adverse Change with respect to the Insurer.
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below on or prior to the Closing Date:
(a) [RESERVED];
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(b) Operative Documents. The Insurer shall have received a copy of each of
the Operative Documents, in form and substance reasonably satisfactory to the
Insurer, duly authorized, executed and delivered by each party thereto;
(c) Certified Documents and Resolutions. The Insurer shall have received
(i) a copy of the applicable organizational documents of EOI and the Depositor
and (ii) a certificate of the Secretary or Assistant Secretary of each of EOI
and the Depositor dated the Closing Date stating that attached thereto is a
true, complete and correct copy of resolutions duly adopted by the Board of
Directors or other governing body, as applicable, of EOI and the Depositor
authorizing the execution, delivery and performance by EOI and the Depositor of
the Operative Documents to which it is a party and the consummation of the
Transaction and that such applicable organizational documents and resolutions
are in full force and effect without amendment or modification on the Closing
Date;
(d) Incumbency Certificate. The Insurer shall have received a certificate
of the Secretary or an Assistant Secretary of each of EOI and the Depositor
certifying the names and signatures of the officers of EOI and the Depositor
authorized to execute and deliver the Operative Documents to which it is a party
and that shareholder consent to the execution and delivery of such documents is
not necessary or has been obtained;
(e) Representations and Warranties. The representations and warranties of
EOI, each Affiliated Seller and the Depositor dated the Closing Date set forth
or incorporated by reference in this Insurance Agreement shall be true and
correct on and as of the Closing Date as if made on the Closing Date;
(f) Opinions of Counsel. The Insurer shall have received all opinions of
counsel addressed to any of Moody's, S&P, the Trustee, EOI, any Affiliated
Seller, the Depositor and the Underwriter, in respect of EOI, any Affiliated
Seller and the Depositor or any of the other parties to the Operative Documents
and the Transaction dated the Closing Date in form and substance reasonably
satisfactory to the Insurer, addressed to the Insurer and addressing such
matters as the Insurer may reasonably request, and the counsel providing each
such opinion shall have been instructed by its client to deliver such opinion to
the addressees thereof;
(g) Approvals, Etc. The Insurer shall have received true and correct copies
of all approvals, licenses and consents, if any, including any required approval
of the shareholders of EOI, any Affiliated Seller and the Depositor, required in
connection with the Transaction;
(h) No Litigation, Etc. No suit, action or other proceeding, investigation
or injunction, or final judgment relating thereto, shall be pending or
threatened before any court, governmental or administrative agency or arbitrator
in which it is sought to restrain or prohibit or to obtain damages or other
relief in connection with any of the Operative Documents or the consummation of
the Transaction;
(i) Legality. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative
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agency or court that would make the Transaction illegal or otherwise prevent the
consummation thereof;
(j) Satisfaction of Conditions of the Underwriting Agreement. All
conditions in the Underwriting Agreement relating to the Underwriter's
obligation to purchase the Class A Certificates shall have been satisfied,
without taking into account any waiver by the Underwriter of any condition
unless such waiver has been approved by the Insurer. The Insurer shall have
received copies of each of the documents, and shall be entitled to rely on each
of the documents, required to be delivered to the Underwriter pursuant to the
Underwriting Agreement;
(k) Issuance of Ratings. The Insurer shall have received confirmation that
the risk secured by the Policy constitutes at least a "BBB" risk by S&P and a
"Baa2" risk by Moody's and that the Certificates, when issued, will be rated
"AAA" by S&P and "Aaa" by Moody's;
(l) No Default. No Default or Event of Default shall have occurred;
(m) [RESERVED];
(n) Satisfactory Documentation. The Insurer and its counsel shall have
reasonably determined that all documents, certificates and opinions to be
delivered in connection with the Certificates conform to the terms of the P & S
Agreement, the Registration Statement, the Offering Document and this Insurance
Agreement; and
(o) Indemnification Letter. The Insurer shall have received from the
Underwriter an indemnification letter or agreement with respect to securities
law matters in form and substance reasonably satisfactory to the Insurer.
Section 3.02. Payment of Fees and Premium.
(a) Legal, Accounting and Due Diligence Fees. EOI shall pay or cause to be
paid to the Insurer, at the Closing Date, legal fees, due diligence expenses and
accounting fees incurred by the Insurer in connection with the issuance of the
Policy in an amount not to exceed $45,000.
(b) Rating Agency Fees. EOI shall promptly pay or cause to be paid the
initial fees of S&P and Moody's with respect to the Certificates and the
Transaction following receipt of a statement with respect thereto. All periodic
and subsequent fees of S&P or Moody's with respect to, and directly allocable
to, the Certificates shall be for the account of, and shall be billed to, EOI.
The fees for any other rating agency shall be paid by the party requesting such
other agency's rating unless such other agency is a substitute for S&P or
Moody's in the event that S&P or Xxxxx'x is no longer rating the Certificates,
in which case the fees for such agency shall be paid by EOI.
(c) Premium.
(i) In consideration of the issuance by the Insurer of the Policy, the
Insurer shall be entitled to receive the Premium, in the amount set forth
in the
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Policy, as and when due in accordance with and from the funds specified by
Section 4.02 of the P & S Agreement.
(ii) The Premium paid under the P & S Agreement shall be nonrefundable
without regard to whether the Insurer makes any payment under the Policy or
any other circumstances relating to the Class A Certificates or provision
being made for payment of the Class A Certificates prior to maturity.
Section 3.03. Reimbursement Obligation.
(a) As and when due in accordance with and from the funds specified in
Section 4.02 of the P & S Agreement, the Insurer shall be entitled to
reimbursement for any payment made by the Insurer under the Policy, which
reimbursement shall be due and payable on the date that any amount is paid
thereunder, in an amount equal to the amount to be so paid and all amounts
previously paid that remain unreimbursed, together with interest on any and all
such amounts remaining unreimbursed (to the extent permitted by law, if in
respect of any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before judgment), at a
rate of interest equal to the Late Payment Rate.
(b) EOI agrees to pay to the Insurer as follows: anything in Sections
2.01(l), 2.02(k) and 3.03(a) to the contrary notwithstanding, the Insurer shall
be entitled to reimbursement from EOI and shall have full recourse against EOI
for (i) any payment made under the Policy arising as a result of EOI's failure
to substitute for or deposit an amount in respect of any defective Loan as
required pursuant to Sections 2.03 and 2.04 of the P & S Agreement, together
with interest on any and all such amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any such unreimbursed amounts representing
interest) from the date such amounts became due until paid in full (after as
well as before judgment), at a rate of interest equal to the Late Payment Rate,
and (ii) any payment made under the Policy arising as a result of EOI's, any
Affiliated Seller's or the Depositor's failure to pay or deposit any amount
required to be paid or deposited pursuant to the Operative Documents.
(c) EOI agrees to pay to the Insurer any and all charges, fees, costs and
expenses that the Insurer may reasonably pay or incur, including reasonable
attorneys' and accountants' fees and expenses, in connection with (i) the
enforcement, defense or preservation of any rights in respect of any of the
Operative Documents, including defending, monitoring or participating in any
litigation or proceeding (including any insolvency proceeding in respect of any
Transaction participant or any affiliate thereof) relating to any of the
Operative Documents, any party to any of the Operative Documents (in its
capacity as such a party) or the Transaction or (ii) any amendment, waiver or
other action with respect to, or related to, any Operative Document, whether or
not executed or completed. Provided that three Business Days written notice of
the intended payment or incurrence shall have been given to EOI by the Insurer,
such reimbursement shall be due on the dates on which such charges, fees, costs
or expenses are paid or incurred by the Insurer.
(d) EOI agrees to pay to the Insurer interest on any and all amounts
described in subsections 3.03(b), 3.03(c) and 3.03(e) and Sections 3.02 and 3.04
from the date such
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amounts become due or, in the case of subsections 3.02(b) or 3.03(c) or Section
3.04, are incurred or paid by the Insurer until payment thereof in full (after
as well as before judgment), at the Late Payment Rate.
(e) EOI agrees to pay to the Insurer as follows: any payments advanced by
the Insurer to EOI or the Depositor, or any payments made by the Insurer on
behalf of EOI or the Depositor, in either case which are required to be paid by
EOI or the Depositor pursuant to the Class A Certificates or any Operative
Documents, on the date any such payment is made or advanced by the Insurer.
Section 3.04. Indemnification.
(a) In addition to any and all of the Insurer's rights of reimbursement,
indemnification, subrogation and to any other rights of the Insurer pursuant
hereto or under law or in equity, EOI, each Affiliated Seller and the Depositor
agree, jointly and severally, to pay, and to protect, indemnify and save
harmless, the Insurer and its officers, directors, shareholders, employees,
agents and each Person, if any, who controls the Insurer within the meaning of
either Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act from and against, any and all claims, losses, liabilities (including
penalties), actions, suits, judgments, demands, damages, costs or expenses
(including reasonable fees and expenses of attorneys, consultants and auditors
and reasonable costs of investigations) of any nature arising out of or relating
to the breach by EOI, any Affiliated Seller or the Depositor of any of the
representations or warranties contained in Section 2.01 or arising out of or
relating to the transactions contemplated by the Operative Documents by reason
of:
(i) any omission or action (other than of or by the Insurer) in
connection with the offering, issuance or delivery of the Certificates by
EOI, the Depositor or the Trustee;
(ii) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or agent
of EOI, any Affiliated Seller, the Depositor or the Trustee in connection
with any Transaction arising from or relating to the Operative Documents;
(iii) the violation by EOI, any Affiliated Seller or the Depositor of
any domestic or foreign law, rule or regulation, or any judgment, order or
decree applicable to it, which violation reasonably could result in a
Material Adverse Change;
(iv) the breach by EOI, any Affiliated Seller or the Depositor of any
representation, warranty (other than a representation or warranty in
respect of the Loans contained in Section 2.03 or Section 2.04 of the P & S
Agreement), or covenant under any of the Operative Documents or the
occurrence, in respect of EOI, any Affiliated Seller or the Depositor,
under any of the Operative Documents of any "event of default" or any event
which, with the giving of notice or the lapse of time or both, would
constitute any "event of default"; or
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(v) any untrue statement or alleged untrue statement of a material
fact contained in the Offering Document or the Registration Statement or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, except
insofar as such claims, losses, liabilities (including penalties), actions,
suits, judgments, demands, damages, costs or expenses (including reasonable
fees and expenses of attorneys, consultants and auditors and reasonable
costs of investigations) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission of a material fact in information included in the Offering
Document or the Registration Statement and furnished by or approved by the
Insurer in writing expressly for use therein (all such information so
furnished being referred to herein as "Insurer Information"), it being
understood that, in respect of the Offering Document and the Registration
Statement, the Insurer Information is limited to the information with
respect to the Insurer included under the captions "THE INSURER" and
"DESCRIPTION OF THE CERTIFICATES -- Certificate Guaranty Insurance Policy"
and the financial statements of the Insurer incorporated therein by
reference.
(b) The Insurer agrees to pay, and to protect, indemnify and save harmless,
EOI, each Affiliated Seller and the Depositor and their respective officers,
directors, shareholders, employees, agents and each Person, if any, who controls
EOI, each Affiliated Seller and the Depositor within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act
from and against, any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and
reasonable costs of investigations) of any nature arising out of or by reason of
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Insurer Information or any omission or alleged omission to
state in the Insurer Information a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (ii) any failure of the Insurer to make a
payment required to be made under the Policy or (iii) a breach of any of the
representations and warranties of the Insurer contained in Section 2.04.
(c) If any action or proceeding (including any governmental investigation)
shall be brought or asserted against any Person (individually, an "Indemnified
Party" and, collectively, the "Indemnified Parties") in respect of which the
indemnity provided in Section 3.04(a) or (b) may be sought from EOI, any
Affiliated Seller or the Depositor, on the one hand, or the Insurer, on the
other (each, an "Indemnifying Party") hereunder, each such Indemnified Party
shall promptly notify the Indemnifying Party in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
expenses. The Indemnified Party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof at the expense of
the Indemnified Party; provided, however, that the fees and expenses of such
separate counsel shall be at the expense of the Indemnifying Party if (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed within a reasonable
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period of time to assume the defense of such action or proceeding and employ
counsel reasonably satisfactory to the Indemnified Party in any such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Party (in which case,
if the Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for the Indemnified Parties, which
firm shall be designated in writing by the Indemnified Party and shall be
reasonably satisfactory to the Indemnifying Party). The Indemnifying Party shall
not be liable for any settlement of any such action or proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
conditioned or delayed, but, if settled with its written consent, or if there is
a final judgment for the plaintiff in any such action or proceeding with respect
to which the Indemnifying Party shall have received notice in accordance with
this subsection (c), the Indemnifying Party agrees to indemnify and hold the
Indemnified Parties harmless from and against any loss or liability by reason of
such settlement or judgment.
(d) To provide for just and equitable contribution if the indemnification
provided by the Indemnifying Party is determined to be unavailable or
insufficient to hold harmless any Indemnified Party (other than due to
application of this Section), each Indemnifying Party shall contribute to the
losses incurred by the Indemnified Party on the basis of the relative fault of
the Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand.
Section 3.05. Payment Procedure. In the event of any payment by the
Insurer, EOI and the Depositor agree to accept the voucher or other evidence of
payment as prima facie evidence of the propriety thereof and the liability, if
any, described in Section 3.03 therefor to the Insurer. All payments to be made
to the Insurer under this Insurance Agreement shall be made to the Insurer in
lawful currency of the United States of America in immediately available funds
at the notice address for the Insurer as specified in the P & S Agreement on the
date when due or as the Insurer shall otherwise direct by written notice to the
other parties hereto. In the event that the date of any payment to the Insurer
or the expiration of any time period hereunder occurs on a day that is not a
Business Day, then such payment or expiration of time period shall be made or
occur on the next succeeding Business Day with the same force and effect as if
such payment was made or time period expired on the scheduled date of payment or
expiration date.
Section 3.06. Joint and Several Liability. EOI and the Depositor shall be
jointly and severally liable for all amounts due and payable to the Insurer
hereunder by any such parties.
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ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement. This
Insurance Agreement shall take effect on the Closing Date and shall remain in
effect until the later of (a) such time as the Insurer is no longer subject to a
claim under the Policy and the Policy shall have been surrendered to the Insurer
for cancellation and (b) all amounts payable to the Insurer by EOI or the
Depositor hereunder or from any other source hereunder or under the Operative
Documents and all amounts payable under the Class A Certificates have been paid
in full; provided, however, that the provisions of Sections 3.02, 3.03 and 3.04
hereof shall survive any termination of this Insurance Agreement.
Section 4.02. Further Assurances and Corrective Instruments.
(a) Except at such times as a default in payment under the Policy
shall exist or shall have occurred, none of EOI, any Affiliated Seller or
the Depositor nor the Trustee shall grant any waiver of rights under any of
the Operative Documents to which any of them is a party without the prior
written consent of the Insurer, which shall not be unreasonably withheld,
conditioned or delayed and any such waiver without prior written consent of
the Insurer shall be null and void and of no force or effect.
(b) To the extent permitted by law, each of EOI and the Depositor
agrees that it will, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as the Insurer may reasonably request
and as may be required in the Insurer's reasonable judgment to effectuate
the intention of or facilitate the performance of this Insurance Agreement.
Section 4.03. Obligations Absolute.
(a) So long as no Insurer Default shall have occurred and shall have
continued beyond any period of cure applicable thereto, the obligations of
EOI, each Affiliated Seller and the Depositor hereunder shall be absolute
and unconditional and shall be paid or performed strictly in accordance
with this Insurance Agreement under all circumstances irrespective of:
(i) any lack of validity or enforceability of, or any amendment
or other modifications of, or waiver, with respect to any of the
Operative Documents or the Certificates that have not been approved by
the Insurer;
(ii) any exchange or release of any other obligations hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right that EOI, any Affiliated Seller or the
Depositor may have at any time against the Insurer or any other
Person;
(iv) any document presented in connection with the Policy proving
to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
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(v) any payment by the Insurer under the Policy against
presentation of a certificate or other document that does not strictly
comply with terms of the Policy;
(vi) any failure of EOI, any Affiliated Seller or the Depositor
to receive the proceeds from the sale of the Certificates; and
(vii) any other circumstances, other than payment in full, that
might otherwise constitute a defense available to, or discharge of,
EOI, any Affiliated Seller or the Depositor in respect of any
Operative Document.
(b) So long as no Insurer Default shall have occurred and shall have
continued beyond any period of cure applicable thereto, EOI, each Affiliated
Seller and the Depositor and any and all others who are now or may become liable
for all or part of the obligations of EOI, any Affiliated Seller or the
Depositor under this Insurance Agreement renounce the right to assert as a
defense to the performance of their respective obligations each of the
following: (i) to the extent permitted by law, any and all redemption and
exemption rights and the benefit of all valuation and appraisement privileges
against the indebtedness and obligations evidenced by any Operative Document or
by any extension or renewal thereof; (ii) presentment and demand for payment,
notices of nonpayment and of dishonor, protest of dishonor and notice of
protest; (iii) all notices in connection with the delivery and acceptance hereof
and all other notices in connection with the performance, default or enforcement
of any payment hereunder, except as required by the Operative Documents; and
(iv) all rights of abatement, diminution, postponement or deduction, or to any
defense other than payment, or to any right of setoff or recoupment arising out
of any breach under any of the Operative Documents, by any party thereto or any
beneficiary thereof, or out of any obligation at any time owing to EOI, any
Affiliated Seller or the Depositor.
(c) EOI, each Affiliated Seller and the Depositor and any and all others
who are now or may become liable for all or part of the obligations of EOI, each
Affiliated Seller or the Depositor under this Insurance Agreement agree to be
bound by this Insurance Agreement and (i) agree that any consent, waiver or
forbearance hereunder with respect to an event shall operate only for such event
and not for any subsequent event; (ii) consent to any and all extensions of time
that may be granted by the Insurer with respect to any payment hereunder or
other provisions hereof and to the release of any security at any time given for
any payment hereunder, or any part thereof, with or without substitution, and to
the release of any Person or entity liable for any such payment; and (iii)
consent to the addition of any and all other makers, endorsers, guarantors and
other obligors for any payment hereunder, and to the acceptance of any and all
other security for any payment hereunder, and agree that the addition of any
such obligors or security shall not affect the liability of the parties hereto
for any payment hereunder.
(d) Nothing herein shall be construed as prohibiting EOI, any Affiliated
Seller or the Depositor from pursuing any rights or remedies it may have against
any Person in a separate legal proceeding.
Section 4.04. Assignments; Reinsurance; Third-Party Rights.
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(a) This Insurance Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. EOI and the
Depositor may not assign its rights under this Insurance Agreement, or delegate
any of its duties hereunder, without the prior written consent of the Insurer.
Any assignments made in violation of this Insurance Agreement shall be null and
void.
(b) The Insurer shall have the right to give participations in its rights
under this Insurance Agreement and to enter into contracts of reinsurance with
respect to the Policy upon such terms and conditions as the Insurer may in its
discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve the Insurer of any of its
obligations hereunder or under the Policy.
(c) Except as provided herein with respect to participants and reinsurers,
nothing in this Insurance Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any Holder, other
than the Insurer against EOI, any Affiliated Seller or the Depositor, or EOI,
any Affiliated Seller or the Depositor against the Insurer and all the terms,
covenants, conditions, promises and agreements contained herein shall be for the
sole and exclusive benefit of the parties hereto and their successors and
permitted assigns. Neither the Trustee nor any Holder shall have any right to
payment from any Premiums paid or payable hereunder or under the P & S Agreement
or from any amounts paid by EOI pursuant to Sections 3.02 or 3.03.
Section 4.05. Liability of the Insurer. Neither the Insurer nor any of its
officers, directors or employees shall be liable or responsible for: (a) the use
that may be made of the Policy by the Trustee or for any acts or omissions of
the Trustee in connection therewith; or (b) the validity, sufficiency, accuracy
or genuineness of documents delivered to the Insurer in connection with any
claim under the Policy, or of any signatures thereon, even if such documents or
signatures should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged (unless the Insurer shall have actual
knowledge thereof). In furtherance and not in limitation of the foregoing, the
Insurer may accept documents that appear on their face to be in order, without
responsibility for further investigation.
Section 4.06. Annual Servicing Audit and Certification. The annual
servicing audit required pursuant to Section 3.17 of the P & S Agreement shall
be performed by an independent third party reasonably acceptable to the Insurer.
Any one of the six major nationally recognized firms of independent public
accountants is deemed to be acceptable.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.01. Defaults. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Any representation or warranty made by EOI, any Affiliated Seller
or the Depositor hereunder or under the Operative Documents, or in any
certificate furnished
-24-
hereunder or under the Operative Documents, shall prove to be untrue or
incomplete in any material respect;
(b) (i) EOI or the Depositor shall fail to pay when due any amount
payable by EOI or the Depositor hereunder or (ii) a legislative body has
enacted any law that declares or a court of competent jurisdiction shall
find or rule that this Insurance Agreement or any other Operative Document
is not valid and binding on EOI or the Depositor, provided that, with
respect to any law or judicial action within the scope of this clause (ii),
EOI and the Depositor shall have 30 days to reinstate the binding effect of
this Insurance Agreement or any other Operative Document; the Insurer
agrees to take such actions as may be reasonably requested of it to
facilitate the reinstatement of such binding effect;
(c) The occurrence and continuance of an "event of default", or any
event which given the lapse of time or notice would constitute an "event of
default", under any Operative Document;
(d) Any failure on the part of EOI, any Affiliated Seller or the
Depositor duly to observe or perform in any material respect any other of
the covenants or agreements on the part of EOI, any Affiliated Seller or
the Depositor contained in this Insurance Agreement (other than the
covenants or agreements contained in Sections 2.02(a), 2.02(l) and 2.02(n))
which continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to EOI by the Insurer (with a copy to the Trustee) or by
the Trustee (with a copy to the Insurer);
(e) A decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law or
the appointment of a conservator or receiver or liquidator or other similar
official in any bankruptcy, insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against EOI or the
Depositor and such decree or order shall have remained in force
undischarged or unstayed for a period of 90 consecutive days;
(f) EOI or the Depositor shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to EOI or the Depositor
or of or relating to all or substantially all of their respective property;
(g) EOI or the Depositor shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage
of or otherwise voluntarily commence a case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar statute,
make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(h) the Trust Fund shall become subject to an entity level tax or to
registration as an investment company under the Investment Company Act.
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Section 5.02. Remedies; No Remedy Exclusive.
(a) Upon the occurrence of an Event of Default, the Insurer may exercise
any one or more of the rights and remedies set forth below:
(i) declare all indebtedness of every type or description then owed by
EOI, any Affiliated Seller or the Depositor to the Insurer to be
immediately due and payable, and the same shall thereupon be immediately
due and payable;
(ii) exercise any rights and remedies under the P & S Agreement in
accordance with the terms thereof or direct the Trustee or the Servicer to
exercise such rights and remedies in accordance with the terms of the P & S
Agreement; or
(iii) take whatever action at law or in equity as may appear necessary
or desirable in its judgment to collect the amounts, if any, then due under
this Insurance Agreement or any other Operative Document or to enforce
performance and observance of any obligation, agreement or covenant of EOI,
any Affiliated Seller or the Depositor under this Insurance Agreement or
any other Operative Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under this Insurance Agreement, the P & S Agreement or existing at law or in
equity. No delay or omission to exercise any right or power accruing under this
Insurance Agreement or the P & S Agreement upon the happening of any event set
forth in Section 5.01 shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the Insurer
to exercise any remedy reserved to the Insurer in this Article, it shall not be
necessary to give any notice, other than such notice as may be required by this
Article.
Section 5.03. Waivers.
(a) No failure by the Insurer to exercise, and no delay by the Insurer in
exercising, any right hereunder shall operate as a waiver thereof. The exercise
by the Insurer of any right hereunder shall not preclude the exercise of any
other right, and the remedies provided herein to the Insurer are declared in
every case to be cumulative and not exclusive of any remedies provided by law or
equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting forth
the terms, conditions and extent of such waiver signed by the Insurer and
delivered to EOI. Unless such writing expressly provides to the contrary, any
waiver so granted shall extend only to the specific event or occurrence which
gave rise to the Event of Default so waived and not to any other similar event
or occurrence which occurs subsequent to the date of such waiver.
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ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. This Insurance Agreement may be amended,
modified, supplemented or terminated only by written instrument or written
instruments signed by the parties hereto. EOI agrees to provide a copy of any
amendment to this Insurance Agreement promptly to the Trustee and the rating
agencies maintaining a rating on the Class A Certificates. No act or course of
dealing shall be deemed to constitute an amendment, modification, supplement or
termination hereof.
Section 6.02. Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered and
telecopied to the recipient as follows:
(a) To the Insurer:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance --
Mortgage Backed Securities
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
(in each case in which notice or other communication to the
Insurer refers to an Event of Default, a claim on the Policy or
with respect to which failure on the part of the Insurer to
respond shall be deemed to constitute consent or acceptance, then
a copy of such notice or other communication should also be sent
to the attention of the general counsel of each of EOI and the
Trustee and, in all cases, both any original and all copies shall
be marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To EOI:
Equity One, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xx. Xxxxxx, Xxx Xxxxxx 00000
Attention: Vice President - Finance
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
Notice to EOI shall also constitute notice to each Affiliated
Seller and to the Depositor to the extent the party providing such
notice is required to provide notice to all such parties (in each case
in which notice or other communication to EOI refers to an Event of
Default, a claim against EOI, an Affiliated Seller or the Depositor or
with respect to which failure on the part of EOI, an Affiliated Seller
or the Depositor to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should
-27-
also be sent to the attention of the general counsel of each of the
Insurer and the Trustee and, in all cases, both any original and all
copies shall be marked to indicate "URGENT MATERIAL ENCLOSED.").
(c) To the Trustee:
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Global Trust Services
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. Severability. In the event that any provision of this
Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
Section 6.04. Governing Law. This Insurance Agreement shall be governed by
and construed in accordance with the laws of the State of New York (without
giving effect to the conflict of laws provisions thereof).
Section 6.05. Consent to Jurisdiction.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of the United States District Court for the Southern District
of New York and any court in the State of New York located in the City and
County of New York, and any appellate court from any thereof, in any
action, suit or proceeding brought against it and to or in connection with
any of the Operative Documents or the Transaction or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York state court or, to
the extent permitted by law, in such federal court. The parties hereto
agree that a final unappealable judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. To the
extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that the related documents or the subject matter
thereof may not be litigated in or by such courts.
-28-
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of
any such court by any court of any other nation or jurisdiction which may
be called upon to grant an enforcement of such judgment.
(c) Service on EOI, any Affiliated Seller or the Depositor may be made
by mailing or delivering copies of the summons and complaint and other
process which may be served in any suit, action or proceeding to the
Servicer addressed as follows: Equity One, Inc., 000 Xxxxxxxxxx Xxxx, Xxxxx
000, Xx. Xxxxxx, Xxx Xxxxxx 00000 Attention: General Counsel. Such address
may be changed by the applicable party or parties by written notice to the
other parties hereto. The provision of notice to change the address set
forth in Section 6.02 shall constitute notice for purposes of the preceding
sentence, unless such notice shall expressly state to the contrary.
(d) Nothing contained in this Insurance Agreement shall limit or
affect any party's right to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Operative
Documents against any other party or its properties in the courts of any
jurisdiction.
Section 6.06. Consent of the Insurer. In the event that the consent of the
Insurer is required under any of the Operative Documents, the determination
whether to grant or withhold such consent shall be made by the Insurer in its
sole discretion without any implied duty towards any other Person, except as
otherwise expressly provided therein.
Section 6.07. Counterparts. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.08. Headings. The headings of Articles and Sections and the Table
of Contents contained in this Insurance Agreement are provided for convenience
only. They form no part of this Insurance Agreement and shall not affect its
construction or interpretation.
Section 6.09. Trial by Jury Waived. Each party hereby waives, to the
fullest extent permitted by law, any right to a trial by jury in respect of any
litigation arising directly or indirectly out of, under or in connection with
any of the Operative Documents or any of the transactions contemplated
thereunder. Each party hereto (A) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(B) acknowledges that it has been induced to enter into the Operative Documents
to which it is a party by, among other things, this waiver.
Section 6.10. Limited Liability. No recourse under any Operative Document
or the Underwriting Agreement shall be had against, and no personal liability
shall attach to, any officer, employee, director, affiliate or shareholder of
any party hereto, as such, by the enforcement of any assessment or by any legal
or equitable proceeding, by virtue of any statute or otherwise in respect of any
of the Operative Documents or the Underwriting Agreement, the Certificates or
the Policy, it being expressly agreed and understood that each Operative
Document or the Underwriting Agreement is solely a corporate obligation of each
party hereto, and that any and all personal liability, either at common law or
in equity, or by statute or
-29-
constitution, of every such officer, employee, director, affiliate or
shareholder for breaches of any party hereto of any obligations under any
Operative Document or the Underwriting Agreement is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Insurance Agreement.
Section 6.11. Entire Agreement. This Insurance Agreement and the Policy set
forth the entire agreement between the parties with respect to the subject
matter hereof and thereof, and this Insurance Agreement supersedes and replaces
any agreement or understanding that may have existed between the parties prior
to the date hereof in respect of such subject matter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as
of the day and year first above mentioned.
AMBAC ASSURANCE CORPORATION,
as Insurer
By: /s/ Xxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxx X. Xxxx
Title: First Vice President
EQUITY ONE, INC.,
as a Seller and the Servicer
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President-Finance
EQUITY ONE ABS, INC.,
as Depositor
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Second Vice President
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