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EXHIBIT 99.1
SEQUOIA MORTGAGE TRUST 1,
ISSUER
AND
FIRST UNION NATIONAL BANK,
INDENTURE TRUSTEE
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FIRST SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 1, 1998
TO
INDENTURE
DATED AS OF JUNE 1, 1997
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CLASS A-1 AND CLASS A-2 COLLATERALIZED MORTGAGE BONDS
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FIRST SUPPLEMENTAL INDENTURE, dated as of November 1, 1998, to
INDENTURE, dated as of June 1, 1997, between SEQUOIA MORTGAGE TRUST 1, a
Delaware statutory business trust, (the "Issuer"), and FIRST UNION NATIONAL
BANK, a national banking association (the "Indenture Trustee").
PURPOSE OF SUPPLEMENTAL INDENTURE
Pursuant to the requirements of Section 9.01 of the Indenture with
respect to entering into a supplemental indenture without consent of the
bondholders, the Issuer has requested by an Issuer Order seeking consent of the
Indenture Trustee and MBIA INSURANCE CORPORATION (the "Insurer"), that the
Issuer and Indenture Trustee enter into this First Supplemental Indenture for
the purpose of making revisions to the redemption provisions of Article X by
replacement of Article X in its entirety with the form attached hereto as
Exhibit A, such supplemental indenture to make said revision by this method
being provided for in Section 9.01 of the Indenture. The Issuer has represented
in the Issuer Order, as required by Section 9.01 of the Indenture, that such
corrections shall neither adversely affect the interests of the Holders of the
Bonds nor violate the terms of the Trust Indenture Act of 1939.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Supplemental Indenture to be duly executed by their respective officers,
hereunto duly authorized, all as of the day and year first written above.
SEQUOIA MORTGAGE TRUST 1
By: REDWOOD TRUST, INC., as Manager
By: /s/ XXXXXX X. XXXX
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Name: Xxxxxx X. Xxxx
Title: Vice President, Secretary,
Treasurer and Chief Financial
Officer
FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ PABLO DE LA CANAL
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Name: Pablo De La Canal
Title: Vice President
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EXHIBIT A
ARTICLE X
REDEMPTION OF BONDS
SECTION 10.01. REDEMPTION.
(a) The Bonds shall not be subject to special redemption.
(b) The Bonds shall be subject to redemption by the issuer, in whole but
not in part, at the option of the Issuer, on any Payment Date on or
after the earlier of (i) seven years after the Closing Date and (ii) the
Payment Date after which the Pool Principal Balance with respect to such
Payment Date, is 35% or less than the Initial Pool Principal Balance, on
the terms and conditions specified in this subsection (b) at the
Redemption Price plus all amounts due to MBIA pursuant to the Insurance
Agreement. If the Issuer elects to so redeem the Bonds, it shall, no
later than 30 days prior to the Payment Date selected for such
redemption, deliver notice of such election to the Trustee and MBIA and
either (a) deposit in the Distribution Account the Redemption Price
therefor plus all amounts due to MBIA pursuant to the Insurance
Agreement (collectively, the "Redemption Amount") or (b) state in such
notice that the Redemption Amount will be deposited in the Distribution
Account not later than 10:00 a.m., New York City time, on the applicable
Redemption Date.
(c) The Bonds will be subject to mandatory redemption and retirement by
the Issuer at the Redemption Price in the event that the Master Servicer or MBIA
exercises its option to purchase all of the remaining Pledged Mortgages. Such
option may be exercised by the Master Servicer (or if the Master Servicer fails
to exercise such option, by MBIA) on any Payment Date after the Payment Date
with respect to which the Pool Principal Balance is equal to 10% or less of the
Initial Pool Principal Balance. To exercise such option, the Master Servicer or
MBIA, as the case may be, must solicit and turn over to the Trustee at least
three bids or the remaining Pledged Mortgages each from a Person that is not an
affiliate of the Master Servicer or MBIA. The Trustee shall accept the highest
such bid submitted provided, further, that the price to be paid for the
remaining Pledged Mortgages shall not be less than the Redemption Price, plus
all amounts due to MBIA pursuant to the Insurance Agreement and plus all other
amounts due by the Issuer to, the Trustee, the Master Servicer, Redwood and plus
the amount of any other claims against the Issuer then outstanding, regardless
of whether said claims are enforceable in a court of law or equity. In addition,
in order to exercise the option to purchase the remaining Pledged Mortgages, in
the manner set
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forth above, prior to soliciting such bids, the Master Servicer or MBIA shall
provide the Issuer with notice 90 days' prior to their exercise of such options.
(d) In effecting any redemption pursuant to subsection (b), concurrent
with the notice provided for therein, the Issuer shall deliver an Issuer Order
directing the Trustee to effect such redemption, any certification and opinion
required pursuant to Section 11.01 and a form of redemption notice. All Bonds so
redeemed shall be due and payable on such Redemption Date upon the giving of the
notice thereof required by Section 10.02.
(e) If the Issuer elects to retain and resell the Bonds, other than to
an affiliate, following any redemption pursuant to subsection (b) of this
Section 10.01, the Issuer shall be required to provide, as a condition precedent
to such sale, the opinion set forth in Section 2.12(c) with such modifications
thereto as shall be acceptable to MBIA provided that no MBIA Default shall have
occurred and be continuing.
SECTION 10.02. FORM OF REDEMPTION NOTICE.
Notice of redemption shall be given by the Trustee in the name and at
the expense of the Issuer by first class mail, postage prepaid, mailed not less
than thirty days prior to the applicable Redemption Date (but in no event prior
to the date on which the Redemption Amount with respect to the Bonds to be
redeemed pursuant to Section 10.01 has been deposited in the Distribution
Account or the date on which the notice of such deposit referred to in Section
10.01 has been received by the Trustee) to MBIA and each Holder of Bonds to be
redeemed, such Holders being determined as of the Record Date with respect to
the Payment Date on which such redemption is to occur.
All notices of redemption shall state:
(1) the Redemption Date; and
(2) the fact of such payment in full or notice that payment shall
be made by 10:00 a.m., New York City time, on the Redemption Date
and the place where such Bonds are to be surrendered for payment
of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02). Failure
to give notice of redemption, or any defect therein, to any
Holder of any Bond selected for redemption shall not impair or
affect the validity of the redemption of any other Bond.
SECTION 10.03. BONDS PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as provided in Section 10.02, the
Bonds or portions thereof so to be redeemed shall, on the applicable Redemption
Date,
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become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price or elect not to retire the Bonds
so redeemed, as provided in Section 10.04) no interest shall accrue on such
Redemption Price for any period after the last day preceding the day on which
such Redemption Date occurs.
SECTION 10.04. RETENTION OF BONDS BY ISSUER.
In the event that the Issuer effects a redemption of the Bonds in
accordance with the provisions of Section 10.01(b), it may elect to cause the
Bonds to remain Outstanding and not release the lien of the Indenture with
respect to the Trust Estate securing such Bonds or terminate such Bonds. If the
Issuer so elects, the Bonds shall not merge with the security therefor, but
shall remain validly Outstanding, subject to the following paragraph and Section
10.01(e).
Notwithstanding the foregoing, no redemption of any Bond shall be
permitted without retiring it and no sale of previously redeemed Bonds may be
made by the Issuer unless the Issuer shall have delivered to the Trustee and
MBIA, provided an MBIA Default has not occurred and is continuing, an Opinion of
Counsel that such redemption without retirement or sale, as the case may be,
does not violate any provision of the TIA or other applicable law.
